Strategic CSR - Sustainability - See you in January!

This will be the last CSR Newsletter until the Spring semester.

Have a great holiday season and I will see you in January!

On reflection, this semester I sent a marked increase in the number of Newsletters focused on environmental sustainability, in general, and climate change, in particular (Issues: Environmental Sustainability, p171). This, no doubt, mirrors the growing public awareness of these issues and, as a result, the greater profile they are given by the media. As such, I will finish this semester's Newsletters with a 20 minute video that focuses on sustainability, although my sense is that it is presented in a 'Michael Moore-type' approach to documentary-making, which is to say it is more polemical than it is objective and scientific. Nevertheless, as with much of Michael Moore's work, it is entertaining and educational, and it makes some very important points:

http://www.storyofstuff.com/index.html

My sense is that the most effective way of achieving the over-arching goal of the video (how to make a linear system more sustainable) lies in maintaining a focus on CSR in its broadest interpretation. In writing Strategic CSR, we originally decided to limit the environmental sustainability content, simply because so much has been written about this subject elsewhere and there were so many other subjects that we wanted to discuss that were not, at the time, central to the CSR debate. One of our main messages, as a result, is that it is the inclusion of all aspects of firm operations that maximizes the strategic advantages of CSR. In the spring, my thought at present is to try and return to this broadest focus. While not ignoring issues of environmental sustainability or recycling or climate change, I will try and rededicate the Newsletters to this issue of system-wide sustainability, as it is only by focusing on the system as a whole that meaningful and lasting change can occur.

As usual, your thoughts and/or feedback are always welcome.

Happy Holidays!
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

Strategic CSR - Supply Chain

The article in the url link below appeared recently in a special insert in the NYT titled ‘Business of Green.’ The supplement focused mostly on the business benefits of environmental sustainability by cutting costs within the firm, but this article extends the sustainability logic into a firm’s supply chain (Issues: Auditing CSR, p94; Country of Origin, p223):

“Call it Phase 3 of the greening of corporate America. Companies have turned to alternative energy, bought hybrid fleets and otherwise tried to clean up their own acts. Many have helped customers go green by stocking green products, selling carbon offsets along with airline tickets or offering electricity from renewable resources for those willing to pay extra. Now they are looking at their supply chain as the next frontier for combating climate change.”

Proactive efforts on in-house sustainability are one thing; setting a high bar and then expecting the same level of commitment from your suppliers is another level of implementation of a social responsibility perspective:

“In September, Wal-Mart announced a pilot program with suppliers of seven common items -- DVDs, toothpaste, soap, milk, beer, vacuum cleaners and soda -- to measure and reduce the amount of energy used in making and distributing them. In marketing and store displays, Home Depot gives preferences to its EcoOptions line of environmentally friendly products, and the company has said it would favor suppliers that came up with a new category of green product, like a recyclable power tool.”

There are a number of interesting questions that emerge from this debate: How many firms are really thinking about this issue at this stage? What are the benefits for those firms that make these demands of their suppliers and what costs to those that do not? And, How far down the supply chain can firms realistically be held responsible for actions over which they have no direct operational control? Most important, perhaps, is ensuring that the demands firms place on their suppliers regarding costs (i.e., as low as possible) do not conflict with expectations regarding sustainability policies, which often involve an upfront investment (CSR Business Plan of Action—Short Term: Awareness Creation: Measurement and Rewards, p71).

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

For Suppliers, the Pressure Is On
By CLAUDIA H. DEUTSCH
1558 words
7 November 2007
The New York Times
Late Edition - Final
1
http://www.nytimes.com/2007/11/07/business/businessspecial3/07Supply.html

Strategic CSR - P&G

The article in the url link below presents a case study concerning a multi-national’s attempts to move into a new market. In particular, it describes P&G’s efforts to work in developing economies to build a business model to appeal to “Bottom of the Pyramid” consumers (Issues: Profit, p200):

“[P&G] has a goal of increasing total sales by 5% to 7% annually over the next three years. As part of that mission, it is looking to tap roughly one billion additional consumers -- most of them very poor women who live in developing countries.”

The article describes in detail the different challenges a firm like P&G faces and the extent to which it needs to adapt to the new cultural and economic environment—from single portion packaging, to small retail outlets, to different shopping habits (daily, rather than weekly, for example):

“Reaching these customers isn't easy. In emerging markets, P&G estimates that 80% of people buy their wares from mom-and-pop stores no bigger than a closet. … Rather than stock up on full-size goods, which cost more per item, they buy small portions of soap, laundry detergent, and single diapers as they need them -- even though the smaller sizes are usually sold at a premium. … P&G calls such locally owned bodegas, stalls and kiosks "high-frequency stores," because of the multiple times shoppers visit them during a single day or week.”

The article is clear that it is the business model that is driving P&G’s expansion in Mexico, although it is through similar efforts that economic and social progress is also made:

“For P&G the stakes are high. Sales of P&G products in developing markets currently total $20 billion, up from $8 billion five years ago. In recent years, emerging markets have contributed about 40% of the company's "organic" sales growth, which excludes gains from acquisitions. The company still lags other consumer-product rivals. Last year P&G derived 26% of sales in these regions -- a far cry from Unilever and Colgate-Palmolive Co., which manage to snag about 40% of their business in developing markets.”

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

Emerging Ambitions -- P&G's Global Target: Shelves of Tiny Stores --- It Woos Poor Women Buying Single Portions; Mexico's 'Hot Zones'
By Ellen Byron
2229 words
16 July 2007
The Wall Street Journal
A1
http://online.wsj.com/article/SB118454911342967244.html

A freely accessible version of this article can be found at:
http://marketdrivengrowth.blogspot.com/2007/08/p-global-target-shelves-of-tiny-stores.html

Strategic CSR - Banks

The article in the url below generates contradictory feelings (Issues: Finance, p180; Investing, p184; Loans, p188). At first, when I read it I thought firms were innovatively expanding access to credit to previously excluded segments of the market (a positive). Then I realized that less affluent customers are more likely to use credit heavily and get caught up in cycles of repayment and high interest rates (a negative). It is important, however, to recognize that consumer credit is far more preferable to the “neighborhood loan shops” that can charge “more than 200% annual interest” and having a credit card helps build credit history (positives). But, then I read that such private label cards tend to charge higher interest rates than regular credit cards (negative). In general, however, I like the Citigroup policy:

“Citigroup lets consumers build a credit history with a MasterCard secured with money the consumer puts in a certificate of deposit. After 18 months, consumers deemed creditworthy may be offered a regular Citigroup credit card, and the original deposit, plus interest, is put into the holder's credit-card account. Others can renew the CD or close the account and get the deposit back, with interest.”

