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.

Friday, January 31, 2014

Strategic CSR - Walmart

The article in the url below reports the number of job applications received by Walmart when it advertised 600 vacancies recently for a new store that it is planning to open in Washington D.C.:
 
“The store is currently combing through more than 23,000 applications for 600 available positions. … That means that Wal-Mart will be able to hire one person for every 38 applications it receives — i.e., just 2.6% of applicants will walk out with a job.”
 
Walmart is often criticized for paying below market wage rates. In reality, however, the firm routinely receives applications that are many multiples of however many job openings it has. This case may be extreme (no doubt exaggerated by the economic situation), but the phenomenon is common. The article illustrates its point by making a clever comparison:
 
“That's more difficult than getting into Harvard. The Ivy League university accepts 6.1% of applicants.”

The question this story generates is: Is Walmart paying above or below market rates for the jobs it is advertising?
 
Have a good weekend.
David
 
David Chandler & Bill Werther
 
Instructor Teaching and Student Study Site: http://www.sagepub.com/chandler3e/
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/

 
Applicants For Jobs At The New DC Walmart Face Worse Odds Than People Trying To Get Into Harvard
By Ashley Lutz
November 19, 2013
Business Insider
 

Wednesday, January 29, 2014

Strategic CSR - GM Foods

Internally, I have long debated the value of genetically modified (GM) crops. The PR surrounding them is compelling (increase crop yields as a way to minimize hunger and malnutrition around the world), yet they still seem somewhat creepy (modifying plants to taste differently and repel insects). Speeding up the process of evolution seems dangerous in ways that we may not be aware of before it is too late. In contrast, the editorial by The Economist in the url below takes a definitive stand in favor of further exploration and study. In the process, it also does a good job of pointing out the dangers of unrepresentative NGOs.
 
First, the editorial makes the statement that, following the recent retraction of an academic paper from 2012 that suggested GM foods might cause cancer (the paper’s methods were found to be flawed):
 
“There is now no serious scientific evidence that GM crops do any harm to the health of human beings. There is plenty of evidence, though, that they benefit the health of the planet.”
 
This is important because of the challenge posed by the global population expansion:
 
“One of the biggest challenges facing mankind is to feed the 9 billion-10 billion people who will be alive and (hopefully) richer in 2050. This will require doubling food production on roughly the same area of land, using less water and fewer chemicals. It will also mean making food crops more resistant to the droughts and floods that seem likely if climate change is a bad as scientists fear.”
 
Importantly, we have no good alternatives. In other words, it is either utilize GM technology or condemn many millions of people to a miserable life and an early death:
 
“Organic farming—the kind beloved of greens—cannot meet this challenge. It uses far too much land. If the Green revolution had never happened, and yields had stayed at 1960 levels, the world could not produce its current food output even if it ploughed up every last acre of cultivable land.”
 
GM foods, on the other hand, offer a real potential solution to this challenge, while also containing environmental benefits:
 
“GM crops boost yields, protecting wild habitat from the plough. They are more resistant to the vagaries of climate change, and to diseases and pests, reducing the need for agrochemicals.”
 
NGO groups opposed to GM foods, however, apparently cannot sacrifice the principle of opposition for the practicality of expanding access to food and nutrition:
 
“In August environmentalists in the Philippines vandalised a field of Golden Rice, an experimental grain whose genes had been modified to carry beta-carotene, a chemical precursor of vitamin A. Golden Rice is not produced by a corporate behemoth but by the public sector. Its seeds will be handed out free to farmers. The aim is to improve the health of children in poor countries by reducing vitamin A deficiency, which contributes to hundreds of thousands of premature deaths and cases of blindness each year.”
 
The editorial states that this is no longer an argument of ideological purity, but a significant moral and ethical transgression:
 
“Vandalising GM field trials is a bit like the campaign of some religious leaders to prevent smallpox inoculations: it causes misery, even death, in the name of obscurantism and unscientific belief. … On moral, economic and environmental grounds, this must stop.”
 
