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.

Thursday, April 11, 2024

Strategic CSR - Nuclear

No doubt there is more to the story in the url below, but I was encouraged by this development:

"For the first time in more than 50 years the US granted permission for a new type of nuclear reactor, a sign regulators are becoming more open to different approaches to producing power from splitting the atom."

What is unique about this new reactor design, it appears, is the cooling technology:

"California startup Kairos Power received a construction permit from the Nuclear Regulatory Commission to build its Hermes demonstration reactor in Tennessee. While commercial reactors in use today are cooled by water, the Kairos technology uses molten fluoride salt as a coolant."

As I have noted previously (see Strategic CSR – Nuclear), there are a lot of misconceptions about nuclear energy (and subsequent resistance among environmental activists), but I have not seen any realistic future projection of sustainable energy use (and rapid transition away from fossil fuels) that does not draw on at least some nuclear energy.

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/


US Approves New Kind of Nuclear Reactor for First Time in 50 Years
By Will Wade
December 13, 2023
Bloomberg
 

Monday, April 8, 2024

Strategic CSR - Gas tax

The "gas tax" in the U.S. is money raised both by the federal government and individual states (separate taxes) and used to invest in the national road system. It is one of the most effective taxes because it is targeted and, at the federal level, famously has not been raised since the 1993 (for a breakdown of state-by-state taxes, see here). In spite of being so effective, politicians are so afraid to introduce any increase in the overall tax burden that investment has dropped, and the country's infrastructure has suffered. The article in the url below argues this situation is about to get worse, as drivers increasingly trade-in internal combustion engine cars and replace them with EVs, which obviously do not need any petrol:

"Back in 2001, … lawmakers in Oregon recognized that the adoption of EVs and hybrids would eventually mean less revenue from the state's gas tax, which would mean less money to pay for roads and bridges. So they formed a committee to study the problem. After considering a tire tax, a battery tax and numerous other options, the committee concluded that Oregonians should be charged based on how many miles they drive. Twenty-two years later, the Road User Fee Task Force continues to operate small pilot programs. But like most other states that have seen gas taxes start to evaporate, Oregon still doesn't have a mandatory alternative revenue plan in place. … all proposed solutions are problematic."

There is still time, but given the seemingly omnipresent dysfunction in politics, it is hard to see how this essential problem can be overcome. In order to meet the ever-stricter gas mileage requirements being imposed by states, and in addition to growing consumer demand, sales of EVs will only rise:

"Electric vehicles currently account for only about 5% of new car sales in the U.S., but that figure will climb to at least 40% by 2030, according to S&P Global Mobility forecasts. Two years ago President Biden signed an executive order calling for half of the vehicles sold in the U.S. to be electric by the end of the decade. A few states, such as California, have been even more aggressive, mandating that all new cars sold after 2035 meet zero-emission standards."

While there are multiple sources of investment funds for road infrastructure, the gas taxes are central:

"States pay for roads in a variety of ways, including vehicle registration fees and tolls, plus money from their general funds. Gasoline taxes account for a large portion of revenue, with the average U.S. rate currently at 32.3 cents a gallon at the state level along with 18.4 cents in federal tax. (Both figures are somewhat higher for diesel fuel.) Even without the impact of electric vehicles, gas-tax revenue is falling as new cars become more fuel efficient and Americans do less driving."

As with so many issues in the U.S., the response by individual states varies significantly. At least most states understand this is a problem that they need to solve:

"Faced with crumbling infrastructure and reduced revenue, 31 states and the District of Columbia have implemented some form of variable-rate gas tax. … Several states are seeking to recoup revenue lost to electric vehicles by imposing new fees on EV owners. Last month Texas began charging $400 to register an EV, plus an additional $200 every year thereafter—on top of the $50.75 registration fee all car owners pay. In all, 33 states assess annual EV fees, according to the National Conference of State Legislatures. Meanwhile, seven states levy a tax on electricity at EV charging stations. Most are directing the funds to road construction, although Iowa's tax is being placed in a statewide economic development fund. … A road-usage fee is the most frequently cited long-range alternative, as Oregon's task force determined 22 years ago. More than a dozen states are studying it and four—Oregon, Utah, Virginia and Hawaii—have implemented voluntary pilot programs. Hawaii's model, which begins in 2025, will apply to only electric vehicles at the start, with motorists opting to pay a flat rate annual fee of $50 or get charged 0.8 cents per mile."

