Strategic CSR - Privacy

The article in the url below is interesting because it argues that data and privacy breaches are today's major oil spills. That is, for firms concerned about their reputations, data breaches should be punished the way that oil spills have previously been punished. To emphasize the point, the article contrasts recent data breaches with the Exxon Valdez oil spill in 1989:

 

"In 1989 the thin-hulled Exxon Valdez supertanker ran aground in Prince William Sound, Alaska, pouring a quarter of a million barrels of oil into the surrounding waters. At the time, it was America's worst offshore spill, and a huge blow to the reputation of the ship's owner, Exxon."

 

What is interesting is the effect the Exxon Valdez spill had on public policy and on the internal controls at Exxon:

 

"The firm paid $3bn to clean up the area and settle legal claims, and to improve safety the American government ordered the phasing out of single-hull ships such as Exxon Valdez. All vessels used worldwide by Exxon's corporate descendant, ExxonMobil, are now double-hulled. But that is not all. The disaster gave rise to a cultlike culture of discipline within ExxonMobil that helped turn it into the profitmaking beast it is today."

 

The author argues that firms today should learn from this experience and do all they can to prevent a similar traumatic experience happening to them. It draws on the recent data breach from Capital One of "personal and financial details of 106m credit-card customers and applicants," which is described as the firm's "own Exxon Valdez moment," especially given the firm's prior reputation "as one of the most technologically adept in finance":

 

"The incident has two parallels with the oil industry. … Like Exxon Valdez, Capital One should have had more protection. Like the oil companies of old, the bank may have also lacked a culture of safety sufficiently strong to ensure that it relentlessly probed for new vulnerabilities. Both are a reminder that, if data are now more valuable than oil, data breaches bear an unhealthy resemblance to oil spills."

 

The idea is that firms today can learn by seeing how Exxon reacted to its 1989 defining event, in spite of the greater complexity of cybersecurity and the odds that are stacked against firms today (they have to be right 100% of the time; hackers only have to get it right once):

 

"Still, the oil industry's experience is instructive. First, the emphasis on ingraining safety in every employee can strengthen the weakest link in cyber-security: the individual. … Studies show that employees are often, by accident or intentionally, the main cause of successful cyber-attacks. … [Second] Oil firms' insistence on their supply chains speaking the same language, and loudly, on safety is also worth emulating. Hackers increasingly infiltrate large corporations by first penetrating the defences of smaller suppliers and piggybacking on the communications systems which link the two. … Third, the near-death experience suffered by BP after the Deepwater Horizon oil disaster in 2010 shows how data can turn from an asset into a crushing liability. It ended up costing the British firm more than $50bn. Its reputation has yet to recover fully."

 

For now, the article argues, data breaches are receiving relatively light punishments from regulators. If this changes (under growing public awareness and concern) and firms are not prepared, then they could suffer an existential threat.

 

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/

The Exxon Valdez of cyberspace

August 10, 2019

The Economist

Late Edition – Final

55

https://www.economist.com/business/2019/08/08/the-exxon-valdez-of-cyberspace

 

Strategic CSR - Donuts

The blogpost in the url below is by an economist who has authored the book, Doughnut Economics: Seven Ways to Think like a Twenty-first Century Economist. Doughnut economics is new to me but, broadly speaking, is a framework that allows for the analysis of a country's economy to determine the extent to which it is sustainable:

 

"In essence, national doughnuts aim to reflect the extent to which a country is meeting its people's essential needs while at the same time ensuring that its use of Earth's resources remains within its share of the planet's biophysical boundaries."

 

In particular, the author of the newsletter, Kate Raworth, wants to highlight what she terms "pioneering national doughnut analysis" from the University of Leeds in the UK, which compares the performance of the G20 countries (and many more) relative to each other using the framework:

 

"Using the best-available, internationally comparable data, they scaled the global concept of the Doughnut down to the national level for over 150 countries (only including those for which there were sufficient data – as a result, Saudi Arabia is unfortunately missing from this G20 analysis. The EU28 group is also not available for this analysis). … The methodology for these national doughnuts is a work in progress, of course, but the indicators and data underlying them are improving year-on-year, and when taken as an overview of 150 countries, the initial analysis reveals some valuable 21st century insights."

