Strategic CSR - Organic funerals

The article in the url below expands upon an issue I first wrote about back in 2015 (Strategic CSR – Compost) and followed-up on in 2019 (Strategic CSR – Compost II) – biodegradable burials. Rather than encouraging the natural decomposition of bodies, converting them directly into compost, however, this latest idea introduces the organic coffin:

"After months of testing, the first funeral has taken place in the Netherlands using a fast-composting 'living coffin' made of mycelium, the mat of fibres that forms the underground part of fungi."

The material, mycelium, is central to producing what the company Loop is calling a "Living Cocoon":

"Mycelium is 'nature's recycler,' [Bob Hendrikx, the founder of Loop] said. Not only does it neutralise toxins and provide fresh food to everything growing above ground, but its fibres can be used to make anything from food to clothes and packaging – including coffins. 'Mycelium is constantly looking for waste products – oil, plastic, metals, other pollutants – and converting them into nutrients for the environment,' he said. 'This coffin means we actually feed the earth with our bodies. We are nutrients, not waste.'"

The process is as efficient as it is sustainable:

"Hendrikx said the process by which a human body in a traditional coffin becomes compost can often take a decade or more, slowed by the varnished wood and metals of the casket and synthetic clothing, which can take even longer to disintegrate. A mycelium coffin will be absorbed back into the soil within a month or six weeks, he said, actively contributing to the full decomposition of the body it contains and enriching the surrounding soil quality – all within a period of two to three years."

The ultimate goal is to use our leftovers to begin reclaiming land we have already polluted:

"Loop is working with scientists to measure the impact of human bodies on soil quality, with a view, Hendrikx said, to 'convincing policymakers to convert polluted areas into healthy forests – with our bodies as nutrients.'"

The challenge will be how to scale the process, while keeping it affordable:

"Each Living Cocoon takes several weeks to form as the mycelium mat grows in the shape of a coffin and is then allowed to dry naturally. As soon as it is exposed to damp soil again it comes back to life and begins the decomposition process."

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 

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First funeral held using 'living coffin' made of mushroom fibre

By Jon Henley

September 15, 2020

The Guardian

https://www.theguardian.com/society/2020/sep/15/first-funeral-living-coffin-made-mushroom-fibre-netherlands

Strategic CSR - Seatbelts vs. Face masks

The article in the url below presents a timely comparison between the introduction of seatbelts in the U.S. in the 1980s and the public discourse around face masks in the U.S. today:

"A legislator in New Hampshire called it constricting. A Michigan man said it messed up his look. A sailor in Massachusetts argued the government has no right to force him to wear it. Though they might sound familiar, those were not the refrains of people rebelling against face masks during the pandemic. Instead, they came from the seatbelt debates of the 1980s, another era when some Americans pushed back against rules meant to keep them safe."

As this quote suggests, the arguments over seatbelts in many ways mirror those over masks today:

"Capitals, legislative halls, petitions and radio shows were the stages for battle over state seatbelt laws, the first of which passed in 1984. Medical workers and police officers gave firsthand accounts of how people not wearing belts died in wrecks. Opponents wondered if it was safe to be strapped into a hurtling vehicle, or complained about discomfort and government overreach."

In particular, similar to many arguments in the U.S., the debates around seatbelts and face masks can be reduced to some concept of individual freedom:

"The fight over seatbelt laws in the United States was fraught with trying to strike a balance between individual and public interests. Those concerns have also been reflected in similar matters of health and safety, including vaccinations, helmet laws – and masks."

An argument that both seatbelts and masks have in common, therefore, is the state's right to compel specific behavior. A difference between the two focuses on the harm that is being committed, whether to the individual themselves or to others:

"Alberto Giubilini, a public health ethics scholar who has compared the arguments over seatbelt laws with those of vaccination opponents, noted that seatbelts and helmets are mostly meant to protect an individual, while vaccinations and face masks are also intended to prevent harm from spreading to others."