And also aspects of the GE plan:

“The issuers say they are treading carefully and tracking payment habits closely, so they aren't saddled with bad loans to nonpaying customers. GE, for example, calls new customers to make sure they understand their bills, interest rates and potential late fees.”

The oversight role played by consumer advocates, discussed in the article, should help keep the banks reasonably honest. Ultimately, I think extending the banking system to serve the huge number of people in the US who do not have either a bank account or access to credit of some sort, providing them with legitimate alternatives to the “neighborhood loan shops,” generates a great deal of social value:

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

Private-Label Card Program From GE Offers 'Road to Credit' To Tap Greater Portion of Market
By Kathryn Kranhold and Robin Sidel
1104 words
6 July 2006
The Wall Street Journal
C1
http://online.wsj.com/article/SB115214210537198943.html

A freely accessible version of this article can be found at:
http://www.nabble.com/Article-(07-06-2006):-Private-Label-Card-Program-from-GE-Offers-'Road-to-Credit'-p5210720.html

Strategic CSR - Internet

The article in the url link below highlights the leveling effect that the Internet (Issues: Internet, p237) has had on the free flow of information (Figure 3.4, p56):

“Opponents of a chemical plant being built in the coastal city of Xiamen used cellphone text messaging to distribute widely their warning of dire consequences if the factory opened. … Spreading like a virus, the message was repeated more than 1 million times, environmentalists said, until it had reached practically everyone in Xiamen, a city of 1.5 million people in southeastern China known for its clean air and scenic views.”

This effect still impacts governments more than corporations, but I believe it is a sign of things to come. Firms that overstep societal expectations will face grass-roots campaigns, which are aided significantly by the revolution in communications technology that has occurred over the last 10 to 15 years. There is no reason to suspect that consumers have any less influence on corporate executives than the public has on politicians:

“[In late May], in a move that caught almost everyone by surprise, municipal authorities announced that they were suspending construction of the plant. … Vice Mayor Ding Guoyan was quoted in the official China Daily newspaper as saying, "The city government has listened to the opinions expressed and has decided, after careful consideration, that the project must be re-evaluated."”

Today, NGOs and individuals can communicate their agenda and mobilize like-minded others in ways that were unthinkable only 10 years ago:

“Student protesters who filled Tiananmen Square in 1989 used fax machines to disseminate news about their struggle, leading to a crackdown on the use of faxes. Similarly, the advent of the Internet and e-mail brought a new organizing tool, one still in use despite a massive, and largely successful, government effort to control it. … But cellphones present a new challenge to the government, because all but the poorest people in China own one and text messaging is ubiquitous — used far more often, and by a wider span of ages, than in the U.S., where it tends to be a tool of the young.”

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

Chinese activists turn to cellphones
Authorities in Xiamen, China, halt construction of a factory after text messages spread word of the risks it would pose.
By MITCHELL LANDSBERG
1118 words
1 June 2007
The LA Times
Late Edition – Final
http://globaltechforum.eiu.com/index.asp?layout=rich_story&doc_id=10856&title=Chinese+activists+turn+to+cellphones&categoryid=30&channelid=4

Strategic CSR - Climate Change

Another report on climate change by a well-intentioned global body (this time the UN Development Program), another insightful (and depressing) comment by Martin Wolf of the FT. I would be in severe infringement of copyright law if I reproduced everything from the article in the url below that I think is important and interesting, so I will leave it to those of you who are interested to read further. The statistics Wolf cites on the complete failure of the Kyoto Treaty are particularly worrying. Needless to say, the overall outlook is bleak:

"In short, if they are to tolerate radical change in energy use, people must first be frightened and then they must be offered a good way out. The truth, moreover, is that this will happen only if the US also takes the lead. No country will deliver radical cuts if the US does not do so, too. No leaps forward in science and technology will occur if the US is not prepared to commit its resources to those ends. The US can no longer wait for a lead from others. Either it takes the lead now or the cause, in all probability, will be lost. Our children and grandchildren will then find out whether it was a real wolf or not."

Have a good weekend.
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
(c) Sage Publications, 2006
http://www.sagepub.com/Werther

Why the climate change wolf is so hard to kill off.
By MARTIN WOLF
1242 words
5 December 2007
Financial Times
Asia Ed1
Page 13
http://us.ft.com/ftgateway/superpage.ft?news_id=fto120420071412536621

Strategic CSR - Recycling

I don’t have much to add to the article in the url link below—it speaks for itself. It is an example of a proactive, progressive policy on re-cycling introduced by the city of Seattle that I find hard to believe is not replicated throughout the US (Issues: Environmental Sustainability, p171):

“Seattle now recycles 44 percent of its trash, compared with the national average of around 30 percent, which makes it a major player in big-city waste recovery. Its goal, city waste management officials said, is to reach 60 percent by 2012 and 72 percent by 2025.”

Importantly, according to the article, there is a strong business case to be made for such policies at present re-cycle prices:

“Waste paper is now commanding about $90 a ton throughout the United States, which makes it possible to turn a profit by loading it onto ships instead of dumping it into landfills. Not to sell it ''would be like burying money,'' said Chaz Miller of the Environmental Industry Associations, which represents the private waste service industry.”

Luckily, those who should know are hopeful:

“Jerry Powell, who publishes Resource Recycling magazine, based in Portland, Ore., and is considered one of the nation's experts on the subject, is bullish on the industry's prospects. ''This decade is the best for recycling markets ever,'' Mr. Powell said. ''If you can't make money recycling, you should go elsewhere.'' By his count, more recycling legislation was passed in 2006 than in any year of the previous 10.”

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

Seattle's Recycling Success Is Being Measured in Scraps
By J. MICHAEL KENNEDY
1072 words
10 October 2007
The New York Times
Late Edition - Final
14
http://www.nytimes.com/2007/10/10/us/10recycle.html

Strategic CSR - Social Marketing

The article in the url link below demonstrates clear boundary constraints on the ability of the market to deliver social value (Issues: Profit, p200). The article argues that, at least in terms of the most effective means of distributing malaria nets to those who need them most, handing them out for free is a far superior means of distribution:

“In doing so, Dr. Kochi [the blunt new director of the World Health Organization's malaria program] turned his back on an alternative long favored by the Clinton and Bush administrations -- distribution by so-called social marketing, in which mosquito nets are sold through local shops at low, subsidized prices -- $1 or so for an insecticide-impregnated net that costs $5 to $7 from the maker -- with donors underwriting the losses and paying consultants to come up with brand names and advertise the nets.”

Past experience with social marketing suggests, in areas where there is little or no existing market infrastructure, trying to impose a market solution is ineffective:

“In 2000, a world health conference in Abuja, Nigeria, set a goal: by 2005, 60 percent of African children would be sleeping under nets. By 2005, only 3 percent were.”

