Strategic CSR - Walmart

The article in the url below reports on a survey that is being conducted by Vanity Fair Magazine and the 60 Minutes TV show—what they are calling “a monthly survey of the American consciousness.” The lead finding that the NYT decided to lead with represents an interesting sign of the times:

“The first survey, unveiled on ''60 Minutes'' and CBSNews.com on Sunday, reports that respondents overwhelmingly selected Wal-Mart as the best corporate symbol of America today. Wal-Mart was selected by 48 percent of respondents, while the first runner-up, Google, was selected by only 15 percent. The other options were Microsoft, the N.F.L. and Goldman Sachs.”

Equally interesting, at least in terms of representing society’s priorities, is the response to the question:

“''Which of these men would you most like to trade places with for a week: George Clooney, Barack Obama, Tom Brady, or Bruce Springsteen?'' (Mr. Clooney narrowly topped Mr. Obama.)”

Have a good weekend.

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility

© Sage Publications, 2006

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

Vanity Fair and '60 Minutes' Are Polling the People

By BRIAN STELTER

476 words

28 September 2009

The New York Times

Late Edition - Final

3

http://www.nytimes.com/2009/09/28/business/media/28vanity.html

Strategic CSR - Brands

The blog entry in the url below indicates the extent to which major firms are losing control over their brands due to the viral nature of the Internet (Figure 3.4, The Free Flow of Information, p56). The blog also reflects, however, the paranoid attempts by some firms to retain as much control as possible:

“A major brand has decided that my blog branding infringes on their trademark and IP. They’ve also accused me of cybersquatting. They’ve ordered me to cease and desist with my domain and to transfer all domain rights to them.”

The actions of this firm (which remains unnamed in the blog, but is related to the blog’s title of ‘The Everyday Foodie’—Martha Stewart’s Everyday Food Magazine perhaps?) are ultimately detrimental. They have the effect of converting a loyal follower and active promoter of the brand and its products into a lifelong enemy:

“I’ve been a customer and advocate of this brand for years. Until I received the legal notice two weeks ago, I was a marketer’s dream: a loyal purchaser who regularly recommended the brand’s products and publications to my friends and family. I’m a content creator and active on social networks, both of which increase my personal reach and influence and gave me more opportunities to be their advocate. Now they have lost me as a customer and advocate forever, with all that that entails. What they may have gained in perceived brand protection they have lost in the profits and the lifetime value of a loyal customer.”

This example is particularly compelling, but similar incidents surface regularly in the media. A central argument of Strategic CSR is the importance for firms of embracing the needs and demands of their key stakeholders in an open and honest dialogue. Seen from this perspective, the Internet provides an opportunity for further competitive advantage. Firms that reject this approach and see the ever-expanding communication technology as a threat to business, however, will find it very difficult to succeed in the new global business environment.

Happy Thanksgiving!

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility

© Sage Publications, 2006

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

The Everyday Foodie

Saying Good-bye to The Everyday Foodie

June 21, 2009

http://theeverydayfoodie.com/2009/06/21/saying-good-bye-to-the-everyday-foodie/

Strategic CSR - Siemens

In December 2008, Siemens paid the largest penalty ever imposed under the Foreign Corrupt Practices Act (FCPA)—U.S. legislation designed to prevent bribes being paid to foreign government officials. The FCPA was passed in 1977 in response to the Congressional Watergate hearings that uncovered corporate slush funds that were being used by multinationals to secure overseas contracts. Siemens, a German company, falls under the jurisdiction of the legislation because it operates in the U.S. The fine Siemens paid was $800 million:

“It has also agreed to pay 596 million euros, or $839.4 million, to German authorities, including a 201 million euro fine levied by a Munich court in 2007.”

If this wasn’t enough, in July, the firm announced an agreement with the World Bank concerning additional bribery allegations. The article in the url below details the extent of the agreement and the culture of bribery that had become ingrained within the firm:

“Siemens AG reached a settlement with the World Bank over bribery allegations, agreeing to pay $100 million to help anticorruption efforts and to forgo bidding on any of the development bank's projects for two years.”

