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, September 17, 2024

Strategic CSR - McDonald's

The fast-food business model is based on cheap food served efficiently. An essential part of that efficiency is single-use packaging that is discarded by the customer in a way that keeps costs low and also helps maintain hygiene. The associated waste is part of the model, but is also a problem if we care about resource utilization, from the point of view of sustainability. French politicians agree, and have decided to try and do something about it, as reported in the article in the url below, and experienced in a Paris branch of McDonald's:

"For those dining in, french fries are served in durable red containers, soda is dispensed into clear washable glasses and chicken nuggets come in hard plastic white bowls. When customers are finished eating, they are asked to drop the containers into a bin to be washed, dried and reused. The assortment of 21 variously sized reusable cups, bowls and fry sleeves are a world-first for McDonald's, which since its inception has used disposable packaging to keep food moving quickly and utility and labor costs low. The new containers have been introduced to comply with a French law aimed at reducing waste that has compelled the burger giant and other fast-food restaurants to serve dine-in orders in reusable containers."

Perhaps not surprisingly, McDonald's is unimpressed:

"'We don't want France to be the template because we strongly believe that this doesn't work,' said Serge Thines, the company's head of international government relations, who argues that reusable packaging is inconvenient for consumers and worse for the environment than disposables. 'It's very problematic,' he added."

I think what Serge means is that the law is imposing an additional cost that the company would rather not have to deal with. If it was just France, it is perhaps manageable. The trouble is that the French law is part of a wider awakening on sustainability issues, and is influential throughout the EU:

"McDonald's is up against proposed laws mandating reusables or banning single-use plastic packaging in a string of other countries including Portugal, Sweden and Poland. It already has had to comply with laws in Germany and the Netherlands by offering reusable cups to consumers who request them and pay a deposit."

And, even in the U.S.:

"… a shareholder advocacy group has seized on McDonald's experience in France to press the company to consider the merits of rolling out reusables stateside."

The key, of course, is how other stakeholders feel about the change. For something like this to stick, it needs to have broad stakeholder support. This is particularly the case as it involves the participation of both employees and customers:

"Seven staff members at the McDonald's restaurant have done three days of training on how to use the new equipment and handle the crockery. Takeaways include the importance of washing hands more frequently and not cutting through the kitchen holding dirty dishes. … Rather than sweeping leftovers and packaging into the same trash can, customers dining in are asked to empty liquids into one hole and scrape food into another. There is a third hole for the exempt disposable packaging and a fourth for the new reusable containers."

At least there seems to be some buy-in, although this suggests this might not be the easy win that legislators perhaps expect:

"McDonald's says its return rate for reusable containers in France is over 92% and the containers are used on average 29 times before being damaged, thrown away or taken by customers."

Take care
David

David Chandler
© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/


French Packaging Law Vexes McDonald's
By Saabira Chaudhuri
December 11, 2023
The Wall Street Journal
Late Edition – Final
B3
 

Thursday, September 12, 2024

Strategic CSR - McDonald’s

This photo, which features in the article in the url below, is ironic for a couple of reasons:
 

First, McDonald's has installed stationary bikes instead of seats for some of its customers. So, they are 'exercising' while also eating food items from the calorie-laden McDonald's menu. Second, the bikes use the power generated by the pedaling to charge the customers' cellphones, which enables additional screen time and further encourages a more sedentary lifestyle:

"The company has created quirky promotions appealing to younger customers that have gone viral on social media. One is a combo meal that comes in a 'cat box' made for felines to play in. In some stores the chain also unveiled exercise bikes equipped with trays, allowing riders to munch their meals while pedaling to wirelessly charge their mobile phones."

The main point in the article accompanying the photo is the push by McDonald's to more than double the number of their stores in China, to over 10,000 by the end of 2028. While, for all customers, the effect of a store visit is likely to be a net gain in calories, for some customers at least, the deficit might not be as large as it would have been if these bikes were not in place.

Take care
David

David Chandler
© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/


McDonald's Is Supersizing Its Presence in China
By Newley Purnell
April 30, 2024
The Wall Street Journal
Late Edition – Final
B1, B2
 

Tuesday, September 10, 2024

Strategic CSR - Incentives

An indication that society in general (and business in particular) is not serious about addressing climate change is the extent to which we are happy to wave through superficial statements or attempts at action, without serious oversight or follow-up. Instead, the approach seems to be 'let's all pretend we are doing something and not look too hard at the details, in case we remind ourselves that we are really not doing much, at all.' The article in the url below does a good job of highlighting the ongoing disconnect between words and action:

"An evaluation of more than 1,500 climate policies in 41 countries found that only 63 actually worked to reduce greenhouse gas emissions."

My reading of the press coverage of this study is that the threshold to count was 'any at all.' In other words, the report is not saying that 63 policies failed to produce a lot of greenhouse gasses, but that they failed to produce any at all – nothing. This is shocking, if you sit down to think about it for more than a second. Helpfully, the article notes what does and does not tend to work. Perhaps not surprisingly, we need to incorporate economics into public policy in order to understand how to incentivize behavior that might make a difference:

"Subsidies and regulations—policy types often favored by governments—rarely worked to reduce emissions, the study found, unless they were combined with price-based strategies aimed at changing consumer and corporate behavior. ... The fraction of policies that worked combined financial incentives, regulations and taxes, according to the study."

'Hope,' it seems, is not a strategy!

"The study found the nations' overall climate emissions will exceed the Paris target by 23 billion metric tons of CO2 by 2030."