But, as Oregon has learned, fixing the problem in theory is very different than implementing a lasting solution in practice:

"… if Oregon has learned anything after 22 years of study—including a voluntary program with fewer than 1,000 participants—it's that the road to finding an alternative to gasoline taxes is filled with potholes."

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/


How Will States Pay for Roads When Gas Taxes Evaporate?
By Peter Funt
October 21-22, 2023
The Wall Street Journal
Late Edition – Final
C4
 

Friday, April 5, 2024

Strategic CSR - Geopolitics

The author in the article in the url below sets up his argument by noting the geopolitical role played by fossil fuels since their emergence as the dominant energy source. While solving the nasty side-effect of direct carbon emissions, he argues that renewable energy might be introducing an alternative source of "commodity dependence and geopolitical baggage":

"Wind, sun and hydrogen are free. But the equipment that transforms them into energy, stores it in batteries and transmits it needs vast quantities of minerals whose supply is more concentrated than that of oil and gas. Democratic Republic of Congo has 43% of the world's cobalt deposits, Argentina 34% of lithium, Chile 30% of copper and Indonesia 19% of nickel. … All exceed Saudi Arabia's 12% share of global oil production and Russia's 16% share of natural-gas output. For all four minerals, the five largest countries have more than half of global deposits. With oil and gas, the top five control less than half. … Downstream production is even more concentrated: China refines 70% of the world's cobalt, 65% of its lithium and 42% of its copper, far exceeding OPEC's share of oil output."

And, while the sustainability lobby is falling over itself to welcome the transition to electricity that is being encouraged by the Inflation Reduction Act in the U.S., the reality is that it will increase demand for these minerals that are already in short supply ("the law will increase that demand by 12% to 15% by 2035"), while also making the U.S. more dependent on imports from countries that are not necessarily predisposed to be friendly:

"For example, in 2035, non-free-trade partners will account for 90% of global cobalt production, most of it in Democratic Republic of Congo, which exports 70% of its production to China."

Meanwhile, the regulatory bureaucracy in the U.S. ensures that, even though there are deposits of some of these minerals available (in theory), we just cannot get out of our own way quickly enough to access them:

"The U.S. alone boasts copper deposits equivalent to 20 years' worth of its own demand. … The problem is accessing it; the firm estimates it takes 15 years on average for a mine to go from discovery to production."

The problems range from permitting ("seven to 10 years [in the U.S.], versus two to three in Australia and Canada"), to refining ("A copper refinery or smelter hasn't been built in the U.S. since the 1970s"), to what the author terms "resource nationalism":

"From the 1950s to the 1980s, western oil companies saw their operations nationalized by host countries. Today, resource nationalism is once again spreading. Indonesia is restricting exports of nickel ore to nurture domestic refining, and Chile is partially nationalizing its lithium mines."

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/


Green Energy Shuffles Global Influence
By Greg Ip
September 14, 2023
The Wall Street Journal
Late Edition – Final
A2
 

Thursday, March 28, 2024

Strategic CSR - Slow(er) fashion?

The article in the url below suggests the message that fast fashion is increasingly a hard sell for some consumers (due to the huge amount of associated waste) is beginning to make progress:

"Fast-fashion retailers including H&M, Uniqlo and Zara have for years enticed shoppers to buy more and more new clothes. Now these brands are pushing consumers to repair their old ones, too."

More specifically:

"Zara this year is launching nationwide repair services in several of its largest markets, Uniqlo is adding repair studios to a number of stores, and H&M-owned Cos is working with a startup to help customers fix damaged dresses and jackets."

Of course, if the material is lower quality (which is a big part of fast fashion's low cost business model), it might not be repairable. I thought the whole point of Zara was that it made clothes you could wear five times and then discard (see Strategic CSR – Fast fashion):

"While some high-end brands have long offered to fix pricier products, the large-scale rollout of repair services is a new venture for mainstream fashion retailers whose clothes are typically much cheaper. The trend could also threaten to cannibalize sales of new products."

Somehow, I think it will be the other way around and customers will ignore the repair option. Given that the price of labor drives repair costs, it is probably going to be cheaper to buy replacements than it will be to repair items that might not last much longer, anyway:

"In the U.K., Zara takes in garments for repair and handles payments, but uses a network of third-party repairers to do the work. Mending a hole, for example, costs £10, equivalent to roughly $13."

