The CSR Newsletters are a freely-available resource generated as a dynamic complement to the textbook, Strategic Corporate Social Responsibility: Sustainable Value Creation.

To sign-up to receive the CSR Newsletters regularly during the fall and spring academic semesters, e-mail author David Chandler at david.chandler@ucdenver.edu.

Thursday, December 7, 2023

Strategic CSR - Weather

 
This is the last CSR Newsletter of the Fall semester.
Happy Holidays and I will see you in the New Year!
 

For this last newsletter of the semester, I thought it worth discussing something that Brits are well known for complaining about – the weather. Historically, complaining about the weather has been futile, since it was thought to be beyond our control. That is, of course, before we invented climate change. Not only can we now influence the weather (if not completely control it), as this chart from the article in the url below reports, we are doing so at great cost to ourselves. Specifically, the chart captures the amount of insurance payouts due to bad weather that have occurred annually, since 1990. Anyone see a pattern?
 

Happy COP 28, everyone. See you in 2024.
Take care
David

David Chandler
© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/


A Punishing Year of Thunderstorms Has Led to Record-Breaking Losses
By David Smagalla
November 27, 2023
The Wall Street Journal
 

Monday, December 4, 2023

Strategic CSR - Housing

We have long known that humans are far from rational when evaluating risk and calculating self-interest. Along these lines, the article in the url below is not particularly surprising (given that price seems to motivate so much of consumer behavior), but it is still entertaining (and/or depressing) to see how bad humans are at making important decisions:

"A midsummer quiz: Let's say you read about an area experiencing blistering heat for weeks on end. Heat so hot that in the day, you can't go outside, and at nighttime it's still above 90F. Would you cross that off your list of locations for your dream home? Now suppose a neighborhood experiences regular heavy flooding and was recently decimated in places by a hurricane.  Do you want to move there, or perhaps look for somewhere on higher, drier ground?"

Apparently not:

"Well, many Americans are actually choosing to move to Zip codes with a high risk of experiencing wildfire, heat, drought and flood, according to a new study on domestic migration. … In fact, the nation's most flood-prone counties experienced a net influx of about 400,000 people in 2021 and 2022. That represents a 103% increase from the two-year period  before that. The US counties with the highest risk of wildfire saw 446,000 more people move in than out over the last two years (a 51% increase from 2019 and 2020). And the counties with the highest heat risk registered a net influx of 629,000, a 17% uptick."

The chart in the article captures the extent to which we are getting even better at making bad decisions (even while the climate around us continues to provide compelling evidence that we should not be doing what we are doing, and insurance companies are stopping some forms of emergency coverage):


There are plenty of examples in the article, if you can get past the firewall. Here is one, just in case you cannot:

"Popular destinations such as Florida, Arizona, Utah and California's Inland Empire can have cheaper land costs for builders and, in some cases, more forgiving building codes, translating to lower new-home prices, but often the climate risks are higher than for older homes. … 55% of homes built so far this decade face wildfire risk and 45% face drought risk. By comparison, just 14% of homes built from 1900 to 1959 are at risk for fire and 37% for drought."

Somewhat encouragingly, there does seem to be a limit to our poor decision making:

"While the macro trend is migration to risky areas, there are two noteworthy exceptions. Hurricane-prone Louisiana and Paradise, California, the scene of the devastating Camp Fire in 2018, both saw a net outflow of residents, proving that perhaps there is a line where enough is enough."

Take care
David

David Chandler
© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/


Americans are moving toward climate danger
By Leslie Kaufman
July 24, 2023
Bloomberg
 

Thursday, November 30, 2023

Strategic CSR - COP 28

In recognition of the COP 28 meeting (an attempt to layer binding global policies and targets on top of national regulation and practices), which started today in Dubai, the article in the url below argues that "the biggest obstacle to saving rainforests is lawlessness." The area of ground that law enforcement agents are expected to cover is so great, that illegal mines and logging operations are easy to hide in plain sight. Even when authorities are able to identify an illegal operation, arriving in time without first alerting the perpetrators is next to impossible:

"The pickup trucks left before dawn. Their occupants—six military police and nine agents from Brazil's national parks service—wore bulletproof vests. Their target was an illegal gold mine deep in the Amazon. To save the rainforest, Brazil's new government is trying to catch the criminals who cut it down. First, though, it must find them. Satellite images had revealed the location, 140km from Itaituba, a city in the state of ParĂ¡. After seven hours of driving, two men on a motorbike spotted the convoy and sped off to alert the miners. The trucks gave chase, but got stuck in knee-deep mud. Five kilometres from their target, the forces of law and order had to turn back. That gave the wildcatters time to hide their equipment, which the agents would have torched. A follow-up raid is unlikely."

