Strategic CSR - GAAP

The article in the url below reveals the extent to which large U.S. firms are now manipulating their quarterly results by presenting adjusted (i.e., non-GAAP) earnings in addition to their standard accounting results:

 

"Just 29 companies in the S&P 500 index—or 5.7% of the total—closed their books for 2015 exclusively using U.S. Generally Accepted Accounting Principles, or GAAP. That's a sharp decline from 25% in 2006, according to research firm Audit Analytics."

 

The reasons why firms do this do not seem to be in doubt:

 

"The purists are dwindling as companies struggle to increase their earnings in the wake of the 2008 financial crisis, analysts and accountants say. … The adjusted, or customized, figures many finance chiefs use to supplement their company's standard financial reports inflate income by an average of 44% at profitable companies, according to new research. … Adjustments can exclude the effects of such factors as currency swings, noncash charges like restructuring costs and one-time charges. That can help mask the impact of tepid global economic growth, which has left many businesses unable to raise prices and hindered sales growth."

 

As one accountant quoted in the article succinctly puts it:

 

"If everything is rosy and GAAP looks great, there is no need to include a non-GAAP metric."

 

The graphic accompanying the article demonstrates the speed with which firms have adopted this practice:

 

https://si.wsj.net/public/resources/images/BT-AJ548_CFO_16U_20160627184204.jpg

 

The interesting thing about this story, however, is not that this is happening so much as that investors are letting firms get away with it. In other words, although the information on the number of firms employing this practice is freely available, investors either do not know or do not care. Clearly, executives do not feel there is a penalty to be paid if they continue this practice. But, it seems reasonable to conclude that, the longer they are allowed to get away with it, the more they will push the boundaries of what is considered 'acceptable':

 

"U.S. companies are allowed to report non-GAAP metrics so long as they are labeled, justified and reconciled with comparable standard accounting figures, but there is little oversight of how these adjusted figures are calculated."

 

Ultimately, where is the line between presenting a more 'realistic' version of the firm's operations and outright lying about performance? Given the jump in use in recent years, this is something that is of concern to regulators:

 

"SEC Chairman Mary Jo White has warned against giving adjusted earnings more prominence than standard numbers, because it might mislead investors. In May, the agency issued new guidance on using and publicizing non-GAAP measures and signaled it may issue new rules to curtail the practice."

 

What might provide a bit more of an incentive for executives to curtail this practice is if SEC queries to specific firms about questionable practices are immediately made available to investors, rather than delayed as at present. Until there is some meaningful pushback from stakeholders, behavior is unlikely to change.

 

Take care

David

 

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (4e)

© Sage Publications, 2017

 

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler4e

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

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


Accounting Blurs Profit Picture

By Tatyana Shumsky and Theo Francis

June 28, 2016

The Wall Street Journal

Late Edition – Final

B1

http://www.wsj.com/articles/accounting-choices-blur-profit-picture-1467086625

 

Strategic CSR - Upcycling

The photos accompanying the article in the url below contain some great examples of clothing and accessory companies that are shifting our definitions of sustainable apparel:

 

"From selling clothes with a 30 year guarantee to touring Europe in a repair shop – these brands are advancing the circular economy within fashion."

 

One good example:

 

"Elvis & Kresse collect decommissioned firehoses from fire brigades across the UK and turn them into bags. The hoses, (some of which have spent over 20 years fighting fire) are saved from landfill and 50% of profits from the range is donated to The Fire Fighters Charity."

 

Similarly:

 

"If you send your old shirts to Netherlands based Van Hulley, they'll turn them into new boxer shorts and send them back to you. The idea came to founder Jolijn Creutzberg over 15 years ago. … In 2012 Creutzberg turned her idea into a social enterprise which employs women who are otherwise distanced from the labour market.

 

As well as creating new products using recycled materials, there is also value in repairing old products, whether they were made by your company or someone else's:

 

"Outdoor clothing company Patagonia is currently on a five-country, 50-stop tour around Europe in two mobile repair shops. The shops are open to anyone with a garment in need of repair, regardless of brand. 'We want to empower our customers to be owners, not just consumers,' says Patagonia CEO Rose Marcario. 'It's a simple but critical message: keep your gear in action longer and take some pressure off our planet.'"