I would think you could buy half of the items in a typical fast fashion store for that price – certainly among companies such as Shein and Boohoo (see Strategic CSR – Shein + Boohoo).

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/


H&M, Zara and Fast-Fashion Peers Are Pushing Into Repair Services
By Trefor Moss
August 2, 2023
The Wall Street Journal
Late Edition – Final
B1-2
 

Tuesday, March 26, 2024

Strategic CSR - Statistics

Lies, damn lies, and statistics. The two charts below were on the front page of the business section of The NYT, recently, and can be used to tell contrasting stories about the successful adoption of EV cars.

The first chart would likely be used to demonstrate how EVs (and hybrids) are diffusing rapidly, and are being embraced by a public eager to tackle climate change:
 

The second chart, on the other hand, which plots those adoptions relative to the total number of cars (most of which, of course, are still ICEs), could be used to tell a very different story:
 

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/


Rapid Rise, With Reservations
By Nadja Popovich
March 13, 2024
The New York Times
Late Edition – Final
B1
 

Thursday, March 21, 2024

Strategic CSR - Bank of America

The article in the url below contains a headline that I don't see very often:

"Bank of America Pledged to Stop Financing Coal. Now It's Backtracking."

What strikes me about it that is different is not that companies are not taking climate change seriously or that they are saying one thing and then doing the opposite (both of which have always been true), but that they feel comfortable saying so, so directly. In other words, backtracking like this is exposed by the media, all the time, but it is rare to see the company announce its own backtrack:

"Two years ago, Bank of America won kudos from climate activists for saying it would no longer finance new coal mines, coal-burning power plants or Arctic drilling projects because of the toll they take on the environment. The bank's latest environment and social-risk policy reneged on those commitments. The policy, updated in December, says that such projects will instead be subject to 'enhanced due diligence.'"

I know there has been a backlash against the label "ESG" (correct impulse, but orchestrated for all the wrong reasons; see Strategic CSR – ESG and Strategic CSR – Green-hushing), but that is different from backtracking on a commitment not to fund fossil fuel projects. The reasoning, according to the article, is the same as the pushback against ESG, in general – I just would have thought Bank of America could have made a meaningful distinction among its stakeholders (and those it perceives to be most important):

"Bank of America's change follows intensifying backlash from Republican lawmakers against corporations that consider environmental and social factors in their operations. Wall Street in particular has come under fire for what some Republicans have called 'woke capitalism,' a campaign that has pulled banks into the wider culture wars."

While the backlash against ESG and related initiatives is a general phenomenon (at least, here in the U.S.), it seems particularly virulent in the finance industry, whether targeted against investment funds or the banks that finance large infrastructure projects:

"States including Texas and West Virginia have passed financial regulations designed to ward off efforts to deny fossil-fuel companies access to banking services. In New Hampshire, state lawmakers have sought to criminalize the business principle known as E.S.G., shorthand for environmental, social and governance."

The shift by Bank of America, in particular, is quite dramatic:

"Bank of America said in a statement that clients or transactions 'that carry heightened risks will continue to go through an enhanced due diligence process involving senior level risk review.' In late 2021, the bank's policy stated that it 'will not directly finance new thermal coal mines or the expansion of existing mines' or 'petroleum exploration or production activities in the Arctic.' It also would not 'directly finance the construction or expansion of new coal-fired power plants, including refinancing recently constructed plants' unless those facilities employed carbon capture or similar technology. That language is gone from its updated policy."

But, there are other signs that a similar shift is occurring industry-wide:

"There have been other contentious changes. In November, JPMorgan Chase said in its annual climate report that it was overhauling the oil and gas emissions-reduction target that had guided its energy investing and was adopting a new 'energy mix' target that took into account financing for clean energy projects. … In a statement, JPMorgan said at the time that its modified target recognized that 'a singular focus on fossil fuels will not successfully achieve the necessary transition of the global energy system.'"

For examples of more banks reneging on their climate commitments, see the article in the second url, below:

"Many of the world's biggest financial firms spent the past several years burnishing their environmental images by pledging to use their financial muscle to fight climate change. Now, Wall Street has flip-flopped. In recent days, giants of the financial world including JPMorgan, State Street and Pimco all pulled out of a group called Climate Action 100+, an international coalition of money managers that was pushing big companies to address climate issues."