But, given that the article appeared in The Economist, there is a market-based solution:

"The destruction of the world's rainforests is not only a scandal; it is a colossal market failure. Rainforests brim with biodiversity and help regulate the water cycle. Most importantly, the forests are giant carbon sinks. Deforestation accounts for 7% of global carbon-dioxide emissions. … clearing and burning a hectare of the Amazon pumps 500 tonnes of carbon dioxide into the atmosphere. It each tonne causes $50 of harm by accelerating global warming, … then the total damage is $25,000. Set against this, the profits are puny."

Thus, the way to prevent the criminal activity is some form of upfront compensation (that exceeds the likely profits, but is less than the likely harm) to incentivize the protection of the forests, rather than their destruction. This is where "lawlessness" reenters the conversation:

"If rainforests were in countries where property rights were clear and the rule of law was strong, it would be straightforward to pay the landowners to conserve them. Where property rights are muddled and the rule of law is weak, however, whom do you pay, and how do you know he or someone else won't chop down the forest anyway? Alas, rainforests are often in the second kind of country."

The article provides examples of how difficult it can be to introduce obvious market solutions in Brazil, Indonesia, and Congo, given the contextual poverty and political instability. The graphic accompanying the article shows the amount of rainforest in these three countries that was lost between 2000 and 2020. There is still a lot left, of course, but the physics of tipping points suggests that we do not have much room for further loss:


Take care
David

David Chandler
© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/


The rule of saw
March 4, 2023
The Economist
Late Edition – Final
52-54
 

Monday, November 27, 2023

Strategic CSR - Energy subsidies

Looking past the hyperbole and faux incredulity that the government would actually try and do something about climate change, the article in the url below from the WSJ's op-ed page makes an essential point that many in the area of sustainability seem unable to comprehend:

"As much wood is burned in the U.S. today as in 1885, when coal surpassed it to become our largest energy source. Wind and hydropower were in use centuries before fossil fuels arrived and never stopped growing. Solar voltaic has grown like topsy since its invention in the 1950s."

The point:

"There's only 'additional' energy and no upward limit on humanity's willingness to consume it except through the workings of price. If energy were cheap enough, we'd have flying cars, supersonic airlines and space travel for the middle class. You would open your windows in the winter to enjoy the benefit of fresh air and heat at the same time. Energy is convenience. Energy is control over our environment. Humans will consume all the energy it makes sense to consume at the available price."

To emphasize the final sentence of that previous paragraph:

"Humans will consume all the energy it makes sense to consume at the available price."

In other words, the price of that energy matters (see Strategic CSR – Carbon Tax and also Strategic CSR – Carbon tax). The makeup of our energy profile also matters – the more sustainable our energy mix, the better. The trouble is that we do not appear to be making much progress on that front:

"Cut to the chase: global CO2 emissions actually grew 12% faster in 2022 than energy consumption did. … [That year] around the world, wind and solar still accounted for less than 2.4% of humanity's total energy consumption. Their annual increase was still a small fraction of the annual increase in fossil-fuel consumption. They remain functionally additive to humanity's energy budget, rather than displacing coal or oil on a global basis."

In short, we cannot escape the laws of fundamental economics – what the author terms "the price effect":

"When certain consumers are subsidized to use less fossil energy, others in the U.S. and world will take advantage of lower prices to consume more."

Thus, our fundamental problem. Even though we are capable of enforcing higher prices of unsustainable energy (ideally through a carbon tax, which is applied worldwide) than the market would otherwise make available, our current track record suggests that is unlikely. In this, and many other ways, we are the architects of our own fate.

