Strategic CSR - Clif Bar

The article in the url below reports on an instance of a firm (Clif Bar) withdrawing its endorsement of five athletes that all appeared in a recently released documentary, Valley Uprising (see the trailer at: https://www.youtube.com/watch?v=o86TpaSBcWw). What is interesting about Clif Bar's decision to withdraw its support for the athletes (who you would think are closely intertwined with the company's vision and mission) is that the firm did it not because the athletes did something wrong, but because Clif Bar was worried about exploiting them:

 

"Clif Bar has withdrawn its sponsorship of five top professional climbers … , some with a year or more left on their contracts, saying the climbers take risks that make the company too uncomfortable to continue financial support. It has stirred debate in the outdoors community, creating rare introspection about how much risk should be rewarded."

 

Essentially, Clif Bar reports that it was reluctant to continue benefitting from its association with the athletes' success when that success is based on the athletes risking their lives in very dangerous sports:

 

"Among those whose contracts were withdrawn were Alex Honnold and Dean Potter, each widely credited with pushing the boundaries of [free soloing and highlining] in recent years. … Other climbers who lost their Clif Bar contracts were Timmy O'Neill and Steph Davis, who spends much of her time BASE jumping (parachuting from a fixed object, like a building, an antenna, a span or earth) and wing-suit flying. Last year, her husband, Mario Richard, was killed when he crashed in a wing suit."

 

While we can debate whether or not there were additional hidden motives that were driving the firm's decision, I think the fact that the company even thought to articulate this explanation demonstrates a sensitivity that we rarely see in corporate communications.

 

To see Alex Honnold's reply to Clif Bar's decision, see this follow-up article in the NY Times:

http://www.nytimes.com/2014/11/20/opinion/the-calculus-of-climbing-at-the-edge.html

 

Have a good weekend.

David

 

David Chandler & Bill Werther

Strategic Corporate Social Responsibility: Stakeholders, Globalization, and Sustainable Value Creation (3e)

© Sage Publications, 2014

 

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/

 

 

A Sponsor Steps Away From the Edge

By John Branch

November 14, 2014

The New York Times

http://www.nytimes.com/2014/11/16/sports/clif-bar-drops-sponsorship-of-5-climbers-citing-risks-they-take.html

 

Strategic CSR - Cheeseburgers

There has been some internet buzz about a recently released documentary, Cowspiracy: The Sustainability Secret (http://cowspiracy.com/). The documentary deals with the environmental impact of the meat industry, which is accused of being the leading cause of environmental destruction, carbon dioxide emissions, deforestation, and species eradication. The producers argue that the 'conspiracy' (from which the documentary gets its name) is constructed by the meat industry, which doesn't want anyone to know about these costs, but is enabled by environmental activists who avoid talking explicitly about the issue in order not to offend the meat industry. This is partly to avoid potential lawsuits from well-financed lawyers, but also partly because of the financial support the meat industry provides directly to the most well-known environmental groups.

 

Anyway, I noticed this documentary after a rebuttal appeared in The Wall Street Journal – the article in the url below:

 

"The documentary film 'Cowspiracy,' released this week in select cities, builds on the growing cultural notion that the single greatest environmental threat to the planet is the hamburger you had for lunch the other day. As director Kip Andersen recently told the Source magazine: 'A lot of us are waking up and realizing we can choose to either support all life on this planet or kill all life on this planet, simply by virtue of what we eat day in and day out. One way to eat takes life, while another spares as many lives (plant, animal and otherwise) as possible.'"

 

A large part of the documentary's argument focuses on the issue of externalities (Chapter 8: Case-study – Lifecycle pricing, p473). Externalities are important because they constitute the costs that are not counted for in the price that is paid for a product:

 

"Environmental nutritionists argue that the social and environmental costs of meat production—obesity, chronic disease, the production of green-house gases such as methane, etc.—are not reflected in prices at the grocery store or restaurant. 'The big-ticket externalities are carbon generation and obesity,' New York Times columnist Mark Bittman recently wrote. He argues that beef prices don't reflect these externalities and that 'industrial food has manipulated cheap prices for excess profit at excess cost to everyone.'"

 

In other words, society is essentially subsidizing the meat industry, sustaining companies that either wouldn't otherwise exist, or would exist only at lower levels of profit than they currently earn. While ignoring this point, the WSJ response focuses on consumer access to affordable meat, rather than on ensuring that the price of meat reflects the costs incurred in producing it:

 

"That the price of meat is too low might come as news to food consumers who, according to data from the Bureau of Labor Statistics, paid 14% higher prices for ground beef this June than they did in June 2013 and 29% more than two years ago. Recent droughts and high corn prices—due in part to Washington's support for ethanol—are largely to blame. It is unclear how high prices must rise to overcome the view that meat is 'too cheap.' Some industry critics have even called for new 'meat taxes' to discourage consumption."