The editorial is particularly insightful in noting the inconsistent use of scientific research:
 
“In the field of climate change, environmentalists insist that the scientific consensus should frame policy. They should follow that principle with GM crops, and abandon a campaign that impoverishes people and the rest of the planet.”
 
NGOs have a higher duty of transparency and accountability. These organizations often have a narrow funding base and face little oversight (other than via laws and regulations). As such, they have a duty to ensure their actions maximize value, broadly defined, rather than pushing the political agendas of a minority. In terms of GM foods, it is hard not to agree with The Economist that they need to reassess their priorities. After all, as the article in the second url below notes:
 
“About 93% of the soybeans and 85% of the corn grown in the US are genetically modified, according to the USDA.”
 
Take care
David
 
David Chandler & Bill Werther
 
Instructor Teaching and Student Study Site: http://www.sagepub.com/chandler3e/
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/


Fields of beaten gold
December 7, 2013
The Economist
17
By Marc Gunther
December 4, 2013
The Guardian
 

Sunday, January 26, 2014

Strategic CSR - Carbon price

While carbon markets at the governmental level are floundering (think Europe's low cost of carbon and Australia reversing course on legislation to introduce a cap-and-trade scheme), the article from The Economist in the url below shows that most of the innovation on this issue is coming from the private sector. Firms are increasingly developing a cost for carbon that they are then using to plan future projects and investments:
 
"A study by CDP, a research group, asked large firms based or operating in America what tools they had for managing risk; 29 said they used an internal carbon price. Anecdotally, more apply such a price but did not mention it as a risk-mitigation measure."
 
Because firms are doing this on a firm-by-firm basis and they range across vastly different industries, the prices they are allowing for a ton of carbon vary widely—primarily because carbon is relevant to their operations in different ways:
 
"The prices range from $6-7 a tonne of carbon dioxide at Microsoft to $60 a tonne at Exxon Mobil. … As a rule, those whose assets have a long productive life and which might be affected by green policies far into the future (such as oil companies) use higher prices than consumer-goods firms whose products are mainly influenced by current policies."
 
The companies are pushing ahead with this for two basic reasons: first, although it is hard to understand why they think so based on recent performance, firms anticipate politicians will eventually get their act together and impose a carbon price:
 
"For many companies the aim is to prepare themselves for future environmental legislation. AEP, a power supplier, says it uses the system because 'it assumes a price of carbon…will begin in the US by roughly 2020.' Delta Air Lines says it uses a price for evaluating flights to Europe 'in anticipation of compliance with EU ETS.'"
 
Second, it allows firms, such as ConocoPhillips and Disney (see: Strategic CSR – Carbon tax), to better understand the present value of future projects and investments:
 
"ConocoPhillips, an oil firm, requires that capital projects worth over $75m calculate the cost of emissions based on a price of between $8 and $46 a tonne, depending on the life of the project. The forecast value of a new oilfield would be: estimated output multiplied by the estimated future oil price minus development costs and carbon emissions. … Disney, a media conglomerate, goes further still. It invests in schemes to offset or reduce carbon emissions and charges the cost of these to business units in proportion to how much they contribute to the company's overall emissions. In effect, this works like an internal carbon tax."
 
The result of these varied approaches is a range of prices among firms. As the article notes, however, the surprising (and encouraging) thing is how high some of the prices are—much higher than any of the failing government experiments:
 
"The market price of carbon is €4.90 ($6.70) per tonne of CO2 in the EU, $11.50 in California. Big oil companies charge $34 or more. That is closer to the 'social cost of carbon'—the damage from an extra tonne of CO2—than to the market price. … the sort of carbon price some companies are using for planning would, if it became a market price, have a much bigger impact than any of the policies that governments are now talking about."
 