What is interesting is that these amounts are considered lenient—a response to Siemen’s efforts to rebuild its image, offering extensive cooperation in an attempt to resolve all its outstanding claims.

In spite of these large fines that have been levied against the firm, it would be interesting to see an estimate of how much Siemens benefitted from the bribes it was paying:

“Investigators have alleged that the German engineering conglomerate spent more than $1 billion in recent years bribing government officials in at least 10 countries to win contracts on projects ranging from supplying power and medical equipment to building refineries.”

Since Siemens was only likely paying these vast sums because it thought it was worth its while to do so, my guess is that the benefits it received were multiples of the bribes paid. In terms of World Bank projects alone:

“Siemens said it has generated roughly $160 million in annual revenue in recent years from World Bank-financed projects.”

Perhaps crime does pay!?

Take care

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility

© Sage Publications, 2006

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

Siemens Settles With World Bank on Bribes --- Company Will Pay $100 Million to Help Combat Corruption and Forgo Bidding on Contracts for Two Years

By Vanessa Fuhrmans

568 words

3 July 2009

The Wall Street Journal

B1

http://s.wsj.net/article/SB124655953719287521.html

Strategic CSR - Honesty

The article in the url below outlines an interesting experiment in Indonesia with Honesty Cafes:

“As part of a national campaign led by the attorney general's office, the provincial government here on the eastern shore of the island of Borneo opened a dozen honesty cafes last month alone in schools and government offices. By 2010, the provincial government here plans to have more than 1,000 such cafes in operation, including in private establishments.”

The government-led effort is part of a wider anticorruption campaign. The goal is to inculcate honesty in people in terms of everyday transactions, which will then have a broader influence on how people interact socially:

“By shifting the responsibility of paying correctly to the patrons themselves, the cafes are meant to force people to think constantly about whether they are being honest and, presumably, make them feel guilty if they are not.”

In response to its ranking of 126th out of 180 nations in a 2008 report by Transparency International that documented perceived level of corruption in a country, the government’s campaign has led to an improvement in Transparency’s ranking, in spite of some of the cafes having to close and other high-profile set-backs:

“Recently, … the head of the Corruption Eradication Commission was arrested on suspicion of involvement in the murder of a prominent businessman over a love triangle involving a golf caddie.”

Nevertheless, if the campaign is successful, the Honesty Cafes will have played a big part:

“Since the attorney general's office started the campaign, some 7,456 honesty cafes have opened in 23 provinces in Indonesia, according to the National Youth Group, which is working with the office. The group expects 10,000 honesty cafes to be operating in 26 provinces by the end of the year before eventually reaching all 33 provinces.”

Have a good weekend.

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility

© Sage Publications, 2006

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

Making Honesty a Customer Policy in Indonesia Cafes

By NORIMITSU ONISHI

1139 words

16 June 2009

The New York Times

Late Edition - Final

8

http://www.nytimes.com/2009/06/16/world/asia/16indo.html

Strategic CSR - Business Schools

In the wake of the current financial crisis, business schools have been criticized for their role in producing the managers who built the firms in which poor business decisions were made. In particular, the management theories that inform the business school curricula have been singled out for unflattering attention.

The article in the url below was written by Roger Martin, the Dean at the Rotman School of Management at the University of Toronto. Firmly embedded in the business school culture, Martin is clear about where he lays the blame:

“The prime culprit for the increasing market volatility that has brought the economy to its knees is a triumvirate of management theories taught in every business school and entrenched in every significant publicly traded company. Intended to ensure longevity and profitability, these theories instead contributed mightily to the technology crash of 2001-02 and the financial services crash of 2008.”

The three theories singled out by Martin are:

“The slide down the slippery slope began with shareholder value theory. … Next came principal-agent theory: the notion that the interests of executive "agents" are not naturally aligned with those of shareholder "principals" … . That in turn led to stock-based compensation alignment theory.”