 

Have a good weekend

David

 

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (4e)

© Sage Publications, 2017

 

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler4e

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

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

 

 

Fish net bikinis and mushroom death suits – Eco fashion in pictures

By Hannah Gould

May 12, 2016

The Guardian

http://www.theguardian.com/sustainable-business/gallery/2016/may/12/fish-net-bikinis-and-mushroom-death-suits-eco-fashion-in-pictures

 

Strategic CSR - Dave's Killer Bread

Here's a good example of the power of business to transform lives – organizations offering opportunities for employment to people who have served time in prison:

 

"Bonnie Rice was released from prison last year. After a five-year, drug-related prison sentence, she knew she couldn't go back to any of the people who led her into trouble. … She managed to find a place to live in a halfway house. But even though she filled out lots and lots of job applications in the first few months out of prison, she didn't get many calls back. … Then she found Together We Bake. It's a bakery … that makes granola, cookies and kale chips for local eateries and a local Whole Foods store. It's also a job-training and coaching program for women who need a second chance — many of whom have served time in prison, or are on probation following criminal charges."

 

Together We Bake (http://www.togetherwebake.org/) operates in the Washington DC area and, as its website states, is set-up to provide opportunities to women who otherwise face limited employment options:

 

"Together We Bake's mission is to provide a comprehensive workforce training and personal development program to help women gain self-confidence, transferable workforce skills, and invaluable hands-on experience which will allow them to find sustainable employment and move toward self-sufficiency."

 

The radio story in the url below explores this issue in depth, profiling Together We Bake as well as other companies that see their role as employer as an opportunity to help a segment of the population that is ignored or excluded by most firms. In particular, it highlights a company and product that I have loved for some time now: Dave's Killer Bread (http://www.daveskillerbread.com/). As Dave's Killer Bread (DKB) announces proudly on its website:

 

"DKB is powerfully different. Packed with protein, fiber, and whole grains with no artificial anything. It will rock your world."

 

Dave's Killer Bread will rock your world, but it will also make you feel good about capitalism. It is a company whose values are founded around the concept of a second chance and, in particular, what it terms "second chance employment":

 

"One in three of our employee partners has a criminal background. At Dave's Killer Bread, we believe everyone is capable of greatness and that a second chance can lead to positive lasting change. In 2015 we introduced our non-profit, the Dave's Killer Bread Foundation, with the mission to inspire other businesses to become Second Chance Employers and affect positive societal change."

 

Dave's Killer Bread is both healthy and tasty and, believe me, your doctor recommends it!

 

Take care

David

 

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (4e)

© Sage Publications, 2017

 

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler4e

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

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

 

 

This Bakery Offers A Second Chance For Women After Prison

By Allison Aubrey

April 15, 2016

National Public Radio

http://www.npr.org/sections/thesalt/2016/04/15/469942932/this-bakery-offers-a-second-chance-for-women-after-prison

Strategic CSR - Passive investing

The article in the url below focuses on the effects of the growing trend of passive investing (e.g., exchange-traded funds) on overall market performance. This is interesting because passive investing is being increasingly sold to armchair investors as a 'safe' way to invest in the market:

 

"The argument goes like this: the stock market will outperform other investments over the long term, yet no individual is in a position to outsmart the market as a whole. So the best way to reap the rewards of investing in stocks with minimal risk is to put your money in a fund that tracks the performance of some broad, indexed measure of the market, such as the S&P 500."

 

In reality, however, the greater the proportion of the total market that is invested in funds designed to track the overall market, the greater the extent to which these funds become a self-fulfilling prophecy. In other words, they become the market, rather than reflecting the market:

 

"It stands to reason that beyond some threshold, a market that has more passive than active investors will behave differently than markets have in the past. One way to think about this is to imagine that investment decisions are increasingly on autopilot: more and more money will pour into a set of firms largely independent of the considerations that have traditionally guided investors, such as supply, demand, management performance, growth potential, or broader economic factors."