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/


Bank of America Reverses Pledge Against Fossil Fuels
By Hiroko Tabuchi
February 4, 2024
The New York Times
Late Edition – Final
p19

More Wall Street Firms Flip-Flop on Climate Pledges
By David Gelles
February 20, 2024
The New York Times
Late Edition – Final
B2
 

Tuesday, March 19, 2024

Strategic CSR – Solar

This graph from the article in the url below, for me, sums up the challenge inherent in many renewable energies:


The chart shows a single day (October 11, 2020) and plots demand for electricity in South Australia against the amount of electricity generated by solar power. Of course, this issue would not matter so much if we could adequately store solar energy and transport it over long distances. Since we haven't solved those challenges, we need to use solar energy as we create it, but that might not be when it is in most demand, as the chart demonstrates.

No doubt, the challenge of replacing fossil fuels is complicated, and involves a multi-pronged approach with multiple different energy sources (including nuclear, of course; see Strategic CSR – Nuclear). Nevertheless, I found this chart to be a powerful reminder of how complex the challenge is, and also how far we are from solving it.

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/


One Last Postcard From the Future of Clean Energy
By Nathaniel Bullard
December 21, 2023
Bloomberg Green
 

Thursday, March 14, 2024

Strategic CSR - COP 28

I thought Bloomberg's summary of the agreement reached at COP 28, last December, was telling. First, the good news (with an essential qualification, right at the end, my emphasis):

"The latest UN climate summit ended with an announcement that nations have committed to transitioning away from all fossil fuels. … The deal calls for countries to quickly shift energy systems away from fossil fuels in a just and orderly fashion, albeit in a non-binding deal."

Then, quickly followed by the reality check:

"The history of adherence to such pledges is spotty at best. After a pledge to phase down coal in Glasgow, Scotland, two years ago, consumption has continued to rise and the world remains very unlikely to limit warming to the Paris Agreement's target of 1.5C."

Equally revealingly, the article in the second url below reports Bloomberg's overall score for the final (nonbinding) agreement in terms of "10 key areas" that optimists ahead of the conference were using to evaluate progress and secure gains made in previous conferences:

"Overall, COP28 scored a 3.8 out of 10. That was … 0.1 points higher than the score for last year's COP27 in Sharm el-Sheikh, Egypt, but 2.2 points below the score for COP26 in Glasgow in 2021."

The chart accompanying the article shows how dire COP 28's final agreement was in light of what is required (and was hoped for):
 

Oh well, I suppose there is always next year (as no-one I know has said).

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/


COP28 Nations Reach First-Ever Deal to Move Away From Fossil Fuels
By John Ainger, Jess Shankleman, and Jennifer A Dlouhy
December 13, 2023
Bloomberg

COP28's Success Marks Just a Tiny Upgrade on COP27 Results
By Olivia Rudgard and Kira Bindrim
December 13, 2023
Bloomberg
 

Tuesday, March 12, 2024

Strategic CSR - Coal

With the newsletters, I am going to start mixing up the level of insight I provide, with some longer in-depth commentaries (as usual), and some shorter, harder-hitting points, like this quote that I read in the article in the url below about the inertial trajectory of coal consumption:

"While coal remains the world's biggest source of electricity, the increase in renewables installations is outpacing rising demand for power. Moving away from coal will be a critical part of the global fight to reduce carbon emissions."

To be clear, this is the point I wanted to highlight:

"… coal remains the world's biggest source of electricity."

I find it amazing that this statement remains true. Given how, collectively, we have known about climate change as a threat for 50+ years, yet we have in essence sat on our hands (see Strategic CSR – Carl Sagan). Obviously, there is great variance but, collectively, we have effectively done nothing since the 1970s, with carbon emissions continuing to rise (see Strategic CSR – 2022 (+ 2023)).

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/


Coal Financing Is Still Booming—Led by China
By Tim Quinson
December 20, 2023
Bloomberg Green
 

Thursday, March 7, 2024

Strategic CSR - EVs

Following on from Tuesday's newsletter, the data in the article in the url below represent an additional challenge to the wider adoption of EVs:

"Americans are keeping their cars longer than ever. The average age of a passenger vehicle on the road hit a record 12.5 years [in 2023], according to data gathered by S&P Global Mobility. Sedans like Holdsworth's are even older, on average – 13.6 years."

Why is this happening?

"Blame it mainly on the pandemic, which in 2020 triggered a global shortage of automotive computer chips, the vital component that runs everything from radios to gas pedals to transmissions. The shortage drastically slowed global assembly lines, making new vehicles scarce on dealer lots just when consumers were increasingly eager to buy."

