Strategic CSR - CONSUMER Social Responsibility

The article in the url below presents an argument that I think CSR advocates will increasingly need to deal with:

"The destruction of the Amazon rainforest to make way for cattle ranches has been directly linked for the first time to patterns of consumption of beef and leather in the developed world, according to campaigners."

While it is fine to hold corporations to high standards of accountability and transparency regarding their operations; at best, firms can only move as fast as the consumers who buy their products. Ultimately, if consumers are unwilling to pay for socially responsible firms, then I do not think firms can be expected to engage in practices that will put them out of business:

"Greenpeace points to evidence of the supply chain for Brazilian beef and leather, tracing the progress of cattle herds raised on recently deforested land in the Amazon to slaughterhouses and processing plants in the south of the country. These slaughterhouses supply under contract to a wide range of companies round the world, including supermarkets, car manufacturers and fashion houses."

Consumers have a degree of responsibility in the CSR debate that is often minimized. It is only when sufficient information is made available for consumers to make educated purchase decisions, as well as consumers deciding to educate themselves about this information, that I think meaningful progress will occur. Much of this information is already out there, but many consumers do not ask the questions necessary to find it.

Progressive firms will see the opportunity for competitive advantage in this situation by operating transparently and remaining accountable to stakeholders. Less progressive firms, however, will resort to obfuscation or greenwash. Most of the firms that are listed in the Greenpeace report, for example, were contacted by the FT for this article. The most common (and extremely unimpressive) response was to dismiss the claims by stating that:

"… their suppliers had signed contracts guaranteeing that cattle did not come from the Amazon."

Oh well, it must not be true, then!

As you might be able to tell, I am not hopeful that this "meaningful progress" will occur any time soon. Importantly, however, I place an equal proportion of blame for this lack of progress with consumers as with firms.

Take care

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility

© Sage Publications, 2006

http://www.sagepub.com/Werther/

Consumer link to rainforest destruction

By Fiona Harvey and Jenny Wiggins in London and Jonathan Wheatley in São Paulo

581 words

1 June 2009

Financial Times

USA Ed1

03

http://www.ft.com/cms/s/0/08460718-4e0f-11de-a0a1-00144feabdc0.html

Strategic CSR - PepsiCo

The article in the first url below comes from a series of articles in a recent issue of Ethical Corporation Magazine that was sponsored by PepsiCo. The byline at the top of the article states that:

“This article comes from an Ethical Corporation focus on sustainability in food and drink supply chains, sponsored by PepsiCo UK & Ireland.”

While I appreciate the need for a news publication to rely on corporate advertising (especially one that distributes its Newsletter free online and given the current newspaper environment), I can’t help but feel that this sponsorship compromises the magazine. However socially responsible PepsiCo is (although, some would argue that it is hard for a firm that produces food and drinks that are fundamentally unhealthy to be truly responsible), forming close corporate ties should be resisted if the main purpose of the magazine is to hold such firms accountable for their actions.

Although the article headlines state clearly that they are part of a “Sponsored focus on food and drink,” what is not clear is the role PepsiCo played in producing the articles. More importantly, it is also not clear whether the firm had any editorial control over the content featured. What is clear, however, is that PepsiCo is presented in a favorable light in the articles and none of its products receive any criticism. In addition, I think the tone of the article is unhelpful to the broader expectation that the current economic model is unsustainable and that we are in trouble unless something changes. Typical is a quote used to conclude the article, which is a message retailers would like to portray, but not necessarily one with which CSR advocates would agree:

“The core sustainability message for brands to communicate to customers, says Uren, is: “Sustainability is about doing more of the good stuff, less of the bad stuff, and not about giving everything up.””

Having said this, the article in the second url below (also from the same series of articles), reports on an interesting shift in focus for food and drink firms:

“Food and drink brands have long been thought of as consumer goods companies. Not anymore. Brands that are serious about cutting their environmental impacts are starting to think about themselves as part of a new breed – they are all farmers now. Green-thinking brands have twigged that by far their biggest environmental impacts are not in food processing, but food growing. Agriculture accounts for most of the greenhouse gas emissions, water use and waste in food supply chains. These impacts occur long before food is turned into the well-known brands we see on supermarket shelves.”

More specifically:

“Cadbury, for example, has found that dairy farming accounts for 64% of the carbon footprint of a Dairy Milk chocolate bar. Just 14% of the bar’s footprint comes from manufacturing the product. PepsiCo has discovered that 60% of the environmental impact of a bag of Walkers Crisps is from sources outside the company’s direct control. Just over a third comes from raw materials, mainly growing potatoes and sunflowers for sunseed oil.”