The example presented in the article is compelling:

“Maendeleo, a village of about 140 mud-walled shacks with tin roofs, was part of a five-year study of 40 health districts. When it started in 2002, the only nets were those for sale in small shops, Dr. Olumese said, and only about 7 percent of people had them. Social marketing was introduced by Population Services International, a large aid contractor. That increased coverage to about 21 percent by early 2006. Then, late last year, the health ministry got a big grant from the Global Fund to Fight AIDS, Tuberculosis and Malaria that allowed it to hand out 3.4 million free nets in two weeks. Coverage rose to 67 percent, and distribution became more equitable. … Deaths of children dropped 44 percent. It also turned out to be cheaper.”

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

Distribution of Nets Splits Malaria Fighters
By REUBEN KYAMA and DONALD G. McNEIL Jr.; Reuben Kyama reported from Maendeleo, Kenya, and Donald G. McNeil Jr. from New York.
1280 words
9 October 2007
The New York Times
Late Edition - Final
1
http://www.nytimes.com/2007/10/09/health/09nets.html

Strategic CSR - Executives

The article in the url link below is taken from the August edition of Strategy+Business, a magazine produced by the consulting company Booz Allen Hamilton, Inc. The article proposes an interesting idea for a non-profit organization, ‘Executives without Borders,’ that would be modeled on the successful medical non-profit, ‘Medecins Sans Frontieres’:

“Like MSF, Executives Sans Frontières (ESF) would be run by an international board of directors, who would be in charge of recruiting a group of volunteer, adventurous business executives and rotating teams of committed members into regions like the Sahel to help establish businesses and develop untapped markets. Based on their background and expertise, these managers from the developed world’s corporate elite and recent startups would be parachuted in for several months to several years to address such critical issues as transportation of goods, sustainable harvesting, and international trade practices. ESF’s success would be predicated on its ability to locate, mentor, and, in some cases, underwrite local entrepreneurs. The overarching goal would be to teach people to run ventures themselves.”

The idea has much to recommend it and is potentially more effective than the uncoordinated similar actions some firms have already initiated:

“Although some businesses have tinkered with sending salaried consultants to developing countries on pro bono projects, such projects tend to be temporary and focused at the higher levels of government. The ESF, however, would be far more adventurous, appealing to executives’ altruistic instincts while giving them an opportunity to apply real business learning in exciting, uncharted settings. ESF would target mid-career managers with experience, drive, and a sense of joie de vivre. There could also be an opportunity for companies to get involved directly; for example, FedEx might donate 15 employees a year, who would each serve four years with ESF while remaining on FedEx’s payroll.”

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

Executives without Borders
by Jonathan Ledgard
August 14, 2007
A novel proposition for saving driest Africa from total collapse.
http://www.strategy-business.com/li/leadingideas/li00038?

Strategic CSR - Corporate Charters

The article in the url link below summarizes the history of the corporate charter and the public-interest demands placed on organizations that sought both the privilege and responsibility of incorporation (Issues: Corporate Charters, p106; Corporation, p116):

“While history does not support the claim of a golden age when corporations came into being to serve a “public purpose”, it does not prevent society from imposing one now.”

I understand the principle of advocating for firms to align themselves publicly with a commitment to serve “a stated public purpose”:

“A charter, like today’s articles of incorporation, brought a corporation into existence. Lawyers still commonly refer to articles as charters, their historical antecedent. The charter – then and now – invariably has a “purpose” clause, a statement of why the company is coming into existence.”

I question, however, what purpose this requirement will serve in practice. Greater transparency will help hold firms accountable for their commitments, but, by definition, a statement in a founding document to serve the “public purpose” is likely to be broad in sweep and short on specifics. Imposing the need for such a statement of purpose on corporations, as advocated by the author, seems only to revive the deception and corruption of the principle, which, as the article reveals, occurred historically in centuries past:

 “… to the extent one could conjure up a public benefit for the new corporation, it would justify the granting of special powers, usually a local monopoly on a particular business. Hence, the Hudson Bay Company’s lock on commerce in vast swaths of colonial Canada. The earliest, recognisably modern business corporation was the famous – or infamous – East India Company. Chartered on 31 December, 1600, its public purpose – “the advancement of trade” – was in fact nothing more glorious than the making of money for its proprietors.”

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther/

Public purpose – Corporate history’s lesson for companies now
While there is much about the history of corporate legislation that remains murky, companies should revive the requirement for a stated public purpose, says Peter Kinder
Ethical Corporation Magazine
June 18, 2007
http://www.ethicalcorp.com/content.asp?ContentID=5406

Strategic CSR - Patagonia

The article in the url link below uses a recent talk at Wharton by Patagonia’s ex-CEO, Kristine Tompkins, to present a profile of the firm (Special Cases of CSR: Malden Mills, p299):

“The company's mission statement today reads: "Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis."”

Two things about the interview are striking: First, how far ahead of the curve Patagonia was in implementing a socially responsible approach to business:

“Patagonia has worked to reduce the environmental impact of its products, processes and facilities -- developing recycled polyester for use in its popular Synchilla fleece, introduced in 1985; shifting to recycled content paper for catalogs in the mid 1980s; minimizing packaging in the mid-1990s; and taking extensive energy conservation and waste reduction measures in its Reno, Nev., distribution center … . As of this fall, Patagonia expected one third of its clothing line to be recyclable.”

And, second, how clear the focus has been all along on financial viability:

“"People don't listen to failing companies," said Tompkins. "You can't be a model for 100 years if you're not profitable. If you're not profitable, you are beholden to a banking system [you don't] believe in.... People thought we were fast and loose financially. We were just the opposite." Headed by CEO and president Casey Sheahan since March 2006, privately held Patagonia reported revenues of $270 million in 2006.”

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

Leadership, Patagonia-style: Changing the Criteria for Success
Knowledge @ Wharton
October 31, 2007
Kristine Tompkins, former CEO of outdoor apparel company Patagonia, pulled no punches with the audience attending her recent Wharton Leadership Lecture. Tompkins said that when she began working full-time at Patagonia in 1972, she didn't understand how the actions of the business world as well as the behavior of individuals "affected the very underpinnings" of the individual, the family and the community. "You know that now," she said, and "the choices you make count more and more." People who can manage "the tough decisions and incorporate" difficult issues into their lives, she said, "are the future leaders."
http://knowledge.wharton.upenn.edu/article/1829.cfm

Strategic CSR - Sustainability

The article in the url link below questions the “actual and moral authority” enjoyed by the IPCC regarding the science and, equally importantly, the economics surrounding climate change (Issues: Environmental Sustainability, p171):

“[The IPCC] is a seriously flawed enterprise and unworthy of the slavish respect accorded to it by most governments and the media. In the decisions which have already been made on climate-change mitigation, to say nothing of future decisions, the stakes are enormous. In guiding these momentous judgments, the flawed IPCC process has been granted, in effect, a monopoly of official wisdom. That needs to change and the IPCC itself must be reformed.”