Take care
David

David Chandler
© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/


Why Are Carbon Emissions Up?
By Holman W. Jenkins, Jr.
August 16, 2023
The Wall Street Journal
Late Edition – Final
A13

Wednesday, November 22, 2023

Strategic CSR - Fast fashion

The article in the url below caught my eye. It focuses on "single-material clothing" and an attempt by the EU to encourage the reduction of waste (and an increase in recycling) in the fashion industry:

"Clothes often contain a mix of fibers, including organics, such as cotton grown on farms, and synthetics, such as polyester refined usually from petroleum. Garments with multiple materials—such as a T-shirt made from 99% cotton and 1% spandex—are difficult to recycle because separating the fibers is tricky."

And, clearly, the room for improvement is significant:

"Currently, less than 1% of the world's textile waste is recycled into new clothes, with the bulk ending up in trash heaps. The EU wants to change this, and the relatively short time frame promises to challenge the big players in fast-fashion, which may have to retool their design processes and rethink their sourcing."

The underlying motivation is to combat the wastefulness of fast fashion (see Strategic CSR – Fast fashion) and, instead, promote an industry that produces products that are more sustainable:

"The European Commission, the EU's executive branch, published a plan in March that aims to put 'fast fashion out of fashion' by 2030, referring to the trend of people buying clothes and throwing them out in less than a year. Clothing should be 'long-lived and recyclable, to a great extent made of recycled fibers,' the EU said."

Given the size of the European trading bloc, a significant change there will affect supply chains and product quality, worldwide:

"European Parliament members and the heads of its 27-member states still need to agree on specific laws. But the regulations would cover all clothes sold in the bloc, which imports nearly three-quarters of its textiles. This will affect not only Europe's homegrown brands, but also American multinationals such as sportswear giant Nike Inc. and jeans-maker Levi Strauss & Co., and Japan's Uniqlo or China's Shein. EU nations have already agreed to collect discarded textiles separately from other waste by 2025."

I didn't realize that the barrier to progress in the fashion industry relies so heavily on this issue of material composition. It is something on which some firms are making progress:

"German sportswear maker Adidas AG, for example, launched a line of single-fiber clothes last year including shoes, coats, T-shirts and pants under its 'Made to be Remade' label. 'These products are created with just one material and once they reach the end of their useful life, they can be cleaned, shredded and recycled for use in new products,' an Adidas spokesman said."

But not to the extent or speed that is needed:

"Still, some single-fiber garments may not be durable enough in some cases, a Hennes & Mauritz AB spokeswoman said. The current share of fabrics with a 100% composition constitutes around a third of the total output of the Swedish fashion retailer, better known as H&M. … in fashion, design remains the most important element, said Christina Dean, founder of fashion nonprofit Redress. She said the EU's focus on the makeup of clothes will drive designers to choose single materials. 'That is addressing this cocktail of fibers that is currently being used,' Ms. Dean said."

Happy Black Friday!
David

David Chandler
© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/


EU Regulators Add to Push for Single-Material Clothes
By Joshua Kirby and Dieter Holger
September 7, 2022
The Wall Street Journal
Late Edition – Final
B4

Thursday, November 16, 2023

Strategic CSR - Cars + parking spaces

The article in the url below presents an interesting challenge to addressing climate change – US car size meets urban parking space. The article opens by describing the way architects determine how big they should make parking spaces when designing a building or parking lot – an allowance that is termed a "design vehicle":

"The design vehicle is a statistical composite of a car, compiled by the Parking Consultants Council, a professional association of parking lot designers. Every five years or so, the Parking Consultants Council analyzes the U.S.'s car sales data. It then calculates the 85th percentile car size. … The design vehicle Schneeman and his industry colleagues use is six feet seven inches wide and 16 feet 10 inches long; incidentally the exact width of a Ford's F-150, the U.S.'s most popular vehicle and a symbol of the country's appetite for larger cars."

The problem is that this method, which has served "the parking industry" well in the past ("ensuring space sizes accommodate the vast majority of American cars and leaving about 20 inches of space for people to open their doors and maneuver on either side"), is running into a problem. Specifically, there are no longer enough spaces and they are not big enough. The problem is particularly noticeable, of course, in older buildings or parking lots, where the size of the space was determined based on average car sizes from previous generations:

"Increasingly, cars are too big for parking spaces, especially in parking garages and other paid parking lots where developers pay close attention to space size. Like the proverbial frog in a slowly heating pot of water, our cars have gotten ever-so-gradually bigger with each passing year, but the parking space standards have barely budged. Now, in the third decade of the growing car size trend, people are starting to notice."