 

In emphasizing the benefits meat offers, the author of the WSJ article misses the crucial point that the market for meat, at present, is heavily distorted:

 

"Let us also not gloss over what is beef's most obvious benefit: Livestock take inedible grasses and untasty grains and convert them into a protein-packed food most humans love to eat. We may be able to reduce our impact on the environment by eating less meat, but we can also do the same by using science to make livestock more productive and environmentally friendly."

 

In short, the author of the WSJ response argues, somewhat unconvincingly, that all the fears raised in the documentary are overblown. The more interesting question, of course (in contrast to the article's headline), is 'What if cheeseburgers do melt the ice caps?' and, if so, 'Do we care enough to do anything about it?'

 

Take care
David

 

David Chandler & Bill Werther

Strategic Corporate Social Responsibility: Stakeholders, Globalization, and Sustainable Value Creation (3e)

© Sage Publications, 2014

 

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/

 

 

Cheeseburgers Won't Melt the Polar Ice Caps

By Jayson Lusk

August 18, 2014

The Wall Street Journal

Late Edition – Final

A13

http://online.wsj.com/articles/jayson-lusk-cheeseburgers-wont-melt-the-polar-ice-caps-1408317541

 

Strategic CSR - Pharmaceuticals

The article in the url below is notable primarily because it deals with the supply chain responsibilities of suppliers, rather than distributors. In other words, it looks forward and up the supply chain, rather than behind and down the supply chain:

 

"Drug manufacturers will have to adhere to new rules governing the chain of custody for pharmaceuticals as they move through the supply chain, with others in the distribution system eventually having to come into compliance."

 

Much of the supply chain debate within the CSR community focuses on the responsibilities that companies like Walmart, Nike, or GAP have for their suppliers. There is little discussion about what responsibilities suppliers (such as mining companies or pharmaceutical companies) have for how their products are used further up the supply chain by distributors (see: Strategic CSR – Distributors):

 

"The Drug Quality and Security Act, which takes effect Jan. 1 [2015], will 'make sure the drug you are getting is the drug the manufacturer produced and that every set of hands that touched it in the supply chain didn't compromise it at all.'"

 

The result should be responsibility spread more evenly throughout the supply chain (among companies that are, after all, all independent entities), with greater transparency leading to better outcomes for consumers:

 

"… companies will be required to keep records of the transaction history of the drugs moving through their systems. … Such a system also will help guard against the introduction of counterfeit drugs, which will not only protect a company's revenue stream but also guard against any potential reputational harm. … Eventually, consumers will be able to scan their medicine at a retail counter to authenticate whether it is real or counterfeit."

 

Take care

David

 

David Chandler & Bill Werther

Strategic Corporate Social Responsibility: Stakeholders, Globalization, and Sustainable Value Creation (3e)

© Sage Publications, 2014

 

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/

 

 

New Drug Supply Chain Rules Set to Take Effect

By Ben DiPietro

December 16, 2014

The Wall Street Journal

http://blogs.wsj.com/riskandcompliance/2014/12/16/the-morning-risk-report-new-drug-supply-chain-rules-set-to-take-effect/

 

Strategic CSR - Globalization

Here is a great song to brighten up your weekend. I interpret it as an anti-globalization protest, but you just might like the song:

https://www.youtube.com/watch?v=VyuQvbpiAp8

Have a good weekend.

David

 

David Chandler & Bill Werther

Strategic Corporate Social Responsibility: Stakeholders, Globalization, and Sustainable Value Creation (3e)

© Sage Publications, 2014

 

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/

 

Strategic CSR - Water

The three articles in the urls below record the growing importance of water scarcity as a business issue for companies. The first article demonstrates the extent to which water has leaped up the list of top concerns for executives:

 

“A risk that wasn’t even on the corporate worry list a few years ago has jumped to the top: water. Over two thirds of global companies reporting information for a new study … say that water risk ‘could generate a substantive change in their business, operations or revenue’ and more than one in five expect water problems to hamper their growth. Water risk hasn’t historically featured in most corporate supply chain and investment plans. The Global Risks 2014 report from the World Economic Forum lists water risk as the third most important source of concern.”