The common factor connecting the three is the importance of the stock market as a measure of corporate (and, therefore, manager) success. These theories encourage actions that focus on investor perceptions, irrespective of a firm’s real performance. As expectations increasingly become detached from reality, Martin argues, incentives to engage in dubious tactics to meet those inflated expectations increase:

“Improving [real] performance is the hardest way to increase expectations. Easier ways include engineering a series of acquisitions to give the appearance of rapid growth or employing aggressive accounting to give the appearance of higher profitability.”

Martin argues that shareholder value theory should be replaced with incentives to maximize “book value per share” and that stock-based compensation should be replaced with pay tied to performance on “real market measures such as revenue growth, market share, profits and book equity return”:

“While these proposals may seem draconian, they are necessary to save corporations from themselves.”

The debate over the extent of the role of business schools (and U.S. schools, in particular) continues (e.g., http://www.ft.com/cms/s/2/41a49c8e-51ea-11de-b986-00144feabdc0.html).

Take care

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility

© Sage Publications, 2006

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

Managers must be judged on the real score

Roger Martin
845 words
12 May 2009
Financial Times

Asia Ed1

http://www.ft.com/cms/s/0/fc3d707c-3e60-11de-9a6c-00144feabdc0.html

There is a pdf of the article available at:

http://www.disas.unisi.it/mat_did/riccaboni/417/FT.pdf

Strategic CSR - Cadbury's

The article in the url below demonstrates how Cadbury’s is trying to expand its hold on the confectionary market in India into the consumer base at the bottom of the pyramid:

“The candy maker's latest product for the low end of the Indian market is Cadbury Dairy Milk Shots. The pea-sized chocolate balls, which were introduced this year, are sold for just two rupees, or about four U.S. cents, for a packet of two, which weighs five grams -- a fraction of an ounce. They have a sugar shell to protect them from the heat.”

The potential for growth is significant:

“The British candy maker has been in India for more than 60 years and dominates the chocolate market. Still, it says, less than half of India's 1.1 billion people have ever tasted chocolate. Traditional milk-based sweets, or mithai, still dominate the industry here, where they are given and eaten at festivals.”

Although Prahalad’s bottom-of-the-pyramid argument has been seized by CSR advocates as a potential hope for solving some of the developing world’s social problems (and the article dutifully notes similar product downsizing by consumer products firms such as Procter & Gamble and Unilever), given some of the more fundamental problems that face the poorer sections of India’s society, it is hard to see how bringing chocolate to the masses constitutes social progress. The principle, however, is important—the greater the opportunities the private sector sees to cater to the needs of market segments in developing economies, the greater the chance for the progress that the private sector has brought elsewhere (the importance of chocolate notwithstanding J).

Take care

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility

© Sage Publications, 2006

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

Cadbury Redefines Cheap Luxury --- Marketing to India's Poor, Candy Maker Sells Small Bites for Pennies

By Sonya Misquitta

826 words

8 June 2009

The Wall Street Journal

B4

http://bw.dowjones.com/article/SB124440401582092071.html

Strategic CSR - e-Bay

The interview with Jeff Skoll, the first company president of e-Bay, in the url below is interesting because it describes how he responded to suddenly finding himself a billionaire:

“When he left eBay in 2001, there was only one direction for a reluctant billionaire like him to head in. "I had started to think about philanthropy, which I'd never really thought about before, because I never had any money," he says. "I was living off room-mates' leftovers and then all of a sudden I had all this money."”

Two projects, in particular, now occupy his time—the first is the Skoll Centre for Social Entrepreneurship at the Said Business School at Oxford University:

“The relationship with a business school has allowed Skoll to provide formal MBA education to people who might not ordinarily have been able to experience it. … It's a one-year MBA and there are five scholarships for these social entrepreneurs that come into the programme. It's worked out very well."”

The second, and more interesting, I think, is Participant Media:

“Changing the world through business is one of Skoll's two main activities. The other is his film company, Participant Media, which aims to change the world through movies. Founded in 2004, Participant aims to produce "quality entertainment about meaningful issues".”