 

The result is an even greater distortion of what the stock market represents (and the overall value that it adds):

 

"Typically, stocks are indexed by market capitalization—the value of a firm's share price times the number of shares—from highest to lowest. A market with more passive investors than active ones will continue to push money into the largest firms, whether these companies are actually performing strongly or not."

 

Inertia is a strong force, affecting everything from business school rankings to our weekly shopping list. It is not hard to see the potentially distorting effects it can have on the stock market:

 

"Timothy O'Neill, the global co-head of Goldman Sachs' investment-management division, [said] that essentially every new indexed dollar goes to the same places as previous dollars did. This 'guarantees that the most valuable company stays the most valuable, and gets more valuable and keeps going up. There's no valuation or other parameters around that decision,' he said. … Such effects already exist today, of course, but the market is able to rely on active investors to counteract them. The fewer active investors there are, however, the harder counteraction will be."

 

Other potentially damaging effects of the growing influence of passive investors/funds are discussed in the article.

 

Take care

David

 

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (4e)

© Sage Publications, 2017

 

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler4e

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

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


Is Passive Investing Actively Hurting the Economy?
By James Ledbetter
March 9, 201
The New Yorker
http://www.newyorker.com/business/currency/is-passive-investment-actively-hurting-the-economy

 

Strategic CSR - Corporate taxes

The article in the url below covers a topic I have been thinking about for a while – corporate taxes. In particular, the appropriate level of corporate taxation:

 

"Just about every American chief executive has the same dream: to get out from under the corporate income tax. For many, that means lobbying Congress to change the tax code. But for a growing number, it also involves increasingly creative — and successful — tricks to avoid their liability."

 

In order to achieve this, most corporations are adopting ingenious schemes (many of which skirt the fuzzy boundary between avoidance and evasion) to pay less than their governments have determined to be their 'fair' share:

 

"The latest fad is inversion. Over the last few years, some of the country's largest companies have arranged to be taken over by smaller companies, conveniently headquartered in the Bahamas or some other tax haven. A company then has to pay tax only in the tax haven; it escapes American corporate income taxes altogether."

 

The result of these schemes (of which inversion is only the most dramatic) is widespread avoidance, which obviously defeats the purpose of corporate taxation. The common refrain from companies is that they abide by the relevant laws wherever they operate. While probably true in most cases, this reflects poorly on our elected representatives who have failed to pass laws that accommodate the modern structures of multi-national corporations, along with innovations in accounting practices that allow firms to avoid taxes so effectively ("intra-group loans" appear to be a favored ploy):

 

"Though the United States has the highest statutory corporate income tax in the developed world, … Corporate income taxes were just 1.9 percent of gross domestic product in 2014. That is down from an average of 2.6 percent in the 1970s, even though profits are near a postwar high as a share of national income."

 

In response, some have suggested that, due to the ability of firms to stay one step ahead of regulators and the enormous waste of resources avoidance/evasion consumes, we should instead consider getting rid of corporate taxes altogether. A related article in The Economist (the article in the second url below) presents the benefits of pursuing this option:

 

"Corporate taxes are a poor way to raise revenue. Since the burden is ultimately borne by people, whether investors, workers or consumers, it would, in theory, be more efficient to tax [those people] directly."

 

One essential element of shifting the tax burden to people, in my opinion, would be to tax capital and income at the same rate. While seemingly attractive, however, the article also indicates the problems that would likely arise if governments pursued this course:

 

"In poor countries with large informal sectors, big companies are a rare source of reliable tax revenue. In rich countries, wealthy people would doubtless turn themselves into companies to avoid income taxes. For policymakers, therefore, the priority is to make corporate taxes less distorting and less easy to avoid."