The article is not against the science of climate change, but argues that in order to construct effective public policy in response, we need to have a better understanding than at present regarding the economic implications of the environmental changes we are experiencing:

“Underlying it all is a pervasive bias. From the outset the IPCC network was fully invested in the idea that climate change is the most pressing challenge confronting mankind and that urgent action far beyond what is already in prospect will be needed to confront it. … The IPCC may be right: climate change may indeed be mankind's biggest and most urgent challenge. … But if governments are to get the best advice, they need information and analysis from an open and disinterested source - or else from multiple dissenting sources. With the environmental risks calmly laid out, framing the right policies demands proper political accountability and a much wider range of opinion and expertise than the IPCC currently provides.”

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

The steamrollers of climate science
By CLIVE CROOK
879 words
2 August 2007
Financial Times
London Ed1
Page 9
http://www.ft.com/cms/s/0/39463a34-40a3-11dc-9d0c-0000779fd2ac.html

Strategic CSR - Wal-Mart

CSR is often presented by critics as an additional cost to firms, above and beyond core business costs, which explains why some firms (particularly low-cost retailers like Wal-Mart) fail to implement proactively a comprehensive social responsibility perspective. A distinction is rarely drawn, however, between a firm’s primary responsibility for CSR (i.e., concerning its own operations) and a secondary responsibility for CSR (i.e., concerning the operations of other firms with which the focal firm is connected, but over which it does not have direct control, such as off-shore suppliers):
    
“The changes afoot in the Thai shrimp ponds reflect the world-spanning, industry-rattling reach of Wal-Mart's push for environmental sustainability. The Bentonville, Ark., retailer has prodded its suppliers to cut their packaging and pare their reliance on nonrenewable fuels. It has relentlessly promoted long-lasting but slow-selling compact-fluorescent light bulbs. It is the world's largest buyer of organic cotton, purchasing more than 10 million pounds a year. And it has pledged to eventually buy its wild-caught fish only from fisheries certified as environmentally sustainable.”

The article in the url link below, however, demonstrates how a powerful firm like Wal-Mart (and its consumers) can conform to the social responsibility expectations of stakeholders by forcing its suppliers to adopt stringent standards, without incurring any additional costs itself:

“… some Thai farmers see little benefit in paying inspection fees -- amounting to a fraction of a penny per pound of shrimp produced -- or upgrading facilities where necessary because Wal-Mart won't reimburse them for their costs nor pay a premium for certified shrimp. Wal-Mart views those costs as the industry's responsibility.”

Wal-Mart has the power and influence to force suppliers to comply as they hang the threat of withdrawing their business if the standards are not met:

“Wal-Mart first threw its weight behind the aquaculture alliance's shrimp-farming standards in 2005, announcing that by the end of this year it would buy all its shrimp from farms certified as meeting the standards. The endorsement drew attention; Wal-Mart buys more shrimp than any other U.S. company, importing 20,000 tons annually -- about 3.4% of U.S. shrimp imports. With Wal-Mart's nod, "we went from trying to convince individual facilities to become certified to having long waiting lines," says George Chamberlain, president of the aquaculture alliance.”

The end result for small producers is a punitive threat to their business that encourages Western firms to favor large-scale producers that can absorb the cost implications of the higher production standards:

“Others see the standards fueling a continuing consolidation of the industry. Wal-Mart prefers to buy from fewer, stronger suppliers with control over all phases of production. Rubicon, for example, owns 14 seafood-processing plants, roughly 150 farms and importing and exporting operations. "Short term, [the costs of meeting the standards] are onerous," says Brian Wynn, Rubicon's president and chief executive. "Long term, they are beneficial because they set up barriers to entry to nonintegrated companies."”

Put it down to the unforeseen consequences of CSR advocacy in the West forcing small operators in developing countries out of business!

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

The New Wal-Mart Effect: Cleaner Thai Shrimp Farms
By Kris Hudson and Wilawan Watcharasakwet
1204 words
24 July 2007
The Wall Street Journal
B1
http://online.wsj.com/article_email/SB118523019620675464-lMyQjAxMDE3ODI1NTIyMzUwWj.html

Strategic CSR - Biofuels

The subject of biofuels and the ludicrous set of government subsidies and trade quotas that are creating artificial markets in related products has been the subject of past Newsletters [Note: The best article I have seen on this subject is still Thomas Friedman’s September 2006 article: http://select.nytimes.com/2006/09/20/opinion/20friedman.html]. The article in the url link below, however, provides an informed (and depressing) summary and update:

“Energy security and climate change are two of the most significant challenges confronting humanity. What we see, in response, is the familiar capture of policymaking by well-organised special interests. A superb example is the flood of subsidies for biofuels. These are farm programmes masquerading as answers to energy insecurity and climate change. Not surprisingly, they have the depressing characteristics of such programmes: high protection, open-ended support to producers, and indifference to economic rationality.”

The article is full of facts, figures, and unintended consequences that effectively dismantle the current approach of a number of political administrations that are committed to specific remedies as a result of the lobbying of entrenched interests. The goal at present, clearly, is not to find efficient solutions to the huge problem climate change presents; rather, it is to appear interested by pursuing those policies that play well with domestic audiences:

“This then is a classic farm programme: a costly system of transfers looking for a rationale. Or, as the report puts it: "The bewildering array of incentives that have been created for biofuels in response to multiple (and sometimes contradictory) policy objectives bear all the hallmarks of a popular bandwagon aided and abetted by sectional vested interests."”

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

Biofuels: an everyday story of special interests and subsidies.
By MARTIN WOLF
1081 words
31 October 2007
Financial Times
Asia Ed1
Page 11
http://www.ft.com/cms/s/0/40a71f96-8702-11dc-a3ff-0000779fd2ac.html

The author’s blog on this article (with useful and insightful comments) can be found at:
http://blogs.ft.com/wolfforum/2007/10/biofuels-a-tale.html

Strategic CSR - GAP

The article in the url link below reports on GAP’s response to a piece of investigative journalism in October by the UK newspaper The Observer that uncovered evidence of under-age children making GAP clothes (Issues: Auditing CSR, p94; Cultural Conflict, p160). The story is interesting on two levels. First, the speed and extent of GAP’s response, which seems to me to be genuine:

“Gap said it would refine its procedures to ensure that items made in textile workshops in India were not being produced by children. It also announced a grant of $200,000 to improve working conditions and said it would hold an international conference next year to come up with solutions for issues related to child labor. … the children who were found to be embroidering decorations on blouses for toddlers for Gap would be paid until they were of working age and then offered employment.”