With growing threats from regulation, combined with increasingly inconsistent supplies of key raw ingredients, the article argues that these numbers represent:

“… a huge opportunity for food and drink brands that want to lay claim to environmental credentials.”

Not surprisingly (J), PepsiCo is a leading light for progressive change in this respect:

“In March 2007, PepsiCo became the first UK company to put carbon reduction labels on products, on packs of Walkers Crisps. In February 2009, Walkers announced it had cut the carbon footprint of its crisps by 7% since joining the scheme. The biggest reductions came from cutting gas and electricity use in crisp manufacturing – direct impacts – saving the company £400,000 a year.”

Take care
David

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

Sponsored focus on food and drink: Engaging consumers – Now it’s the environment, stupid
Consumers want to do the right thing, especially about the environment, but expect brands to make it easy for them
John Russell
May 18, 2009
http://www.ethicalcorp.com/content.asp?ContentID=6478

Sponsored focus on food and drink: Greening the chain – We are all farmers now
Food and drink brands must tackle supply chain environmental impacts to make good on green promises
John Russell
May 15, 2009
http://www.ethicalcorp.com/content.asp?ContentID=6475

Strategic CSR - Commencement

The article in the url below contains the commencement address by Paul Hawken to the University of Portland graduating class in 2009. I had not heard of Hawken before, but his bio at the end of the address describes him as “a renowned entrepreneur, visionary activist, and author of many books.”

The commencement address is worth reading. It is concise, powerfully written and, hopefully, made an impact on the graduating students at which it was aimed. A couple of quotes that give a sense of the content:

“Hey, Class of 2009: you are going to have to figure out what it means to be a human being on earth at a time when every living system is declining, and the rate of decline is accelerating. … Basically, the earth needs a new operating system, you are the programmers, and we need it within a few decades.”

“Forget that this task of planet-saving is not possible in the time required. Don’t be put off by people who know what is not possible. Do what needs to be done, and check to see if it was impossible only after you are done.”

“Think about this: we are the only species on this planet without full employment. Brilliant. We have an economy that tells us that it is cheaper to destroy earth in real time than to renew, restore, and sustain it. … At present we are stealing the future, selling it in the present, and calling it gross domestic product. We can just as easily have an economy that is based on healing the future instead of stealing it.”

“Ralph Waldo Emerson once asked what we would do if the stars only came out once every thousand years. No one would sleep that night, of course. … Instead the stars come out every night, and we watch television.”

Have a good weekend.

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility

© Sage Publications, 2006

http://www.sagepub.com/Werther/

The Unforgettable Commencement Address by Paul Hawken to the Class of 2009 University of Portland
May 3, 2009
http://globalmindshift.wordpress.com/2009/05/21/

Strategic CSR - China

The article in the url below makes both for a refreshing and depressing read. The article is refreshing, because it reports important steps China is taking to build cleaner coal plants:

“China has emerged in the past two years as the world's leading builder of more efficient, less polluting coal power plants, mastering the technology and driving down the cost.”

The article is depressing, however, because it seems that China is doing a much better job in this regard than the U.S.:

“While the United States is still debating whether to build a more efficient kind of coal-fired power plant that uses extremely hot steam, China has begun building such plants at a rate of one a month.”

While China is taking at least preliminary steps to minimize the environmental impact of its reliance on coal-generated energy, by retiring old plants and building new ones with better technology:

“Western countries continue to rely heavily on coal-fired power plants built decades ago with outdated, inefficient technology that burn a lot of coal and emit considerable amounts of carbon dioxide.”

The overall reliance on coal, both in the U.S. and in China is not good news:

“China uses more coal than the United States, Europe and Japan combined, making it the world's largest emitter of gases that are warming the planet.”

Recent media reports about China’s evolving approach to climate change, however, are increasingly promising.

Take care

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility

© Sage Publications, 2006

http://www.sagepub.com/Werther/

China emerges as a world leader in cleaner coal technology

By Keith Bradsher

The New York Times Media Group

1125 words

12 May 2009

International Herald Tribune

2R

17

http://www.nytimes.com/2009/05/11/world/asia/11coal.html

Strategic CSR - Tata

The article in the url below outlines a new plan for the Tata conglomerate. Bolstered by its success with the Tata Nano (“the world’s cheapest car”), Tata wants to expand its access to the market at the bottom of the pyramid (Issues: Profit, p200) by building and selling homes in the poorest areas of India:

“Tata Housing Development … has begun its first ultra low-cost development selling homes ranging from 283 sq ft to 465 sq ft priced at between Rs390,000 ($8,200) and Rs670,000.”

