Strategic Corporate Social Responsibility: 3/1/11

Monday, March 28, 2011

Strategic CSR - Chevron

I will be traveling for the next week with only intermittent internet access.

Apologies for the interruption in service. The Newsletters will resume on April 6.

As always, your comments and ideas are welcome at any time.

The article in the url below reports on the recent court decision in Ecuador where Chevron was found guilty of pollution/environmental degradation and ordered to pay $8.6bn in fines and clean-up costs (possibly rising to over $9bn):

“The plaintiffs, residents of Ecuador's oil-rich Amazon rain forest, are seeking to hold Chevron accountable for environmental damage they say was caused by Texaco Inc., which operated in the country from 1965 to 1992. Chevron inherited the case when it acquired Texaco in 2001.”

The case is complex and, perhaps unsurprisingly, Chevron denies any wrongdoing or liability. What I thought was interesting about the decision, however, was the following:

“And if the U.S. oil giant doesn't publicly apologize in the next 15 days, the judge ordered the company to pay twice that amount.”

The intimacy of a public apology (and implied admission of guilt), together with the legal consequences of refusing to comply, was an interesting twist to the story. The judge seemed to be trying to make the legal transaction more human and personal. In the process, he is holding the firm to a level of accountability that exceeds the monetary value of the fine.

It is always interesting (depressing?) to see the reaction of the stock market to these kinds of decisions”

“Investors … shrugged off the ruling Monday. Chevron's shares rose 1.3% to $96.95 in 4 p.m. composite trading on the New York Stock Exchange.”

Take care

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility: Stakeholders in a Global Environment (2e)

http://www.sagepub.com/strategiccsr2e/

Instructor Teaching Site: http://www.sagepub.com/strategiccsr/

The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/

Chevron Hit With Record Judgment

By Ben Casselman, Isabel Ordonez and Angel Gonzalez

1025 words

15 February 2011

The Wall Street Journal

http://online.wsj.com/article/SB10001424052748703584804576144464044068664.html

Additional information about this case can be found in this second article:

Chevron Is Ordered to Pay $9 Billion by Ecuador Judge

By SIMON ROMERO and CLIFFORD KRAUSS; Simon Romero reported from Caracas, and Clifford Krauss from Houston. John Schwartz contributed reporting from New York, and Irene Caselli from Quito, Ecuador.

1088 words

15 February 2011

The New York Times

Late Edition - Final

http://www.nytimes.com/2011/02/15/world/americas/15ecuador.html

Friday, March 25, 2011

Strategic CSR - Open Supply Chains

This website is interesting:

http://www.sourcemap.org/

It is an interactive website set-up to allow people to create visual representations of a product’s supply chain. Maps contain the source of all the raw materials used to construct the product:

“We built Sourcemap so that everyone can access the information needed to make sustainable choices and share them with the world. The project is free, opensource, and volunteer driven.”

You can either create a map, or view maps created by others. There is a helpful video on the home page that introduces the software and there are other videos elsewhere on the site (http://www.sourcemap.org/info/). They also feature specific source maps on the home page, such as this one for Nissin Chicken Cup Noodles:

http://www.sourcemap.org/food/Nissin-cup-noodle--Chicken-flavour--#

As well as listing all the places that supply materials used in the final product, the maps allow you to calculate the carbon footprint of the product (1.11kg in the case of Nissin’s Cup Noodles) and also view supply facilities using Google maps.

Of course, the final maps are only as good as the work invested in producing them, but I thought the tool was an interesting insight into the extent to which business is becoming increasingly transparent.

Have a good weekend

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility: Stakeholders in a Global Environment (2e)

http://www.sagepub.com/strategiccsr2e/

Instructor Teaching Site: http://www.sagepub.com/strategiccsr/

The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/

Wednesday, March 23, 2011

Strategic CSR - Unilever

In November, Unilever launched its “sustainable living plan” (http://www.unilever.com/sustainable-living/):

“We have ambitious plans to grow our company, creating jobs and income for all whose livelihoods are linked to our success – employees, suppliers, customers, investors, and thousands of farmers around the world. But growth at any cost is not viable. We want to be a sustainable business in every sense of the word. So we have developed a plan – the “Unilever Sustainable Living Plan” – that will enable billions of people to increase their quality of life – without increasing their environmental impact.”

