Strategic CSR - A Rational Argument for CSR

 

This will be the last CSR Newsletter of the Spring semester. Have a great summer and I will see you in August!

 

I thought this graphic is a great representation of how quickly the legal environment can change for firms:

 

http://www.bloomberg.com/graphics/2015-pace-of-social-change/

 

As such, it provides evidence in support of the rational argument for CSR (Chapter 1: What is CSR? p26):

"CSR is a rational argument for businesses seeking to maximize their performance by minimizing restrictions on operations. In today's globalized world, where individuals and activist organizations feel empowered to enact change, CSR represents a means of anticipating and reflecting societal concerns to minimize operational and financial constraints on business."

 

At a minimum, it pays companies to be part of the conversation as issues evolve and new values become established. A good example of this is Chick-fil-A and its resistance to the idea of same-sex marriage and same-sex partner benefits. You cannot help but look at the way this issue is evolving and come to the conclusion that, however much it professes its values, Chick-fil-A is on the wrong side of history. While there is still stakeholder support for their position at present, that support is not guaranteed. And, given the pace at which society's perception of this issue is changing (see graphic above), it will not be long before their resistance becomes less a point of differentiation and more of a liability to their business.

 

Have a good summer.

David

 

David Chandler & Bill Werther

Strategic Corporate Social Responsibility: Stakeholders, Globalization, and Sustainable Value Creation (3e)

© Sage Publications, 2014

 

Instructor Teaching and Student Study Site: http://www.sagepub.com/chandler3e/

Strategic CSR Simulation: http://www.strategiccsrsim.com/

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

 

Strategic CSR - Recycling

For those who advocate a market-based solution for recycling, the recent drop in the price of oil has had serious consequences for the viability of the growing industry:

 

"A former World War II bomber hangar houses a monument to the recent plunge in oil prices: hundreds of bags of shredded plastic. The hangar is used by CK Group, a recycler of bottles, pipes and sundry bits of plastic. Plastic is often derived from oil, and there used to be money in recycled scrap. Not anymore. The fall in oil prices has dragged down the price of virgin plastic, erasing the recyclers' advantage."

 

The consequences for the business model underlying the plastics recycling industry is potentially dramatic:

 

"In the U.S., many cities and towns pick up detergent bottles, milk jugs and other bits of household plastic and sell them to recyclers who sort, process and resell the scrap. These municipalities typically earned cash—as much as $10 a ton in parts of New Jersey—for selling recyclable materials under contracts that tie the sales price to commodities prices, with a minimum. In recent months, some expiring contracts have been replaced with new contracts that set no such floor. That raises the possibility for some municipalities that a moneymaker could turn into a loser."

 

The drop in price of new plastic has been particularly dramatic since the start of this year:

 

"At the start of this year, new polyethylene terephthalate, a type of plastic widely known as PET and used to make soft-drink and water bottles, cost 83 cents a pound, according to data compiled by industry publication Plastics News. That was 15% higher than the cost of recycled PET. As of late March, the cost of new PET had fallen to 67 cents a pound, or 7% less than the recycled form, which costs 72 cents a pound."

 

The article in the second url below contains a similar story about glass, although the threats to the business model are slightly different. The problem with glass highlights the costs associated with the relatively recent shift to single-source recycling (i.e., putting all recyclables in the same disposal unit):

 

"Curt Bucey, an executive vice president at [Strategic Materials Inc., the country's largest glass-recycling company], said that when used glass arrived at its plants 20 years ago, it was 98% glass and 2% other castoffs, such as paper labels and bottle caps. These days, some truckloads can include up to 50% garbage, he said. 'Now what comes with the glass are rocks, shredded paper, chicken bones people left in their takeout containers, and hypodermic needles,' Mr. Bucey said. The company has had to invest in expensive machinery to separate the glass from the trash, then has to dispose of the garbage, making recycling a much costlier equation."

 

The result in both cases is that, while paper continues to be recycled at ever-increasing rates, there have been only incremental increases in the amounts of plastic and glass recycled in recent years:

 

http://si.wsj.net/public/resources/images/BT-AB347_GLASSY_16U_20150421205406.jpg

 

Take care

David

 

David Chandler & Bill Werther

Strategic Corporate Social Responsibility: Stakeholders, Globalization, and Sustainable Value Creation (3e)

© Sage Publications, 2014

 

Instructor Teaching and Student Study Site: http://www.sagepub.com/chandler3e/

Strategic CSR Simulation: http://www.strategiccsrsim.com/

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

 

 

Recycling Becomes a Tougher Sell as Prices Drop

By Georgi Kantched and Serena Ng

April 5, 2015

The Wall Street Journal

http://www.wsj.com/articles/recycling-becomes-a-tougher-sell-as-plastic-prices-drop-1428279575

 

High Costs Put Cracks in Glass-Recycling Program

By Serena Ng

April 23, 2015

The Wall Street Journal

Late Edition – Final

B8

http://www.wsj.com/articles/high-costs-put-cracks-in-glass-recycling-programs-1429695003