Participant Media “is now a serious player, producing 17 films in the past four years” and has produced movies such as Good Night and Good Luck (with George Clooney) and the documentaries, An Inconvenient Truth (http://www.climatecrisis.net/) and Food, Inc (http://www.foodincmovie.com/). The important thing, as Skoll says, is making a difference:

“The trick is finding something that is really dealing with an important issue. There's a creative part, there's the commercial part and there's the social part. And making sure all of that is working.”

His role is to make sure it all works—sounds very cool to me.

Take care

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility

© Sage Publications, 2006

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

The timid titan

Lunch with the FT: Jeff Skoll made his fortune with eBay. Now he uses it to change the world through business - and to make movies that make a difference. Stefan Stern enjoys a fittingly modest meal with a reluctant billionaire

Stern, Stefan

2280 words

13 June 2009

Financial Times

London Ed1

03

http://www.ft.com/cms/s/2/9bdfb524-56dd-11de-9a1c-00144feabdc0.html

Strategic CSR - the WAG

The Wag (http://www.rightreality.com/wag/) is an e-mail newsletter written by David Batstone:
“The WAG [Worthwhile and Gain] is a weekly ezine that shows how to conduct business with passion, purpose and profit. The WAG features an original column by David Batstone, groundbreaking business research and surveys, the best of the business media, and insight into joy at work.”

I think David is doing some excellent work and thought it was worth advertising. There is no charge to subscribe to his Newsletter and I enjoy reading what he has to say on the broad range of topics under the CSR umbrella.

His latest campaign, introduced in the Newsletter below, deals with the global slave trade and the role consumers can play in helping eradicate it. You can read more about it at the campaign’s website (http://www.notforsalecampaign.org/):

“The major obstacle that we face in the fight against modern-day slavery is that the crime is hidden. Individuals that work in the field know that slavery is not part of the current collective consciousness. Initially, it shocks the general public to learn that slavery still exists and is widespread. It is even more shocking for them to realize that it may exist in their own backyards.”

Have a good weekend.
David

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

________________________________________
Date: Tue, 23 Jun 2009 20:31:21 -0400
From: batstoned@notforsalecampaign.org
Subject: the WAG from David Batstone

Strategic CSR - CSR Reports

The article in the url below focuses on the value to stakeholders of firms’ CSR reports:

“Most of the world’s top companies now issue non-financial statements, up from almost zero a decade ago, and soon everyone will. … Do they offer any real value to stakeholders or are they just propaganda?”

In trying to answer that question:

“We have to ask ourselves hard questions: what purpose do these reports serve and do they do their job? And which companies are doing the heavy lifting when it comes to candidly reporting the social impact of their operations?”

The author argues that it is crucial to be able to compare one firm’s performance with another’s, rather than declaring specific firms and whole industries as acceptable (or not) in terms of CSR:

“The sustainability community is split between “best practice” adherents such as SAM and “sin screen” absolutists, like the designers of the FTSE4Good, which excludes BAT. The latter rewards companies based on an absolute, if arbitrary, ranking of sustainability; the former rewards comparative behaviour and improvement.”

The core of this debate, therefore, revolves around the issue of absolute versus comparative measures of performance. Evaluating CSR is inherently nuanced—an aggregate measure of multiple strengths and weaknesses. No firms are absolutely good and very few, if any, are absolutely bad. But, there are clearly some firms that are better than others. Attempting to capture this relative difference is a sign that any measurement tool is on the right track:

“Lo and behold! Using these various standards and verification frameworks, the messier industries, from tobacco to mining to oil production, have consistently ranked among the best companies for disclosing what they do, addressing their sustainability footprint and providing independent integrity assurance.”

Take care

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility

© Sage Publications, 2006

http://www.sagepub.com/Werther

The contrarian – Reporting contradictions
Praising so-called evil companies for good corporate responsibility reporting is better than bashing them for what they are, argues Jon Entine
Jon Entine
June 7, 2009
http://www.ethicalcorp.com/content.asp?ContentID=6492

Strategic CSR - Sports sponsorship

The article in the url below highlights the value of sports sponsorship for firms:

“Sport is a valuable element in corporate community investment because of associations with fair play, health and community and its ability to reach a wide range of consumers.”