The plan was received well by the CSR community (e.g., http://tobywebb.blogspot.com/2010/11/unilever-raises-sustainability-bar-but.html) due to specific targets that build on Unilever’s ongoing commitment to CSR. In particular, the firm commits by 2020 to:

“Help more than 1 billion people improve their health and well-bring. Halve the environmental impact of our products. Source 100% of our agricultural raw materials sustainably.”

As the article in the url below highlights, Unilever sees this as important for business:

“Unilever has a long history of doing well by doing good. William Lever, one of its founders, created Lifebuoy soap to encourage cleanliness and reduce infectious diseases in Victorian Britain. Today, in the developing world, 3.5m children under five die from diarrhoea and respiratory infections. Teaching children to wash their hands is a way of reducing this toll. The company sees opportunities to save lives and sell soap.”

What was striking about the announcement, however, was the framing of the document by Unilever’s CEO, Paul Polman. Rather than focus on the cost savings to the firm in an attempt to justify the plan to investors, Polman instead issued a challenge:

“Unilever has been around for 100-plus years. We want to be around for several hundred more years. So if you buy into this long-term value-creation model, which is equitable, which is shared, which is sustainable, then come and invest with us. If you don't buy into this, I respect you as a human being, but don't put your money in our company.”

Importantly, Polman stuck with this line, even in the face of a lukewarm reception by investors. In the period shortly after the announcement:

“… the Financial Times reported his company's shares were lagging behind both competitors' and the market. Analysts gave Mr Polman credit for six quarters of year-on-year volume growth, raised margins and greater cash generation. But they doubted his ability to maintain this pace.”

Rather than present any cause for concern, however, Polman responded by reinforcing his underlying message, while also stopping the issuing of earnings guidance to investors:

“We certainly don't want to attract the investor base that wants higher and higher and quicker results against targets that we put out every 90 days.”

The decision to frame this announcement in an absolute moral argument, rather than a relative business argument, was refreshing, made all the more so by how unique it was. While acknowledging this, however, the article’s author feared this put the CEO at risk:

“Even the most patient investor eventually needs a decent return. If Mr Polman fails to deliver that, he may run short of supporters who understand his language.”

This concern was counteracted by a more positive message in the Ethical Corporation Magazine’s coverage of the launch (http://www.ethicalcorp.com/communications-reporting/unilever-sustainable-living-planned):

“Ultimately, Unilever’s pledge points to a new model of doing business: one in which economic growth is “decoupled” from negative social-economic costs. One company, however large, cannot shape the system. But it can signal the way.”

Take care

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility: Stakeholders in a Global Environment (2e)

http://www.sagepub.com/strategiccsr2e/

Instructor Teaching Site: http://www.sagepub.com/strategiccsr/

The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/

Long-term corporate plans may be lost in translation

By Michael Skapinker

761 words

23 November 2010

Financial Times

Asia Ed1

http://www.ft.com/cms/s/0/78cf6070-f66e-11df-846a-00144feab49a.html

http://cachef.ft.com/cms/s/0/78cf6070-f66e-11df-846a-00144feab49a.html

Monday, March 21, 2011

Strategic CSR - Groupon

The article in the url below features an interview with Andrew Mason, the founder and CEO of Groupon, the website that distributes daily coupons for its members:

“The basic idea is simple: The site offers subscribers (44 million and counting) at least one deal a day in their city -- say, half-off for sushi dinner or a spa treatment. But Groupon's innovation is the collective buying model suggested by its name: group plus coupon. A certain number of people need to buy into any given deal before it kicks in, or "tips" in Groupon parlance. Once the deal tips -- for example, 200 people have purchased a $40 coupon for an $80 massage -- the merchant and Groupon split the revenue roughly 50/50, and a group of customers has an unbeatable bargain.”