The constrained supply, of course, also contributed to inflation, which is another factor:

"Since the pandemic struck three years ago, the average new vehicle has rocketed 24% to nearly $48,000 as of April, according to Edmunds.com. Typical loan rates on new-car purchases have ballooned to 7%, a consequence of the Federal Reserve's aggressive streak of interest rate hikes to fight inflation."

The result?

"It's all pushed the national average monthly auto loan payment to $729 – prohibitively high for many. Experts say a family earning the median U.S. household income can no longer afford the average new car payment and still cover such necessities as housing, food and utilities."

And, this is not just affecting sales of new cars:

"Used vehicle prices, on average, have surged even more since the pandemic hit – up 40%, to nearly $29,000. With an average loan rate having reached 11%, the typical monthly used-vehicle payment is now $563. Faced with deciding between making a jumbo payment and keeping their existing vehicles, more owners are choosing to stick with what they have, even if it means spending more on repairs and maintenance."

In order for EVs to be widely adopted, old cars need to be removed and, in order for this to make sense for the environment, the net effect needs to be carbon positive (i.e., replaced with EVs or hybrids). As with everything to do with climate change, it seems, we are doing too little, too late. Of course, the macro economic factors are not working in the planet's favor, but that has always been true. In order to divert from the pathway we are on, an intervention is required (and some leadership would be nice) – and most economists agree that the best intervention would be a revenue neutral carbon tax (see Strategic CSR – Carbon tax).

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/


Repelled by high car prices, Americans are holding on to their vehicles longer than ever
By Tom Krisher
May 15, 2023
Associated Press
 

Tuesday, March 5, 2024

Strategic CSR - Electricity

The article in the first url below argues that, for all the talk about the shift to electrification, and the focus on producing electrical versions of goods already in existence (e.g., EVs; see Strategic CSR – EVs), we are not nearly as prepared as we think to transition:

"It makes sense: Electrification is often the fastest and cheapest way to decarbonize our energy consumption. The technologies to decarbonize electricity already exist and are, for the most part, readily deployable at a large scale by the private sector. But here's a sobering fact about all the talk of the 'electrification of everything': It isn't likely to happen. At least, not soon. We can't go all the way down the electrification road for a host of reasons—nor should we want to. For one thing, it would place unnecessary limitations on other viable solutions to rising greenhouse-gas emissions. It also ignores existing technical, regulatory and strategic constraints on electrification."

More specifically, the author presents what she argues are the five major barriers to the electrification of everything:

1. Some things can't be electrified

2. Cheaper alternatives may be coming for the most difficult-to-electrify areas

3. Access to land, a surfeit of complaints

4. Difficulty getting the necessary permits

5. Electricity grids are highly interruptible 


I am not sure these are the only five, or even the most important five (I read a while ago that, if all the cars currently in California became EVs overnight, the electrical system would need to produce 50 percent more electricity than its current capacity – and this is a utility that already has trouble keeping the lights on), but they do convey the complexity of electrification. Perhaps most important, they highlight the extent to which these challenges are not part of the current conversation (and policy making) around electrification, which is proceeding based on false or misleading assumptions. Developing an EV does not mean that every car can be an EV – in short, there are very few easy answers out there.


For a related argument (favoring hybrid cars over EVs), see the article in the second url below.


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/


The Five Things Keeping Us From Going All-Electric
By Amy Myers Jaffe
July 24, 2023
The Wall Street Journal
Late Edition – Final
R1, R4-5

We May Not Be Ready for an All-E.V. World
By Peter Coy
July 17, 2023
The New York Times
Late Edition – Final
A19
 

Thursday, February 29, 2024

Strategic CSR - Allbirds

The article in the url below records the rapid rise and equally dramatic fall of Allbirds – the once trendy "eco-friendly wool sneakers worn by Silicon Valley tech bros." The story also highlights the obvious fact about business (life?), which has always been true – good intentions do not necessarily lead to good outcomes. And, in particular in the marketplace, good intentions do not replace the need to have a great product:

"It turns out that not everyone wants to dress head-to-toe in merino wool, which although better for the environment than nylon or polyester, isn't as durable. Customers complained of holes in their sneakers months after buying them. And the leggings, which were made from a blend of wool and other fibers, in addition to being see-through, didn't hold their shape, the people said. Allbirds said the sheerness was limited to one light color and that it was a minor issue caught at an early stage."