 

In contrast, I wonder if a low tax rate (say 1-2%) levied as a percentage of revenues, rather than profits, would achieve the desired effect (and is essentially how the incomes of individuals are taxed). Although this would penalize firms that are yet to make a profit, it is also true that companies at all stages of development extract a benefit and exert a cost on the societies in which they are based. At a minimum, it would be interesting to see a comparison of the revenues raised by government under the existing system and one based on a corporate tax rate of 1% (or 2% or 3%) of gross revenues. An alternative idea, presented in the article in the first url below, is more creative:

 

"Suppose that, instead of taxing corporate profits, we required companies to turn over an amount of stock, in the form of nonvoting shares, to the government. … The shares would be nontransferable, except in the case of mergers or buyouts, but they otherwise would be treated just like any other shares. If the company paid a dividend to its other stockholders, then it would pay the same per share dividend to the government. If it bought back 10 percent of its shares, then it would buy back 10 percent of the government's shares at the same price. In the event of a takeover, the buyer would have to pay the same per-share price to the government as it did to the holders of other shares."

 

The author suggests this would make it much more difficult for companies to avoid paying their 'fair' share of profits:

 

"This way, there is no way for a corporation to escape its liability. A portion of whatever profit it makes will automatically go to the government. It also eliminates the enormous cost and waste associated with complying with or avoiding the corporate income tax (there would be some start-up and monitoring costs, of course, but nothing like what current enforcement requires). And federal revenues will go up, because companies will have incentive to do what is most profitable, not what minimizes their tax liability."

 

And, in order to reduce resistance, the suggestion is that the policy should be voluntary – firms could choose whether they wanted to pay the current rate of tax or, instead, pay using shares:

 

"If we pick the right number, many companies will go with the share option. This both gets us much of the way there, but also makes it easier for the Internal Revenue Service to focus on the companies that didn't take the deal. They have told us with their actions that they think they can escape their tax liability."

 

Take care

David

 

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (4e)

© Sage Publications, 2017

 

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler4e

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

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

 

 

Get Rid of Corporate Taxes

By Dean Baker

January 13, 2016

The New York Times

Late Edition – Final

A21

http://www.nytimes.com/2016/01/13/opinion/a-progressive-way-to-replace-corporate-taxes.html

 

Going after Google

Editorial

January 30, 2016

The Economist

Late Edition – Final

11

http://www.economist.com/news/leaders/21689546-britains-tax-men-struck-poor-deal-real-problem-lies-flawed-international

 

Strategic CSR - Patagonia

I had missed this, but Patagonia is now making and selling food. As the article in the url below reports, the independent company set-up by Patagonia for this is named Patagonia Provisions and draws on "regenerative agriculture" as its guiding philosophy:

 

"Conventional farming practices tend to entail reaping one annual crop, tilling the soil for next season's harvest, and making extensive use of inputs—fertilizer, herbicides, pesticides—to boost yield. Regenerative agriculture emphasizes a diverse variety of crops (throughout the farm, in rotation, or even in the same field), not tilling the soil, using fewer inputs, and adding perennials into the mix as buffers and cover crops. It's a lot harder than it sounds, but a growing body of soil science and on-farm research shows that these techniques—especially not tilling the soil—can generate competitive harvests while saving water and restoring topsoil. That restored soil is able to fix more nitrogen in place, so farmers can cut down on expensive nitrogen fertilizers and excess nitrogen doesn't run off into rivers and create dead zones in bays. This soil retains higher concentrations of carbon, too, so it doesn't rise in the atmosphere and trap heat there, frying the planet."

 

The article is long and detailed for all those wanting to find out more about this new venture. I was drawn to a couple of quotes by Yvon Chouinard towards the end of the article that illustrate this revolutionary founder's exasperation at the snail's pace of progress on what has become his life's work:

 

"For a while, [Chouinard] was proud of the work his sustainability teams did with companies like Walmart. But, he says, 'they took the low-hanging fruit, recycling plastic, converting their fleet over to natural gas. Things like that. They did everything that ends up making 'em more money. But when it comes down to doing the hard things, anything with a long-term payoff, they backed out.' He stresses that it's not just Walmart. 'All of these companies, whether it's Dannon or Unilever, they're all ­greenwashing. They start out making a big deal out of something and they back down. It's like Nike started out doing a little bit of organic cotton, like 1 percent. Now I don't know if they do any at all. The fashion industry, same thing.'"

