The CSR Newsletters are a freely-available resource generated as a dynamic complement to the textbook, Strategic Corporate Social Responsibility: Sustainable Value Creation.

To sign-up to receive the CSR Newsletters regularly during the fall and spring academic semesters, e-mail author David Chandler at david.chandler@ucdenver.edu.

Tuesday, May 11, 2021

Strategic CSR - Impact investing

 
This is the last CSR Newsletter of the Spring semester.
Have a great summer and I will see you in the Fall!
 


The article in the url below outlines how a new nonprofit, Social Finance, is using impact investing to build an innovative approach to vocational training:

"Bill Barber saw an ad on Facebook last year for American Diesel Training Centers, a school in Ohio that prepares people for careers as diesel mechanics. It came with an unusual pitch: He would pay for the schooling only if it landed him a job, thanks to a nonprofit called Social Finance. After making sure it wasn't a scam, he signed up. After going through the immersive five-week program, he got a job with starting pay of $39,000 a year — about $10,000 more than he made before as a cable TV installer."

The idea is that, rather than being rewarded for how many students enroll in a program or graduate from it, the training organization is rewarded based on how many students get well-paid jobs in their area of study:

"Right now, there are only a relative handful of these pay-for-success programs that train low-income Americans for better-paying careers. The challenge has been to align funding and incentives so that students, training programs and employers all benefit."

The nonprofit is backed by investors who purchase "career impact bonds," which raise the money needed to support the initial training:

"The Social Finance effort is powered by a fund of more than $40 million raised from philanthropic investors. The money goes toward paying for low-income students, as well as minority candidates and veterans, to enter the training programs. The group is not related to the online lender SoFi. It has supported four job training programs, including American Diesel Training, in the past year. It has plans to have double that number a year from now."

And the bonds generate a return once the students who get a job start repaying their training costs:

"The Social Finance income-share agreement with students ranges from about 5 percent to 9 percent depending on their earnings — less from $30,000 to $40,000, and generally more above $40,000. The monthly payments last four years. If you lose your job, the payment obligation stops."

What is most intriguing is that Social Finance is beginning to consult on how the model can be implemented at scale:

"Social Finance is advising Ohio on pay-for-success programs and is in talks with several other states. The financing arranged by Social Finance from investors is called a career impact bond, while the state-backed initiatives are called pay-it-forward funds — since payments from job-holding graduates help pay for new students. Social Finance is also preparing a proposal for the new labor secretary, Martin J. Walsh, recommending that the federal government provide matching funds to accelerate state programs."

And the results so far appear to be promising. For example, in the case of American Diesel Training (based in Ohio and featured in the article), the funding model appears to provide an effective mix of incentives and rewards for the students and their trainers:

"The first group of Social Finance-funded students started the five-week course last September. There are now about 70 students in each course. That is about four times as many as a year ago. Social Finance pays American Diesel Training just over 60 percent of its fee initially. The rest comes later, after a student lands and keeps a job. … A total of 229 students supported by Social Finance have been enrolled. The graduation rate is nearly 100 percent, and 89 percent have jobs. Their average annual income is $36,500, and the average gain from income before the program is $12,400."

Take care
David

David Chandler
© Sage Publications, 2020

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler5e 
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/


Greasing the Wheels of Opportunity
By Steve Lohr
April 8, 2021
The New York Times
Late Edition – Final
B1, B6

Thursday, May 6, 2021

Strategic CSR - Plastics

The article in the url below contains some useful facts about plastics and our (extremely limited) capacity to recycle them:

"[In 2018] the U.S. manufactured 35.7 million tons of the stuff in a single year. … More than 90% of plastics generated in the U.S. each year winds up in landfills or incinerators, according to the Environmental Protection Agency. Only about 9% is recycled."

Central to understanding why such a low percentage is recycled is understanding the various types of plastic, which are identified by "a triangle made of three arrows enclosing a resin-identification code—a digit from 1 to 7 that indicates the type of plastic." While the 1s, 2s, and 5s have some (variable) value, the rest have a negative market value (meaning someone has to be paid to take them away):

"No. 1 plastics, including water bottles and clear plastic cups, sell for around 13 cents a pound. Clear (meaning undyed) No. 2 plastics, including milk jugs and shampoo and detergent bottles, fetch 60 cents to 70 cents a pound. And No. 5 plastics, including yogurt containers, prescription bottles and bottle caps, draw around 30 cents a pound. Aluminum gets about 55 cents a pound."

In contrast:

"… there's little or no domestic market for No. 3 plastics made of PVC, or polyvinyl chloride; No. 4 plastics, such as plastic film and frozen-food bags, made of low-density polyethylene; No. 6 plastics, including party cups and plastic utensils, made of polystyrene; or No. 7 plastics, a catchall category for all other resins."