The graphic that accompanies the article demonstrates the extent of the differences in internal carbon price among firms:
 
 
Take care
David
 
David Chandler & Bill Werther
 
Instructor Teaching and Student Study Site: http://www.sagepub.com/chandler3e/
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/


Carbon copy
Some firms are preparing for a carbon price that would make a big difference
December 14, 2013
The Economist
70
 

Friday, January 24, 2014

Strategic CSR - Financial Crisis

The article in the url below provides an update on the cost of the recent Financial Crisis:
 
“Wall Street could pay nearly $50 billion to buy peace from federal authorities who are taking aim at the banks over their role in the mortgage crisis, according to interviews and a confidential analysis of the industry’s potential legal exposure. … The $50 billion figure does not include JPMorgan’s $13 billion payout, which means the ultimate industry tab could exceed $60 billion, according to the analysis.”
 
The basis for these estimates is the $13 billion settlement announced at the end of last year between the government and JP Morgan. Based on the relative amounts of mortgages issued by each of the largest banks from 2005-2008 (see accompanying graphic) and comparing to the JP Morgan settlement, the article arrives at estimates for each of the banks, individually:
 
“The analysis, which lawyers prepared for one of the financial institutions and which was reviewed by The New York Times, indicates that Bank of America could ultimately settle for $11.7 billion in penalties, with an additional $5 billion in relief to homeowners. Morgan Stanley’s combined tally, the analysis shows, could be around $3 billion, with roughly a third going to consumer relief, while Goldman Sachs’s total could come to roughly $3.4 billion. For the Royal Bank of Scotland, the total price could be around $10 billion, which might prompt an outcry in Britain, where the government owns a majority stake in the bank. Citigroup could pay roughly $1 billion, the analysis shows. The potential penalties for other banks are under $1 billion, the analysis shows.”
 
It is encouraging to see the government act as a concerned stakeholder … at last. Of course, all pain is relative:
 
“A payment of $50 billion, made up of a string of separate deals, would amount to roughly half the total annual profit of large American banks in 2012.”
 
Have a good weekend
David
 
David Chandler & Bill Werther
 
Instructor Teaching and Student Study Site: http://www.sagepub.com/chandler3e/
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/
 
 
Wall Street Predicts $50 Billion Bill to Settle U.S. Mortgage Suits
By Jessica Silver-Greenberg and Peter Eavis
January 10, 2014
The New York Times
Late Edition – Final
A1
 

Wednesday, January 22, 2014

Strategic CSR - Welcome back!

 
 
Welcome back to the Strategic CSR Newsletter!
The first Newsletter for the Spring semester is below.
As always, your comments and ideas are welcome.
 
 
Over the break, I read the foundational 1953 book by Howard Bowen, Social Responsibilities of the Businessman. Two thoughts struck me—reading the book was both uplifting and depressing, essentially for the same reason.
 
First, the process was uplifting because of how prescient Bowen was in identifying trends and proposing answers to issues that we still debate. Much of what he wrote in 1953 would not have looked out of place in a policy proposal or opinion paper published today. It may be that, if more people had just read Bowen’s book, a lot of the debate in the intervening period could have been circumvented.
 
Second, the process was depressing because we still do not have widely-agreed upon answers to the questions that Bowen (and others, such as Frank Abrams, see: Abrams, F. W. 1951. Management's Responsibilities in a Complex World. Harvard Business Review, 29(3): 29-34) were asking 60 years ago. Here is one example (the book is littered with similar ideas):
 
“The day of plunder, human exploitation, and financial chicanery by private businessmen [sic] has largely passed. And the day when profit maximization was the sole criterion of business success is rapidly fading. We are entering an era when private business will be judged solely in terms of its demonstrable contribution to the general welfare.” (p52)
 
Of course, the constant ‘reinventing of the wheel’ is great because it keeps us all in a job; but it would be nice to at least feel like we are making progress after so much effort.
 
Take care
David
 
David Chandler & Bill Werther
 
Instructor Teaching and Student Study Site: http://www.sagepub.com/chandler3e/
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/
 

Wednesday, December 11, 2013

Strategic CSR - Earth

 
 
This will be the last CSR Newsletter of the Fall semester.
Have a great holiday season and I will see you in 2014!
 