Although this distinction is somewhat debatable (since seatbelts prevent more serious injuries that increase healthcare costs for all), different areas of the country respond in different ways to these arguments about degrees of individual freedom. As a result, and due to the U.S. federal system where most legislative powers reside with the individual states, the introduction of seatbelt laws has moved at different speeds and to varying degrees across the country:

"Since 1984, when New York became the first state to have a seatbelt law, they have continued to be an uneven patchwork. Some have made it a primary violation, meaning officers can pull over a driver only for not wearing a seatbelt. Others made it secondary, meaning a driver stopped for another reason can also be given a seatbelt citation. Only 31 states extend the requirement to adults in the back seat."

The article goes into detail about the history of seatbelt legislation in three states – Massachusetts, Michigan, and New Hampshire, which remains "the only state that still does not have a mandatory seatbelt law," in spite of the obvious benefits of wearing one:

"In 2018, according to the National Highway Traffic Safety Administration, seatbelts saved about 14,955 lives of people ages 5 and older nationwide. If everyone involved in crashes had worn seatbelts, an additional 2,549 people could have been saved, it said."

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 

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Face Mask Debate Recalls Seatbelt Wars of the 1980s

By Christine Hauser

October 17, 2020

The New York Times

Late Edition – Final

A4

https://www.nytimes.com/2020/10/15/us/seatbelt-laws-history-masks-covid.html

Strategic CSR - CEO pay

I regularly see articles on this topic, but the article in the url below does a good job of undermining the myth that the market for CEOs (and the debate around how much they earn) is driven primarily by performance:

"'Pay for performance' has been the mantra of America Inc over the past few decades. A small circle of influential pay consultants, compensation analysts and academics has argued that American firms must pay top dollar for top candidates because they compete in a global market for talent. They argue that firms have grown more complex and bosses must know how to manage new technologies and the vagaries of globalisation. The controversial corollary is that pay should be allowed to rise ever higher because superior CEO performance is maximising shareholder returns."

This argument has certainly fared CEOs well as their salaries have risen rapidly, especially when compared to leaders in other countries:

"… the median CEO compensation at big American firms in the S&P 500 share index reached $14m last year. America's top earners made far more. Alphabet's Sundar Pichai received a cool $281m. The sums are considerably smaller across the Atlantic, where pay practices have historically been more restrained. The ten best-paid British bosses together did not make as much as Mr Pichai in 2019."

As a result, these expanding pay packets are increasingly coming under scrutiny as the concept of 'performance' is expanding:

"Such numbers were setting off alarm bells before the covid-19 crisis. Now the mass lay-offs and bleeding balance-sheets resulting from the recession have brought it into stark relief."

The cause for concern centers around the construction of executive compensation:

"The favoured measure of performance is a company's total returns, which combine share-price moves with any dividend payouts. As a consequence of a record bull market in equities after the global financial crisis of 2007-09, only brought to a halt by the covid-19 pandemic, executive pay in America shot up into the stratosphere."

Of course, the intellectual underpinnings of this compensation structure is principal/agency theory—the idea that shareholders are the owners of firms (not true, but anyway …) and that stock options effectively align their interests with those of the executives. The extension of this argument is that, if executives are able to create value for the 'owners,' they should also be rewarded. In other words, 'good' CEOs create value for shareholders, which justifies the compensation they receive. In fact, as the article does a good job of pointing out, the relationship between CEO pay and firm performance is weak, at best:

"In 2017 MSCI, a research firm, published its analysis of realised chief-executive pay between 2007 and 2016 at more than 400 big public American firms. At more than three-fifths of the firms, it showed no correlation with ten-year total returns."

This chart in the article demonstrates as well as anything that the relationship between CEO pay and firm performance is virtually nonexistent:

https://www.economist.com/sites/default/files/images/print-edition/20200711_WBC388.png

A common phenomenon seems to be that, when the firm performs well the CEO is more than happy to take the credit, but when the firm does badly then the weak performance was due to exogenous factors. The reverse of this can work in the CEO's favor when they benefit from stock market gains that are driven primarily by exogenous factors. For example:

"A recent paper … finds 'strong evidence' that bosses of energy firms see clear pay gains when stock valuations rise as a result of an oil-price spike which they have no way to influence."