 

This growing threat is being felt by all firms, irrespective of whether they utilize water directly in their products. This risk is heightened if the firm’s customers use water as a result of consuming the firm’s product:

 

“For example, use of Unilever PLC’s products for dishwashing, laundry, handwashing, etc. can account for over 90% of domestic water use in some countries, according to the company’s website.”

 

The second article provides an example of the sort of steps firms are taking in response, such as Nestle’s new milk factory in Mexico:

 

“The Swiss multinational says the factory, in Lagos de Moreno, is the first of its kind in the world not to rely on external water sources. Instead, it recycles the waste fluid extracted from milk when it is powdered and puts it back to work.”

 

This matters because Nestle is the world’s largest food company and when it is able to shave percentage points off its total resource use, the effects are meaningful:

 

“Nestlé says [the new factory] will allow it to cut total water consumption from its 13 plants in Mexico by 15 per cent this year. The company said it has already slashed its global water use by a third since 2005 and … operations in Mexico had halved their water use in total.”

 

And the third article demonstrates the consequences if firms fail to account fully for water in their planning:

 

“In 2013 a Chilean court ruled that Barrick of Canada, the world’s largest gold-mining firm, could not go ahead with its Pascua Lama mine until it could guarantee not to pollute downstream water or damage nearby glaciers. The company eventually suspended the project, taking a $5 billion write-down.”

 

As a result of the rising strategic importance of water:

 

“A survey by CDP, a research firm that works for institutional investors, finds that in almost two-thirds of the world’s largest listed companies responsibility for dealing with water problems lies at board level. An increasing number of bosses say water is or will soon become a constraint on their firm’s growth.”

 

Ultimately:

 

“Shortages do not only affect those that use millions of gallons in their industrial processes (miners, say) or whose products are made of water (beer and soft-drinks makers). It also affects those whose inputs depend on the stuff (food companies) and, indirectly, almost all firms that do business in water-stressed countries, which include China.”

 

Take care
David

 

David Chandler & Bill Werther

Strategic Corporate Social Responsibility: Stakeholders, Globalization, and Sustainable Value Creation (3e)

© Sage Publications, 2014

 

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/

 

 

Companies Discover Water, Water Everywhere–No More

By Gregory J. Millman

November 6, 2014

The Wall Street Journal

http://blogs.wsj.com/riskandcompliance/2014/11/06/the-morning-risk-report-companies-discover-water-water-everywhere-no-more/

 

Nestle opens ‘zero water’ plant in Mexico

By Jude Webber

October 30, 2014

Financial Times

Late Edition – Final

17

http://www.ft.com/intl/cms/s/0/01fbfc86-5a21-11e4-be86-00144feab7de.html

 

Value diluted

November 8, 2014

The Economist

67

http://www.economist.com/news/business/21631047-water-growing-business-problem-many-companies-havent-noticed-value-diluted

 

Strategic CSR - Diversity

The article in the url below presents an argument against the idea of quotas as a solution for the lack of diversity among the senior executives and directors of large firms. Across the board, the Scandinavian countries have done more than most to advance equal opportunities for women in business:

 

"The region has also led the world in introducing quotas for corporate boards. Norway started the trend, and now requires stockmarket-listed companies to allot at least 40% of board seats to women. Iceland, Finland and some other European countries have introduced similar requirements."

 

These quotas, however, only relate to director positions. The argument behind doing so was that, over time, greater numbers of female directors would create more opportunities for female employees to become managers, executives, and eventually CEOs. While that was the theory, however, there is evidence to suggest that: 1) progress has not been as rapid as anticipated, and 2) that even what progress there has been is misleading. First, is the idea that progress is little different from countries that have not adopted similar quotas:

 

"[The latest Global Gender Gap Index, compiled by the World Economic Forum] ranked Denmark 72nd in terms of the gender gap among senior managers and officials. There may be more women sitting round the table at board meetings, but the person who runs the show is almost always a man: only 6% of Norwegian listed firms had a female chief executive in 2013, little better than the 5% of American companies on the Fortune 500 list that have a woman as CEO."

 

Second, however, the article presents evidence that the progress that has been made is essentially inflated. The quotas only cover listed firms. As such, many of the firms that did not want to or could not comply took themselves out of compliance by becoming private:

 

"Certainly, the [quota] has transformed the boardrooms of Norway's listed companies: female directors have closed the pay gap with male ones, even as their numbers have surged. But look beyond those 'golden skirts' and the picture is more complex. Companies fled the stockmarket as quotas were phased in: Norway's stock of listed firms fell from 563 in 2003 to 179 in 2008. And even among those that remain on the stockmarket, Norway's 6% figure for female CEOs in 2013 is an improvement on the 2% in 2001, but no more of an increase than Denmark, which has no quotas, achieved over the same period."