The case is an insightful story of how to attract a loyal following among customers, and then lose it just as quickly:

"[Co-founder] Zwillinger has a saying: Customers will accept one degree of weirdness, but not two. Iterations of existing styles are preferred over brands pushing too far into new categories. He said in an interview that shoppers who came to Allbirds for its original shoes weren't ready to buy technical gear such as running shoes or workout clothes from the brand. He acknowledged problems with the leggings and other workout clothes. 'You've got to get [the] fit right,' he said."

The ultimate takeaway has implications well beyond the lifespan of a marginal apparel company:

"Allbirds said it isn't changing its commitment to sustainability, even though it doesn't always drive shoppers to buy its products. Emails sent to customers touting the environmental benefits of Allbirds shoes and clothing produced fewer sales than messages that prioritized comfort among other attributes. Environmental concerns are among the least important attributes consumers look for when buying shoes and clothing, according to a survey in March of 750 U.S. consumers by Wedbush Securities. Comfort and price are among the most important."

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/


How a Hot Allbirds Lost Its Way
By Suzanne Kapner
July 17, 2023
The Wall Street Journal
Late Edition – Final
A1, A10
 

Tuesday, February 27, 2024

Strategic CSR - Plastic bags

The article in the url below presents a great example of a well-intentioned market intervention that produced unintended consequences:

"Almost a decade ago, California became the first state in the United States to ban single-use plastic bags in an effort to tackle an intractable plastic waste problem."

Predictably, the market reacted:

"Then came the reusable, heavy-duty plastic bags, offered to shoppers for ten cents. Designed to withstand dozens of uses, and technically recyclable, many retailers treated them as exempt from the ban."

But, less predictably, the consequences generated by the adaptation produced the exact opposite of what was originally intended:

"But because they didn't look much different from the flimsy bags they replaced, lots of people didn't actually reuse them. And though they came emblazoned with a recycling symbol, it turned out that few, if any, actually were recycled."

Ultimately:

"Last year, Californians threw away more plastic bags, by weight, than when the law first passed, according to figures from CalRecycle, California's recycling agency."

In short, the mainstream CSR discussion in action.

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/


California Hopes to Fix Flawed Plastic-Bag Ban
By Hiroko Tabuchi
February 18, 2024
The New York Times
Late Edition – Final
p20
 

Friday, February 23, 2024

Strategic CSR - Sea temperatures

The article in the url below hints at the extent to which climate change is accelerating:

"The exceptional warmth that first enveloped the planet last summer is continuing strong into 2024: Last month clocked in as the hottest January ever measured. … It was the hottest January on record for the oceans, too. … Sea surface temperatures were just slightly lower than in August 2023, the oceans' warmest month on the books. And sea temperatures kept on climbing in the first few days of February, surpassing the daily records set last August."

The graphic accompanying the article makes the difference from prior years explicit:
 

Tellingly, in terms of how much we now take such headlines for granted, the story was on the back page of the main NYT section (hard copy) – in essence, ensuring that few people see it.

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/


2024 Begins With More Record Heat Worldwide
By Raymond Zhong and Elena Shao
February 9, 2024
The New York Times
Late Edition – Final
A24
 

Tuesday, February 20, 2024

Strategic CSR - LGBTQ+

The article in the url below frames one of the most challenging issues in implementing strategic CSR – how does a company know what their stakeholders truly care about? In other words, how can company leaders better understand the real interests and demands of the firm's stakeholders. There are certainly plenty of examples to demonstrate that what stakeholders say and what they do are different (and potentially diametrically opposed – see Strategic CSR – Uber, Strategic CSR – United, and Strategic CSR – Accountability):

"Most consumers want brands to support inclusion. But when they do, they face a potentially negative backlash. … Just ask Bud Light."

Social response bias tells us that, when asked, we will say what we think is the socially appropriate thing to say. What we do when the spotlight is off, however, could easily be something completely different. This makes it challenging for leaders to create value for those stakeholders, as noted by the author of the article, the CEO and president of "the LGBTQ advocacy group Glaad":

"Reading the headlines in 2023, it may have seemed as if consumer brands lost big when it came to LGBTQ issues. Dozens of companies faced social-media attacks—in some cases boycotts—over their support for Pride month, among other things. And some of those corporations took a sales hit during the furor."