There is a risk, however, if a firm’s actions are perceived to be superficial or opportunistic:

“Brands have learned the hard way. Six years ago Cadbury was slammed for its Get Active campaign, where funding sports equipment was linked directly to chocolate sales through a wrapper collection initiative.”

As a result, firms feel it is important to avoid the appearance of acting primarily for marketing reasons:

“Hugh Milward, head of public affairs for McDonald’s in the UK, agrees. He says: “McDonald’s does not need sports sponsorship to sell its food or to create awareness of the brand; we have more effective ways of doing that.” He cites the company’s football in the community initiatives in the UK as a goodwill gesture, saying: “It is a demonstration of our commitment to giving back to the communities in which we serve.””

Clearly for some critics, however, McDonald’s (and others’) claims are not credible:

“Critics, however, argue that if brands such as McDonald’s are not investing money in sport for commercial reasons then they would leave their logos at the door, and not have any branding on show at programmes.”

The value of the article, therefore, is in outlining those conditions under which any cause-related philanthropy works best:

“Corporate responsibility consultant John Luff suggests sponsorship strategies are more likely to be trusted by consumers if they tie in with what the company does. Banks sponsoring playing-fields may be very laudable, but supporting initiatives to improve numeracy skills may be more coherent, and strike a chord with consumers.”

This is the same argument for firms closing down their philanthropy offices or Foundations and moving these responsibilities to a strategic functional department, such as marketing, where the firm’s expertise can determine the area and level of involvement.

Take care

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility

© Sage Publications, 2006

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

Analysis: sports sponsorship – The risk of marketing own-goals

Corporate community investment in sport can offer healthy exposure for brands, but must be managed with care
Ben Cooper
May 18, 2009

http://www.ethicalcorp.com/content.asp?ContentID=6477

Strategic CSR - Trash

This website (http://saveyourtrash.typepad.com/) profiles the exploits of Ari Derfel (pictured), who saved all the trash that he produced over the course of a year:

http://saveyourtrash.typepad.com/save_your_trash/images/2008/02/14/ari_and_trash1_6.jpg

Taken from an interview Derfel gave to Real Simple Magazine, he details the amount of trash that he accumulated over the year. Beyond all the organic and food waste he generated, which was composted, Derfel said that the pile of trash was the size of a queen-sized bed and weighed 238 pounds. The 238 pounds consisted of:

·         143 pounds of glass

·         26 pounds of plastic

·         21 pounds of paper

·         11 pounds of metal

·         6 pounds of Tetra Pak beverage containers

·         31 pounds of miscellaneous waste.

Derfel’s biggest takeaway from the project?

“… that the vast majority of my trash came from food packaging. … Now I can’t buy a single thing without thinking about the energy that went into manufacturing it, how far its parts traveled until it was assembled, and how far it then traveled to get to the store where I purchased it.”

Have a good weekend.

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility

© Sage Publications, 2006

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

Strategic CSR - Xerox

The article in the url below charts the turnaround of Xerox by CEO (now Chair) Anne Mulcahy. When Mulcahy became Xerox’s CEO in 2001 the firm was:

“… more than $17 billion in debt and had lost $20 billion in stock-market value between April 1999 and May 2000. The company faced the very real prospect of bankruptcy. Yet by 2005, Xerox had gone from a $273 million annual loss to a $978 million gain.”

The focus of Mulcahy’s turnaround was integrating sustainability throughout all aspects of operations:

“The company set a goal of "producing waste-free products in waste-free facilities to promote waste-free offices for our customers."”

What does that mean in practice?

“"We had these warehouses full of old copiers, and our repair teams were cannibalizing them for parts," says Calkins. "And then we realized that if we design our products with remanufacturing in mind from the get-go, we could be moving quickly toward zero waste... Our goal was to get to 90% reusability."”