 

Maybe the ripple effects of the quotas will take longer than expected, especially with the gender discrimination that is so embedded in much of society. Norway's ambitious quota of 40% was passed in 2006 and came into effect in 2008 (for more information on this, see this briefing from The Economist). Certainly, the evidence exposed by the academic research that is presented in the article, however, does not look promising:

 

"… in the first substantial study of the Norwegian reforms, … [there is 'no evidence' that the quotas have done anything] to improve the career prospects of highly qualified women below board level. They have not helped close the gender gap in the incomes of recent business-school graduates. Nor have they done anything to encourage younger women to go to business school in the first place."

 

Take care
David

 

David Chandler & Bill Werther

Strategic Corporate Social Responsibility: Stakeholders, Globalization, and Sustainable Value Creation (3e)

© Sage Publications, 2014

 

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/

 

 

A Nordic Mystery

November 15, 2014

The Economist

74

http://www.economist.com/news/business/21632512-worlds-most-female-friendly-workplaces-executive-suites-are-still-male-dominated

 

Strategic CSR - Bribery

The article in the url below marks an important step forward in the campaign to minimize instances of bribery by corporations abroad:

 

"U.K. oil, gas, mining and logging companies will, as of Jan. 1, 2015, have to disclose … payments to foreign governments of more than 86,000 pounds (about $135,000) for taxes, royalties, permits, bonuses and the like, and they'll have to do it on both a country-by-country and project-by-project basis."

 

In other words, rather than merely punishing firms that get caught, this legislation requires the reporting of all payments (legitimate or otherwise) over the minimum amount by energy companies. This is useful because, in the past, firms have cloaked bribes in legitimate-sounding payments, such as consulting fees. Now, all payments will have to be reported, allowing regulators the opportunity to identify suspicious patterns:

 

"The U.K. is the first European Union country to implement an EU directive passed in June 2013 requiring member states to pass laws requiring the disclosures. The first company payment reports will be published in the U.K. in 2016."

 

The hope is that this action in the UK will encourage the SEC to move forward with a similar proposal in the U.S. that has run into strong industry resistance and is currently stalled.

 

Have a good weekend.

David

 

David Chandler & Bill Werther

Strategic Corporate Social Responsibility: Stakeholders, Globalization, and Sustainable Value Creation (3e)

© Sage Publications, 2014

 

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/

 

 

U.K. Implements Extractive Transparency Rule

By Samuel Rubenfeld

December 1, 2014

The Wall Street Journal

http://blogs.wsj.com/riskandcompliance/2014/12/01/u-k-implements-extractive-transparency-rule-as-sec-delays-standard-further/

 

Strategic CSR - Executive pay

Something that has always struck me as weird about executive compensation is the idea of performance-related pay. I find this weird because the common way to describe how this works in practice is, as the article in the url below repeats, to say that executives should be paid:

 

"… according to their performance."

 

In reality, the executive is not paid according to his/her performance, but according to the performance of the firm. That is, what the executive actually does is not measured, but it is how the firm performs that is measured. This is primarily because it is easier to measure firm performance using one of the narrow accounting measures that exist and very hard to measure how effective an executive actually is. The assumption is, of course, that the performance of the firm is highly correlated with the performance of the executive. This arrangement is therefore very convenient for the executive because a great deal of research in this area suggests that they tend not to make much difference to the firm's performance. At a minimum, the firm's performance is determined by a large number of factors, some of which the executive is responsible for, but many of which s/he is not.

 

While the article in the url below does not focus on this distinction, it does do a good job of highlighting how ineffective many executives are and how, as a result, the idea of pay for performance is somewhat ridiculous on closer inspection:

 

"It is easy to get steamed up about how much executives earn. Some pay packets are ridiculously large: Tim Cook, Apple's boss, was paid $378m in 2011. Some are quite out of line with achievement: Martin Sullivan was paid $47m when he left AIG, despite the fact that, on his watch, the company's share price declined by 98% and the American taxpayer had to lend it $180 billion to keep it from collapsing."

 

In the process, the article, which is a review of a book titled Indispensable and Other Myths: Why the CEO Pay Experiment Failed and How to Fix It, also provides a bit of context in which to place the relatively recent introduction of performance related pay:

 

"During the glory years of the country's capitalism, from the late 1940s to the late 1960s, American bosses were paid salaries like other professionals (performance-related pay was for the lower classes). They were also paid about as much at the end of the period as at the beginning: about $1m a year (in inflation-adjusted dollars) for the heads of America's 50 biggest companies."