In some cases, the discrepancy between pay and performance can be stark:

"The bosses in the top pay quartile made twelve times what those in the bottom quartile did, but produced financial returns only twice as good. The bosses in the second-lowest pay quartile made nearly three times as much as those in the bottom quartile, even though their firms' total returns were actually worse."

There is clear evidence that the practices boards of directors currently use to set CEO pay create perverse incentives and do not achieve what they are designed to achieve:

"Compensation committees often rely on advice—and political cover—from pay consultants. A recent study of 2,347 firms … finds that companies using consultants pay more. Independently, those with higher pay and more complex pay plans are also likelier to hire advisers. Most problematic is their use of pay benchmarking, which has led to the ratcheting-up of pay for all bosses."

Hopefully, boards will come to their senses and develop alternative metrics that capture the performance they aim to reward. Alternatively, why do CEOs need bonuses and incentive structures? Why not just pay them a straight salary and fire them if they do not do their job?

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/

Pay guaranteed, performance optional

July 11, 2020

The Economist

Late Edition – Final

65

https://www.economist.com/business/2020/07/11/how-ceo-pay-in-america-got-out-of-whack

Strategic CSR - Planetary warming

We have long known that, even if we stop producing greenhouse gases today, the planet will continue to warm for some time. The article in the url below quantifies the extent of this causal relationship:

"Much of the international effort thus far to combat climate change has focused on cutting emissions of greenhouse gases, chief among them carbon dioxide. That is, of course, a rational approach. … But greenhouse-gas emissions do not cause an instantaneous rise in global temperatures, and neither does cutting them result in instantaneous cooling. Instead, it will take decades for today's policy efforts to result in measurable impacts on global temperature."

How many decades exactly? Researchers used hypothetical scenarios to simulate the range of possibilities:

"[The researchers] probed hypothetical futures in which emissions of nine different industrial pollutants, including carbon dioxide and methane, were either eliminated instantly or phased out at a rate of 5% each year, starting in 2020."

The results are not very encouraging:

"Running these simulations over and over again in order to get statistically reliable results suggests that cutting CO₂ emissions could slow the rate of warming as early as 2033, but only if they are ended worldwide in 2020. In effect, that would mean eliminating 80% of the world's energy sources, including shutting down all fossil-fuel power stations, overnight—clearly not a realistic or desirable scenario."

More realistic scenarios understandably produced more worrying results:

"Reducing CO₂ by 5% per year, starting this year, would produce a statistically significant deviation from what temperatures would have otherwise been only in 2044. And yet, even that rate of CO₂ reduction is ambitious, on a par with the 4-7% drop estimated this year as a result of the covid-19 pandemic and widespread economic shutdowns. Before this, annual emissions were creeping up. Without concerted efforts from governments, they are likely to rise again as economies reopen."

There are a number of reasons for this:

"The main reason for the delay, however, is that carbon dioxide emitted today will remain in the atmosphere for decades to centuries before it is reabsorbed by vegetation and the oceans. That is not true of other industrial emissions. Each molecule of methane warms the planet 84-87 times more, averaged over 20 years, than carbon dioxide, but it stays aloft for merely years instead of decades or centuries."

The main takeaway from this research is that atmospheric temperature may not be the best measure we have to indicate progress on combating climate change. The Paris Agreement, for example, contains the overall commitment to try and limit global warming to below 2 degrees centigrade. But, the research summarized here suggests that, even though we can (in theory) make great strides in reducing emissions, temperatures will continue to rise for many years to come. This makes temperature a misleading indicator of progress:

"Instead, direct measurements of the concentrations of greenhouse gases in the atmosphere may be better, as they will remove the confounding effect of natural variability. And without clever messaging, there could be a public backlash against seemingly ineffectual policies."

More immediately, however:

"… results like these underline that even as economies begin to decarbonise, governments and societies need to drastically step up efforts to adapt to the inevitable warming that lies ahead."