 
Some stark quotes from a review of the book Countdown: Our Last, Best Hope for a Future on Earth? that appeared recently in The New York Times Book Review:
 
“If we wanted to bring about the extinction of the human race as quickly as possible, how might we proceed? … the most effective measure, counterintuitive as it may be, would be to increase our numbers. … The more people, the greater the likelihood of ecological collapse, nuclear war, plague.”
 
“Some seven billion people are alive today; the United Nations estimates that by the end of the century we could number as many as 15.8 billion. Biologists have calculated that an ideal population — the number at which everyone could live at a first-world level of consumption, without ruining the planet irretrievably — would be 1.5 billion.”
 
“[The author’s] dire warnings, and the warnings of the scientists and government officials he interviews, are unrelenting, with variations of the following sentence appearing at regular intervals: ‘In the entire history of biology, every species that outgrows its resource base suffers a population crash — a crash sometimes fatal to the entire species.’”
 
“From Thomas Malthus to Paul and Anne Ehrlich, authors of The Population Bomb (1968), population doomsayers have endured ridicule and vilification, largely because their predictions of imminent doom fail to materialize on schedule. In our own time, there are a few mitigating indicators. Much of the current population growth comes in the developing world, where carbon consumption remains low, so the environmental effect is relatively muted. The next thousand Americans will do more than twice as much damage as the next hundred thousand Nigeriens.”
 
“The grim prophecies are illustrated with statistics. Each year the world adds the equivalent of another Germany or Egypt; by 2040, China will have more than 100 million 80-year-olds. We add another million people every four and a half days.”
 
Thoughts worth pondering as we enter the most materialistic (sorry, I meant ‘festive’) time of the year!
 
Take care
David
 
David Chandler & Bill Werther
 
Instructor Teaching and Student Study Site: http://www.sagepub.com/chandler3e/
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/


Earth Control
By Nathaniel Rich
October 13, 2013
The New York Times Book Review
Late Edition – Final
18
 

Monday, December 9, 2013

Strategic CSR - Twitter

While it has been apparent for some time now that the free flow of information was shifting the balance of power away from corporations and into the hands of their most active stakeholders (Chapter 4, The Free Flow of Information, p161), the article in the url below demonstrates how far firms have to go in order to regain the initiative:
 
“News of a business crisis spreads internationally within an hour in more than a quarter of cases, and in more than two-thirds of cases it has reached an average of 11 countries within 24 hours, yet it takes businesses on average fully 21 hours to start getting their own version of the story out.”
 
The report on which this article was based was written after interviewing “100 senior PR professionals”—a reasonable source for information about the PR/reputation/crisis management industry. And, for those firms out there who do not yet understand this (see: Strategic CSR – British Airways):
 
“Social media are important channels for airing dirty laundry, albeit more so locally than internationally. In half the cases, social media had ‘a significant impact’ on how the news spread locally, but in somewhat under a third of the cases internationally, the report said.”
 
What is worse is that, if a firm starts behind the curve on a breaking story, the damage can be significant:
 
“Not only do social media help spread the word initially, they also help keep the spotlight on the story. … Freshfields found that ‘inability to control reputational crises in the early stages can prove costly for a business, affecting its value, revenue and long-term reputation.’ In about six out of 10 cases, the impact disrupted operations. In just over half the cases, revenue suffered. Over a quarter of cases–27%–resulted in a stock price drop. ‘Only one in 10 companies (11%) suffered no impact or were adequately prepared to deal with the issue,’ the survey found.”
 
What is most interesting about the report, however, is that it has begun to tease apart different moderating effects for the role that social media plays in enhancing the reputational damage associated with crises:
 
“Freshfields identified four kinds [of crises]: operational, such as a product recall or environmental problem; behavioural, involving dubious conduct by the company or its employees; corporate, such as a liquidity problem or litigation; or informational, i.e. IT or data security problems. Operational crises had the most serious revenue impact, while behavioral crises were the fastest to move through social media. In fact, social media moved news of bad behavior at twice the speed of operational crises, with 40% of behavioral bad news spreading within an hour through social media, the report said, twice the rate of operational crises.”
 