 

The key results, at least the ones I found most interesting, plot the G20 countries in terms of how they are performing relative to the theoretical doughnut (i.e., which countries are operating more or less sustainably than the other G20 countries). You can see the graphical representation of this here:

 

https://www.kateraworth.com/wp/wp-content/uploads/2018/12/Screen-Shot-2018-12-01-at-11.36.39.jpg

 

The resulting 2x2 has four quadrants:

• A. "Countries that are barely crossing any planetary boundaries, but are falling very far short on meeting people's needs, including G20 members India and Indonesia,"
• B. "Many middle-income, 'emerging' economies – including G20 members like Brazil, Russia, China, Argentina and South Africa – are both falling short on social needs while already crossing biophysical boundaries,"
• C. "Today's high-income countries ­– including G20 members like the US, UK, France, Germany and the EU 28 itself – cannot be called developed, given that their resource consumption is greatly overshooting Earth's boundaries and, in the process, undermining prospects for all other countries," and
• D. "No country is yet in sweet-spot cluster D (for Doughnut!)."

In light of this, Raworth asks whether it is possible for any country to get there ("so how many years until some are there, and which will make it there first?"). While I think it is possible, in theory; I worry that, in practice (given human nature), it might not be possible.

 

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/

Doing the Doughnut at the G20

By Kate Raworth

December 1, 2018

https://www.kateraworth.com/2018/12/01/doing-the-doughnut-at-the-g20/

 

Strategic CSR - Oxford

At its core, addressing climate change is a philosophical debate about whether we have the moral authority to maximize resource consumption today at the expense of resource availability for future generations. But, it is also a practical problem full of logistical challenges. Even if we can agree that significant change is necessary, how and when to go about it raises specific issues. The contrast between these two elements of the climate change debate are captured succinctly in the article in the url below – an editorial in the WSJ relating what it describes as "a lesson in common sense" that occurred recently at Oxford University:

 

"That's exactly what the bursar at St. John's College—the most richly endowed college at Oxford—delivered when he responded to students occupying his 15th-century quadrangle and refusing to leave until the college divested its oil-company shares. The students want the college to sell the more than $10 million of its endowment now invested in Shell and BP, and they want it now."

 

In response to the students' demands, Andrew Parker, the bursar, took a controversial stance:

 

"'I am not able to arrange any divestment at short notice,' he wrote. 'But I can arrange for the gas central heating in college to be switched off with immediate effect. Please let me know if you support this proposal.'"

 

Following the calls of outrage and accusations that Parker was minimizing the issue, being unnecessarily provocative, and endangering the students' health given that it is the middle of winter, the bursar continued:

 

"You are right that I am being provocative but I am provoking some clear thinking, I hope. It is all too easy to request others to do things that carry no personal cost to yourself. The question is whether you and others are prepared to make personal sacrifices to achieve the goals of environmental improvement (which I support as a goal)."

 

The journey from idealism to practical reality can be short when framed effectively.

 

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 Heated Oxford Exchange

By Editorial

February 3, 2020

The Wall Street Journal

Late Edition – Final

A20

https://www.wsj.com/articles/a-heated-oxford-education-11580680180

 

Strategic CSR - Casper

The article in the first url below discusses the troubles faced by Casper, the online mattress company, since it recently decided to go public:

 

"The company's stock began trading on the New York Stock Exchange [Thursday] at $14.50 a share, slipped below $14 in the afternoon and ended the day at $13.50. … The New York-based start-up had been valued at $1.1 billion by private investors last year. But that was before the five-year-old company publicly revealed in January that it lost $67 million on $312 million in revenue in the first nine months of 2019. … Casper reduced its proposed share price, valuing the company at less than $500 million. It raised $100 million in the offering."