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 

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Delayed cool

July 11, 2020

The Economist

Late Edition – Final

65

https://www.economist.com/science-and-technology/2020/07/11/emissions-slashed-today-wont-slow-warming-until-mid-century

Strategic CSR - Blue Sparrow Coffee

A while ago (pre-COVID), a colleague was looking for new coffee shops to support and came across Blue Sparrow Coffee (BSC, https://www.bluesparrowcoffee.com/) here in Denver. He was impressed by their approach to operations (highly transparent) and, in particular, their stated policy on setting employee wages. Here is what the firm posts on its website (https://www.bluesparrowcoffee.com/transparency):

"The people of Denver have spoken, and as of January 1st 2022 the new tipped minimum wage will be $15.87 for hourly employees, and $12.85 for tipped employees. Before this was voted into law we asked our customers what they thought and 80% said they support $15 / hr. minimum wage. We then asked a follow up question asking what they would be willing to pay, 76% said they would pay .50 or more per drink in order to pay our baristas accordingly. We currently pay $10.55 / hr. or $2.47 more per hour than the tipped minimum wage along with tips that average much higher than the industry average. This is what our customers, our neighbors, and our baristas want, and we don't see any reason to wait until 2022 to give them what they want. Effective January 1st 2020 we will be paying a minimum of $12.85 per hour plus tips for all of our hourly employees. In order to fund this while still maintaining a sustainable business we have increased our prices 11%. Some items have gone up as high as .75 with the majority being around .50 and a few select items not changing."

In spite of my colleague's aversion to artificial wage minimums, he really likes the firm's approach, first consulting with their customers to see what they value and, in particular, what they say they want to see (and are willing to pay for) for the people who serve them their coffee. As he noted, "What if Amazon asked its customers this same question?  Would people be willing to pay more for Prime to give warehouse employees a better work environment and pay....I doubt it."

There is much to like about what BSC is doing here. Their website is a paragon of good intentions around what a progressive employer should look like and, as an added benefit, a commitment to transparency that ensures they share much of their deliberations with all stakeholders.

The only potential issue that I can see is that they appear to put great faith in what their customers say they will do, rather than measuring what they are actually prepared to do. Asking their customers what they are willing to pay is a dangerous way to set wage policy. Mainly because the customers will not tell the company when they leave for the competition. Maybe this case is different, but I have seen a fair amount of academic research that reveals, for example, that customers are unwilling to pay an extra 50 cents for sweatshop-free socks. So why should coffee be any different? The response of customers when asked by BSC was that they are willing to pay an extra 50 cents per cup of coffee to ensure the firm's employees are paid a higher minimum per hour. Again, these customers may be different, and perhaps the local/face-to-face interaction when purchasing the coffee makes the impact more tangible, when the customer never meets the sweatshop worker (even if their photo is attached to the product). Either way, I think it would be in Blue Sparrow's best interest to pay close attention to sales the moment they instigate the price rise.

Incidentally, it would also pay their employees to reward the company for its progressive approach to wage-setting. An increase in productivity would be the best way to offset the likely dip in sales due to the price increase.

The firm is very good at reporting wage levels on its website. What I would like to see, however, is data around revenues and customer purchase patterns before and after the wage/price increases. Communicating the direct effect of the price increase would also be a good way to ensure broader buy-in. This is important because, as the article in the url below reports, the coffee sector as a whole is expected to contract over the next five years, with most of the store failures occurring among independent coffee shops (to the beneficiary of large chains, such as Starbucks).

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 

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Say Goodbye to Your Local Coffee Shop in America's Café Shakeup

By Marvin G. Perez

October 8, 2020

Bloomberg Businessweek

https://www.bloomberg.com/news/articles/2020-10-08/say-goodbye-to-your-local-coffee-shop-in-america-s-cafe-shakeup

Strategic CSR - Trees

The article in the url below is both hopeful and insightful. It covers the growth in the market for carbon offsets that, in practical terms, means the preservation of forests:

"For much of human history, the way to make money from a tree was to chop it down. Now, with companies rushing to offset their carbon emissions, there is value in leaving them standing. The good news for trees is that the going rate for intact forests has become competitive with what mills pay for logs in corners of Alaska and Appalachia, the Adirondacks and up toward Acadia. That is spurring landowners to make centurylong conservation deals with fossil-fuel companies, which help the latter comply with regulatory demands to reduce their carbon emissions."

