Strategic CSR - Amazon

The article in the url below details Amazon's attempts to make its supply chain more efficient by requiring its suppliers to limit their packaging:

 

"Amazon is pressuring brands to make their packaging more efficient, which has prompted vendors to make costly changes to their businesses or face fines. Since last fall, Amazon has told companies they must make packaging for thousands of larger products more compact and easier to open by Thursday. Eventually, Amazon wants every product it ships to meet similar standards, according to the company and its suppliers. In a letter to vendors, Amazon said the requirements will make packages more environmentally friendly."

 

As an indication of its growing purchasing power, it is increasingly able to enforce its requirements:

 

"The company has also been pushing brands to sell products in quantities and at prices that best fit its storage and delivery systems; brands that don't comply are being cut from Amazon's site."

 

My question, therefore, is: Is this an example of sustainability (which the CSR community would no doubt applaud) or is it an example of an overly-aggressive, dominant market power forcing suppliers to alter their practices irrespective of their interests/concerns? Or, is it both at the same time and do we care about the distinction?

 

The article reminded me of Walmart's efforts to squeeze costs out of its supply chain, for example by forcing laundry detergents to introduce concentrate products that are then, supposedly, diluted by the end customer when we put it in our laundry machines? By not shipping the extra water, Walmart (and its suppliers) saved millions of dollars in packaging and reduced fuel costs – savings that are not one-off, but are compounded year-on-year as the products in specific industries, and their supply chains, changed forever.

 

To me, this speaks to the confounding effect of altruism in the CSR debate. I go into length about this in the textbook in the discussion about voluntary vs. mandatory CSR. It seems to me that the most effective way to bring about change is to incentivize firms to engage in practices that are deemed to be beneficial. If the incentives are real, then the self-interest of the firm is automatically aligned with the broader societal (collective set of stakeholders) interest. But, in order for the incentives to be real, stakeholders have to truly care and reward those firms that engage in the desired practices and punish those firms that shun those practices.

 

That, in a nutshell, is the argument driving strategic CSR.

 

Happy Thanksgiving!

David

 

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (5e)

© Sage Publications, 2020

 

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler5e 

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

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

Amazon Pushes Brands to be Less Boxy

By Annie Gasparro

July 30, 2019

The Wall Street Journal

Late Edition – Final

B2

https://www.wsj.com/articles/amazon-pushes-brands-to-be-less-boxy-11564490849

 

Strategic CSR - United

Given that many of you in the U.S. will be travelling this week for the Thanksgiving holiday, the article in the url below covers the progress airlines are making on reducing the environmental impact of their core product. It details a one-off plane trip from Chicago to LA, operated by United, designed to demonstrate the range of new policies and practices the company is exploring to achieve carbon neutral plane flights. The airline has previously committed to reduce its emissions "by more than 50% by 2050," and this flight was designed to demonstrate its progress to date:

 

"The meals were served on compostable or recyclable plates; hot beverages were served in recyclable paper cups, an industry first, according to the airline. The cutlery was compostable. In first class, passengers' meals were covered with a beeswax wrap instead of the usual plastic and there was no plastic ring around the napkin."

 

A reduction in waste was the first of four areas of operations that United was using the flight to demonstrate. The other three areas were:

 

• Fuel: "The Boeing 737-900 flight, with 161 passengers, was powered not just by traditional jet fuel; 30% was biofuel made from agricultural waste."
• Efficiency: "Pilots used single-engine taxi procedures instead of using both engines to reduce fuel burn on the runway."
• Offsets: "The airline purchased carbon offsets to cover the remaining portion of flight where it didn't achieve zero emissions."

 

Although this was only a one-off flight, United reported zero waste from the flight, with the exception of waste generated separately by the customers:

 

"The goal: zero cabin waste instead of the average 65 pounds of garbage taken off a United flight. (They got it down to 14 pounds, all of it passenger garbage.)"

 

What I find interesting about the experiment, however, are the customer reactions. The article reports a limited sampling, but all the comments are either superficial or negative:

 

"Annika Bjorklund, 17, … and her father, Steve, were on Flight 310 but didn't know the special events were planned. 'I think it's a really cool thing,' she said. Steve Bjorklund praised the airline's sustainability efforts but said they wouldn't dictate his choice of airline. 'I'm a United flyer,' he said. 'I'm going to fly United anyway.' Joanne DeTrana watched the festivities somewhat skeptically from the B11 gate area. … 'I believe in sustainability but I think sometimes you can carry it to the Nth degree,' she said. 'To me, that's not a big marketing sell.' DeTrana said it wouldn't factor into her ticket buying decisions. 'Price and comfort top that list, she said."