 

Since the collapse of WeWork's business model, it seems that Wall Street is finally waking up to the importance to a firm of revenue generation. More specifically, from a strategic management perspective, the market now appears to more fully appreciate the importance of a sustainable competitive advantage (with the emphasis on 'sustainable'):

 

"Before it went public, Casper had been the toast of the start-up world. The company shook up a stodgy mattress industry by selling beds online, delivering them to people's doorsteps in boxes the size of mini-fridges. … Venture investors poured more than $340 million into the company, according to Crunchbase, and Casper began calling itself the 'Nike of sleep,' selling pillows, sheets, dog beds and other accessories to what it termed the 'sleep economy.' … But as Casper grew, competitors saw an easy opportunity and rushed in, with an average of one new 'bed-in-a-box' company launching per week between 2015 and 2018. There are now 175 competitors in the market, according to GoodBed, a mattress comparison website. There are even copycats from the older mattress companies, like 'Cocoon by Sealy.'"

 

As such, Casper has continued to struggle in the stock market, and currently sits at around $10 a share. Having recently bought a new mattress myself (from a chain store, locally), this story got me thinking about the online mattress business. I considered Casper when I was looking into mattresses, but dismissed the company on the basis that I couldn't try its products out in advance and returning the mattress, if there was a problem, would be too much hassle. Then I saw the article in the second url below, which details the environmental impact of this relatively new online mattress industry:

 

"The UK threw away more than 7m mattresses in 2017, the vast majority of which went straight to landfill. … Flytipping is another huge area of concern: English councils spend £58m a year on clear-up, with mattresses among the most commonly illegally dumped items. According to the National Bed Federation (NBF), only about 19% of mattresses are recycled. The reason? They are a nightmare to recycle."

 

A similar challenge is faced here in the U.S.:

 

"Mattresses are a global environmental nightmare. The US throws away 18.2m mattresses a year, but there are only 56 facilities available to recycle them."

 

The problem is more acute today, according to the article, because of the emergence and growth of the online mattress industry:

 

"Changing consumer behaviour is behind this ever-growing mattress mountain. Time was, you would change your mattress every eight to 10 years. But with online retailers offering more choice than ever, we have learned to expect better mattresses, and to replace them more frequently."

 

This industry has been enabled by specific innovation:

 

"The development of roll-down technology – which allows mattresses to be packed into small, easily shippable boxes – has led to a plethora of start-ups targeting a $30bn international market. There are now at least 175 companies that will ship roll-down mattresses to your front door."

 

And, what is interesting about such a crowded market is that there is intense competition to survive, which exacerbates the environmental impact of all these mattresses:

 

"Most of these start-ups offer 100-day comfort guarantees, during which consumers can return their mattresses for a full refund if for any reason they are not up to scratch. Some, such as the US's Nectar, even offer a 365-day guarantee. Theoretically, consumers can cycle between these providers for high-quality mattresses at no cost: a Wall Street Journal reporter recently calculated that if she took advantage of all the offers available, she would be able to sleep on a free mattress for eight years."

 

What most people no doubt do not realize when they return their mattress is that it most likely cannot be re-sold. And, because these mattresses are do difficult to recycle, they are most often dumped:

 

"Some online providers have arrangements with care homes or hospitals to collect lightly used mattresses, re-cover them, and put them back into use. Others send them for recycling. But many will, inevitably, end up in landfill."

 

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/

Casper, the Mattress Start-up, Goes Through with Lackluster I.P.O.

By Erin Griffith

February 6, 2020

The New York Times

Late Edition – Final

B4

https://www.nytimes.com/2020/02/06/technology/casper-ipo.html

The mattress landfill crisis: How the race to bring us better beds led to a recycling nightmare

By Sirin Kale

February 12, 2020

The Guardian

https://www.theguardian.com/environment/2020/feb/12/mattress-landfill-crisis-recycling-nightmare

 

Strategic CSR - Carbon reports

The article in the url below is interesting not because it reports on firm's attempts to quantify the impact of climate change, but because it shows how bad they are currently at doing just that. First, the article shows how firms are trying to become more realistic in their estimations:

 

"In 2018, more than 7,000 companies submitted [climate change risk] reports to CDP, formerly known as the Carbon Disclosure Project. And, for the first time, CDP explicitly asked firms to try to calculate how a warming planet might affect them financially. After analyzing submissions from 215 of the world's 500 biggest corporations, CDP found that these companies potentially faced roughly $1 trillion in costs related to climate change in the decades ahead unless they took proactive steps to prepare. By the companies' own estimates, a majority of those financial risks could start to materialize in the next five years or so."