What those recycled materials become again depends on the type of plastic:

"Of the resins that do get recycled, almost 100% of clear No. 2 plastics are turned into new packaging, Mr. Bell said, while the colored versions often end up as black agricultural piping. About 25% of the No. 1 plastics become new bottles, with the remainder primarily used for clothing and carpets. And No. 5 plastics are used for items such as paint cans, toothbrushes or deodorant sticks."

And, if you are not cleaning the material properly before you recycle it, your effort might be to no end:

"In general, … plastics should be washed and dried before they're tossed into a recycling bin. Labels don't need to be removed, and caps can be left on, even if they're made of a different resin."

And, it seems, if you put your plastics in a plastic bag before recycling them, they almost certainly will not be recycled:

"Processing facilities won't open black bags. Clear bags have the potential to get tangled in machinery."

The graph that accompanies the article indicates how far we still have to go to any kind of sustainable economic system (at least, in terms of plastic usage):
 


If we really care about reducing the amount of plastic waste in our environment, it seems that the only way to ensure that goal is achieved is to use less of it in the first place.

Take care
David

David Chandler
© Sage Publications, 2020

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler5e 
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/


This Plastic Recyclable? Depends on the Sort
By Jo Craven McGinty
April 24-25, 2021
The Wall Street Journal
Late Edition – Final
A2

Tuesday, May 4, 2021

Strategic CSR - EVs

I was always aware that simple statements around the 'obvious benefits' of electrical vehicles (EVs) were obscuring a much more complex reality (where EVs are ultimately more beneficial for the environment, but not immediately so). The interactive article in the url below provides some data to support that position:

"Carmakers including General Motors Co. and Volkswagen AG are retooling their companies to make electric vehicles on the premise that their battery-powered motors are cleaner than gas-burning engines. Are EVs really better for the environment, though? A close look at all the factors shows they are—but it's a complex answer with some asterisks."

In order to answer this question, there are a number of factors that need to be taken into account:

"The environmental cost of a car includes both building it and fueling it. That means factoring in emissions associated with oil drilling and power plant smokestacks, as well as from mining metals such as nickel and cobalt that are needed for electric-car batteries."

In short, right off the production line:

"Building both a Tesla Model 3 and a Toyota RAV4 generates several tons of greenhouse gas emissions to smelt the aluminum, manufacture the components and assemble the vehicle. But building a Tesla actually generates more emissions because of the metals needed for its lithium-ion battery. Before it rolls off the assembly line, the Tesla has generated 65% more emissions than the RAV4."

After a few thousand miles, however, the Tesla begins to catch-up:

"The RAV4 burns gasoline, which is refined from crude oil extracted from wells around the world. At 5,000 miles, the RAV4 also needs its first motor oil change. The Tesla refills with electricity, and doesn't need motor oil changes. Generating electricity creates emissions, but the U.S. grid is getting cleaner each year, burning less coal and using more renewables and natural gas."

The study concludes that it is only after being driven for 20,600 miles that the Tesla becomes the more sustainable option:

"For every mile driven, generating the electricity for the Tesla emits 34% of the emissions associated with making and burning the gasoline consumed in the RAV4 engine. At 20,600 miles, the greenhouse gas emissions from building and driving the two cars are roughly the same. … Then the Tesla pulls ahead."

Finally, after what the article refers to as "the lifespan of a typical car," the Tesla far outshines the RAV4:

"By the time we get to 200,000 miles, ... Building and operating the RAV4 has generated 78 tons of greenhouse gases. The Model 3 has generated less than half: 36 tons. The Model 3 also comes out ahead in Consumer Reports's total cost of ownership, at $49,800 to $51,000."

 

So, according to this study, the Tesla is not only the overall better environmental option than the RAV4, but is also more cost-effective. Presumably, this comparison would be even more favorable for the Tesla if the other car was larger and heavier than a RAV4. The study also goes on to examine what would happen in four different scenarios in terms of the speed in which that transition occurs for all cars currently on U.S. roads ("more than 280 million light-duty vehicles"). Perhaps not surprisingly, the most effective results come when multiple complementary policy changes are made with the common goal of reducing our carbon footprint:

 

"No matter what kind of engines they run on, cars add to greenhouse gas emissions. But the data show that switching from gas to electric vehicles will make a huge impact. Consumers making individual choices between cars will make a difference. So will policy decisions made by governments and investments by companies as we drive into the future."


Take care

David


David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (5e)

© Sage Publications, 2020


Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler5e 

Strategic CSR Simulation: http://www.strategiccsrsim.com/

The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/



Are Electric Cars Better for the Environment?

By Russell Gold, Jessica Kuronen and Elbert Wang

March 23, 2021

The Wall Street Journal

Late Edition – Final

A8

https://www.wsj.com/graphics/are-electric-cars-really-better-for-the-environment/