It seems that people put a lot of thought into parking spaces, and they want them bigger – that is until they realize the associated cost:

"When Warren Vander Helm, a partner at Parking Design Group, first meets with a client on a new project, one of the first things they will say is they want the spots to be big. But once Vander Helm walks them through the local zoning regulations that require a certain number of parking spaces, how much more surface area big spots will require to meet that minimum, and how much more that will cost, the enthusiasm for big spots wanes. 'For a surface lot, you're looking at $7,000, $7,500 just to build one parking space,' Vander Helm said. 'For an underground garage, in a city, it can be $200,000 per space, easy. Structured parking above ground is $40,000, $45,000 per space.'"

And, when multiplied by a large number of spaces in a building, "even a few inches can be the difference between profit and loss." And, today, car consumers in the U.S. want a different kind of car (SUV instead of sedans) and they want them bigger:

"Consider someone who switched from a Honda Civic to a Honda CR-V. This added about three inches in width. A CR-V to a Pilot, a large SUV, would add five more inches in width. This may not sound like much, but repeat for half the cars in a parking lot and it adds up. For example, in a 700-space garage, if each car is four inches wider than its predecessor, that is 233 additional feet in car width—from the goal line to the opponent's 23 yard line on a football field—that needs to be accommodated."

How are these trends compatible with addressing climate change? Even if all cars become electric (which has massive implications for our electricity generation system that is still driven largely by fossil fuels and, at current capacity, falls well short of what is required), a car-based society is not what we should be aiming for, as anyone who has spent any time living in a European city with functioning public transport can report. We have developed an effective way of allocating scare and valuable resources (in this case, valuable real estate) – the pricing mechanism. In short, if something is in high demand but limited supply, the price should rise to help determine how much of that good any one person should have:

"Essentially, parking lot owners will have two choices: Either make spaces bigger and charge more for them or make some spaces bigger, charge vehicles that park there more, and keep the prices lower for smaller vehicles. Oversized vehicle fees have become popular in dense urban parking lots, especially in New York City, but are rare in the rest of the country. It's easy to imagine the backlash that may ensue from any effort to charge people with large vehicles more for parking, even though the suggestion that people who use more of something should pay more than people who use less is one of the most basic tenets of economic theory and the basis of capitalism. But now, everything with a hint of stifling Traditional American Values is part of the culture wars. And, somehow, big cars have become part of that worldview. But there is nothing traditional about huge cars."

Take care
David

David Chandler
© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/


American Cars Are Getting Too Big For Parking Spaces
By Aaron Gordon
February 8, 2023
Vice
 

Tuesday, November 14, 2023

Strategic CSR - Nuclear

If you want to understand why nuclear energy has to be a part of our collective solution to climate change, the article in the url below offers one of the most comprehensive and compelling explanations I have seen:

"Progressive lawmakers, along with environmental groups like the Sierra Club and Natural Resources Defense Council, have historically been against nuclear power — often focusing on the danger, longevity and storage requirements of the radioactive waste."

Key to the argument, you won't be surprised to hear, is removing the fearmongering and misinformation that is routinely spread about the byproduct of nuclear energy, nuclear waste:

"So it's no surprise that many Americans believe nuclear waste poses an enormous and terrifying threat. But after talking to engineers, radiation specialists and waste managers, I've come to see this misunderstanding is holding us back from embracing a powerful, clean energy source we need to tackle climate change. We must stop seeing nuclear waste as a dangerous problem and instead recognize it as a safe byproduct of carbon-free power."

First, the obvious advantages of nuclear energy (other than being carbon-free, of course):

"The countries that have cleaned up their electricity production the fastest have generally done so with hydroelectric power, nuclear, or a combination of the two. The distinct advantage of nuclear is that it requires little land and can reliably produce lots of power regardless of weather, time of day or season. Unlike wind and solar, it can substitute directly for fossil fuels without backup or storage. The International Energy Agency believes it's so crucial that global nuclear capacity must double by 2050 to reach net-zero emissions targets."

Next, overcoming the understandable (and arguably misplaced) fears about the waste, which is often presented in popular media as some fluorescent material that burns through anything it touches:

"In reality, nuclear fuel is made up of shiny metal tubes containing small pellets of uranium oxide. These tubes are gathered into bundles and loaded into the reactor. After five years of making energy, the bundles come out, containing radioactive particles left over from the energy-making reactions. The bundles cool off in a pool of water for another five to 10 years or so. After that, they are placed in steel and concrete containers for storage at the plant. These casks are designed to last 100 years and to withstand nearly anything — hurricanes, severe floods, extreme temperatures, even missile attacks."