While the report identifies various reasons for firms’ slow responses (e.g., the need to get sign-off by lawyers and senior executives), the underlying message is that firms are not preparing ahead of time to minimize the potential damage when the crisis occurs. The overall goal? To avoid “trial by Twitter.
 
Take care
David
 
David Chandler & Bill Werther
 
Instructor Teaching and Student Study Site: http://www.sagepub.com/chandler3e/
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/
 
 
Business Caught Flat-footed in Trial by Twitter
By Gregory J. Millman
November 4, 2013
The Wall Street Journal
 

Friday, December 6, 2013

Strategic CSR - Walmart

Walmart is a phenomenon that CSR advocates need to take seriously because it is so huge. When Walmart does something, it immediately and irrevocably alters whatever market it is affecting. As reported in the article in the url below, this effect is no more apparent than in its experiments with solar energy:
 
“In the race for commercial solar power, Wal-Mart is killing it. The company now has almost twice as much capacity as second-place Costco. A better comparison: Wal-Mart is converting more sun into energy than 38 U.S. states [see: https://openpv.nrel.gov/rankings].”
 
Whatever Walmart decides to do (good or bad) is big news. This applies equally to its attempts to reduce packaging in its supply chain (Chapter 3: The Walmart Paradox, p102) as it is for beer:
 
“Wal-Mart recently decided alcohol was good business and vowed to double sales by 2016. The result: 500 reps from the alcohol industry converged on the Sam’s Club auditorium in Bentonville, Arkansas, for an ‘adult beverages summit’ focused on Wal-Mart.”
 
In similar ways, Walmart’s effect on the market for solar power is dramatic:
 
“After a 40 percent surge in installations through the second quarter, Wal-Mart now draws on 89 megawatts of capacity, according to a report last week by the Solar Energy Industries Association. That’s roughly enough to power 22,250 U.S. homes.”
 
This graphic, which accompanies the article, displays the disparity among Walmart and its nearest solar power competitors:
 
 
Have a good weekend
David
 
David Chandler & Bill Werther
 
Instructor Teaching and Student Study Site: http://www.sagepub.com/chandler3e/
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/


Wal-Mart Now Draws More Solar Power Than 38 U.S. States
By Tom Randall
October 25, 2013
Bloomberg
 

Wednesday, December 4, 2013

Strategic CSR - e-waste

The CSR community often applies screens to filter for CSR behavior at the level of the industry. In other words, tobacco is a bad industry, along with alcohol and weapons. In reality, however, there is considerable variance within industries, but data that allows like-for-like comparison is hard to get. The article in the url below provides some insight in this respect by looking at how e-waste (Chapter 8, Case study: e-waste, p544) is being handled in the cellphone industry. To be sure, no company is excelling and the industry as a whole has much work to do:
 
“All the major carriers say they are working hard to get consumers to bring mobile devices back into stores for reuse or recycling. But the hard numbers – overall – remain low. The Environmental Protection Agency estimates that only 11% of smartphones and tablets are being recycled. Electronic waste has become a major environmental issue, with mercury and other heavy metals from devices crowding landfills across the US.”
 
Nevertheless, the results generated by the article’s comparison among the performance of the industry’s biggest players are surprising:
 
“When it comes to e-waste, though, not all US carriers are equal. I asked the top US carriers – Verizon, AT&T, Sprint and T-Mobile – how many phones they recycled in 2012 so I could compare those figures with the number of phones sold in the same year. Among the major carriers, Sprint is way ahead of the pack. Its recycled or reused smartphones equate to 44% of its sales in 2012, compared to only 11.5% for AT&T. For Verizon, which divulged numbers incorporating all devices instead of just smartphones, its recycling and reuse rate came to 28%. T-Mobile doesn't list its figures and didn't respond to the Guardian's request for a similar percentage.”
 