When the reality is quite different:

"But that's just the headlines. The real picture shows that corporations are continuing their support for LGBTQ inclusion and representation in marketing—despite threats and boycotts. More than 60 companies from a variety of industries, for instance, signed Glaad's joint statement of support for LGBTQ people at the end of June."

In spite of broad support throughout the U.S. for LGBTQ+ rights, there remains a significant amount of institutional resistance:

"[In 2023], the ACLU reported that more than 500 bills targeting the LGBTQ community were introduced in 47 states. Most of those bills singled out transgender youth."

The other part of this that is so challenging is that, if a leader fails to respond to stakeholders who say they want to see a certain kind of behavior, they are criticized. Equally, if they implement behavior that stakeholders say they want (but really don't), then they get punished in the market. By resisting or parrying all social pressure, therefore, leaders can avoid some of the backlash, but no one was ever rewarded for avoiding a disaster. In our society, we reward people who clean up after a disaster, and we criticize those who don't do what we say – what we do not do is reward someone for preventing a crisis, since we can never be sure the crisis was guaranteed to happen. Much better to stand for something, therefore, rather than against that thing (or attempt to ignore the issue altogether). The danger for firms who misjudge their stakeholders' position on sensitive topics, of course, can be severe – just ask Anheuser-Busch and Target. Similarly, due directly to stakeholder criticism:

"Bud Light dropped from its position as top-selling beer in the U.S. by dollar sales. For the year, Bud Light says, it remains the No. 1 brand in the U.S. nationally by volume. Target removed some items from its Pride selection and in some cases moved the displays from the front of the store. The retailer's sales dropped due to the controversy."

The only answer that makes sense is to build strong, trust-based relationships with all stakeholders, based on genuine commitments by the firm. Doing so ensures that (a) the firm has a better idea about what stakeholders truly care about and (b) if a disaster happens, you have a well of trust for those stakeholders to draw from, so they are much more likely to give you the benefit of doubt. The problem with that, of course, is that building trust-based relationships with all stakeholders takes a huge amount of commitment and runs counter to the way that capitalism has been practiced in the West for so long.

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/


The Challenge Facing Companies When Dealing With LGBTQ Issues
By Sarah Kate Ellis
December 10, 2023
The Wall Street Journal
Late Edition – Final
 

Thursday, February 15, 2024

Strategic CSR - Child labor (II)

The article in the url below provides an update on my recent newsletter about child labor in the U.S. (see Strategic CSR – Child labor (in the U.S.)). I think the report reveals a remarkably quick reaction from the companies that were named in The NYT's initial article:

"Now, McDonald's says it is requiring private inspectors to review overnight shifts at slaughterhouses that provide some of its meat, where children as young as 13 were cleaning heavy machinery. Suppliers for Ford Motor Company must now scrutinize the faces of employees when they arrive for work. Costco is commissioning more audits with Spanish-speaking inspectors."

The response illustrates the central concept within Strategic CSR of stakeholders holding firms to account for their actions. In this case, the key stakeholders (the media) exposed the offensive behavior, which generated additional backlash from other stakeholders, and a subsequent adjustment by the firms. In this sense, firms are merely the reflection of the aggregated interests of their collective set of stakeholders – they will do what their stakeholders (truly) want, which firms can identify when those stakeholders reward the behavior they support and punish the behavior they do not support:

"Along with McDonald's and Costco, Starbucks, Whole Foods and PepsiCo are revising the kinds of audits they require at their suppliers. The changes include enhancing reviews of night shifts and shifts run by outside contractors, such as cleaning companies, and moving away from announcing audits in advance."

Now, it is up to stakeholders to follow-up and ensure the announced response becomes actual behavior.

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/


Confronted With Child Labor in the U.S., Companies Move to Crack Down
By Hannah Dreier
February 8, 2024
The New York Times
Late Edition – Final
A22
 

Tuesday, February 13, 2024

Strategic CSR - ESG

The article in the url below updates a newsletter I sent in September about how executives, in the face of growing ideological polarization around ESG-related issues, are engaging in "green-hushing" by mentioning ESG less often on quarterly calls (see Strategic CSR – Green-hushing):

"Many companies no longer utter these three letters: E-S-G. Following years of simmering investor backlash, political pressure and legal threats over environmental, social and governance efforts, a number of business leaders are now making a conscious effort to avoid the once widely used acronym for such initiatives."