While the size of the market is debatable, the size of the demand is not in doubt:

“Tata Housing calculates India needs at least 24m homes if it is to house all its people living in slums. One of the worst affected cities is Mumbai, where by some estimates about 60 per cent of its population lives in shanties.”

The firm calculates that, although living in the poorest areas, many consumers have access to sufficient funds to purchase affordable homes:

“However, many slum-dwellers are not destitute by local measures. Tata estimates 180m Indian households live on between Rs90,000 and Rs200,000 a year. Housing at Tata's new low-cost development - Shubh Griha, or "Auspicious Homes" - in Boisar, about 60km from Mumbai, comes with electrical, toilet and plumbing fittings built in.”

To make the communities even more appealing, Tata Housing also plans to build “schools, a hospital, shops and a recreation centre” nearby.

Take care

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility

© Sage Publications, 2006

http://www.sagepub.com/Werther/

Tata laying foundations to house India's millions of slum dwellers

By Joe Leahy and Varun Sood in Mumbai

451 words

29 May 2009

Financial Times

USA Ed1

01

http://www.ft.com/cms/s/0/a5bf7b44-4bb4-11de-b827-00144feabdc0.html

Strategic CSR - Trash

The article in the url below from yesterday’s NYT is a lot of fun:

“Where does all the trash go? Karin Landsberg, 42, a self-described ''eco-geek'' in Seattle, was so curious that she invited researchers from the Massachusetts Institute of Technology into her home last month to fish 12 items out of her garbage and recycling bins -- a can of beans, a compact fluorescent light bulb -- and tag them with small electronic tracking devices. Her trash is now on its journey to the place where it goes to die or be reborn.”

Karin’s trash is part of a larger study MIT is conducting on 3,000 pieces of trash that have been thrown away, mostly in Seattle. The aim is to track the trash as it is processed over a period of the next three months to see where it travels and how long it takes to get there. The broader goal of the study is to try and influence human behavior:

“One purpose of the project, said Carlo Ratti, director of the lab, is to give people a concrete sense of their impact on the environment in a way that might lead them to change their habits.”

I would be more interested to know what percentage of the items that are placed in recycle bins are actually recycled and how many of them still end up in a landfill:

“Other factors are also in play in the travel of recyclables like metal and plastic. Among them are price fluctuations that may make it cheaper for a company to ditch items than to recycle them, contamination that makes a can or paper useless, and human error in sorting or transporting material.”

The project is being under-written by the company Waste Management, which is interested in the logistics of moving trash around the country and avoiding unnecessary waste in waste processing!

Have a good weekend.
David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility

© Sage Publications, 2006

http://www.sagepub.com/Werther/

Once It's Tossed, Does Your Trash Take the Tunnel Or the Bridge?

By MIREYA NAVARRO

1240 words

17 September 2009

The New York Times

Late Edition - Final

16

http://www.nytimes.com/2009/09/17/science/earth/17trash.html

Strategic CSR - Bribery

The article in the url below reports increased efforts by the U.S. Justice Department in recent years to crack down on corporate bribery by U.S. firms across the world:

“The crackdown under the Foreign Corrupt Practices Act, or FCPA -- a post-Watergate law largely dormant for decades -- now extends across five continents and penetrates entire industries, including energy and medical devices.”

Similar to the political environment that gave rise to the FCPA in 1977 (see http://www.corpwatch.org/article.php?id=14859), once again it is the rise in corporate scandals, starting with the Enron scandal around the turn of the century, that is prompting the government to act:

“At least 120 companies are under investigation … up from 100 at the end of last year.”

An interesting component of the article focuses on the “grey areas” of the legislation. Firms complain that the wording of the legislation is so broad (Is paying for a client’s dinner prohibited?) and insensitive to cultural differences (In many countries, token gift-giving is an essential part of the culture.) that it leaves the best-intentioned firms unable to know when they are breaking the law:

“The law prohibits U.S. companies from paying, or offering to pay, foreign-government officials or employees of state-owned companies to gain a business advantage. It covers nonmonetary gifts or offers in addition to cash payments, and is worded broadly enough that it's spawning an army of consultants, some of whom once prosecuted bribery cases for the Justice Department, who offer to interpret the gray areas.”