 

Take care

David

 

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (4e)

© Sage Publications, 2017

 

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler4e

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

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

 

 

Solving Climate Change with Beer From Patagonia's Food Startup

By Bradford Wieners

October 10-16, 2016

Bloomberg Businessweek

Late Edition – Final

54-59

http://www.bloomberg.com/news/features/2016-10-03/solving-climate-change-with-beer-from-patagonia-s-food-startup

 

Strategic CSR - Warren Buffett

If you are an active investor, you are likely aware that Warren Buffett releases an annual letter to Berkshire Hathaway's shareholders. In this year's letter (released in March), he addressed the issue of climate change. In particular, he analyzed the issue in relation to Berkshire Hathaway's sizeable holdings in the insurance industry. Perhaps surprisingly, he was very bullish on the prospect of widespread environmental degradation:

 

"As a citizen, you may understandably find climate change keeping you up nights. As a homeowner in a low-lying area, you may wish to consider moving. But when you are thinking only as a shareholder of a major insurer, climate change should not be on your list of worries."

 

His reasoning rests on the somewhat ignorant argument that climate change has yet to produce any change in the number of extreme weather events:

 

"Up to now, climate change has not produced more frequent nor more costly hurricanes nor other weather-related events covered by insurance. As a consequence, U.S. super-cat rates have fallen steadily in recent years, which is why we have backed away from that business. If super-cats become costlier and more frequent, the likely – though far from certain – effect on Berkshire's insurance business would be to make it larger and more profitable."

 

As the article in the url below notes, however, this view contradicts the current scientific consensus. I imagine it is also not consistent with those in the north-east of the U.S. who were standing in the way of Hurricane Sandy when it hit in 2012:

 

"This claim flies in the face of growing scientific evidence. In 2014, the federally funded National Climate Assessment stated that: 'Certain types of extreme weather events with links to climate change have become more frequent and/or intense, including prolonged periods of heat, heavy downpours, and, in some regions, floods and droughts.'"

 

Moreover:

 

"Other insurers have already expressed concern about these changes. Carl Hedde, head of risk accumulation for insurer Munich Re America, says: 'The number of loss-relevant, weather-related natural catastrophes worldwide has almost tripled since 1980 […] we do think that the warming climate – depending on region and peril concerned – does play a certain role.'"

 

What is even more striking is the contrast between what Buffett said in this year's letter and what he has said in previous year's letters (as noted in the article in the second url below):

 

"Buffett certainly understands the danger of miscalculating risks. In his 2007 shareholder letter, he wrote that 'devastating storms' like Hurricane Katrina could 'rock the insurance industry.' 'We do know it would be a huge mistake to bet that evolving atmospheric changes are benign in their implications for insurers,' Buffett said then."

 

Buffett has demonstrated similar insensitivity to shifts that are occurring in other industries, too. He has recently reiterated his strong support for the railroad industry (in particular, Burlington Northern Santa Fe), even though between 30 and 40% of revenues in this industry come from the transportation of coal. In banking, I have not seen or heard any demonstrable comments about the recent behavior at Wells Fargo, which has now resulted in the CEO's resignation. And in the food industry, by doubling down on his support for Coca-Cola, not to mention Dairy Queen and last year's merger between Kraft and Heinz, he appears willing to squeeze as much revenue out of these fading brands, irrespective of the healthcare consequences of the salt, sugar, and fat that are stuffed into each of the company's products.

 

As a European living in the U.S., it seems counter-intuitive to me that Buffett should be praised for doing so much good with the fortune he has amassed (by pledging it to the Gates Foundation), without some comment on the social consequences incurred during the accumulation of that fortune. To me at least, doing good with a fortune once you have it does not justify the methods used to build that fortune.