The key takeaway:

"To date, there have been no deaths, injuries or serious environmental releases of nuclear waste in casks anywhere. And the waste can be transferred to another cask, extending storage one century at a time."

And, what about all the misinformation about the half-life of nuclear material?

"The way radiation works, the waste products that are the most radioactive are the shortest-lived, and those that last a long time are far less dangerous. About 40 years after the fuel becomes waste, the heat and radioactivity of the pellets have fallen by over 99 percent. After around 500 years, the waste would have to be broken down and inhaled or ingested to cause significant harm."

The author compares this to industrial waste that we are much less careful with, even though it tends not to lose any of its toxicity, over time:

"Take ammonia: It is highly toxic, corrosive, explosive and prone to leaking. Hundreds of ammonia-related injuries and even some fatalities have been reported since 2010, and we continue to produce and transport millions of tons of it annually by pipelines, ships and trains for fertilizer and other uses."

While there may be security reasons for storing nuclear waste in a single location, deep in the mountains, the author argues there is not much of a safety justification for doing so:

"The waste should really be a chief selling point for nuclear energy, particularly for those who care about the environment: There's not very much of it, it's easily contained, it becomes safer with time and it can be recycled. And every cask of spent nuclear fuel represents about 2.2 million tons of carbon, according to one estimate, that weren't emitted into the atmosphere from fossil fuels. For me, each cask represents hope for a safer, better future."

For interest, the NYT collected reader responses to this article, most of which appear to focus on the storage of nuclear waste, rather than rebutting the core argument (which is that the fears are greatly overblown):


The article in the second url below demonstrates the potential, via a company that has developed a technique that can be attached to existing nuclear reactors to generate hydrogen, at scale. Overall, of course, we need to proceed with caution (and there are all kinds of other issues with nuclear energy, such as how long it takes to approve and build a power station), but our options for significant carbon reduction are limited, and time is running out. Much better to be guided by facts, rather than mythical fears, in plotting the most effective way forward.

Take care
David

David Chandler
© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/


We're Thinking About Nuclear Waste All Wrong
By Madison Hilly
May 1, 2023
The New York Times
Late Edition – Final
A18

Billion-Dollar 'Pink Hydrogen' Plan on Hold as US Weighs Rules
By Will Wade
May 30, 2023
Bloomberg

Saturday, November 11, 2023

Strategic CSR - 2022 (+ 2023)

I recently Zoomed into a class where my textbook was being taught to answer questions from the students (which I am asked to do, occasionally). At some point in the conversation, I was asked whether I am hopeful for the future, given that things are beginning to change. There is so much conversation around sustainability and CSR-related topics (although the acronym of the day is now more likely ESG), the questioner suggested, that there should be reason for hope.

There are many ways to process that question and begin to formulate a response but, for me, a straightforward answer that cuts to the heart of whether we are serious about doing something on climate change (and that effort can be a proxy for so many social and societal initiatives) is global carbon emissions. As I noted in a prior newsletter, during COVID, when the world that we knew had effectively come to a halt, total emissions only dropped 6% (see Strategic CSR – COVID-19), while there is increasing evidence that companies are promising a lot and delivering much less (see Strategic CSR – Accountability). And we claim to be serious about net-zero targets in 2050.

Along similar lines, the article in the url below focuses on the sustainability reporting metrics of financial institutions (and introduces the useful term, "financed emissions"). In a related story, it includes a chart of annual total carbon emissions, worldwide, since 1899:

Feel free to draw your own conclusions on whether this graph presents a picture of hope: 


As a result, it is not surprising that 2023 is being predicted by scientists to be the hottest year for global temperatures, on record.

Have a good weekend
David

David Chandler

© Sage Publications, 2023
Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/


Oil and Gas Companies Face an Era of Credit Downgrades, Fitch Warns
By Gautam Naik
October 31, 2023
Bloomberg
 

Wednesday, November 8, 2023

Strategic CSR - Lego

The article in the url below reflects a company making a sustainability-related decision based on an honest assessment of its ability to make a difference, rather than the appearance of making a difference:

"Lego is scrapping plans to make its toy bricks from recycled plastic bottles after determining that switching to the material would result in it producing higher carbon emissions.