 

In the end, however, The Economist favors the overall effect of massive financial incentives (a dynamic economy with the world's best companies), rather than linger on any obscene anomalies, even if the relationship between what the CEO does and how the firm performs remains somewhat murky:

 

"Mr Dorff offers lots of examples of performance-related pay gone wrong. But what about pay that ignores performance? Professions that stick with rigid salary structures lose talent to more flexible ones: one reason why America's school system is in such a parlous state is that high-flyers refuse to join a profession in which the only way to get ahead is to get older. Public companies are already in a war for talent with more flexible entities, such as private companies or hedge funds. It would be an odd world if you could get seriously rich working for a private-equity company but not as the boss of General Electric."

 

Take care
David

 

David Chandler & Bill Werther

Strategic Corporate Social Responsibility: Stakeholders, Globalization, and Sustainable Value Creation (3e)

© Sage Publications, 2014

 

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/

 

 

Moneybags

October 25, 2014

The Economist

87

http://www.economist.com/news/business-books-quarterly/21627553-should-ceos-really-be-paid-less-moneybags

 

Strategic CSR - CSR reports

The article in the url below presents an important caveat to the growing numbers of companies that are publishing more and more (and supposedly better and better) CSR/sustainability reports:

 

"Only 128 of the 4,609 largest companies listed on the world's stock exchanges disclose the most basic information on how they meet their responsibilities to society, according to a new report."

 

In terms of "the most basic information," the report states that:

 

"… 97% of companies are failing to provide data on the full set of 'first-generation' sustainability indicators – employee turnover, energy, greenhouse gas emissions (GHGs), injury rate, pay equity, waste and water."

 

Specifically:

 

"More than 60% of the world's largest listed companies currently fail to disclose their GHGs, three quarters are not transparent about their water consumption and 88% do not divulge their employee turnover rate."

 

For the article, these numbers are important because of what they reveal about the companies themselves, rather than the lack of information per se:

 

"The reason these figures are so important is because there is a direct correlation between transparency and companies taking substantive action to improve their performance."

 

Additional questions that arise are: If these reports are not being done well, why do firms do them? What value do they see in the process that justifies the expense? Equally importantly, who reads these reports? And, if they are filled with fluff, why do these people pay any attention to the reports?

 

Take care

David

 

David Chandler & Bill Werther

Strategic Corporate Social Responsibility: Stakeholders, Globalization, and Sustainable Value Creation (3e)

© Sage Publications, 2014

 

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/

 

 

97% of companies fail to provide data on key sustainability indicators

By Jo Confino

October 13, 2014

Guardian Sustainable Business

http://www.theguardian.com/sustainable-business/2014/oct/13/97-companies-fail-to-provide-data-key-sustainability-indicators-stocck-exchange-report

 

Strategic CSR - Waste

The article in the url below contains a quiz to test readers on the amount of waste generated in the United Kingdom. Here are a few of the questions:

 

What is the UK's second most binned [trashed] food coming in at 320,000 tonnes per year?

          -  Carrots
          -  Potatoes
          -  Brussel sprouts

To grow all of the food thrown away from UK homes each year, we'd need an area 91% the size of which country?

          -  Wales
          -  Scotland
          -  England

Wasted food and drink costs the average UK family roughly how much a month?

          -  £25
          -  £60
          -  £80

How many bananas are wasted every day in the UK?

          -  444,000
          -  1.4mn
          -  14,000

Go to the article to see the answers.

Have a good weekend
David

David Chandler & Bill Werther
Strategic Corporate Social Responsibility: Stakeholders, Globalization, and Sustainable Value Creation (3e)
© Sage Publications, 2014

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/


How much food does the UK waste?
By Hannah Gould
October 13, 2014
Guardian Sustainable Business
http://www.theguardian.com/sustainable-business/quiz/how-much-food-waste-uk-quiz-test-knowledge
 

Strategic CSR - Tax inversion

The issue of corporate tax has arisen lately as companies in the U.S., in particular, try to evade the relatively high headline rates by acquiring or merging with smaller companies in foreign, low-tax economies and re-incorporating their HQ in that economy—a process known as a "tax inversion." In response, the natural thing to do would be for governments to get together to reform the global tax infrastructure. Coming up with a reasonable uniform tax code and universal rate would be in everyone's interests, including the companies who currently dedicate a significant amount of resources to navigate among different regimes. The article in the url below, however, conveys the complexity of such a task, which is being pursued by the OECD:

 

"Launched by the G-20 last year, the overhaul is intended to modernize a web of 3,000 bilateral tax treaties and national tax rules that dates back to the 1920s and allows companies to adopt legal structures designed to shift their profits to the lowest-tax jurisdictions, regardless of where those profits are generated."