Because of this encouraging news that the value of keeping forests intact is competitive with that earned from chopping them down, some companies are beginning to speculate that their price will increase further. As a result, more than a useful offset today, the forests become a worthwhile investment for the future:

"For now, California is the only U.S. state with a so-called cap-and-trade system that aims to reduce greenhouse gasses by making it more expensive over time for firms operating in the state to pollute. Preserving trees is rewarded with carbon-offset credits, a climate-change currency that companies can purchase and apply toward a tiny portion of their tab. But lately, big energy companies, betting that the idea will spread, are looking to preserve vast tracts of forest beyond what they need for California, as part of a burgeoning, speculative market in so-called voluntary offsets."

BP is one example of a firm that is beginning to see greater long-term potential in this natural capital beyond any immediate gains off-setting can provide. The key is their push to develop a "voluntary market" beyond their immediate off-setting needs and/or any regulatory requirement—a kind of buy-and-hold option where the forests are purchased now to be offset or traded at some point in the future:

"[BP] has already bought more than 40 million California offset credits since 2016 at a cost of hundreds of millions of dollars. Last autumn, the energy giant invested $5 million in Pennsylvania's Finite Carbon, a pioneer in the business of helping landowners create and sell credits. The investment is aimed at helping Finite hire more foresters, begin using satellites to measure biomass and drum up more credits for use in the voluntary market. BP has asked Finite to produce voluntary credits ASAP so they can be available for its own carbon ledger and to trade among other companies eager to improve their emissions math. As part of its shift into non-fossil-fuel markets, BP expects to trade offset credits the way it presently does oil and gas."

Perhaps it is not surprising to see that California is leading the way in the U.S. after the level of investment by the federal government has stalled in recent years:

"California forged ahead, setting caps on emissions, which become stricter over time, and creating a corresponding number of allowances. Refiners, fuel importers and utilities vie for the allowances at auction and turn them over to regulators to cover their emissions. … The companies have the option of covering up to 4% of their emissions with less-costly offset credits, which California issues for capturing methane from dairies and mines, destroying ozone-depleting substances and, most popularly, preserving forests."

As a result:

"About 153 million forest credits have been issued, each representing a metric ton of sequestered carbon. They limit logging on about five million U.S. acres. That's a sliver of the 740-million-odd acres of U.S. forests and woodlands that aren't already reserved, but the amount of offset-protected property is growing fast."

It is this exponential growth where the advantage lies for a company like BP, which is beginning to understand forests as an asset:

"If other governments join California and institute cap-and-trade markets ["Quebec linked its own program with California's in 2014"], voluntary offsets could shoot up in value. It could be like holding hot tech shares ahead of an overbought IPO. Like unlisted stock, voluntary credits trade infrequently and in a wide price range, lately averaging about $6. … California credits changed hands at an average of $14.15 in 2019 and were up to $15 before the coronavirus lockdown drove them lower. They have lately traded for about $13."

There are also advantages around internal carbon budgeting, which has the dual advantage of appealing to employees and also preparing companies for the day when a carbon price will be imposed and expensive:

"These days, voluntary offsets are mostly good for meeting companies' self-set carbon-reduction goals. BP is targeting carbon neutrality by 2050. Between operations and the burning of its oil-and-gas output by motorists and power plants, the British company says it is annually responsible for 415 million metric tons of carbon emissions."

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 

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

Emissions Rules Turn Saving Trees into Big Business

By Ryan Dezember

August 24, 2020

The Wall Street Journal

Late Edition – Final

A1, A10

https://www.wsj.com/articles/preserving-trees-becomes-big-business-driven-by-emissions-rules-11598202541

Strategic CSR - Generation Z

The article in the url below presents an interesting take on the issue of climate change from the perspective of the generation just now entering the workforce. In particular, it highlights the difficulties oil and gas firms face in hiring sufficient numbers of graduates and their concern that this will create a "generational gap" within their employee populations. This challenge has only been enhanced by the COVID-19 recession:

"The economic crisis caused by the pandemic, combined with a growing distaste for the oil business among potential young employees, is creating a new problem for the industry. Energy giants including Chevron Corp. and BP PLC are trying to avoid creating a generational gap in their staffs—a problem they've faced in previous downturns—that could make it more difficult to tackle industry-changing competition from renewable energy and electric vehicles."