 

Second, however, the article provides concrete evidence that the range of possibilities is so vast as to render even genuine efforts meaningless:

 

"[It remains challenging for firms] to take scientific reports about rising temperatures and weather extremes and say what those broad trends might mean for specific companies in specific locations. Previous studies, based on computer climate modeling, have estimated that the risks of global warming, if left unmanaged, could cost the world's financial sector between $1.7 trillion to $24.2 trillion in net present value terms."

 

And, of course, given a range of possibilities, firms are still vastly under-estimating the potential impact:

 

"In its report to CDP last year, PG&E said that the rise in wildfire risk in the American West, partly driven by global warming, could create significant financial costs if the utility were held liable for the fires. PG&E estimated the "potential financial impact" from wildfires at around $2.5 billion, based on claims that the utility had paid out in 2017. However, that turned out to be overly optimistic: This past January, PG&E filed for bankruptcy protection and said it now faced up to $30 billion in fire liabilities shortly after its power lines sparked what became California's deadliest wildfire yet last fall."

 

The encouraging takeaway from the article, therefore, is that large numbers of firms are finally becoming serious about estimating the business risks associated with climate change. The discouraging takeaway is that they do not have the ability (either knowledge or willpower) to come close to their likely impact. Beyond this, however, two interesting (discouraging?) points stand out. First, that in estimating impact, some firms see a benefit to climate change:

 

"Some 225 of the world's largest corporations highlighted roughly $2.1 trillion of possible opportunities in a warming world, with the majority expected to materialize within the next five years. Eli Lilly, a drug maker in the United States, cited research suggesting that rising temperatures could drive the spread of infectious diseases — a problem the company was well-positioned to help address."

 

And second, that there remains a substantive geographical/cultural disparity in how firms deal with this challenge:

 

"The CDP report found that companies headquartered in the European Union are much more likely to detail the potential financial effects of global warming, in part because local regulations often require them to do so. By contrast, companies in the United States, China, Brazil and Mexico were far less likely to report significant financial risks."

 

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/

Companies Expect to Feel Climate Change's Bite in 5 Years

By Brad Plumer

June 5, 2019

The New York Times

Late Edition – Final

B4

https://www.nytimes.com/2019/06/04/climate/companies-climate-change-financial-impact.html

 

Strategic CSR - Babies

An article in The Sunday NYT last August covered the topical issue of fertility rates, which "have been dropping precipitously around the world for decades – in middle-income countries, in some low-income countries, but perhaps most markedly, in rich ones." Although not a direct response to that piece, the article in the url below shows the extent to which some companies are going in order to do their bit, while also trying to keep their employees present at work:

 

"Companies from Apple, Facebook and Tesla to Bain, KKR and Starbucks are offering employees fertility benefits."

 

Whether the move is well-intentioned or cynical, however, is up for debate:

 

"When Apple and Facebook began paying for employees to freeze their eggs in 2014, this generosity was met with cynicism. Critics dismissed it as another attempt at social engineering from Silicon Valley, no bastion of female-friendliness. Rather than empowering women, they feared, it would press them to delay motherhood; Apple would do better to install child-care facilities at its brand new headquarters."

 

I was amazed to see how far-reaching this practice has become:

 

"More than one in four large American companies now pay for some fertility treatment, … one in 20 covers egg-freezing. In America Bain, a consultancy, KKR, a private-equity firm, and Tesla, a carmaker, pay for unlimited IVF cycles (which can cost $100,000). … [Recently] Starbucks said it would raise its fertility cover to $25,000, including for baristas who work over 20 hours a week for more than six months. For part-timers on $12 an hour that can add up to twice their annual salary."