 

While inter-governmental agreement might prove challenging, it is merely the first step in a highly convoluted process that must also take place at the national level:

 

"But tax experts warned that agreement between governments on the outlines of new tax rules is a first step that must be followed by changes in domestic legislation in each of the participating countries that could take many years to complete and implement."

 

And, of course, in spite of the inherent common sense of synching the world's tax codes, there are some governments that benefit from the system as currently structured:

 

"Ireland hosts the international operations of a number of U.S. digital giants, and has been among a small number of countries that have faced allegations that their tax codes facilitate questionable tax-planning practices by international firms. But the Irish government has vehemently denied that the country can be characterized as a tax haven."

 

Take care
David

 

David Chandler & Bill Werther

Strategic Corporate Social Responsibility: Stakeholders, Globalization, and Sustainable Value Creation (3e)

© Sage Publications, 2014

 

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/


Global Tax Overhaul Gathers Momentum

By Paul Hannon

September 16, 2014

The Wall Street Journal

Late Edition – Final

B1

http://online.wsj.com/articles/g-20-plans-to-overhaul-international-corporate-tax-system-still-on-track-1410868802

 

Strategic CSR - Supply Chain

The article in the url below contains advice for companies on how to generate more responsible supply chains. In particular, the article argues that, although an effective compliance program must be part of this effort, a compliance-alone approach is insufficient:

 

"Some of the best approaches come from those big companies that realize they can only do so much employing a policing approach."

 

Essentially, the article argues that, in order for real results to occur, firms need to be genuinely committed to improving their supply chain practices:

 

"That means working with suppliers on more training and capacity building, and dealing with the root causes of problems in a community rather than the symptoms that manifest themselves in labor abuses or worker safety issues."

 

In effect:

 

"It is too simplistic for companies truly committed to reforming their supply networks to declare a zero-tolerance policy and pull out once problems arise."

 

It has long been the approach of Strategic CSR that mandated compulsion is insufficient to generate the scale of changes we need to see at the speed with which we need to move. It is only when firms understand the strategic value of CSR—that is, they understand that their self-interest is embedded in working towards sustainable value creation, that change on a sufficiently broad basis will occur.

 

Take care

David

 

David Chandler & Bill Werther

Strategic Corporate Social Responsibility: Stakeholders, Globalization, and Sustainable Value Creation (3e)

© Sage Publications, 2014

 

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/


The Morning Risk Report: Compliance Not Enough to Sanitize Supply Chain

By Ben DiPietro

September 5, 2014

The Wall Street Journal

http://blogs.wsj.com/riskandcompliance/2014/09/05/the-morning-risk-report-compliance-not-enough-to-sanitize-supply-chain/

 

Strategic CSR - Tipping

The article in the url below outlines what sounds like a great idea:

 

"Imagine there's no tipping. By getting rid of gratuities, a few restaurants believe they'll make life easier for customers, while providing a more stable income to servers."

 

The restaurant featured in the article is doing this to put its customers at ease. In return the new French-style restaurant in Philadelphia:

 

"… intends to offer its staff up to $13 an hour in salary, plus health benefits, but with no tips."

 

The result is that servers get more stable incomes, while customers at other restaurants that have tried this say service improves:

 

"Menu prices might read a bit higher, but diners will know what they'll end up paying at meal's end — probably no more than they would have at an equivalent place where they'd tip."

 

Now the market will tell us whether customers think this is a good idea in Philadelphia, or whether they prefer to pay lower prices and control to what extent they reward/value the service they receive.

 

Have a good weekend
David

 

David Chandler & Bill Werther

Strategic Corporate Social Responsibility: Stakeholders, Globalization, and Sustainable Value Creation (3e)

© Sage Publications, 2014

 

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/

 

 

Customers Can Keep The Tip—Which Might Please Restaurant Workers

By Alan Greenblatt

October 9, 2014

National Public Radio

http://www.npr.org/blogs/thesalt/2014/10/09/354656429/customers-can-keep-the-tip-which-might-please-restaurant-workers

 

Strategic CSR - Cats and dogs

The expansion of legal rights in our courts continues—from corporations (see: Strategic CSR – March 4, 2011; Strategic CSR – January 27, 2010; and Strategic CSR – October 26, 2009), to the environment (see: Strategic CSR, August 26, 2009), and now to cats and dogs:

 

"Americans have long seen dogs and cats as family members, but the law hasn't always agreed. Until the early 1900s, both animals were deemed so legally worthless that they didn't even qualify as property—and could be stolen or killed without repercussion. But as Americans began to spend millions, then billions, on food, toys and veterinary care for their pets, the law changed. Today, cats and dogs aren't just property; they are the most legally protected animals in the country."