The article is not clear about what is driving the differences (trade-in rates do not explain it, for example). What is clear, however, is that Sprint is doing something right on an issue that is becoming increasingly important for this industry:
 
“Since 2001, Sprint has diverted more than 53m mobile devices from landfills and it offers up to $300 in-store credit for old devices, including those from other carriers. In 2012, Sprint paid out $100 million in-store credit to customers.”
 
What is also clear, is that this makes a lot of business sense to Sprint:
 
“Sprint has made it clear that its buyback program isn't just about doing good; the program also has boosted the bottom line. Last year, the company avoided $1bn in costs with its phone trade-in program. Nine out of 10 used products brought into its stores get reused or remanufactured. … The company has set a goal of collecting 90% of the devices it sells by 2017.”
 
Take care
David
 
David Chandler & Bill Werther
 
Instructor Teaching and Student Study Site: http://www.sagepub.com/chandler3e/
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/


Sprint wins on e-waste: Why do AT&T and Verizon fall short?
By Jennifer Inez Ward
November 5, 2013
The Guardian
 

Monday, December 2, 2013

Strategic CSR - Human Life

What is the price of a human life? That is a question that actuaries at insurance companies spend a lot of time quantifying. Clearly, however, the answer to the question is relative, rather than absolute. All human lives are not valued equally. Factors such as education, profession, and future projected earnings provide the foundation for the differences. Another variable that is relevant, it seems, is the nationality of the individual. If you are Bangladeshi, for example, and more specifically a Bangladeshi who works in a garment factory, your life is apparently not worth very much:
 
“A dozen global retailers began two days of meetings in Geneva on Wednesday to negotiate a $77 million compensation package for the victims of two Bangladesh garment factory accidents, as labor unions pressed the companies for payments that would acknowledge their responsibility for the country's worst facilities. …To get to the grand total, labor unions and workers' rights groups applied a formula that has been used in previous Bangladesh factory accidents, awarding 25 years of salary plus various bonuses to the families of the deceased victims.”
 
Although that may sound reasonable on paper, “25 years of salary” does not add up to much if your salary is not very high to begin with. As such, the bottom line is less impressive:
 
“Families could receive about $33,000 for each victim, according to calculations.”
 
Of course, one of the underlying issues that needs to be determined in such compensation packages is responsibility and, therefore, legal liability:
 
“Some companies are reluctant to make payments to victims of those accidents that could acknowledge their responsibility—and open themselves to lawsuits—for events they believe they couldn't control. Some labor groups counter that apparel companies are broadly responsible even if they weren't producing in the factories at the time of the disasters.”
 
More details of the proposed settlement—how it is calculated and apportioned among factory owners, trade unions, the government, and the western retailers/brands that were producing in the country at the time—are contained in the graphic that accompanies the story:
 
 
Take care
David
 
David Chandler & Bill Werther
 
Instructor Teaching and Student Study Site: http://www.sagepub.com/chandler3e/
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/
 
 

Retailers Debate Reparations for Deaths

By Christina Passariello and Shelly Banjo
September 12, 2013
The Wall Street Journal
Late Edition – Final
A12
 

Friday, November 29, 2013

Strategic CSR - Unilever

The article in the url below poses a great question:
 
“It's easy to identify the companies that are leading the way on climate change. But how many of them follow the same principles when it comes to their pension funds?”
 
If a firm believes in an issue or way or running a company, why would it not extend those same principles to the management of one of its largest assets/liabilities?
 
“We often think of European companies leading the way on good environmental practices. But a recent report by Independent Capital Management AG, took a closer look at the pension funds of a number of Swiss companies, all of which are listed on the global Dow Jones Sustainability Index. Not one fund it looked at adopted the same stringent investment policies as its sponsoring company.”
 
The dissonance extends to some of the leading CSR brands:
 
“Catherine Howarth, the chief executive of ShareWatch said: ‘In the UK there are a numerous examples of companies who have developed good corporate social responsibility policies, but their pension funds are not fully engaging with these issues at present.’ She said this applied to companies such as Unilever, GlaxoSmithKline and Kingfisher, which owns B&Q – all of which run substantial pension funds. … She added: ‘Unilever is a good example. Paul Polman [the chief executive] has talked seriously at company AGMs about the financial risks of climate change, and the business benefits of taking a sustainable approach. If it is in the best interest of the company to do this, then surely these same arguments apply to the pension fund?’”
 