 

In other words, United goes to all that effort and its passengers merely shrug their shoulders. This still may be useful for the firm if it motivates its employees but, in order for United to continue these efforts, a key stakeholder group needs to demonstrate that it wants and appreciates them. Otherwise, what is the point?

 

Take care

David

 

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (5e)

© Sage Publications, 2020

 

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler5e 

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

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

Biofuel, beeswax wraps and recyclable coffee cups: United debuts 'eco-friendly flight'
By Dawn Gilbertson
June 6, 2019

USA Today

https://www.usatoday.com/story/travel/flights/2019/06/06/united-airlines-eco-friendly-flight-biofuel-cabin-waste-recyclable-cups/1358168001/
 

Strategic CSR - Ethics and A.I.

One of the most interesting aspects of autonomous cars, I think, is the ethics surrounding them. Because cars are dangerous, the programmers writing the software to govern autonomous vehicles have to make decisions about life and death. For example, if there is a potential accident and the car has to make a decision between two bad options (e.g., swerving to miss one pedestrian, but inevitably hitting another), what are the values being embedded in the software that will help the car make such decisions when it has to? For example, would it preserve the life of one child if it meant hitting two elderly people? Who gets to decide this stuff? Who should be deciding this stuff? Putting aside the fact that, by default, we have outsourced the responsibility for determining these ethics/values to a small set of multi-national companies (where recent events suggest adult oversight is lacking), it is interesting to consider the range of possibilities. The article in the url below tackles this challenge head-on. It does so by evoking one of the oldest conundrums used in ethics classrooms around the world:

 

"THE TROLLEY problem used to be an obscure question in philosophical ethics. It runs as follows: a trolley, or a train, is speeding down a track towards a junction. Some moustache-twirling evildoer has tied five people to the track ahead, and another person to the branch line. You are standing next to a lever that controls the junction. Do nothing, and the five people will be killed. Pull the lever, and only one person dies. What is the ethical course of action?"

 

The relevance of this problem to the autonomous car debate quickly becomes evident:

 

"The excitement around self-driving cars … has made the problem famous. A truly self-driving car, after all, will have to be given ethical instructions of some sort by its human programmers. That has led to a miniature boom for the world's small band of professional ethicists, who suddenly find themselves in hot demand."

 

Rather than ask philosophers, however, a group of researchers at MIT decided to scale this project by designing a website ("Moral Machine," http://moralmachine.mit.edu/) that asks the general public to make decisions about who to spare when difficult choices need to be made:

 

"In one [scenario], for instance, a self-driving car experiences brake failure ahead of a pedestrian crossing. If it carries on in a straight line, a man, a woman and two homeless people of unspecified sex will be run down. If it swerves, the death count will be the same, but the victims will be two women and two male business executives. What should the car do? ... In the end [the website] gathered nearly 40m decisions made by people from 233 countries, territories or statelets."

 

The results are somewhat predictable (a "person with a pram" was spared the most; "girls" are favored over "boys," etc.), but are no less interesting because of that. The chart in the article (https://cdn.static-economist.com/sites/default/files/images/print-edition/20181027_STC639.png) starkly displays the relative value placed on the lives of different people (and some pets). It is interesting, for example, that a "criminal" is valued over a "cat," but not over a "dog":

 

"Preferences differed between countries. The preference for saving women, for instance, was stronger in places with higher levels of gender equality. The researchers found that the world's countries clustered into three broad categories, which they dubbed 'Western,' covering North America and the culturally Christian countries of Europe, 'Eastern,' including the Middle East, India and China, and 'Southern,' covering Latin America and many of France's former colonial possessions. Countries in the Eastern cluster, for instance, showed a weaker preference for sparing the young over the elderly, while the preference for humans over animals was less pronounced in Southern nations. Self-driving cars, it seems, may need the ability to download new moralities when they cross national borders."

 

While the authors of the project are quick to point out that these results should not simply be translated directly into public policy, they do want to make the point that some rules on this might be a good idea:

 

"Germany is, so far, the only country to have proposed ethical rules for self-driving cars. One of those rules is that discrimination based on age should be forbidden. That seems to conflict with most people's moral preferences."