Second, the extent to which GAP could have (or should have) been expected to avoid this problem:

“… the vendor that got the Gap order for the children's clothes had employed a rural community center to do the embroidery work but that this entity had subcontracted the work to a Delhi workshop where children were employed. While auditing in factories is relatively straightforward, checking conditions in the informal workshops where hand embroidery is done is harder because large contracts are often divided up among dozens of small workshops.”

It is one thing for a firm to be held responsible for the business practices of an immediate supplier. It seems to be another thing altogether to expect GAP to know about a sub-contractor (“a rural community center”) that had again contracted out this order to a Delhi factory—three steps removed from the initial order by GAP. The extent to which a firm is responsible for the actions of its suppliers throughout its supply chain (as well as how that responsibility should be enforced) is an issue on which a consensus within the CSR community is yet to arise.

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther/

Gap Vows To Combat Child Labor At Suppliers
By AMELIA GENTLEMAN
557 words
16 November 2007
The New York Times
Late Edition - Final
6
http://www.nytimes.com/2007/11/16/business/worldbusiness/16gap.html

Strategic CSR - Freerice.com

This is a fun website that is very appropriate for the Thanksgiving holiday and also does a lot of good: http://www.freerice.com/:

“FreeRice has two goals:

   1. Provide English vocabulary to everyone for free.
   2. Help end world hunger by providing rice to hungry people for free.”

For every vocab word you get right, the organization pledges to “donate 10 grains of rice through the United Nations to help end world hunger.”

Happy Thanksgiving!
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther/

Strategic CSR - Unilever

The article in the url link below presents an interesting tension between for-profit and non-profit priorities in the developing world (Issues: Philanthropy, p196; Profit, p200):

“In their work to promote handwashing, partners say Unilever tends to be in a hurry to get things done, while some donors and aid workers get entangled in their own red tape. … One of toughest challenges faced by Unilever’s marketing experts has been to persuade partners that radio ads and roadshows need to be run at particular times of the year to be effective, and cannot always wait for consensus-building.”

Unilever’s involvement in the campaign to increase hand washing in Uganda hangs on the firm being able to get its branded soap (“Lifebuoy”) associated in the public’s mind with hand washing. Unicef’s goal, however, is to just get people to wash their hands, but they benefit from the marketing and distribution expertise that accompanies private sector involvement. It is easy to see how the two organization’s goals are compatible, while being awkward at the same time:

“Donors would never pay for a branded campaign that told the suspicious residents of Muko to “wash your hands with Lifebuoy”, Ms Sidibe says, and some are not comfortable with a multinational brand on the same list as campaign supporters. “But they are realising it’s the only way to keep us interested. It’s important the brand gets recognised otherwise it’s impossible to justify our involvement.””

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther/

Unilever looks to clean up in Africa
The consumer goods group is piggybacking on public health networks to promote its antibacterial Lifebuoy soap.
By BARNEY JOPSON
1064 words
15 November 2007
Financial Times
London Ed1
Page 20
http://www.ft.com/cms/s/0/ed8386ce-92cd-11dc-b9e6-0000779fd2ac.html

Strategic CSR - Measuring CSR

The article in the url link below demonstrates the social and economic value of providing consumers with the information they need to make educated purchase decisions (Special Cases of CSR: GM Labeling, p293):

“The system that Hannaford developed, called Guiding Stars, rated the nutritional value of the grocery items in the store on a scale of zero to three stars, with three representing the most nutritious products.”

Simplifying the complicated, non-standardized information on food labels into an easily identifiable three star rating format enables consumers to better match their purchases with their needs (perceived or real):

“After analyzing a year's worth of sales data, Hannaford found that customers tended to buy leaner cuts of meat. Sales of ground beef with stars on their labels increased 7 percent, and sales of chicken that had a star rating rose 5 percent. Sales of ground beef labeled with no stars dropped by 5 percent, while sales of chicken that had a zero-star rating declined 3 percent.  Similarly, sales of whole milk, which received no stars, declined by 4 percent, while sales of fat-free milk (three stars) increased 1 percent. Sales of fruits and vegetables, however, remained about the same as they did before the ratings were introduced. All fresh produce received stars.”

Interesting, however, is the low percentage of products that received a one star rating (the lowest recognition of some nutritional benefit) or better. Even more interesting would be to see a list of products that advertise themselves as “healthy” or “natural,” but which didn’t receive any stars:

“… when Hannaford ran its 25,500 products through the formula devised by its advisory board, many products that were marketed as healthful received no stars, usually because they had too much salt or sugar. Twenty-eight percent of the items in the store received one star or more.”

If more grocery stores were to implement such rating systems, my sense is that firms would quickly respond and the percentage of foods receiving a higher star rating would grow.

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

Store Chain's Test Concludes That Nutrition Sells
By ANDREW MARTIN
818 words
6 September 2007
The New York Times
Late Edition - Final
3
http://www.nytimes.com/2007/09/06/business/06grocery.html

Strategic CSR - Energy

Martin Wolf is one of a number of excellent commentators who appear regularly on the FT’s op-ed pages. In his article this week (in the url link below), he summarizes a recent report by the International Energy Agency that provides an overview of the state of the global energy industry and its frightening projected increases in future demand (Issues: Environmental Sustainability, p171; Special Cases of CSR: ExxonMobil, p292; Shell, p302). There is no point me providing a summary of a summary—the article is better read directly. I was struck, however, by the quote he uses to open the article, which highlights starkly the challenge the world faces in the coming decades in transforming a global economy that is dependent on carbon-based fuels—a dependence that is only intensifying with rapid economic expansion:

“"The increase in China's energy demand between 2002 and 2005 was equivalent to Japan's current annual energy use." This nugget of information … tells one almost all one needs to know about what is happening to the world's energy economy.”

Have a good weekend.
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther/

Welcome to the new world of runaway energy demand.
By MARTIN WOLF
1100 words
14 November 2007
Financial Times
Asia Ed1
Page 11
http://www.ft.com/cms/s/0/af2a0ed4-9223-11dc-8981-0000779fd2ac.html

Strategic CSR - Ethical Retailing

The article in the url link below reviews the extent of the market for “ethical retailing” (Chapter 2: CSR: Do Stakeholders Care? p25; Issues: Consumer Apathy, p156). In spite of the common perception among executives that consumers do not tend to make purchase decisions based on their best intentions, the author argues this is now changing:

“But there is no mistaking the trend. Worldwide sales of Fairtrade-certified products, for example, grew 42 per cent last year, although at Pounds 1.1bn (Dollars 2.2bn) they are still equivalent to only 2.6 per cent of Tesco's revenues and 0.6 per cent of Wal-Mart's.”