Importantly, rather than “downcycling,” where recycled materials are converted into different products of lower quality (think old sneaker soles converted by Nike into safe playground surfaces for children), Xerox focused on “remanufacturing”—re-using parts and materials in new replacement products and designing recyclable parts as integral components of any new products:

“So Xerox's first step was to help develop an international standard for remanufacturing to guarantee quality so that customers would know they were receiving a fully functioning product.”

Another important shift was to move to:

“… total-life costing to reflect the fact that, while initial costs were higher, the company would save money as the parts were used over and over.”

The results are impressive:

“Today, … the company has a 91% recycling rate for its copiers. The company has saved millions of dollars through its remanufacturing efforts, and its zero-waste initiative has brought the company closer to the needs of its customers.”

Take care

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility

© Sage Publications, 2006

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

Carbon Copy
How Xerox Tapped the Power of Reuse
Fast Company Magazine
From: Issue 137 | July 2009 | Page 60 | By: Adam Werbach
http://www.fastcompany.com/magazine/137/green-business-carbon-copy.html

 

Strategic CSR - Shell

The articles in the two urls below reflect the extent to which firms are increasingly being held accountable for their actions overseas and how the U.S. Alien Tort Claims Act of 1789 is the tool activists are using to achieve their goals:

“The current suit was brought under the Alien Tort Claims Act, an arcane law written in 1789 to fight piracy, which is increasingly being used for lawsuits asserting human rights violations that occurred overseas. The Supreme Court ruled 6 to 3 in 2004 that foreigners could use American courts in limited cases, like crimes against humanity or torture. So far no corporation has been found guilty under the alien tort law, though human rights lawyers note that several cases are still moving through the court system.”

The articles here focus on Shell’s past work in Nigeria—it was the first company to drill for oil there in 1956. They highlight the firm’s alleged role in the death of Ken Saro-Wiwa and eight of his colleagues by the Nigerian government in 1995—litigation that has been ongoing since the activist’s death and, 14 years later, continues to haunt Shell:

“The trial … will examine allegations that Shell sought the aid of the former Nigerian regime in silencing Mr. Saro-Wiwa, a vociferous critic, in addition to paying soldiers who carried out human rights abuses in the oil-rich but impoverished Niger Delta where it operated. Shell strongly denies the charges.”

The articles also, however, detail allegations in many countries against numerous other multi-national firms (often extraction companies). These firms have achieved significant wealth mining the natural resources of countries whose local populations feel they were not fairly compensated:

“In December, Chevron, Shell's rival oil multinational, was cleared in a separate case alleging complicity in human rights violations in Nigeria. There are also wide-ranging claims against multinationals in industries including banking and pharmaceuticals over alleged abuses in apartheid South Africa. … There have been cases France, the Netherlands and Ecuador while in England thousands of Ivory Coast nationals are suing Trafigura, the oil trading company, over waste dumped by a subcontractor that allegedly made them ill.”

Thinking about this issue for a number of years, now, there is no easy answer to the situation firms face when operating in countries with corrupt governments that are indifferent to the suffering of their local populations. For-profit firms are not substitutes for elected governments; they are neither diplomats, nor politicians. Having said this, the body of litigation that is being waged against these firms and the nature of the events that prompted it, indicate that there is much more that these firms could have done to minimize their exposure to risk.

On June 8, 2009, Shell agreed to settle the case with a payment of $15.5m, while continuing to deny that it had anything to do with Ken Saro-Wiwa’s death (http://www.nytimes.com/2009/06/09/business/global/09shell.html).

Take care

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility

© Sage Publications, 2006

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

Oil industry braces for rights abuses trial Shell to answer charges in connection with the death of Nigerian activist

By Jad Mouawad

The New York Times

1327 words

23 May 2009

1

http://www.nytimes.com/2009/05/22/business/global/22shell.html

Old law exhumed by rights fighters; A stream of litigation targeting companies has opened up thanks to the renaissance of a 220 year old statute, writes Michael Peel

By Michael Peel

1485 words

26 May 2009

Financial Times

London Ed1

14

http://www.ft.com/cms/s/0/55232f38-498d-11de-9e19-00144feabdc0.html