Not only is the industry having to reinvent itself in order to adapt, but it is being forced to do so within a radically transformed competitive environment:

"America's oil-and-gas industry has cut about 105,000 positions, or roughly 20% of its jobs, from March 1 through the end of June, according to Accenture. At its low in April, global oil demand was down more than 20% from a year earlier, according to the International Energy Agency. Demand has been climbing since, but it isn't expected to surpass 2019 levels until 2023, said analytics firm IHS Markit. Even by the end of the decade demand is expected to be 3.5 million to 4 million barrels a day lower than previously forecast, IHS said."

Given the damage already done by fossil fuels to the environment, along with energy companies' historical reluctance to recognize their impact, the industry is facing a bit of an image problem among the prospective employees it now needs to attract:

"… the public, especially younger people, increasingly sees the industry in a negative light. A career in oil and gas was unappealing to 44% of 20- to 35-year-olds, according to a 2017 survey by Ernst & Young LLP. An even greater portion of 16- to 19-year-olds, nearly two-thirds, held that sentiment."

Moreover, the industry has hardly been exactly 'inclusive' at the best of times:

"[In 2019] 88% of people working in oil-and-gas extraction were white, and just 22% were women."

The result is that these companies face higher hiring costs and a reduced pool of talent from which to select, but at least they are aware of the challenges they face:

"This time, Chevron plans to maintain at least some university recruiting despite being in the process of cutting up to 15% of its workforce. The company also continued its internship program virtually. Half of the class are racial or ethnic minorities and 37% are women, a more diverse group than Chevron's workforce overall. … BP made its summer internship program virtual and honored full-time offers to some 300 recent graduates, even as it cuts nearly 10,000 jobs, or 14% of its global workforce."

One chart in the article demonstrates the dramatically cyclical nature of hiring in the industry. These cycles are correlated with the price of oil:

 

 

University departments are responding to the needs of the industry, although in a way that appears more reactive and pandering, rather than proactive and intellectually independent:

 

"Universities' petroleum-engineering departments are remaking curricula in light of demands for digitally savvy employees. LSU began requiring additional data-analytics course work last year, and it plans in the spring to introduce an elective about carbon capture and storage."

 

Ultimately, to those who support the industry, the core concern of energy companies is not so much finding enough people willing to work for them, but rather being able to generate enough open positions given the volatility in oil prices to hire all of the students looking for jobs. To some degree, while the headline driving the article is all about the values of the new generation of job seekers, the article concludes by noting that there will always be sufficient numbers of people willing to work for the higher salaries the industry provides, as long as the jobs are available to them. Or, perhaps that is what we might expect someone to say from a university department already fully committed to the industry:

 

"'There's a mentality out there that oil and gas is finished,' said Jeff Spath, who leads Texas A&M University's petroleum-engineering department, adding that there is 'a growing disdain' for the industry. Dr. Spath said he thinks a generation or two of students will still be able to build a full career in oil and gas, because fuels are widely expected to make up a large share of the global energy supply for decades. But the downturn is hitting Texas A&M's students hard. As of early August, only a third of the petroleum engineers who graduated this spring with a bachelor's degree had a job, Dr. Spath said. Some 70% of the class of 2019 had found a job by that time last year."

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 

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

Oil Firms Fret Over Finding Young Workers

By Rebecca Elliott

August 19, 2020

The Wall Street Journal

Late Edition – Final

B1, B4

https://www.wsj.com/articles/oil-industry-frets-about-recruiting-its-next-generation-of-workers-11597763882

Strategic CSR - Big Tech

The article in the url below was prompted by the news that Exxon Mobil was being dropped from the Dow Jones Industrial Average after nearly 100 years of being on the list. This shift in the company's fortunes has been widely reported as a symptom of the oil industry's precipitous decline of late (see also Strategic CSR – Exxon):

"Less than a decade ago, Exxon Mobil was the most valuable company in the world. … Today all of Exxon is worth less than Jeff Bezos."