In general, the author portrays the UK’s ethical retail market as being relatively mature:

“One UK retail executive who has made a detailed study of the phenomenon divides consumers into four categories. The first, about 8 per cent of the total, are committed, cause-driven purchasers. A second group, accounting for 30-35 per cent, want to purchase ethically but are not really sure how and are looking to retailers to help them. The third group, also about 30-35 per cent, feel the same, but doubt that their individual purchases can make much difference. The fourth group, the remainder, are completely uninterested, often because they are too poor to think about much more than putting food on the table for their families.”

In using this evidence to make his case, however, the author only serves to highlight the limitations of this market. These category numbers mean that the “completely uninterested” group is at least twice the size of the “committed, cause-driven consumers,” possibly three times as big. At the end of the day, we are still nowhere near a majority of consumers who are willing to place social responsibility concerns above more traditional considerations in arriving at their purchase decisions. The overwhelming sense, despite the author’s enthusiasm, is that any gains made are still largely superficial and are more about relieving first-world consumer guilt than re-shaping the underlying business model to instill a permanent strategic CSR perspective:

“… by publicising their initiatives the supermarkets help consumers feel they have done the world a good deed. Only a small proportion of goods in their shopping baskets may be Fairtrade, but all the in-store advertising about ethically sourced this and free-range that helps persuade consumers that they are buying more of it than they are.”

The final quote in this article, however, is most interesting and demonstrates the danger for firms that are too progressive on this issue:

“Retailers need to be alert to the change. The supermarket executive I mentioned above told me: "A smart retailer is half a step ahead of the consumer. Ten steps ahead and you're out of business."”

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther/

There is a good trade in ethical retailing
By MICHAEL SKAPINKER
789 words
11 September 2007
Financial Times
London Ed1
Page 15
http://www.ft.com/cms/s/0/352205cc-5fc6-11dc-b0fe-0000779fd2ac.html

Strategic CSR - Apple

The article in the url link below from BusinessWeek provides insight into the tactics sometimes used by interest groups to pressure high-profile companies that the interest group suspects of committing social harm (Issues: NGO and Corporate Cooperation, p192; Internet, p237):

“Greenpeace is bringing the rhetorical hammer down on Apple for what it considers environmental offenses, namely for not moving fast enough to eliminate nasty chemicals from its products. Its latest headline-grabbing maneuver: pressure on ex-Vice-President and current Apple director Al Gore … . Publicly pressuring Gore, the thinking goes, improves the chances that Apple's board will amply consider two eco-friendly shareholder proposals.”

In this case, however, it is hard to escape the conclusion that Greenpeace is picking on a high-profile brand, rather than focusing on meaningful reform. As the author notes, Greenpeace seems to be applying double-standards in this case and unfairly targeting Apple for what it has failed to say, rather than what it has actually done:

“As of now, neither Apple nor Dell—nor Hewlett-Packard (HPQ) for that matter—is selling a single PVC- or BFR-free computer. So in truth, Greenpeace has graded Apple based on statements, not actions. Both Dell and Apple are in the same boat, but one is saying the right things in public, and getting applause for it. … So if you're evaluating an Apple purchase versus another computer product based on the haranguing that Apple is receiving from Greenpeace, don't be fooled. Apple's no more or less evil than any other computer manufacturer. And while it's one thing to call attention to a problem that an entire industry needs to address, Greenpeace's methodologies, in this particular case, don't paint an accurate picture.”

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

Business Week Online
Insider NewsletterSaturday, March 31, 2007
*******************
BYTE IF THE APPLE: IS GREENPEACE OFF THE MARK ON APPLE?
The group says Apple isn't ridding its products of nasty chemicals fast enough. But it may be holding the company to different standards
by Arik Hesseldahl
http://newsletters.businessweek.com/c.asp?653539&c55a2ee820194f0f&51

Strategic CSR - Nike

The article in the url link below demonstrates that, no matter how hard it tries, a firm cannot please all of the people all of the time (Issues: Cultural Conflict, p160; Special Cases of CSR: Nike, p286):

“''If this isn't an example of corporate manipulation of race, I don't know what is,'' wrote one of about 200 readers commenting online about an article that appeared in The Rapid City Journal in South Dakota.”

Given the effort and good intentions that went into designing the shoe, as well as the fact that Nike will donate all of the profits the shoe generates, you would think this is something that the firm will be showered with plaudits for by stakeholders:

“''What makes this a ridiculously bad move is decorating it 'Native American style,''' … ''They probably brought in a Native consultant and heard what they wanted to hear, which is that Native Americans like sunrises and rainbows and feel real connected to the earth and the night sky and stuff.''”

What is not clear from the article, however, is how much of this process the various critics knew about. The question then becomes: How much should Nike advertise its good work/intentions? It seems that it is damned if it does (CSR is only a PR exercise) and damned if it doesn’t (Nike is patronizing ethnic minorities):

“''When I heard it, the first thing I did is I laughed until I cried, because I just though it was hilarious,'' said Sherman Alexie, a Spokane/Coeur d'Alene Indian and a novelist … ''The day it was announced, I thought: 'Are they going to have dream catchers on them? Are they going to be beaded? Will they have native bumper stickers on them that say, 'Custer had it coming'?''”

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

To the Nike Swoosh, Add Indian Artifacts
By ANDREW ADAM NEWMAN
746 words
3 October 2007
The New York Times
Late Edition - Final
3
http://www.nytimes.com/2007/10/03/business/03nike.html

Strategic CSR - Unforeseen Consequences

The article in the url link below indicates the difficulty in upending established systems and replacing them with new systems that emphasize outcome over process, but also generate unforeseen consequences:

“Then there are biofuels. Often put forward as an eco-friendly alternative to fossil fuels, they now seem to be anything but. In theory, the crops from which the biofuels are derived should mop up around half the greenhouse gas generated by the burning of the fuel in vehicles. But environmentalists are now warning that the demand for biofuels is driving up rates of deforestation in Indonesia, Malaysia and Brazil, as farmers chop down trees in order to plant more profitable biofuel crops instead. A UN expert committee on energy warned this month that the result could be a net increase in greenhouse emissions, and "significant biodiversity loss, soil erosion and nutrient leaching".”

In addition to having to turn around the supertanker global economy in the face of global warming, sustainability advocates have the added pressure of discovering viable alternative processes and products, and quickly!