Instead:

"On earnings calls, many chief executives now employ new approaches. Some companies, including Coca-Cola, are rebranding corporate reports and committees, stripping ESG from titles. Advisers are coaching executives on alternative ways to describe their efforts, proposing new terms like 'responsible business.' On Wall Street, meanwhile, some firms are closing once-popular ESG funds as interest fades."

The chart accompanying the article, illustrating the number of S&P 500 firms that refer directly to "ESG" in their quarterly earnings calls, is instructive:


This pattern is replicated within firms, also, including some of the most high-profile advocates for ESG. For example, I saw this chart recently from Bloomberg about Larry Fink's BlackRock:
 

And, even more dire, in New Hampshire (and a few other U.S. states), the Republican-led legislature has tried to criminalize ESG investing:

"Republican lawmakers in New Hampshire are seeking to make using ESG criteria in state funds a crime in the latest attack on the beleaguered investing strategy."

My own reaction to this is that the pushback against the ESG 'industry' is justified, but is being motivated by the wrong reasons. Although the partisan rhetoric can be wildly misleading, the lack of consistent definitions and measurements, let alone agreement on what even should be measured, means the ESG industry only has itself to blame (see Strategic CSR – ESG). Moreover, the focus has been almost exclusively on the "E," with little discussion around the huge (and equally essential) areas of the "S" and the "G," which few people understand and even fewer know how to measure. The emergence (and advocacy) of ESG, although no doubt due to good intentions, has been a mess and has set-back the cause as a whole. Because it was so poorly thought-through, the opening was created for those with an ideological agenda (or even for those who just care to exploit the information asymmetry to make money) to wade in, and the result has been both ugly and extremely unhelpful.

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/


Companies Avoid Mentioning ESG, The Latest No-No
By Chip Cutter and Emily Glazer
January 10, 2024
The Wall Street Journal
Late Edition – Final
A1, A6

Thursday, February 8, 2024

Strategic CSR - Ends vs. means

The article in the url below wrestles with the proposition that the ends justify the means. Specifically, that when the danger is existential (which is how many understandably frame the climate crisis), then attempting to force change in order to avert the crisis can be justified with extreme action. In particular, the article is an interview with the author (and activist), Andreas Malm:

"With the 2021 publication of his unsettling book, 'How to Blow Up a Pipeline,' Andreas Malm established himself as a leading thinker of climate radicalism. The provocatively titled manifesto, which, to be clear, does not actually provide instructions for destroying anything, functioned both as a question – why has climate activism remained so steadfastly peaceful in the face of minimal results? – and as a call for the escalation of protest tactics like sabotage."

The interview is fascinating, and I have a lot of sympathy with the points being made. Here is an exchange that is illustrative:

"Is there not a risk that smashing things would cause a backlash that would actually impede progress on climate? I fundamentally disagree with the idea that there is progress happening and that we might ruin it by escalating. In 2022, we had the largest windfall of profits in the fossil-fuel industry ever. These profits are reinvested into expanded production of fossil fuels. The progress that people talk about is often cast in terms of investment in renewables and expansion in the capacity of solar and wind power around the world. However, that is not a transition. That is an addition of one kind of energy on top of another. It doesn't matter how many solar panels we build if we also keep building more coal power plants, more oil pipelines, and on that crucial metric there simply is no progress. I struggle to see how anyone could interpret the trends as pointing in the right direction."

Equally fascinating/challenging/depressing:

"Could you give me a reason to live? What do you mean?
Your work is crushing. But I have optimism about the human project. I'm not an optimist about the human project. …
I'm not joking. Yeah, I'm not sure that I have the qualifications to give people advice about reasons to live. My daily affective state is one of great despair about the incredible destructive forces at work in this world – not only at the level of climate. What has been going on in the Middle East just adds to this feeling of destructive forces completely out of control. The situation in the world, as far as I can tell, is incredibly bleak. So how do we live with what we know about the climate crisis? Sometimes I think that the meaning of life is to not give up, to keep the resistance going even though the forces stacked against you are overwhelmingly strong. This often requires some kind of religious conviction, because sometimes it seems irrational."

Tactics similar to this are becoming more 'acceptable' among environmental activists for some time now (see Strategic CSR – Eco-activism). Whether they will be any more effective is yet to be determined.

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/


How This Climate Activist Justifies Violence
By David Marchese
January 21, 2024
The New York Times Magazine
Late Edition – Final
11-13