 

And, although the study focuses on relatively rare/unusual events, the researchers' point is that no one is thinking seriously about any ethical aspects of the decisions programmers are making every day about the values these machines will be guided by:

 

"Many people, says Dr Rahwan [one of the study's authors], dismiss the trolley problem as a piece of pointless hypothesising that is vanishingly unlikely to arise in real life. He is unconvinced. The specific situations posed by the website may hardly ever occur, he says. But all sorts of choices made by the firms producing self-driving cars will affect who lives and who dies in indirect, statistical ways. He gives the example of overtaking cyclists: 'If you stay relatively near to the cycle lane, you're increasing the chance of hitting a cyclist, but reducing the chance of hitting another car in the next lane over,' he says. 'Repeat that over hundreds of millions of trips, and you're going to see a skew in the [accident] statistics.'"

 

Take care

David

 

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (5e)

© Sage Publications, 2020

 

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler5e 

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

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

A selection from the trolley

October 27, 2018

The Economist

Late Edition – Final

75

https://www.economist.com/science-and-technology/2018/10/27/whom-should-self-driving-cars-protect-in-an-accident

 

Strategic CSR - Economics

The greatest challenge we face as a society is how best to utilize the limited resources we have on the planet. In other words, given the fixed set of (scarce and valuable) resources available to us (unless Elon Musk hurries up and finds a way to get us to Mars), how can we best allocate them to achieve optimal outcomes? This, in essence, is the challenge that economics exists to address. Although the field has had mixed results to date, clearly market forces are a better solution than anything else we have invented. Not perfect by any means (and the advent of behavioral economics has moved us forward considerably) but, nevertheless, the best option we have at present.

 

In many ways, this is the same question that the CSR debate seeks to address (although it is rarely framed this way), which is why it is so important to incorporate what we have learned from economic theory and human psychology into the models we use to analyze economic exchange and develop possible reforms or (alternative) solutions.

 

The fundamental answer proposed by Strategic CSR is a form of empowered stakeholder theory, where stakeholders act according to their true values/ethics/morals to hold firms to account for their actions – rewarding behavior they support and punishing behavior they oppose. It is important to understand that this model does not rely solely on consumers, but on all stakeholders in terms of their interactions with the firm (e.g., employees deciding where to work, suppliers deciding which firms to supply, government deciding what to regulate, journalists deciding which stories to cover, etc.). While these stakeholder decisions often occur subconsciously (and/or ignorantly), Strategic CSR encourages them to be more conscious. The more we are informed and consciously interacting with firms, the more they will do exactly what we (collectively) want them to do.

 

As I often say to my students, we get the firms we deserve in the same way that we get the politicians we deserve. The key is to create these outcomes consciously, rather than subconsciously. If we do this, we are less likely to be surprised/disappointed by the reality that surrounds us.

 

Over the winter break, I plan to think more about this. If anyone has any ideas/thoughts, I would love to hear them.

 

Take care

David

 

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (5e)

© Sage Publications, 2020

 

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler5e 

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

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

 

Strategic CSR - Plastic (II)

The article in the url below charts a rise in the cost of recycled plastics:

 

"In recent months, the price of recycled plastic flakes, used to make goods from soft drink bottles to glitter, has become more expensive than virgin plastic for the first time. For years the cost of making plastic products from recycled flakes was cheaper than relying on virgin plastics made using fossil fuels, meaning the sustainable option was an economic option too. But according to experts it is now cheaper for major manufacturers to use new plastic. A report from S&P Global Platts, a commodity market specialist, revealed that recycled plastic now costs an extra $72 (£57) a tonne compared with newly made plastic."

 

This higher price is reportedly due to increased interest among manufacturers who want to include recycled materials in their packaging so that they can advertise that fact to consumers:

 

"Coca-Cola's European business plans to cut the amount of virgin plastic used in its soft drink bottles to 50% within the next two years, and will change the colour of its Sprite bottles from green to clear to make sure 100% of its bottles can be reused."

 

In addition:

 

"… new plastic is becoming cheaper to make due to a flood of petrochemicals production from the US driven by the shale gas boom. … this could cost sustainable manufacturers across Europe an extra $250m a year."

 

As a result, the article reports that the recycled industry is in trouble because it is now simply cheaper for manufacturers to use virgin plastic, at least for the moment:

 

"The UK is planning to tax companies which don't use at least 30% recycled plastic in their products, but until then it may be cheaper for companies to demand more new plastic to make their packaging."