Have a good weekend.
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

Unforeseen consequences
Businesses can fend off the risk of 'revenge effects' with more vigilant expertise and less optimism.
By ROBERT MATTHEWS
1039 words
24 May 2007
Financial Times
London Ed1
Page 16
http://www.ft.com/cms/s/1892df7c-0994-11dc-a349-000b5df10621.html

Strategic CSR - Carbon Labels II

The article in the first url link below demonstrates the growing impact of carbon footprints in the UK (Special Cases of CSR: GM Labeling, p293):

“Carbon footprints provide a measure of how much of an impact an individual or company is having on the planet, and a carbon label is an indication of the amount of carbon dioxide emitted as a result of producing goods and services. This information is difficult to estimate without detailed knowledge of the producer's methods, so consumers and investors have little idea of a company's carbon footprint, or the footprint of what they buy, unless companies choose to disclose it. … Walkers Crisps then put the first carbon label on packets of its crisps. More companies followed: Timberland, Coca-Cola, Halifax, Muller Dairy and the brewer Scottish & Newcastle are all committed to either carbon labelling or footprinting.”

In spite of the enthusiasm, however, the processes used to generate these carbon profiles are still evolving and there is little informed agreement about both their reliability and validity at this stage:

"Quoting results in grams of C02 per product suggest a high level of accuracy that is not possible on a large scale today. Much of the data required is not readily available so many assumptions need to be made which reduce the accuracy of the calculation. … Another concern is that there is as yet no standard way to perform the measurements. "Companies typically spend 2-3 months doing footprint analysis for their first product and even then results are contentious due to methodology."

The article in the second url link below demonstrates the importance of having an holistic perspective in viewing a firm’s supply chain, especially when estimating the environmental impact of specific food products:

“While much consumer and media attention has recently focused on "food miles", transportation, it turns out, is only a small part of the carbon footprint of food. Meanwhile, food and agriculture are responsible for a wide range of environmental impacts ranging from food waste and water use to nitrogen run-off and methane emissions from livestock.”

The complexity of the problem is paralyzing, especially when considering the institutionalized production processes in farming and other financial barriers to reform:

“"It's just that it's such a diverse group of stakeholders and there's not enough technical research or grant money available to farmers to allow cost sharing when adopting some of these sustainable strategies." For food and agriculture businesses, another challenge is to introduce sustainable practices in an industry in which rising commodity prices are eroding margins.”

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

FT REPORT - SUSTAINABLE BUSINESS 2007
http://www.ft.com/reports/susbusiness2007

Food footprints coming soon to a label near you.
By FIONA HARVEY
900 words
12 October 2007
Financial Times
Surveys SUB1
Page 4
http://www.ft.com/cms/s/1/cb820020-76e7-11dc-ad83-0000779fd2ac,dwp_uuid=f89cd9c6-7567-11dc-b7cb-0000779fd2ac.html

Food chain is complex.
By SARAH MURRAY
822 words
12 October 2007
Financial Times
Surveys SUB1
Page 7
http://www.ft.com/cms/s/1/ceb3bf22-76e7-11dc-ad83-0000779fd2ac,dwp_uuid=f89cd9c6-7567-11dc-b7cb-0000779fd2ac.html

Strategic CSR - Carbon Labels I

The article in the url link below tracks the latest evolution in CSR-related consumer labeling in the UK (Special Cases of CSR: GM Labeling, p293):

“Pick up a packet of Walkers potato crisps in the UK and you might notice something unusual on the back. Alongside the normal information on how much fat, salt and calories they contain, there is another label. It informs the consumer that the bag contains only 34.5g of crisps, but 75g of carbon dioxide.”

The “virtual CO2” level on these carbon labels represents:

“… a calculation of the amount of the gas expelled into the atmosphere as a result of the processes that went into the packet's production, from growing the potato to packaging and distributing the finished crisps.”

Such developments place the power (and responsibility) largely in consumers’ hands to determine the extent to which firms will genuinely adopt a CSR perspective. We argue in Strategic CSR that it is in a firm’s best interests to strive to meet the needs and expectations of its stakeholders, broadly defined. This statement only rings true, however, if:

(a)   Stakeholders actually care about CSR (Chapter 2: Do Stakeholders Care? p25); and

(b)   Those stakeholders that do care (consumers in particular) are willing to punish firms that ignore their demands by taking their custom elsewhere (Chapter 2: Consumer Reaction, p35).

On the positive side:

“… the measurement and monitoring can yield useful information. All of the companies that the Carbon Trust has worked with on the labels have found they could make savings as a result of what they discovered during the process, cutting their costs at the same time as cutting their carbon output.”

On the less positive side:

“Separate research by LEK Consulting, to be published tomorrow, has found that just over half of people in the UK say they "would value details concerning a product's carbon footprint when making a buying decision". Rather under half would use this information to switch to a product or service with a lower carbon footprint, however, and only one in five would go to a less convenient retailer in order to obtain such products.”

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

A chance for shoppers to start counting the carbon
Manufacturers are supplying information on the environmental costs of products to convince consumers of their green credentials.
By FIONA HARVEY
1101 words
13 August 2007
Financial Times
London Ed1
Page 9
http://www.ft.com/cms/s/01879832-4903-11dc-b326-0000779fd2ac.html

Strategic CSR - Labor Law

The article in the url link below charts the progress of a dramatic revision of labor law in China that was due to be finalized this past summer (Issues: Employee Relations, p118; Wages, p204):

“The draft law was first presented in December 2005, and the standing committee met in April to discuss it and other pending bills. If passed in June, the measure is expected to take effect next year.”

While the article is vague in terms of details (to be fair, the revision of the legislation was on-going at the time), the focus here is on the broad, consultative approach of the Chinese government in soliciting input during the drafting process:

“The delay in passing a labor law has been because of a surprising development in China: The government solicited public comments on the draft, and it received nearly 200,000 of them. … But the process shows how China's government is increasingly seeking to involve interest groups and the public at large in the formation of laws. The cautious steps toward greater transparency reflect both the state's desire to retain popular support of its rule and its need to tap a wider base of expertise to ensure laws are suited to the ever-more-complex economy and society.”

The article comments on the apparent genuine desire of the Chinese authorities to ensure the law improves the social unrest that has accompanied many of the economic reforms that have transformed the Chinese economy and society in recent years:

“China wants the new law to bring more order to the workplace. Many workers lack written contracts and often don't receive salaries on time. The government is also concerned that many workers are being unfairly trapped in short-term contracts, with little chance of advancement.”

An update on the legislation and a discussion of its pros and cons can be found in a recent Knowledge@Wharton Newsletter at:

http://www.knowledgeatwharton.com.cn/index.cfm?fa=article&articleid=1685&languageid=1

“China's labor market is rife with problems -- frequent coal mine accidents and workplace injuries, and unpaid wages on a large scale. Legislators as well as scholars are keenly aware of these issues, but have come up with different solutions. Professor Chang Kai's answer is to raise labor standards, but Dong believes “high standards” will lead to "narrow coverage" and "weak enforcement". On the other hand, "The new law might hurt the workers it tries to protect," Dong wrote in another paper. "For example, to cope with difficulty in firing, companies might be more unwilling to hire, and some job positions might not be created."”