 

Apparently, firms see this as a strategic opportunity, given the nature of the U.S. healthcare system:

 

"Most American states still do not require insurers to cover infertility treatment. So companies use the benefits to differentiate themselves. This helps recruit and retain staff. … Firms keen to promote 'diversity and inclusion' see health plans with IVF or surrogacy as a way to attract LGBT employees."

 

Critics, however, point out that such policies are often adopted after a scandal of some sort and are a relatively minor plus in a general workforce that still contains a great deal of discrimination for many workers (mothers, in particular):

 

"Some companies … appear to adopt fertility benefits in response to harassment scandals. Under Armour, Uber and Vice added family-friendly policies, including generous fertility perks, following such controversies."

 

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/

Fert perks

August 10, 2019

The Economist

Late Edition – Final

51

https://www.economist.com/business/2019/08/08/more-employers-want-to-help-workers-make-babies

 

Strategic CSR - Amazon

The articles in the two urls below (which appeared soon after each other, either side of Black Friday in the NYT) indicate some of the consequences of the growth in online purchases that need to be delivered to our houses. The first article discusses the closure of a convenience store in Manhattan that appears to offer everything you would want in a neighborhood store:

 

"On Ninth Avenue in Manhattan, not far from where I live, there's a small neighborhood hardware store called Chelsea Convenience Hardware. … Inside, tools and supplies are piled to the ceiling, and when you enter, the owner, Naum Feygin, an immigrant from Boris Yeltsin's Russia, looks up to ask you what you need. The 'convenience' in the store's name is no misnomer, for the place is extraordinarily efficient. It is cheaper and faster than ordering from Amazon and offers expert advice that reduces the risk of buying the wrong thing. It is all too easy on Amazon, for example, to buy halogen bulbs that don't fit your lamp base; Mr. Feygin has spared me many such headaches. And the store's small size is a virtue: Unlike at Home Depot, you can be in and out in 10 minutes."

 

In spite of being more convenient, Mr Feygin's store is in trouble and is due to close. The author argues this doesn't make sense, but is also symptomatic of the online shopping world in which we now live:

 

"The closing is of no great economic significance, other than to Mr. Feygin. But it is a microcosm of the forces reshaping the United States economy, often paradoxically and for the worse. Why is a less efficient, less personalized and more wasteful way of buying screws and plungers — ordering online — displacing the local hardware store?"

 

The author answers his own question by arguing it is the perception of convenience (rather than actual convenience) that appears to be driving more people to prefer to shop online:

 

"Here we can see how an ideology of convenience is reshaping the economy. Ordering things like tape or bolts online is rarely cheaper or faster than popping down to the local hardware store — not to mention the wasteful packaging — but many of us do it anyhow. Clicking on a product from the comfort of your couch seems more convenient — and that impression of ease can have more influence on our behavior than better service, quicker acquisition and lower prices."

 

Mr Feygin sums this up more succinctly:

 

"'Amazon, eBay,' he explains. 'People ordering without advice.' They might not get what they need, but still they order online."

 

The second article comments on a more surprising consequence of our online economy (at least in terms of the scale of the problem). It reports the massive number of packages that go missing on a daily basis in the U.S. I was shocked to see the number of packages that never arrive in Manhattan:

 

"In New York City, where more orders are delivered than anywhere else in the country, over 90,000 packages a day are stolen or disappear without explanation, up roughly 20 percent from four years ago, according to an analysis conducted for The New York Times."

 

But, this is not just a big-city phenomenon:

 

"About 15 percent of all deliveries in urban areas fail to reach customers because of package theft and other less frequent issues, like deliveries to the wrong house, according to transportation experts. In suburbs and rural areas, thieves often follow delivery trucks and snatch just-delivered packages from homes, often out of sight of neighbors."