The article provides details on multiple past investigations by the Justice Department into corporate activities that breached the legislation’s boundaries of acceptable corporate behavior. The financial and reputation costs of a serious transgression are significant:

“A spokesman at Siemens, which paid the largest foreign-bribery fine to date, said the cost of addressing its own corruption allegations was nearly as much as its total fine of 1.22 billion euros ($1.7 billion), including fines to the German government. … A Siemens spokesman said in an email that it's wise for a company "to have an adequate compliance system in place and a corporate culture that stands for clean business."”

Take care

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility

© Sage Publications, 2006

http://www.sagepub.com/Werther/

US Cracks Down On Corporate Bribes

1118 words
The Wall Street Journal

27 May 2009

http://online.wsj.com/article/SB124329477230952689.html

Strategic CSR - Food Labels

The article in the url below covers a warning by the Food & Drug Administration to General Mills about the health claims on its Cheerios packets. In particular, the FDA took exception to the firm’s claim that “in just six weeks, Cheerios can reduce bad cholesterol by an average of 4 per cent”:

“The FDA warned that [General Mills] was exceeding the qualified health claim approved for food labels on the benefits of soluble fibre.”

The article argues that the decision indicates that the FDA is seeking to limit producers’ claims, in general. The FDA stated that, by making the health claims on Cheerio’s ability to reduce cholesterol, General Mills was marketing its cereal, “in effect, like a drug” and, as such, would be subject to much stricter oversight of the veracity of those claims.

The decision suggests the FDA might be willing to take a much more activist role in regulating the claims made by food manufacturers on their product labels. The article also argues, however, that the FDA’s more activist stance will pale in comparison to the remit of the relatively new European Food Safety Authority (EFSA):

“While the FDA restricts its authority over food marketing to "disease" reduction claims on labels - such as whether foods reduce the risk of heart disease or cancer - the EFSA has been asked by the European Commission to assess "functional" health claims as well - such as assertions that a food ingredient helps blood circulation or helps increase concentration.”

Early decisions by the EFSA suggest the agency has set a high threshold of scientific ‘evidence’ that firms will need to provide to validate any claims. And, only approved claims will be allowed to be included on labels after 2010.

Take care

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility

© Sage Publications, 2006

http://www.sagepub.com/Werther/

Taste of a stricter future for health claims on food labels; Agencies on both sides of the Atlantic have started to show a deeper interest in how manufacturers promote their products

By Jonathan Birchall in New York

887 words

22 May 2009

Financial Times

London Ed1

12

http://www.ft.com/cms/s/0/e1f54832-4669-11de-803f-00144feabdc0.html

Strategic CSR - CSR in a recession

The article in the url below asks the question: Why do firms continue to invest in CSR when many expected such policies to diminish in an economic downturn?

"That easy prediction has turned out to be wrong. Mars, the world's biggest confectionery company, has announced that its entire cocoa supply will be "produced in a sustainable manner" by 2020."

The author also cites the examples of Cadbury, the maker of the UK's most popular chocolate bar that recently made a similar commitment to Mars, and Wal-Mart:

"… the world's biggest retailer, which told a meeting of 1,000 Chinese suppliers last year that it would hold them to strict environmental and social standards, the downturn notwithstanding."

The author then proceeds to outline the strong business reasons behind these decisions by the three firms. He argues that, contrary to skeptical opinion, in the current economic climate, CSR is essential for firms seeking to please customers, guarantee supplies of high quality raw ingredients, and also lower costs:

"… when, in 2007, M & S laid out its "Plan A" on sustainable sourcing and fair trading, it expected the changes to cost the company £200m ($290m, €225m) over five years. But because, like Wal-Mart, M & S is saving money through its initiatives, it is finding its changes are cost-neutral."

Have a good weekend

Dave

Bill Werther & David Chandler

Strategic Corporate Social Responsibility

© Sage Publications, 2006

http://www.sagepub.com/Werther/

Why corporate responsibility is a survivor

By Michael Skapinker

829 words

21 April 2009

Financial Times

Asia Ed1

11

http://www.ft.com/cms/s/0/bc9a37ce-2def-11de-9eba-00144feabdc0.html

Strategic CSR - Timberland

The article in the url below is a wide-ranging interview with Jeff Swartz, CEO of Timberland (Issues: Volunteering, p141), who has been a leading advocate for strategic CSR for many years. For Swartz, CSR is not an abstract concept, but a factor of business that he wrestles with, often publicly, in making his firm’s day-to-day operational decisions. Below are a sample of quotes from the interview that reflect, not only Timberland’s progressive stance on many aspects of CSR, but also Swartz’s refreshing openness on how difficult it is to find acceptable answers to some of these challenges:

“The social fabric is frayed at best and torn in many places.”
“We build things that last. Maybe we should go into the banking business.”
“For example we are for capping carbon emissions, but not for trading them.
“Consumers are starting to value brands as social institutions.”
“Brands must be transparent in a way that we have never been transparent before.”
“We are learning how to get naked in front of customers in a socially acceptable fashion, which is not a first instinct for a brand like ours.”