Groupon recently turned down a $6 billion buyout offer from Google. Mason wants to retain control over the firm because, as he says, “What we're trying to do is fundamentally change the way that people buy from local businesses.” Groupon tries to do this in two ways: first, by focusing on support for local businesses and, second, by its innovative policy of only allowing a coupon to be useable once a certain number of people have agreed to purchase it. As such, Groupon represents an interesting experiment in the idea of the social mobilization of consumers, made possible by the free flow of information that has emerged from the revolution in communications technology in recent years (Figure 4.4, p102):

“Groupon now promotes some 650 deals each day and more than 95% of those tip. Upwards of 26 million Groupons have been purchased world-wide, saving customers in the U.S. $850 million.”

While this group power is focused on consumption at present, it is easy to imagine how it can be applied to social activism in response to any firm action that runs counter to stakeholder expectations:

“Like so many other successful tech ventures, Groupon grew out of an earlier, less successful idea. ThePoint.org was a website for organizing campaigns like protests or fund-raising drives. And, like Groupon, it was built around the tipping point concept: The campaign was only carried out if enough people committed. But ThePoint never took off. ‘The big problem with ThePoint is that it's this huge, abstract idea. You can use this platform to do anything from boycotting a multinational company to getting 20% off a subscription to the Economist,’ says Mr. Mason.”

In order for this technology to be applied to some form of social movement that encourages firms to act in socially responsible ways, however, there has to be the willingness among consumers to act. On this point, at least for now, Mason is less confident:

“One of the things I realized ... is how few success stories there are in websites or products or businesses that exist primarily for an altruistic purpose. Most of the time, the things that really change the world exist for something fundamentally selfish and then the world-changing ends up being a side-effect of that.”

More information on Groupon and its latest idea, Groupon Now, can be found in this article in the current issue of Businessweek:

http://www.businessweek.com/magazine/content/11_13/b4221070014682.htm

Take care

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility: Stakeholders in a Global Environment (2e)

http://www.sagepub.com/strategiccsr2e/

Instructor Teaching Site: http://www.sagepub.com/strategiccsr/

The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/

The Weekend Interview with Andrew Mason: Groupon's $6 Billion Gambler

By Bari Weiss

2213 words

18 December 2010

The Wall Street Journal

A15

http://online.wsj.com/article/SB10001424052748704828104576021481410635432.html

Friday, March 11, 2011

Strategic CSR - Science

If you want an objective summary of the science surrounding climate change, this series of videos is excellent:

http://www.youtube.com/user/potholer54?blend=1&ob=4#p/c/A4F0994AFB057BB8/0/52KLGqDSAjo

The first video in the series is an informative overview of how the gasses in the atmosphere can promote warming (and/or cooling) and what is causing the current warming of the planet. Of particular interest in videos 3 and 4, however, is the debunking of urban myths that have been propagated by both supporters (e.g., Al Gore) and skeptics (e.g., Fox News) of climate change:

http://www.youtube.com/user/potholer54?blend=1&ob=4#p/c/A4F0994AFB057BB8/2/EU_AtHkB4Ms

Have a good spring break!

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility: Stakeholders in a Global Environment (2e)

http://www.sagepub.com/strategiccsr2e/

Instructor Teaching Site: http://www.sagepub.com/strategiccsr/

The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/

Wednesday, March 9, 2011

Strategic CSR - Recycling

The article in the url below introduces IndexR (see also: http://www.psfk.com/2010/12/indexr-database-reducing-uncertainty-over-proper-waste-recycling.html), an innovative idea by a graduate student from the California College of the Arts. IndexR is designed to provide consumers with the information they need to maximize the amount of recycling they can do:

“… we all produce lots of refuse, but how often are we uncertain about what can, or should, be recycled? … Statistics show that, as of 2008, the typical person discards 4.5 pounds of stuff per day, 1.5 pounds of which are recycled, but what does that really mean?”

IndexR proposes to use the bar code on the products we buy. In addition to providing information to retailers about our shopping habits, IndexR creates a system where we would also receive information on how and where to recycle the products we have just bought:

“So suppose that upon checkout at Kroger (or wherever), a shopper received not just a paper receipt but a digital record tailored to the individual. Ideally all your shopping data would flow into one spot, accessible from your computer or mobile device. This could reveal perhaps surprising patterns (drinking more soda than you would have guessed?). But apart from guiding your future consumption, it would also provide information about whether what you've already bought can be recycled, and how. If a package needed to be broken into parts, for example, you'd have that information; if unused contents can be composted, you'd get those details too.”