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

China Toils Over New Labor Law
Rare Public Debate Pits Growth vs. Worker Rights
By Andrew Batson and Mei Fong
1038 words
7 May 2007
The Wall Street Journal
A8
http://online.wsj.com/public/article/SB117849173259593852-iksPXSVyWmuECE4t646qC0rO0P4_20070514.html?Mod=regionallinks

or, reproduced in ChinaDaily.com at:
http://www.chinadaily.com.cn/china/2007-05/07/content_867069.htm

Strategic CSR - Conflict Jewelry

The article in the url link below evaluates the jewelry industry’s reaction to the recent democracy protests in Burma (Issues: Country of Origin, p223). Burma supplies a large amount of the world’s jewels and is particularly dominant in supplies of rubies (90%) and jade (98%):

“Within days, they were telling their cut-stone suppliers that they would not buy any more gems mined in Burma and would conduct random checks to ensure that the stones they did buy were not coming from there.”

Two aspects of this story are notable:
   1. That the jewelry profession is moving so quickly on this, without any obvious external prompting.
   2. The framing of this action as “an emotional response,” rather than a strategic business decision:

“Cartier's move reflects the strong response by big western jewellers to last month's crackdown in Burma after many of them had long overlooked human-rights concerns.”

A positive interpretation of this move recognizes the actions as a form of atonement for the industry’s slow reaction to the negative publicity it received over the issue of ‘conflict diamonds.’ The swift action on this issue suggests that lessons have been learned. A less than positive interpretation, however, suggests greenwash, or, at a minimum, strategic PR. The main argument supporting this interpretation is that Tiffany is the only jewelry company that has been boycotting Burma for any length of time (“since 2002”). While this suggests that Tiffany has undergone a somewhat genuine process of reflection following the conflict diamonds fiasco, the implication for the rest of the industry is that it is jumping on the bandwagon rather late in the day. The military regime in Burma did not turn anti-democratic overnight. The main difference with these protests is that pictures of the violent clampdown were broadcast on TVs and computers direct to Western consumers (Figure 3.4: The Free Flow of Information in a Globalizing World, p56).

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

The junta's exports lose their sparkle.
By AMY KAZMIN
787 words
27 October 2007
Financial Times
London Ed1
Page 9
http://www.ft.com/cms/s/0/45c8f650-83e9-11dc-a0a6-0000779fd2ac.html

Strategic CSR - Accountability

The article in the url link below features the Top 10 from a ranking of the world’s largest 100 firms in terms of “the quality of their commitment to social and environmental goals.” To create the ranking, Fortune partnered with AccountAbility and CSRNetwork—organizations that are leading the effort to create a meaningful, standardized method of assessing a firm’s CSR profile that allows comparison among different firms in different industries and cultures (Issues: Auditing CSR, p94). Below is the summary report for BP, which is the top firm ranked, in spite of recent troubles:

1. BP
Accountability score: 75.2
2006 rank: 2
Global 500 rank: 4

“The world's second-biggest company reclaims the top spot on our list from Vodafone, the leader on last year's list. BP has led its industry in the research and development of wind, solar, and carbon-dioxide sequestration technologies. But new CEO Tony Hayward's core focus is getting new oil and gas projects online, like fields in Azerbaijan, Angola, Indonesia, and the Gulf of Mexico. That pleases shareholders and helps to lower prices for consumers through increased supply - a goal BP considers a core part of its social responsibility. Despite two years of major accidents - a pipeline spill in 2006 and a refinery explosion in 2005 - BP earned points for replacing several executives at those businesses.”

Have a good weekend.
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

ACCOUNTING FOR ACCOUNTABILITY 10 Most 'Accountable' Companies
Fortune partnered with AccountAbility and CSRnetwork to rank the world's 100 largest corporations by the quality of their commitment to social and environmental goals.
CNNMoney.com
http://money.cnn.com/galleries/2007/fortune/0710/gallery.accountability.fortune/index.html

Strategic CSR - Diversity

The article in the url link below reports on an interesting project introduced by graduating law students at Stanford (Issues: Diversity—Discrimination, p164; Diversity—Helpful Intent, p168):

“The students are handing out ''diversity report cards'' to the big law firms, ranking them by how many female, minority and gay lawyers they have. … Firms in the top fifth received A's, in the second fifth B's, and so on. Overall grades were arrived at by averaging grades for partners and associates in five categories: women, blacks, Hispanics, Asians and gay people.”

As the article notes, this is a strong indication that it is currently a sellers’ market for the students, but it is also an important message for firms that they need to reflect the values of a key stakeholder—their prospective employees. In addition, it seems to me that this, controlling for individual ability, is as good a point of differentiation among their prospective employers as any other the students could come up with:

“The students have ambitious plans, including asking elite schools to restrict recruiting by firms at the bottom of their rankings. They also plan to send the rankings to the general counsels of the Fortune 500 companies with the suggestion that they be used in selecting lawyers.”

This story also reflects a shift in the locus of power from producer to consumer thanks to the free flow of information encouraged by the internet (The Free Flow of Information in a Globalizing World: Figure 3.4, p56). The results of the project are very revealing:

“In New York, a third of the big firms had no black partners, and an overlapping third no Hispanic ones. … Half the firms in Boston had no black partners, and three-quarters no Hispanic ones. The students also found relatively few female partners in New York, ranging from 7 percent at Fulbright & Jaworski to 23 percent at Morrison & Foerster.”

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

In Students' Eyes, Look-Alike Lawyers Don't Make the Grade
By ADAM LIPTAK
914 words
29 October 2007
The New York Times
Late Edition - Final
10
http://www.nytimes.com/2007/10/29/us/29bar.html

Strategic CSR - Dell

The article in the url link below reports another environmental proposal recently announced by Dell (Issues: Environmental Sustainability, p171). This article is interesting, however, not because of Dell’s announcement, but because of the FT’s dismissal of it:

“Dell is rather late among technology companies to jump aboard the environmental bandwagon and its focus on CO2 emissions raises questions about whether the sector is on the right path.”

Making computers more efficient, the article argues, leads to greater carbon emissions, not less:

“… according to Eric Williams, professor at the Arizona State University, only 20 per cent of the total energy consumption of a PC comes from using it.”

Extending the life cycles of electronic products and working out how to re-cycle components are much more environmentally-friendly goals:

“Some 160m computers and 550m mobile phones are expected to reach the end of their life this year and many will end up in dumps.”

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

Computer makers miss the big green picture.
By KEVIN ALLISON and MAIJA PALMER
641 words
7 June 2007
Financial Times
London Ed2
Page 28
http://www.ft.com/cms/s/10c521be-1494-11dc-88cb-000b5df10621.html