Importantly, the company is not giving up, just recognizing that the technology is not there, at present:

"Lego has long sought to replace its petroleum-based bricks with more sustainable materials. It tried making pieces from corn, but that resulted in bricks that were too soft. A wheat-based brick didn't look right. Bricks made from other materials over the years proved too hard to pull apart or lost their grip. Its latest effort was focused on recycled plastic bottles. The company found a one-liter plastic PET bottle could produce around 10 of its classic 2×4-stud bricks. The company has been testing bricks made from the material for their quality, durability and "clutch power"—the name Lego gives to the brick's ability to lock together with other bricks."

The challenge:

"Lego said it is abandoning the effort because it found that scaling up production wouldn't cut the company's carbon emissions: The extra steps involved in production would use more energy and manufacturing facilities would require retooling. … The company said it would instead continue with testing and developing Lego bricks made from a range of alternative sustainable materials, including other recycled plastics."

This reminds me of a phenomenon I have increasingly experienced when I meet people working in the CSR-related space. This is no doubt related to my advanced age and growing frustration, but I have taken to asking the people I meet whether they are interested in making money or interested in making a difference. It is obvious that there are plenty of ways to make money, via the perception of action or meaning. All the work being done in the market for ESG-related investment products is a great example – a whole industry has grown around consumer demand for more sustainable funds, with no discernible impact (as far as I can see) on either corporate behavior or, more important, actual carbon emissions. Nevertheless, there are plenty of people willing to dive into the space, because money is there to be made. When I push these people who I meet on the issue, 9 times out of 10 I don't hear from them anymore. My takeaway is that they are in it for the money, which is fine (people need to earn a living and markets offer a powerful motivator for change, when directed appropriately), but not conversations I want to waste time on. What is interesting about the Lego example is that it suggests the intention to make a difference, even if it means taking a short-term hit to perceptions (i.e., withdrawing a proposal that appears sustainable, on the surface).

Take care
David

David Chandler
© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/


Lego's Latest Effort to Avoid Oil-Based Plastic Hits a Brick Wall
By Dominic Chopping
September 26, 2023
The Wall Street Journal
Late Edition – Final
B3
 

Tuesday, October 31, 2023

Strategic CSR - Accountability

A lot of companies have made a lot of promises, in recent years, regarding their environmental performance. Most of them revolve around a net-zero target, usually by 2050. I have generally been skeptical about these promises – they are often made without any specifics (suggesting these companies do not really know what attaining "net-zero" would actually require). And, of course, the easiest promise from a CEO concerning a high-stakes bet is one where the delivery deadline is well beyond their tenure (or even lifespan). Most CEOs have no qualms about committing some distant successor to a target, especially since they will not be around to be held accountable.

So, where are we with all of these promises? The article in the url below contains some updates and, perhaps unsurprisingly, we are not where we need to be. For example, McDonald's:

"Five years ago McDonald's said it planned to reduce greenhouse gas emissions by more than a third in parts of its operations by 2030. A few years later, it pledged to be 'net zero' … by 2050. But in its most recent report, McDonald's disclosed that things were moving in the wrong direction: The company's emissions in 2021 were 12 percent higher than its 2015 baseline."

Companies in the restaurant/food industries appear particularly challenged by the promises they themselves made:

"McDonald's is hardly alone. An examination of various climate-related reports and filings for 20 of the world's largest food and restaurant companies reveals that more than half have not made any progress on their emissions reduction goals or have reported rising emissions levels. The bulk of emissions — in many cases more than 90 percent — come from the companies' supply chains. In other words, the cows and wheat used to make burgers and cereal."

There is PepsiCo:

"At PepsiCo, which began setting targets to reduce emissions in 2015, emissions in its supply chain are up 7 percent from its baseline, according to its 2022 climate report."

And Chipotle:

"Chipotle, which set a goal of halving its emissions by 2030, reported a 26 percent surge in supply chain and other emissions in its 2022 report."

How about Starbucks?

"For 2022, for example, Starbucks reported a 12 percent increase in its total emissions from 2019 levels."