More specifically, the article discusses the possibility that the major IT companies, which are so dominant today, might be heading in the same direction as the tobacco companies of the past and the oil companies at present. The author presents two reasons motivating this assertion:

"First, as wild as it feels to have a handful of American technology superpowers rule the economy and the stock market and influence world events, oil superpowers like Exxon were in a similar position not very long ago. And second, while it's hard to imagine Big Tech losing relevance, most people didn't predict that demand for fossil fuels would start to wane, until it did. That's part of the sweeping changes that ushered out the era of Big Oil and started the Big Tech age."

Given the dynamic nature of the situation in which IT companies currently find themselves, are they able to adapt in a way that tobacco and seemingly oil have not been able to? The author argues there are multiple reasons to think they can:

"Apple wouldn't be the company it is today without its savvy diplomatic skills in the United States and China to advance its own business interests. Facebook is so influential that it's a tool used both against and by authoritarian governments. Google shapes how government regulators and the public think about antitrust laws. It's an imperfect comparison, but big tech companies are private empires in some of the same ways as the old Exxon."

Moreover:

"One fundamental difference is that Big Oil's fate relies on demand for a product that the companies can't control. The tech industry doesn't seem to have this essential vulnerability."

The clinching argument seems to be that, while individual companies may stumble, unlike oil, it is difficult to think that technology will become less important in our lives and the whole industry will disappear:

"[There is] a history of technology in which evolutionary changes have ruined seemingly invincible industry leaders. But while it's possible to imagine some of the individual tech powers losing relevance … it's much harder to imagine the tech industry overall growing less potent or essential."

Either way, the symbolism of the IT industry moving-in to take over from the oil industry is powerful:

"Exxon is being dropped from the Dow Jones index because of a technical change necessitated by Apple's stock getting too expensive. And Exxon's spot is being taken by a tech company: Salesforce.com."

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/

In Time, Big Oil Faded. Will Big Tech Follow?

By Shira Ovide

August 31, 2020

The New York Times

Late Edition – Final

B5

https://www.nytimes.com/2020/08/31/technology/big-oil-faded-will-big-tech.html

Strategic CSR - Personhood

Here is a great short documentary that I came across recently about a 2017 decision in New Zealand to award legal personhood to a sacred Maori river: https://youtu.be/YQZxRSzxhLI. The documentary begins with a Maori saying about the river at the center of the case, the Whanganui River (New Zealand's third longest river):

"The river flows from the mountain to the sea. I am the river and the river is me."

The narration then switches to the legal interpretation of the river's status, as determined by legislation passed by the New Zealand Parliament:

"Section 12: The river is an indivisible and living whole incorporating all its physical and metaphysical elements. … a living entity with the same legal rights as a person."

It is clear from the video that the river forms a central role in Maori culture:

"When you carry the weight of your ancestors, it is not an easy position to be in. In one sense, you feel them supporting you, the old people, those who have gone on. … [We see the river] as a living entity that carries our ancestors, it carries their memories, as a metaphor for our history. We are very much connected physically, virtually, and even our philosophies very much come from being a people of the river."

A specific dialogue between the producer of the documentary and the Attorney General of NZ who oversaw the passage of the legislation is instructive:

AG: "The fact of the matter is that you can't divide a river up into the bed, the water column, and the air above the river. I think you can get hung-up on these Western concepts of ownership."

Narrator: "OK, so the river's water comes from the rain, and the rain falls through farmland, and city streets, through a lot of different areas. Because, legally, the river is now indivisible, I'd imagine that everything that water touches along the way might eventually gain the same personhood."

AG: "Yes, I suppose that is right in so far as the water is part of this indivisible entity, it will flow-in, flow-out."

Narrator: "So then the larger idea would be that all of nature, in some way or another, gets spoken for."

AG: "When you think about it, why not?"

The issue of personhood appears twice in the fifth edition of Strategic CSR – in Chapter 3 in terms of defining a stakeholder (in which the Whanganui River is mentioned specifically), and in Chapters 5 and 6 in terms of the discussion around corporate personhood. The river's Wikipedia page is here: https://en.wikipedia.org/wiki/Whanganui_River

Take care

David

David Chandler

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

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