 

The result is what must be a major headache for Amazon (and other online retailers):

 

"Around the country, more than 1.7 million packages are stolen or go missing every day – adding up to more than $25 million in lost goods and services, according to an analysis for The Times. … In a new survey by insuranceQuotes.com, an online insurance service, nearly 1 in 5 respondents nationally reported having had a package stolen."

 

The article contains some of the solutions both people receiving the packages and the companies sending them are trying to implement in response. Although there is not much data to go on, however, it appears to be a problem that is increasing and is set to get worse:

 

"Most police departments do not track package thefts, but those that have examined the problem have reported notable increases. The Denver Police Department started compiling data on package thefts in 2015, and has seen a 68 percent increase in reported cases, to 708 last year, from 421 four years ago. In Washington D.C., 1,846 cases of package theft were reported as of mid-November, already exceeding last year's total of 1,546 cases, according to police records."

 

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/

 

Better, Cheaper and Faster than Amazon

By Tim Wu

November 24, 2019

The New York Times

Late Edition – Final

SR10

https://www.nytimes.com/2019/11/22/opinion/sunday/small-business-economy.html

 

Battling Thieves, When 90,000 Packages a Day Go Missing

By Winnie Hu and Matthew Haag

December 3, 2019

The New York Times

Late Edition – Final

A21

https://www.nytimes.com/2019/12/02/nyregion/online-shopping-package-theft.html

 

Strategic CSR - Business Roundtable (II)

Following up on my post last semester about the Business Roundtable's recent announcement about the purpose of a corporation (see Strategic CSR – Business Roundtable), the article in the url below reports the results of research designed to learn more about the firms that signed-up to the statement:

 

"The Business Roundtable made a big splash in August by 'modernizing its principles on the role of a corporation.' No longer stressing the unique importance of maximizing shareholder value, the organization got 181 CEOs to sign a statement outlining a corporate commitment to various 'stakeholders.' … Why did they sign? We see two possibilities. Either they are genuinely committed to lead in socially conscious business practices, or they are trying to pre-empt criticism. One way to determine which explanation fits better is to compare the behavior of publicly listed signatory firms to that of public nonsignatory firms in the same industries."

 

Needless to say, the data suggest that any hope invested in the Business Roundtable's statement is probably optimistic. Specifically, looking at the five-year period leading up to the statement release (2014-2018), the researchers identified four dimensions along which the signatory firms performed in ways that, at best, suggest they are seeking to atone for past behavior. At worst, the data suggest the firms were using their Business Roundtable allegiance as cover for their transgressions. First, legal compliance:

 

"… from 2014-2018 signatory firms report a higher incidence of compliance-related violations than the nonsignatory firms, reported by federal agencies such as the Environmental Protection Agency and the Occupational Safety and Health Administration."

 

Second, share buybacks:

 

"Signatories have brought back a larger proportion of their shares—even as buybacks are increasingly condiment by politicians."

 

Third, predatory market dominance:

 

"[Business Roundtable] signatories have amassed market shares 5 percentage points higher than those of peer firms, on average, assessed based on sales. … Such market power increases the probability of regulatory scrutiny. … Thus Business Roundtable signatories may have greater reason than their peers to convince regulators of their benevolence."

 

Fourth, executive compensation:

 

"Business Roundtable signatories pay CEOs 4% more on average than peer firms but achieve lower stock returns relative to their benchmarks."

 

The researchers' conclusion suggests the Business Roundtable statement was not quite the revelation it was presented as at the time and that the group's commitment to a firm's broad set of stakeholders is less convincing, at least based on prior performance:

 

"These findings suggest that Business Roundtable signatories aren't leaders in socially conscious environmental, social or governance practices or stakeholder orientation. Instead, the average signatory is more likely to enjoy a larger market share, and has an incentive to pre-empt regulatory scrutiny that might expose rent-seeking behavior."

 

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/

Is There Real Virtue Behind the Business Roundtable's Signaling?

By Aneesh Raghunandan and Shiva Rajgopal

December 3, 2019

The Wall Street Journal

Late Edition – Final

A15

https://www.wsj.com/articles/is-there-real-virtue-behind-the-business-roundtables-signaling-11575330172