 

Strategic CSR - Plastic

Plastic is a problem. For all its utility, it is based on oil that is a pollutant. Equally importantly, it doesn't break down easily. That leaves us a limited range of options when we are finished with any particular piece of plastic – we can either bury it, we can recycle it, or we can throw it away. Unfortunately, we seem to do more of the first option than the second option. Worst of all, we seem to do huge amounts of the third option. As a result, discarded plastic is everywhere. The article in the url below reports on a recent study that tells us how much is in our oceans:

 

"There is an awful lot of it: at least 268,940 tonnes, a new report estimates. And there may well be even more, mostly invisible to the eye, because the patches of rubbish appear to work like giant shredders, breaking plastic items down into tiny pieces which are then widely dispersed through the world's oceans with potentially devastating consequences for wildlife."

 

Large items make up a sizeable proportion of that weight ("just over 75% of the 268,940 tonnes of plastic is accounted for by items measuring more than 200mm"), but sheer numbers are also an issue:

 

"As for the number of items in the sea, the researchers calculated this to be 5.25 trillion bits of plastic of all sizes. The vast majority, some 4.8 trillion, are microplastics and these were spread across the world."

 

This is important because the study shows that the vast majority of the waste is extremely small in size:

 

"Some schemes have been proposed to try to clean up the plastic waste floating in the sea. But it is hardly practical when more than 90% of that rubbish is smaller than a grain of rice and is distributed globally, says Dr Eriksen [of the Five Gyres Institute in Los Angeles]. Much better, he believes, to prevent plastic getting into the oceans in the first place."

 

The planet is in our hands. We can either destroy it or preserve it. Either way, we have no-one to blame but ourselves.

 

Have a good weekend.
David

 

David Chandler & Bill Werther

Strategic Corporate Social Responsibility: Stakeholders, Globalization, and Sustainable Value Creation (3e)

© Sage Publications, 2014

 

Instructor Teaching and Student Study Site: http://www.sagepub.com/chandler3e/

Strategic CSR Simulation: http://www.strategiccsrsim.com/

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

 

 

Charting the plastic waters

December 13, 2014

The Economist

Late Edition – Final

80

http://www.economist.com/news/science-and-technology/21635982-amount-plastic-sea-huge-and-widely-spread-charting-plastic

 

Strategic CSR - Prisons

The articles in the two urls below compare maximum security prisons in the U.S. and Norway.

 

The articles are long and the issues complex but, needless to say, the two main institutions featured are like night and day. In the U.S., mental illness is routinely ignored and solitary confinement is the norm, rather than the exception. As a result, the prisoners commit awful acts against each other and, equally often, against themselves. In Norway, by contrast, the prisoners are treated with humanity in open-plan communities that were designed with rehabilitation as the goal. As such, violence in the facility is rare.

 

The issues surrounding incarceration are intensely complex and the article is clear that judging the effectiveness of one prison versus the other (in terms of recidivism, at least) is far from straightforward or conclusive. More importantly, however, I thought a series of quotes at the end of the second article spoke volumes in terms of how a society structures its core institutions (such as its legal system, it's courts, and it's approach to incarceration). Essentially, these prisons are reflections of the broader societies in which they are based. They reflect values and morals that are central to that society (consciously or subconsciously) that, I think, has ramifications far beyond the prison system. In particular, I see parallels in the issues that consistently arise in this Newsletter and around all aspects of CSR:

 

The article finishes up with a summary of a discussion with a Norwegian anthropologist (Ragnar Kristoffersen) who studies incarceration and recidivism:

 

"After nearly an hour of talking about the finer points of statistics, … Kristoffersen stopped and made a point that wasn't about statistics at all. 'You have to be aware — there's a logical type of error which is common in debating these things,' he said. "That is, you shouldn't mix two kinds of principles. The one is about: How do you fight crimes? How do you reduce recidivism? And the other is: What are the principles of humanity that you want to build your system on? They are two different questions.' He leaned back in his chair and went on. 'We like to think that treating inmates nicely, humanely, is good for the rehabilitation. And I'm not arguing against it. I'm saying two things. There are [sic] poor evidence saying that treating people nicely will keep them from committing new crimes. Very poor evidence.' He paused. 'But then again, my second point would be, … if you treat people badly, it's a reflection on yourself.' In officer-­training school, he explained, guards are taught that treating inmates humanely is something they should do not for the inmates but for themselves. The theory is that if officers are taught to be harsh, domineering and suspicious, it will ripple outward in their lives, affecting their self-­image, their families, even Norway as a whole. Kristoffersen cited a line that is usually attributed to Dostoyevsky: 'The degree of civilization in a society can be judged by entering its prisons.'"