 

This is confusing, to say the least. Ever since China stopped taking waste material from the West, I have been reading reports about how the recycling industry is in dire straits because the market value for recycled material is weak, leading to low prices, which mean it is not economically worthwhile for waste collectors to collect recycled materials and process them. Now, the article in the url below reports such materials are becoming too high in demand, leading to sky high prices, meaning that manufacturers will likely switch to virgin materials. In other words, when the price of recycled materials is too low, it is not viable to collect and process the waste; when the price is too high, industry will simply switch to virgin materials. So when, exactly, will it become economically viable to recycle plastic? It seems that when we have too few recycled materials it doesn't make sense, and when we have too much of the stuff it doesn't make sense, either.

 

Take care

David

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (5e)

© Sage Publications, 2020

 

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler5e 

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

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


War on plastic waste faces setback as cost of recycled material soars

By Jillian Ambrose

October 13, 2019

The Guardian

https://www.theguardian.com/environment/2019/oct/13/war-on-plastic-waste-faces-setback-as-cost-of-recycled-material-soars

 

Strategic CSR - Plastic (I)

The article in the url below, which discusses the plastics industry, contains a number of dramatic facts. The first of which is the nature of the problem at the heart of the plastics industry:

 

"In a much-cited analysis from 2016, consultants at McKinsey calculated that the value of plastic disposed after a single use is $80bn-120bn a year."

 

Second, is the dramatic shift against plastic in recent years and the corresponding legislative responses from politicians seeking to meet the evolving expectations of their constituents:

 

"The UN says that last year 127 countries had restrictions on plastic bags. [In July] Panama became the first Central American country to outlaw them. Britain is considering a tax on plastic packaging made with less than 30% recycled content. In March 560 members of the European Parliament backed a law that would require 90% of plastic bottles to be recycled by 2029. Just 35 voted against."

 

Third, is the size of the plastics industry, which has to deal with the sudden backlash:

 

"Many companies in the $375bn plastic-packaging value chain—which comprises producers of oil and gas (the main feedstocks), petrochemicals giants, packaging firms and consumer brands—look ill-prepared."

 

Beyond that, there are a number of indications that the shift in public sentiment against plastics could affect those companies that do not alter operations to accommodate:

• "… fizzy-drinks firms that fail to reduce their reliance on virgin plastics could see annual profits shrink by 5% over the next decade or so because of regulations and taxes."
• "… recycling all plastic packaging, rather than the 15% that is reused today, could cut annual growth in demand for oil and gas from 1% to 0.5% by 2040."

The most interesting point, however, concerns the (counterintuitive) consequences of the current rush to ban plastic from our lives:

 

"Given the environmental footprint of substitutes like cotton bags, aluminium cans or paper boxes—which often require more energy and water to make and transport than plastic equivalents—new regulations could in fact end up doing harm to the planet."

 

The unintended consequences of good intentions is one of the most challenging issues for the CSR community to address. I find that it often stems from an under-valuing of economic theory. We have been studying economic exchange for centuries, and it helps explain why our society has evolved the way that it has. Markets work simply because there is no-one in charge. This reduces the influence of any single group, which diminishes the effect of the (human) biases that lead to the sub-optimal allocation of resources. When we ignore these market forces or are ignorant of the essential role they play in resource allocation, we get unintended consequences, which can easily be more damaging than the harm the change was trying to correct. That doesn't mean that the market is always 'right' (or even that a 'free' market is possible) and, clearly, plastics cause a massive amount of damage; but they are also a wonderful invention that saves lives (particularly in medical applications). As such, any decision to override the market forces that generated the solution that works (e.g., plastics) should be reasoned and driven by science, not emotional and driven by politics.

 

Take care

David

 

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (5e)

© Sage Publications, 2020

 

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler5e 

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

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

Lacking flexibility

July 27, 2019

The Economist

Late Edition – Final

57

https://www.economist.com/business/2019/07/25/the-inflexibility-of-plastic

 

Strategic CSR - Compost (II)

Today's Newsletter is a follow-up to an idea that I first covered back in 2015 (Strategic CSR - Compost):

 

"A non-profit group in Seattle hopes to become the first organisation in the world to tackle overcrowding in cemeteries by turning human corpses into garden compost."

 

The article in the url below shows that the idea has finally come to fruition:

 

"Ashes to ashes, guts to dirt. Governor Jay Inslee signed legislation Tuesday making Washington the first state to approve composting as an alternative to burying or cremating human remains. It allows licensed facilities to offer 'natural organic reduction,' which turns a body, mixed with substances such as wood chips and straw, into about two wheelbarrows' worth of soil in a span of several weeks."