Mars appears to be a more positive story, however:

"Mars said it had reduced its total emissions, including its supply chain, by 8 percent from 2015 levels while increasing its revenue 60 percent. The company's goal is to cut its total 2015 emissions by 50 percent by 2030 and to be net zero by 2050."

As Mars' Chief Sustainability Officer puts it, commenting on the performance of its many competitors:

"'We've had five years of companies making promises and being celebrated for the quality of their promises and not their performance.'"

Take care
David

David Chandler
© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/


Emissions are Taking Wrong Turn for Some
By Julie Creswell
September 25, 2023
The New York Times
Late Edition – Final
B1, B3
 

Thursday, October 26, 2023

Strategic CSR - Markets

The article in the url below is a reaction to the UK Prime Minister's recent announcement scaling back his government's commitment to phasing out internal combustion engines in cars:

"The science is simple: halting the rise in global temperatures requires getting to net-zero emissions. But the politics is hard: getting there will require every one of us to end the use of many carbon-emitting devices. And so pundits viewed it as a mere political maneuver last week when UK Prime Minister Rishi Sunak announced he will be delaying the end date for the sales of fossil-fuel powered cars from 2030 to 2035. The prime minister argued it should be market demand — not government bans — deciding the pace of EV uptake."

What I found particularly interesting is that the graph in the article presents a comparison between the predicted adoption rates of EV cars, in the UK, for government-mandated coercion vs. market-based consumption. In other words, it shows the adoption rates if the government bans fossil fuel combustion engines in 2030, versus the expected adoption rate if market forces drive consumer decisions (through efficiencies and lower prices, increased technology and design, etc.). 


This is interesting because I don't think I have seen such a direct comparison, before. The element missing from the analysis in the article is what markets are best at – identifying the optimal technology. In others words, if we rely on government mandate, the 'wrong' (or sub-optimal) technology may be forced on everyone. In contrast, if market forces are allowed to play out, a competing technology might emerge as costs decrease, technological awareness increases, along with competition among firms to develop the 'winning' design.

In other words, while government intervention might be the quickest pathway to full adoption, it might not be the 'best' pathway and, even worse, might generate unforeseen consequences that have other negative implications.

The other factor, of course, is whether we have the luxury of allowing the market to decide, given that we have waited so long, to date, and have distorted the market through things like fossil fuel subsidies, for so long.

Take care
David

David Chandler
© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/


Why Ban CO2-Emitting Cars if the Market's Moving Against Them Already?
By Akshat Rathi
September 26, 2023
Bloomberg
 

Tuesday, October 24, 2023

Strategic CSR - Ben & Jerry's

The article in the url below presents a different take on the debate around the extent to which companies should engage in discussions around social issues:

"Companies ranging from Anheuser-Busch to Disney and BlackRock have recently lost loyal customers and billions of dollars in market capitalization and assets after wading into controversial political issues. The reason customers left and investors bailed is simple: These companies failed to carry out what they had promised in their mission statements."

In essence, the argument is that companies should, first and foremost, stay true to their founding mission, and that it is when they diverge that confusion is caused. Anheuser Busch's mission, for example, is to "Dream Big to Create a Future With More Cheers," while BlackRock promises to "to help more and more people experience financial well-being," both of which suggest a more neutral foundation:

"Clear mission statements are critical for company success. A 2016 Harvard Business Review study found that companies that clearly establish their purpose innovate more successfully and increase revenue faster than companies that don't. That's because clear mission statements explain why a company exists and what it hopes to achieve. They also identify its present—and, ideally, future—customers. This aligns internal employees and external investors in pursuit of a common goal: delivering great products and services to increase shareholder value."

Disney is another example of a company that has gotten itself into trouble, of late, with what some see as a confounding of its guiding purpose:

"[Disney's] stated mission is 'to entertain, inform and inspire people around the globe through the power of unparalleled storytelling, reflecting the iconic brands, creative minds and innovative technologies that make ours the world's premier entertainment company.' Creating movies like 'The Lion King' and 'Star Wars' is on mission. Less so is public criticism of such legislation as Florida's Parental Rights in Education Act, which prohibits the state's educators from teaching about sexual orientation and gender identity in classes from kindergarten through third grade. When Disney announced its opposition to the bill in 2022, the majority of its customers disagreed. Disney's public approval rating cratered to 33% in 2022 from 77% in 2021. Customers spoke with their wallets. The company's streaming service, Disney+, saw canceled memberships, and attendance at Disney theme parks suffered. The company's stock remains depressed even after it swapped in new leadership."