Good point. In general, the way companies have treated the duty placed in them by employees regarding their pension funds leaves much to be desired. As a result, I would extend the CSR components of this issue. In addition to responsible asset management and investing principles, what about a minimum standard for the percentage of the pension that is funded (i.e., the percent of pension obligations to current and future retirees)? Also, what discount rate do firms use in calculating the annual funds paid into the scheme? And, at the most basic level, which firms still have defined benefit (rather than defined contribution) plans?
 
Have a good weekend and Happy Thanksgiving to those of you in the US.
David
 
David Chandler & Bill Werther
 
Instructor Teaching and Student Study Site: http://www.sagepub.com/chandler3e/
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/


Do Sustainable Companies Offer Sustainable Pensions
By Emma Simon
September 19, 2013
The Guardian
 

Wednesday, November 27, 2013

Strategic CSR - Scale

Marc Gunther writes some great articles for the UK newspaper, The Guardian. He also writes a very good blog. He started a recent post with the following provocative question:
 
“Which trio of companies has done more for the environment…
Patagonia, Starbucks and Chipotle?
or
Walmart, Coca-Cola and McDonald’s?”
 
While provocative, the answer to the question is also intuitive – size matters! That is not to say, however, that the question isn’t an important one to ask. And, perhaps for the CSR/sustainability/business ethics community, it is the only one worth asking. Ultimately, the core of the issue is: Are we interested in unrealizable ideals or realistic change? If change is what we want, then Walmart, Coca-Cola, and McDonald’s need to be the source. If we want to hold onto ideals, however, then we will at least sleep well as we head towards oblivion while cheering on the efforts of Patagonia, Starbucks, and Chipotle.
 
Focusing on firms such as Walmart, Coca-Cola, and McDonald’s does nothing to change the fact that Patagonia, Starbucks, and Chipotle are wonderful firms, doing great things, under inspired leadership. If anything, they are the roadmap for what larger firms also need to accomplish. This argument merely acknowledges the reality that these firms operate at the periphery, rather than the core, of the economy. It is similar to the conundrum I face every time I recycle a plastic bottle – it is the sustainable thing to do, even though I am fully aware that I am not saving the world. All of the plastic bottles that are recycled every day pale in comparison to the huge amount of resources that are wasted elsewhere in our economic system.
 
For-profit firms are the most important organizational form because it is only these organizations that can combine scarce resources in the most efficient way on the scale necessary to implement meaningful economic reform in the timeframe in which change needs to occur. Within the vast group of organizations labelled for-profit firms, however, there are some that contain vastly more potential for significant impact. As the article from The Economist in the url below indicates, massive firms have a disproportionate impact on our daily lives. The market capitalization of the Top 10 global firms alone is $1.5 trillion; the scale of their operations are almost unfathomable. As a result, what these large firms do in the near future will do more to influence our lifestyles, standard of living, and future security than all of the smaller firms put together. Or, as Jason Clay puts it in his TED talk on how big brands can save biodiversity:
 
“100 companies control 25% of the trade of all 15 of the most significant commodities on the planet. … Why is 25% important? Because if these companies demand sustainable products they will pull 40-50% of production.”
 
According to Clay, it is all about scale in the supply chain. Large companies pushing other large companies will achieve change much faster and on a scale that actually matters, rather than waiting for consumers, one-by-one, to wake up to the global consequences of their consumption decisions:
 
“Convince just 100 key companies to go sustainable, and … global markets will shift to protect the planet our consumption has already outgrown.”
 
Take care
David
 
David Chandler & Bill Werther
 
Instructor Teaching and Student Study Site: http://www.sagepub.com/chandler3e/
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/
 
 
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September 21, 2013
The Economist
24-25