 

Take care

David

 

David Chandler & Bill Werther

Strategic Corporate Social Responsibility: Stakeholders, Globalization, and Sustainable Value Creation (3e)

© Sage Publications, 2014

 

Instructor Teaching and Student Study Site: http://www.sagepub.com/chandler3e/

Strategic CSR Simulation: http://www.strategiccsrsim.com/

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

 

 

Inside America's Toughest Federal Prison

By Mark Binelli

March 29, 2015

The New York Times Magazine

Late Edition – Final

36

http://www.nytimes.com/2015/03/29/magazine/inside-americas-toughest-federal-prison.html

 

The Radical Humaneness of Norway's Halden Prison

By Jessica Benko

March 29, 2015

The New York Times Magazine

Late Edition – Final

44

http://www.nytimes.com/2015/03/29/magazine/the-radical-humaneness-of-norways-halden-prison.html

 

Strategic CSR - Chipotle

The article in the url below covers a recent announcement by Chipotle:

 

"In a first for a major restaurant chain, Chipotle Mexican Grill on Monday will begin serving only food that is free of genetically engineered ingredients."

 

This is the latest step in a series of actions by various food companies to distance themselves from GMO-related foods:

 

"In 2013, Chipotle was the first restaurant chain to indicate which items contained genetically modified organisms, and a small but growing number of restaurants, largely in fine dining, also now label their menus. Grocers, too, are moving to offer consumers more products free of genetically altered ingredients. The shelves and cases in Whole Foods stores are to be free of products containing such ingredients by 2018, and Walmart is vastly expanding its selection of organic foods, which are free of genetic alteration by law."

 

The problem, of course, is whether this is possible in practice, now that GMO foods have worked themselves so far into the food-chain:

 

"Ridding the supply chain of genetically altered components is difficult. They lurk in baking powder, cornstarch and a variety of ingredients used as preservatives, coloring agents and added vitamins, as well as in commodities like canola and soy oils, corn meal and sugar."

 

In addition to identifying non-GMO foods, a significant challenge is finding the volume necessary to supply a national fast-food chain:

 

"Chipotle has run short of beef from time to time, and last December it announced that it could not supply all of its restaurants with the pork needed for carnitas after an audit found that one of its suppliers had failed to meet its standards for raising pigs. That shortage continues, cutting into the company's sales, and last week it said it probably would not be able to offer carnitas in all of its more than 1,800 restaurants until this fall."

 

In spite of these challenges, to the extent that food outlets continue to reject GMO ingredients, food producers (farmers, large agribusinesses) will face pressure to remove GMOs from the supply chain. Irrespective of the science behind these organisms, stakeholders should be active in shaping their societies and, if we do not want GMO foods, then we should be sending that signal to food companies who should stop producing them.

 

Take care

David

 

David Chandler & Bill Werther

Strategic Corporate Social Responsibility: Stakeholders, Globalization, and Sustainable Value Creation (3e)

© Sage Publications, 2014

 

Instructor Teaching and Student Study Site: http://www.sagepub.com/chandler3e/

Strategic CSR Simulation: http://www.strategiccsrsim.com/

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

 

 

Chipotle to Stop Serving Genetically Altered Food

By Stephanie Strom

April 27, 2015

The New York Times

Late Edition – Final

B2

http://www.nytimes.com/2015/04/27/business/chipotle-to-stop-serving-genetically-altered-food.html

 

Strategic CSR - Moral character

The article in the url below is an interview on NPR with David Brooks, who is talking about his recently published book, The Road to Character. The book is a personal journey for Brooks, but also talks about moral character in general terms, featuring pillars of history who overcame specific character flaws and are presented as models to emulate:

 

"I do think the turning point in a life toward maturity is looking inside yourself and saying, 'What's the weakness that I have that leads to behavior that I'm not proud of?'"

 

A particular focus of the book is to contrast the goal of living a life defined by moral character against what Brooks calls "the culture of the Big Me," a characteristic of society that has become more prominent in recent decades. Brooks highlights this 'culture' because it presents such a challenge to overcoming any narcissistic tendencies we have and living for and on behalf of something that is larger than the individual:

 

"My favorite statistic about this is that in 1950 the Gallup organization asked high school seniors: Are you a very important person? And in 1950, 12 percent said yes. They asked again in 2005 and it was 80 percent who said they were a very important person."

 

Although the book is not about business, per se, I played the interview in my strategy class because I thought it was instructive in terms of building the leaders we hope our students will become. In essence, I suggested my students would be better managers if they are asking themselves the questions that Brooks poses. I believe that building moral character should be a central component of a business education, as opposed to the functional factories our business schools have become.

 

Have a good weekend.
David

 

David Chandler & Bill Werther

Strategic Corporate Social Responsibility: Stakeholders, Globalization, and Sustainable Value Creation (3e)

© Sage Publications, 2014

 

Instructor Teaching and Student Study Site: http://www.sagepub.com/chandler3e/

Strategic CSR Simulation: http://www.strategiccsrsim.com/

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

 

 

Take It From David Brooks: Career Success 'Doesn't Make You Happy'

April 13, 2015

National Public Radio

http://www.npr.org/2015/04/13/399391894/take-it-from-david-brooks-career-success-doesnt-make-you-happy