 

Some examples of how the law now accommodates these family pets:

 

"Felony anticruelty laws in all 50 states impose up to $125,000 in fines and 10 years in prison for anyone who abuses animals. The federal Pets Evacuation and Transportation Standards Act, passed after Hurricane Katrina, requires rescue agencies to save pets as well as people during natural disasters. Judges have been increasingly willing to treat cats and dogs like people in the courtroom, allowing custody disputes over pets and granting large awards … including so-called noneconomic damages typically reserved for the death of a spouse or a child. In a few recent court cases, judges even gave dogs their own lawyers."

 

The rising amounts courts are willing to award owners against workers (dog walkers, home cleaning services, pet groomers, etc.) for any negligence that causes the loss of these animals has been steadily rising. In particular, vets are increasingly being exposed to the same malpractice lawsuits that many medical doctors face today:

 

"In 2004, a Los Angeles man won a $39,000 veterinary malpractice verdict for the death of his Labrador mix. The American Veterinary Medical Association warned that 'personhood' for pets could flood the courts, drive vets out of business and ultimately harm dogs and cats by making veterinary services prohibitively expensive."

 

Ironically, although a possible threat today, the article notes that vets were originally the cause of the rising legal status of cats and dogs:

 

"In the 19th century, [vets] would have shared the law's view that pets were worthless animals. Their work focused almost exclusively on economically valuable creatures such as horses and cows. But as these animals began to disappear from U.S. cities in the early 20th century, veterinarians often found themselves out of work. They turned to cats and dogs for the survival of their profession."

 

Where does all this lead? In addition to growing concern among vets:

 

"Firms involved in agriculture and biomedical research fear that personhood for pets could spill over to livestock and lab rats, stymying cures for human diseases and shutting down meat production."

 

A related story about an Argentinian court freeing an orangutan who was recognized as a "non-human person" that had been "unlawfully deprived of its freedom" by being held in captivity at Buenos Aires Zoo, is detailed in this Reuters article:

 

"In a landmark ruling that could pave the way for more lawsuits, the Association of Officials and Lawyers for Animal Rights (AFADA) argued the ape had sufficient cognitive functions and should not be treated as an object."

 

Take care

David

 

David Chandler & Bill Werther

Strategic Corporate Social Responsibility: Stakeholders, Globalization, and Sustainable Value Creation (3e)

© Sage Publications, 2014

 

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/


Should pets be people too?

By David Grimm

April 12-13, 2014

The Wall Street Journal

Late Edition – Final

C3

http://online.wsj.com/news/articles/SB10001424052702304058204579491630809550504

 

Strategic CSR - Hippocratic Oath

Building on the idea of an oath for graduating MBA students (http://mbaoath.org/) and a general oath for executives (see: Strategic CSR – Executive oath), the article in the url below proposes a Hippocratic oath for the financial sector. The stated need for such an oath is that:

 

"… despite five years of reform the public retains its distrust for bankers and the services provided fail to meet the diverse financial needs of society."

 

The reason, it is argued, is that the focus of reform was misplaced—falling more heavily on the symptoms of the problem, rather than the cause:

 

"A focus on financial stability alone fails to address the root cause of the crisis, which we believe lies in the inherent lack of virtue among our banking institutions and subsequent ethos. This led to a self-serving culture that influenced the behaviour of bankers."

 

It therefore follows, the authors argue, that a more effective response targets the underlying culture of the finance/investor industry. Rather than trying to impose a "rigid moral regime" to all, however, the authors instead apply what they refer to as the "theory of virtue":

 

"Applying this theory to banking reform means that our banks should, to the best of their abilities, attempt to meet people's diverse financial needs, and should not simply focus on self-enrichment or basic transactional services."

 

In essence, an ethical responsibility that is larger than the individual – a professional responsibility. More specifically:

 

"One way this can be achieved is by requiring all members of the banking profession to affirm a Hippocratic-style oath, where employees publicly voice their commitment to behave in a manner that prioritises customers and recognises that the abuse of their position can have dramatic consequences for society."