 

And the resulting compost can be taken home:

 

"Loved ones are allowed to keep the soil to spread, just as they might spread the ashes of someone who has been cremated – or even use it to plant vegetables or a tree."

 

The idea came from an architecture graduate student at the University of Massachusetts, Amherst, Katrina Spade:

 

"She came up with the idea for human composting, modeling it on a practice farmers have long used to dispose of livestock. She tweaked the process and found that wood chips, alfalfa and straw created a mixture of nitrogen and carbon that accelerates natural decomposition when a body is placed in a temperature- and moisture-controlled vessel and rotated. … In 2017, Spade founded Recompose, a company working to bring the concept to the public."

 

As such, this idea tackles multiple problems at the same time — mortality, sustainability, and population density:

 

"Supporters say the method is an environmentally friendly alternative to cremation, which releases carbon dioxide and particulates into the air, and conventional burial, in which people are drained of their blood, pumped full of formaldehyde and other chemicals that can pollute groundwater, and placed in a nearly indestructible coffin, taking up land."

 

Of course, there are always detractors:

 

"[Senator Jamie Pedersen, the Seattle Democrat who sponsored the measure] said he had received angry emails from people who object to the idea, calling it undignified or disgusting. 'The image they have is that you're going to toss Uncle Henry out in the backyard and cover him with food scraps,' he said."

 

The intention is, of course, to create a respectful service that honors those who seek to reduce their impact, both during and after their lives:

 

"It gives meaning and use to what happens to our bodies after death," said Nora Menkin, executive director of the Seattle-based People's Memorial Association, which helps people plan for funerals. … Recompose's website envisions an atrium-like space where bodies are composted in compartments stacked in a honeycomb design. Families will be able to visit, providing an emotional connection typically missing at crematoriums, the company says."

 

Additional reporting on this story is available at: https://www.nytimes.com/2019/05/22/us/human-composting-washington.html

 

Take care

David

 

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (5e)

© Sage Publications, 2020

 

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler5e 

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

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

 

 

Eco-friendly ending: Washington state is first to allow human composting

By Associated Press

May 21, 2019

The Guardian

https://www.theguardian.com/us-news/2019/may/21/eco-friendly-ending-washington-state-is-first-to-allow-human-composting

 

Strategic CSR - Paris (II)

The article in the url below sets out the process by which the U.S. plans to leave the United Nations climate change agreement that it signed only four years ago:

 

"The Trump administration formally notified the United Nations on Monday that it would withdraw the United States from the Paris Agreement on climate change, leaving global climate diplomats to plot a way forward without the cooperation of the world's largest economy."

 

This process was initiated yesterday when the current administration sent official notice of its intention to leave (something that was announced a couple of years ago, but could not legally begin until now – see Strategic CSR – Paris):

 

"The action, which came on the first day possible under the accord's complex rules on withdrawal, begins a yearlong countdown to the United States exit and a concerted effort to preserve the Paris Agreement, under which nearly 200 nations have pledged to cut greenhouse emissions and to help poor countries cope with the worst effects of an already warming planet."

 

Although this process cannot conclude until one day after the next presidential election (November, 2020) and would allow the U.S. to retain observer status to the ongoing negotiations, that does not mean a new administration would easily be able to rejoin the accord:

 

"Analysts cautioned that even if the United States elects a Democrat in 2020, re-entry will not necessarily go smoothly. The Paris Agreement is the second global climate change pact that the United States joined under a Democrat and abandoned under a Republican. George W. Bush withdrew the United States from the 1997 Kyoto Protocol. Jonathan Pershing, who served during the Obama administration as the State Department's special envoy for climate change, said a Democrat rejoining the Paris Agreement would likely be expected to deliver a specific suite of policies showing how the United States intended to move away from fossil fuels. Even then, he said, other countries would be rightly wary that the pendulum of support for climate action could swing back in another election cycle. The United States will have to live with that lingering mistrust, Mr. Pershing said. 'The United States has been written off in many cases as a partner,' he said. 'You just can't count on them.'"

 

Take care

David

 

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (5e)

© Sage Publications, 2020

 

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler5e 

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

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


U.S. Gives Notice of Intent to Quit Paris Agreement

By Lisa Friedman

November 5, 2019

The New York Times

Late Edition – Final

A1, A7

https://www.nytimes.com/2019/11/04/climate/trump-paris-agreement-climate.html