 

Take care

David

 

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (4e)

© Sage Publications, 2017

 

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler4e

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

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


The big flaw in Warren Buffett's view of climate change

By Thomas P Lyon

March 7, 2016

The Guardian

http://www.theguardian.com/sustainable-business/2016/mar/07/warren-buffett-climate-change-insurance-policy-berkshire-hathaway-shareholder-letter

Warren Buffett to shareholders: Climate change is nothing to worry about

By Alison Moodie

March 2, 2016

The Guardian

http://www.theguardian.com/sustainable-business/2016/mar/02/warren-buffett-shareholders-climate-change-insurance-berkshire-hathaway

 

Strategic CSR - The child in the basement

Good social commentators seek to hold up a mirror to society so we can see what we look like to others. The best ones are able to do it while inviting us in, rather than pushing us away. The goal is to enlist our participation in seeking change, rather than highlighting our weaknesses and moving on. David Brooks of The New York Times is one of my favorite commentators because he does this with good writing and by drawing on a wide source of literary and academic sources. I don't always agree with his columns, but there are a critical mass of them that truly hit home, powerfully. I have written a number of Newsletters that were stimulated by his columns (see here) and my favorite of his columns that speaks directly to my research interests is here. The article in the url below is another good one. The foundation for the column is a short story by Ursula Le Guin ('The Ones Who Walk Away from Omelas') and the center of the story is the child in the basement in the town of Omelas. You'll have to read the column to understand why the child is in the basement, but the central moral decision lies in those who choose to live in Omelas and those who choose not to accept the moral tradeoffs that living in Omelas entails:

 

"That is the social contract in Omelas. One child suffers horribly so that the rest can be happy. If the child were let free or comforted, Omelas would be destroyed. Most people feel horrible for the child, and some parents hold their kids tighter, and then they return to their happiness. But some go to see the child in the room and then keep walking. They don't want to be part of that social contract. 'They leave Omelas; they walk ahead into the darkness and they do not come back.'"

 

In reality, as Brooks notes, the vast majority of us, facing the same tradeoff, choose to live in Omelas:

 

"The story compels readers to ask if they are willing to live according to those contracts. Some are not. They walk away from prosperity, and they make some radical commitment. They would rather work toward some inner purity. The rest of us live with the trade-offs. The story reminds us of the inner numbing this creates. The people who stay in Omelas aren't bad; they just find it easier and easier to live with the misery they depend upon. I've found that this story rivets people because it confronts them with all the tragic compromises built into modern life — all the children in the basements — and, at the same time, it elicits some desire to struggle against bland acceptance of it all."

 

Of course, we can rationalize living in Omelas because we are trying to make the town better. In reality, we all compromise our principles on some level, both collectively and individually, for the benefits that living in Omelas provides:

 

"In another reading, the whole city of Omelas is just different pieces of one person's psychology, a person living in the busy modern world, and that person's idealism and moral sensitivity is the shriveling child locked in the basement."

 

Take care

David

 

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (4e)

© Sage Publications, 2017

 

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler4e

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

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


The Child in the Basement

By David Brooks

January 13, 2015

The New York Times

Late Edition – Final

A23

http://www.nytimes.com/2015/01/13/opinion/david-brooks-the-child-in-the-basement.html

 

Strategic CSR - CSR Threshold

You know that an industry has passed through its CSR Threshold (Chapter 10, p222) when the government has to place a health warning on ads promoting its main product:

 

"San Francisco is set to become the first U.S. city to require health warnings on advertisements for soda and other sugar-added drinks after the beverage industry failed Tuesday to get a court order to stop it."

 

The law was implemented over the summer and it designed to shape ads on billboards or other public spaces, such as bus stops. The law stipulates the wording of the warning that should accompany these adds in future:

 

"WARNING: Drinking beverages with added sugar(s) contributes to obesity, diabetes, and tooth decay. This is a message from the City and County of San Francisco."

 

All legal attempts by the American Beverage Association to block the law have failed on the radical idea that it is well within the rights of governments to pass laws that are designed to protect their citizens. Increasingly for the soda industry in the U.S., this is a position that is gaining ground:

 

"Philadelphia is weighing a tax of 3 cents per ounce on drinks with added sugars. The Food and Drug Administration has proposed listing the amount of added sugar on nutrition labels and recommended consumption levels. Lawmakers in states including California and New York also have proposed warning labels on beverage containers but have failed to gain traction."