Take care
David

David Chandler
© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e  
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/


Most Climate Policies Are Ineffective at Cutting Emissions, Study says
By Eric Niller
August 22, 2024
The Wall Street Journal
Late Edition – Final
A3
 

Thursday, September 5, 2024

Strategic CSR - Patagonia

Whenever I get down about the prospects for the planet (or, at least, human life on the planet), there is always Patagonia to amaze with their commitment to sustainability (in a very practical sense). As the article in the url below demonstrates, Patagonia continues to push the boundaries in terms of what is possible, in an industry that is known for its excessive levels of waste:

"Starting next year, Patagonia's wetsuits won't just be recycled — they'll be reincarnated. At the company's 'Wetsuit Forge' repair and design center, located a few blocks from the beach in Ventura, California, a first-of-its-kind wetsuit is draped over a table. The suit looks and feels like any other, but it's made in part from used Patagonia wetsuits broken down at a molecular level. It too will be melted down at the end of its life and reborn into a new, lower-carbon wetsuit."

This sounds like not such a big deal, given that lots of items are recycled. But, if you read the detail of the article, what Patagonia has achieved seems (to me, at least) to be both an impressive achievement, and a step forward for the industry, as a whole:

"The prototype is the product of a years-long initiative by Patagonia to eliminate much of the waste that accumulates when a surfer buys a new wetsuit. While the outdoor apparel retailer guarantees a lifetime of repairs for wear and tear, eventually the day comes when the racks of old wetsuits awaiting mending in Ventura can no longer be stitched back together. Some are recycled into yoga mats or tote bags, but inevitably, they all end up buried in landfills. Just how many old Patagonia wetsuits end up as part of $500 reincarnated versions depends on the volume of discarded wetsuits the company collects. But the strategy is ushering in a potentially repeating cycle that would yield the ultimate, immortal wetsuit."

Specifically, the key appears to be one element of the wetsuit, carbon black:

"Despite surfing's one-with-nature vibe, most wetsuits are the sartorial equivalent of an oil spill. They're made from neoprene, a petroleum-based synthetic rubber. (Many wetsuits sold in California even carry a state warning that they can expose you to chemicals known to cause cancer.) Patagonia is collecting end-of-life wetsuits for a partner that vaporizes them to reclaim what's known as carbon black, a key ingredient in neoprene and in the natural rubber Patagonia uses. It's the petroleum-derived element that gives wetsuits their strength and jet-black color. Whether carbon black can be infinitely recovered remains to be scientifically validated, but reusing it keeps old wetsuits out of landfills. The reclaimed material also avoids carbon dioxide emissions from the production of virgin carbon black, a ubiquitous ingredient in tires, plastics, inks and electronics. The material's $19.3 billion market, which is expected to grow 66% by 2032, emits as much as 79 million metric tons of CO2 annually from the combustion of tar oil and other petroleum feedstocks."

Complicated (and impressive) stuff.

Take care
David

David Chandler
© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/


Patagonia Is Cracking the Code on Endlessly Recylable Wetsuits
By Todd Woody
May 2, 2024
Bloomberg
 

Tuesday, September 3, 2024

Strategic CSR - Chocolate

I have long thought that any research done on consumers' willingness to pay for ethical products suggests that they are not (willing to pay). In general, when presented with two identical items, but plenty of labelling advertising that one of them was made with sweatshop-free labor (and is therefore slightly more expensive) and the other without specific labelling (and is slightly cheaper), that the cheaper version is selected. What is important about the article in the url below, therefore, is that it presents evidence that this is not always the case (or that what had previously been true is changing):

"In April, the British grocery chain Waitrose added a small yellow label to nine of its store-brand chocolate bars. 'Tony's Open Chain: Together, we'll end exploitation in cocoa,' it read."

What is interesting is that the supermarket (Waitrose) did not make a big deal about this, but it seemed to have been noticed by customers:

"The rollout wasn't accompanied by in-store advertising, and press coverage was relatively quiet. The price of the bars rose from 2 British pounds (about $2.50) to £2.20. Still, sales shot up by 43% year over year in the week after the launch, and averaged 34% in the first six weeks."

These results therefore clearly counter what has currently been accepted about consumers' unwillingness to pay for ethically produced products:

"In surveys, consumers frequently express a willingness to pay extra for products they perceive to be sustainable, but actual shopping behavior tells a different story. A 2022 study by the consulting firm BCG found that while 80% of respondents said they cared about sustainability, less than 7% actually paid extra for sustainable products."

One explanation for this is that the product is more of a treat or luxury good, which might mean consumers don't want to feel as guilty as they consume it. Or, it could mean that social mores are shifting and there is growing support for more ethical supply chains. Central to the Strategic CSR framework is the idea that companies and capitalism is neutral – mere tools that we have devised to allocate scare and valuable resources. This means that all organizations merely reflect the collective set of values among all stakeholders. In this case, if consumers are willing to pay more for ethically produced products, then that is what companies will produce, and global supply chains will adapt. The key, if true, is how wide is this effect, and how much of a price premium will consumers be willing to pay?

"It is even less clear how rich a 'sustainability premium' people are willing to pay. Recent research has put the number between roughly 10% and 25%."

On the other hand, given that Waitrose is a higher-end supermarket:

"At Waitrose, customers appeared willing to pay extra for ethical cocoa sourcing—though it is also possible shoppers didn't notice the difference. Inflation, and an attendant preference for store brands, might have played a role."

Take care
David

David Chandler
© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/


Grocer's Chocolate Sales Soar After It Vows Fair Pay to Farms
By H. Claire Brown
June 4, 2024
The Wall Street Journal
Late Edition – Final
B1, B2