 

It is argued that such an oath would reform the culture of the profession, as a whole, as a result of focusing more on the social value banking adds, rather than a personal route to financial success. It would also reposition the image of bankers in the eyes of the wider public:

 

"Lawyers, doctors and architects all hold a professional motive to not only do the best for their client but also adhere to the well established principles of that profession. In medicine, the Hippocratic oath provides a centre-piece for personal responsibility in the profession and their overarching principles. Banking is no different and in the post-crash era, should strive towards professionalism."

 

Take care
David

 

David Chandler & Bill Werther

Strategic Corporate Social Responsibility: Stakeholders, Globalization, and Sustainable Value Creation (3e)

© Sage Publications, 2014

 

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/

 

 

Bankers should take a Hippocratic oath to restore virtue to the financial sector

By David Fagleman

July 28, 2014

The Guardian

http://www.theguardian.com/sustainable-business/banking-reform-bankers-hippocratic-oath-report

 

Strategic CSR - Free flow of information

The article in the url below offers an interesting meditation on the loss of control by companies of the debate over their products online (what we discuss in Strategic CSR as "the free flow of information," Chapter 4, Figure 4.5, p161):

 

"The digital revolution has dramatically shifted the balance of power from companies to their critics. Although big firms deploy armies of PR flacks, anyone with a smartphone and a social media account now has the same power to reach a global audience. Whistleblowers once had to photocopy documents and smuggle them out in their underpants. Now they can be shared with the world in a trice, by e-mail or instant messaging."

 

What caught my eye, however, was a statistic demonstrating the devastating operational effects this phenomenon can have for firms today:

 

"In the two weeks after the 1989 Exxon Valdez oil spill in Prince William Sound, in Alaska, Exxon's shares dropped 3.9% but quickly rebounded. In the two months after the Gulf of Mexico spill in 2010 BP's shares fell by half (and have still to recover fully)."

 

Social media increasingly allows small, motivated activists to control the message, spreading bad news ever faster and to greater effect. Whether this shift in power is resulting in better social outcomes is unclear to me at the moment. Either way, companies had better adapt.

 

Have a good weekend.

David

 

David Chandler & Bill Werther

Strategic Corporate Social Responsibility: Stakeholders, Globalization, and Sustainable Value Creation (3e)

© Sage Publications, 2014

 

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/

 

 

Beware the angry birds

By Schumpeter

October 11, 2014

The Economist

76

http://www.economist.com/news/business/21623676-social-media-age-bosses-careers-are-more-vulnerable-ever-beware-angry-birds

 

Strategic CSR - Welcome back!

 

Welcome back to the Strategic CSR Newsletter! The first CSR Newsletter of the Spring semester is below. As always, your comments and ideas are welcome.

 

I hope you all had a good winter break.

 

As I mentioned in the autumn, I have been doing a lot of thinking recently about the core principles that underpin the concept of strategic CSR. The main stimulus for this thinking is a new book that I was invited to write for the UN PRME initiative collection (http://www.unprme.org/). The book has just been published by Business Expert Press (http://www.businessexpertpress.com/books/corporate-social-responsibility-strategic-perspective):

 

 

 

 

The title for the book is Corporate Social Responsibility: A Strategic Perspective. The book details a series of ten principles that I believe provide an intellectual foundation for strategic CSR that better fits with what we know about economic theory and human behavior. As a preview, here are the ten principles that I am arguing define strategic CSR:

1. Business equals social progress.
2. Shareholders do not own the firm.
3. Identifying stakeholders is easy; prioritizing among stakeholder interests is difficult.
4. CSR is not solely a corporate responsibility.
5. Market-based solutions are optimal.
6. Profit = economic value + social value.
7. The free market is an illusion.
8. Scale matters; only business can save the planet.
9. Strategic CSR is not an option; it is business.
10. Milton Friedman was right, the social responsibility of business is business.

 

In particular, I am attempting to redefine CSR as "sustainable value creation." By defining CSR in this way, I believe it moves from being something that is peripheral to strategy and operations (and, as such, something the CEO/executive team can ignore, if they so choose), to being central to the value creating function of the business (something that cannot be ignored). As a result, I think this framework has radical consequences for both business practice and business education.

 

If you have any questions about the book, please let me know.

Take care

David

 

David Chandler & Bill Werther

Strategic Corporate Social Responsibility: Stakeholders, Globalization, and Sustainable Value Creation (3e)

© Sage Publications, 2014

 

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/