 

Take care

David

 

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (4e)

© Sage Publications, 2017

 

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler4e

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

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

 

 

Soda Industry Fails to Stop San Francisco Law Targeting Sugar

By Mike Esterl

May 18, 2016

The Wall Street Journal

http://www.wsj.com/articles/soda-industry-fails-to-stop-san-francisco-law-targeting-sugar-1463525818

 

Strategic CSR - Pfizer

The article in the url below reports an important step in the campaign against the death penalty in the U.S.:

 

"The pharmaceutical giant Pfizer announced on Friday that it had imposed sweeping controls on the distribution of its products to ensure that none are used in lethal injections, a step that closes off the last remaining open-market source of drugs used in executions."

 

Pfizer is a late-comer to this debate, joining a long list of companies that have objected to the use of their drugs in executions:

 

"More than 20 American and European drug companies have already adopted such restrictions, citing either moral or business reasons. Nonetheless, the decision from one of the world's leading pharmaceutical manufacturers is seen as a milestone."

 

This announcement is important because Pfizer was the last legitimate source for these drugs:

 

"'With Pfizer's announcement, all F.D.A.-approved manufacturers of any potential execution drug have now blocked their sale for this purpose,' said Maya Foa, who tracks drug companies for Reprieve, a London-based human rights advocacy group. 'Executing states must now go underground if they want to get hold of medicines for use in lethal injection.'"

 

Rather than taking these obstacles as an indication of social disapproval, however, those U.S. states still executing their citizens (and the list is growing short) are improvising:

 

"Some states have used straw buyers or tried to import drugs from abroad that are not approved by the Food and Drug Administration, only to see them seized by federal agents. Some have covertly bought supplies from loosely regulated compounding pharmacies while others, including Arizona, Oklahoma and Ohio, have delayed executions for months or longer because of drug shortages or legal issues tied to injection procedures. A few states have adopted the electric chair, firing squad or gas chamber as an alternative if lethal drugs are not available."

 

As sources dry up, states have refused to reveal how they obtained the drugs they use. While possibly unconstitutional (in that it makes it impossible for undue suffering to be avoided), the resulting variable quality of drugs has produced alarming results:

 

"Many states have experimented with new drug combinations, sometimes with disastrous results, such as the prolonged execution of Joseph R. Wood III in Arizona in 2014, using the sedative midazolam. The state's executions are delayed as court challenges continue. Under a new glaring spotlight, deficiencies in execution procedures and medical management have also been exposed. After winning a Supreme Court case last year for the right to execute Richard E. Glossip and others using midazolam, Oklahoma had to impose a stay only hours before Mr. Glossip's scheduled execution in September. Officials discovered they had obtained the wrong drug, and imposed a moratorium as a grand jury conducts an investigation."

 

Pfizer, for its part, is presenting this decision as a moral stand, even though the company has taken its time getting to this point:

 

"'Pfizer makes its products to enhance and save the lives of the patients we serve,' the company said in Friday's statement, and 'strongly objects to the use of its products as lethal injections for capital punishment.' Pfizer said it would restrict the sale to selected wholesalers of seven products that could be used in executions. The distributors must certify that they will not resell the drugs to corrections departments and will be closely monitored."

 

Pfizer's decision is just the latest in a long line of indicators that the death penalty is becoming increasingly impractical to implement, even while it remains a relatively popular punishment option in the U.S.:

 

"For a host of legal and political reasons as well as the scarcity of injection drugs, the number of executions has declined, to just 28 in 2015, compared with a recent peak of 98 in 1999, according to the Death Penalty Information Center."

 

Take care

David

 

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (4e)

© Sage Publications, 2017

 

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Pfizer Blocks the Use of Its Drugs in Executions

By Erik Eckholm

May 13, 2016

The New York Times

http://www.nytimes.com/2016/05/14/us/pfizer-execution-drugs-lethal-injection.html