The idea is in the early stages of development and there are barriers to implementation (primary among which is incentivizing manufacturers to participate), but IndexR effectively combines technical progress with the need to reduce resource use. Given humans’ seeming collective inability to radically alter behavior/consumption patterns, we need to hope that technical solutions can curb the most damaging excesses of life in twenty-first century developed societies.

Take care

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility: Stakeholders in a Global Environment (2e)

http://www.sagepub.com/strategiccsr2e/

Instructor Teaching Site: http://www.sagepub.com/strategiccsr/

The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/

Wasted Data

By ROB WALKER

910 words

5 December 2010

The New York Times Magazine

Late Edition - Final

http://www.nytimes.com/2010/12/05/magazine/05FOB-Consumed-t.html

Monday, March 7, 2011

Strategic CSR - Sweatshops

The NYT editorial in the url below comments on the end of a “15-year struggle” last November by the Coalition of Immokalee Workers to raise the pay of tomato pickers in Florida by a penny a pound:

“… they struck a deal with growers to raise workers' pay and to create an industry code of conduct, a health and safety program and a system to resolve worker complaints.”

While a penny a pound may not sound a lot, because of the huge volume of tomatoes picked by these workers, the annual change is meaningful:

“For workers who lug two tons or more of tomatoes a day, a penny raise might bring a $10,000 yearly income to $17,000. A raise from abject to survivable poverty for 30,000 tomato pickers is a victory to welcome, but not rest upon.”

The campaign was initially aimed at the tomato growers, who “insisted they could not afford it,” but, ultimately, was successful because it shifted emphasis to the tomato buyers:

“The coalition tried the usual tactics — hunger strikes, marches, boycotts directed at the growers. But they also pressed major tomato buyers to pay for the raises themselves, by accepting a penny-per-pound surcharge on their purchases. That worked, first with Taco Bell, then McDonald’s, then a long list of other companies in the fast-food and food-service industries.”

The reluctance of the fast-food restaurants Taco Bell and McDonald’s (and others) to agree to this pay raise and, in particular, the organized resistance of the Florida Tomato Growers Exchange demonstrates how far some organizations have to go to integrate CSR throughout operations. It also shows the value of social pressure on firms to act, even if it sometimes takes 15 years to realize the desired result.

Take care

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility: Stakeholders in a Global Environment (2e)

http://www.sagepub.com/strategiccsr2e/

Instructor Teaching Site: http://www.sagepub.com/strategiccsr/

The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/

One Penny More a Pound

349 words

Editorial

4 December 2010

The New York Times

Late Edition - Final

http://www.nytimes.com/2010/12/04/opinion/04sat3.html

Friday, March 4, 2011

Strategic CSR - Corporate Rights

I have always been interested in constitutional law and the immense impact of the Supreme Court on day-to-day life in the U.S. Clearly, appointing a Supreme Court Justice is one of the most important powers a U.S. President has because the effects last well beyond their time in office and affect society so broadly. While the Supreme Court is a highly influential and important branch of government, however, it doesn’t mean it is efficient or, at times, even logical. However much it likes to ignore the reality, it is as political an institution (subject to the same biases, emotions, and inertial forces) as the other branches of government. In particular, I am struck by the inconsistencies of the judicial logic used to rationalize particular decisions and, presumably, win majority support among the Justices for different positions in different cases under different clauses of the constitution.

These thoughts were prompted by a Supreme Court decision that was announced earlier this week in a case that focused on corporations’ right to privacy:

“… the Supreme Court on Tuesday ruled unanimously that corporations have no personal privacy rights for purposes of the Freedom of Information Act.”

While I find the intricacies of the arguments fascinating, and also agree with this decision, I cannot understand why the same arguments weren’t used to deny corporations the right to free speech in the controversial Citizens United decision in January last year that removed limits on firms’ donations to political campaigns.

I disagreed with the Citizens United decision because, although consistent with the legal definition of a corporation as an individual, it does untold damage to the sanctity of the political process (and, for the same reason, I think other organizations, such as unions, should also be banned from making donations). If the Court is going to decide that a firm has the right to free speech, however, surely it must decide that firms also have other rights that we attribute to individuals, such as the right to privacy.