Timberland has for three years carried “nutrition labels” on products that show in explicit detail the environmental impact of a product and the child-labour record of the factory that made it.

Timberland is “almost at the point where we have achieved sustainability in human rights”.

The goal is to ensure workers go from being “factors in production” to “partners in production”.
Swartz also has ambitious goals to cut the environmental impacts of Timberland shoes, which he notes “are toxic, by definition.”

A second green goal is to create products that are completely recyclable and biodegradable:

“At heart, responsible business does not mean being more expensive. You are not responsible in order to save cost, but saving cost is a consequence.”

Take care
David

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006


The big interview: Jeff Swartz – Consumer trust that’s good for the sole
Timberland’s Jeff Swartz explains why brands must start engaging consumers on social issues to rebuild trust lost during the financial crisis
John Russell
Ethical Corporate Magazine
May 3, 2009
http://www.ethicalcorp.com/content.asp?contentid=6452

Strategic CSR - Sustainable Cities

The article in the url below is interesting because it mentions the U.S. Mayors’ Climate Protection Agreement (http://usmayors.org/climateprotection/agreement.htm), which I hadn’t heard of before. The Agreement allows U.S. cities to move towards achieving “the greenhouse gas reductions targeted by the Kyoto Protocol” in the absence of meaningful federal policy:

“Since the 2005 agreement, some 500 more cities and counting have signed on. And while some cities simply signed the document and moved on, others have used the initiative to draft further strategies that deliver meaningful reductions in emissions.”

The article profiles seven cities (San Jose, Boston, Austin Texas, San Francisco, Seattle, Portland Oregon, and Denver) that have positioned themselves as the “earl[iest] adopters of "green" products and services” and, as a result, offer the most welcoming environment for clean technology start-up companies.

Take care
David

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


Cities Striving to Be Green

By Amy Westervelt
Businessweek
May 19, 2009
Some places in the U.S. are way ahead in policies to reduce carbon emissions. Here are the seven best spots to start a clean tech company
http://www.businessweek.com/technology/content/may2009/tc20090519_708295.htm

Strategic CSR - Countdown to Copenhagen

Here is a website to focus the mind:

http://unfccc.int/2860.php

The stakes are being raised for the Copenhagen meeting. Almost every reference I see to it in the press is associated with a superlative emphasizing the importance of reaching a meaningful agreement if we are to hope to avoid the various tipping points that scientists predict will occur in the near future.

As Bill Baue of CSRwire puts it (http://www.csrwire.com/press/press_release/27071):

“When that clock reaches zero, world leaders will negotiate a successor to the Kyoto Protocol – hopefully before the climate’s “clock” reaches zero and the world spirals into climate catastrophe.”

For anyone doing research on Kyoto and subsequent progress towards a global treaty to combat climate change, this UN website provides a treasure trove of information:

http://unfccc.int/essential_background/items/2877.php

Have a good weekend.

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility

© Sage Publications, 2006

http://www.sagepub.com/Werther/

Strategic CSR - Organic Food

The article in the url link below reports 2007 agriculture census data on the distribution of organic farms across the U.S.:

“The map of organic farms in the United States is clustered into a few geographic centers, a strikingly different pattern than the map of all farms, which spreads densely over many regions, breaking only for the Rockies and Western deserts.”

The article notes that, while there are large numbers of small organic farms in both the NW and NE of the U.S. that sell direct to consumers, large organic farms are located mostly in California. Overall, organic sales in the U.S. have been rising in recent years:

“Organic vegetables now account for 5 percent of all vegetable sales; organic dairies, which are the fastest-growing sector, now produce 1 percent of the nation's milk.”

There is a lag, however, between consumer demand and the ability of farmers to increase their supply of organic products:

“… the Agriculture Department requires a three-year waiting period for farms to win organic certification.”

The graphics that accompany this article can be found at: http://www.nytimes.com/imagepages/2009/05/03/business/03metrics.graf01.ready.html

Take care

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility

© Sage Publications, 2006

http://www.sagepub.com/Werther/

The Hot Spots for Organic Food

By HANNAH FAIRFIELD

214 words

3 May 2009

The New York Times

Late Edition - Final

http://www.nytimes.com/2009/05/03/business/03metrics.html