Instead, we get a convoluted semantic argument by Chief Justice Roberts (who wrote the majority opinion), detailed in the article in the url below. Roberts’ opinion, which “relied as much on dictionaries, grammar and usage as it did on legal analysis,” debated the meaning of the word “personal” as a noun versus an adjective to justify a decision that appears to be inconsistent with recent precedent:

“''Adjectives typically reflect the meaning of corresponding nouns,'' he wrote, ''but not always.'' He gave examples. ''The noun 'crab' refers variously to a crustacean and a type of apple, while the related adjective 'crabbed' can refer to handwriting that is 'difficult to read,' '' he wrote, quoting a dictionary. '' 'Corny,''' he went on, ''has little to do with 'corn.' ''”

???????

Have a good weekend.

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility: Stakeholders in a Global Environment (2e)

http://www.sagepub.com/strategiccsr2e/

Instructor Teaching Site: http://www.sagepub.com/strategiccsr/

The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/

Justices' Ruling Is Wrapped in an English Lesson

By ADAM LIPTAK

781 words

2 March 2011

The New York Times

Late Edition - Final

http://www.nytimes.com/2011/03/02/us/02scotus.html

Wednesday, March 2, 2011

Strategic CSR - Measuring CSR

The articles in the three urls below all contain examples of different ways to measure CSR and convey that information to consumers. In particular, firms use product labels (in-house or third-party certifications) and report cards (letter grades) to capture complex processes and outcomes using simple images and broad categories in ways that are intended to be easily understood.

Easily understandable, however, does not necessarily mean either consistent or accurate. This distinction is made clear in the article in the first url below, which compares different government agency-issued report cards that are increasingly being used to rate industries as diverse as restaurants and vehicles:

“In Los Angeles County, 98% of restaurants got A's or B's last year for health safety. Not so at the Environmental Protection Agency. The agency recently proposed redesigned labels for new vehicles, with one option including grades ranging from D to A-plus for fuel economy and greenhouse-gas emissions. Fewer than 1% of 2010 models (17 of 2,011) would rate an A-minus or better, according to calculations by the EPA.”

The variance in grades across different measures is detailed in the graphic accompanying the article:

http://sg.wsj.net/public/resources/images/NA-BI001_NUMBGU_NS_20100917204425.gif

The article in the second url below details the difficulties involved in conveying valuable information about the ethicality of a firm’s supply chain on product labels and ensuring the reality matches the claims being made:

“If you ever buy an item of clothing from Tesco, the UK supermarket chain, you can be sure it will not contain any cotton from Uzbekistan. The company decided to boycott Uzbek cotton in 2006, following reports of forced and state sanctioned child labour. That was the easy part. Eliminating the unwanted material from Tesco's supply chain and proving that it was no longer used would take until the end of 2007. "It was an enormously complex task," says Alan Wragg, the company's clothing technical director. "Even the production of a simple garment such as a T-shirt requires materials to pass through four to seven pairs of hands, so the number of possible permutations in the supply chain was huge."”

What these reporting mechanisms have in common is the goal of simplicity (clarity and comprehensiveness). The unintended consequence of the cumulative effect of these and other similar initiatives, however, is inconsistency, complexity, and confusion, as indicated in the article in the third url below:

“According to the Ecolabel Index, there are currently 349 seals and certifications for marketing green products worldwide, with 88 used in North America alone.”

As a result, the revision of “Green Guides” by the Federal Trade Commission last September (to be implemented in 2011) is a welcome step forward. The Guide, last updated in 1998, governs the marketing claims firms can make about a product’s level of sustainability or social responsibility and has been tightened in attempt to limit the extent of greenwashing. The new restrictions:

“… warn marketers against using labels that make broad claims that cannot be substantiated, like ''eco-friendly.'' Marketers must qualify their claims on the product packaging and limit them to a specific benefit, such as how much of the product is recycled.”

Take care

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility: Stakeholders in a Global Environment (2e)

http://www.sagepub.com/strategiccsr2e/

Instructor Teaching Site: http://www.sagepub.com/strategiccsr/

The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/

THE NUMBERS GUY: Report Cards for Consumers Don't Always Make the Grade

By Carl Bialik

875 words

18 September 2010

The Wall Street Journal