Ultimately, the author is arguing that there should be alignment between mission and behavior. Stakeholders engage with a company based on an understanding of what it is that the company does. If the company suddenly diverges from that, however well-intentioned, then it will confuse stakeholders who had been engaging based on alternative assumptions:

"Anheuser-Busch, Disney and BlackRock could learn about proper mission control from Ben & Jerry's. The ice-cream company has been aligning customers and shareholders behind a progressive and social mission for decades. Its mission states: 'We believe that ice cream can change the world. We have a progressive, nonpartisan social mission that seeks to meet human needs and eliminate injustices in our local, national, and international communities by integrating these concerns in our day-to-day business activities.' When Ben & Jerry's supports returning to Native Americans what it claims is stolen land, when it advocates overturning voter-integrity laws, or when it favors defunding the police, its customers aren't surprised. This is because Ben & Jerry's has been advocating such change since two Vermont hippies founded the company in 1972. When they sold the business to multinational conglomerate Unilever in 2000, they maintained an independent board to make decisions on the company's social mission. Their customers expect this activism and buy such ice-cream flavors as 'Save our Swirled' and 'Empower Mint' to support social causes."

For me, the takeaway is that companies need to be founded based on a strong set of values, and those values should be conveyed to stakeholders clearly, from day 1. That authenticity is what binds stakeholders to companies, because the relationship is based on transparency and trust. It is when companies diverge, often for superficial reasons because they feel pressured to comment/act on the topical issue of the day, that problems arise. A company staying true to its values means refusing to engage in certain issues unless they are consistent with what the firm has believed and how it has acted, all along.

Take care
David

David Chandler
© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/


Why Woke Works for Ben & Jerry's
By Anson Frericks
August 9, 2023
The Wall Street Journal
Late Edition – Final
A17
 

Thursday, October 19, 2023

Strategic CSR - Recycle logo

The article in the url below reveals some of the difficulties with using a simplified, generic (albeit well-designed) logo or label to represent a complex construct. Specifically, the article is talking about the universally-recognized recycling logo:

"The 'chasing arrows' logo, designed by a college student for the first Earth Day in 1970, has become ubiquitous on everything from cartons of milk to shampoo bottles as a way to nudge users to recycle packaging rather than discard it."

The trouble is that the logo is now so widely used that companies are putting it on materials that, while theoretically recyclable, are almost never being recycled, at least not in the U.S. The result is a form of false advertising that the U.S. government wants to prevent:

"At issue is the use of the logo along with the 'resin number' of different types of plastics. Resin one and two plastics, such as bottles and jugs, are the most easily recycled products, but those marked with numbers three to seven, categories that include plastic bags, styrofoam and plastic trays, are typically not recycled and are instead sent to landfills or burned."

Again, the issue is not that these plastics cannot be recycled, it is that they cannot yet be recycled efficiently and, as a result, there is no functioning market for the original materials, once they have been used (see Strategic CSR – Labels):

"A new rule was needed, the agency said, to help clear up this confusion. In 2021, California passed a law to restrict the use of the logo to avoid misleading claims about recycling. Environmental groups are pushing for an end to the blanket use of the logo, too, claiming that its use amounts to 'greenwashing' by companies."

We either need to find a way to recycle these plastics in ways that are efficient and practical (without the plastic degrading so much that the recycled material does not have many practical applications), or we need to reduce the amount of single-use plastic in our lives (a challenge that has its own complications; see Strategic CSR – COVID-19):

"Only around 5% of plastics are recycled in the US, a proportion that has been declining since China announced it would no longer be accepting unwanted plastic waste from western countries in 2018. American households produce around 51m tons of plastic waste a year, more than any other country, with much of that either dumped in landfills, incinerated or littered, often ending up in the ocean."

Take care
David

David Chandler
© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/


Universal 'chasing arrows' recycling symbol could be dumped in US
By Oliver Milman
May 18, 2023
The Guardian
 

Monday, October 16, 2023

Strategic CSR - M&A

The article in the url below reports on the mining giant, Glencore's, hostile bid to acquire Teck Resources of Canada, for $23 billion. What is interesting about Teck's attempt to resist the takeover, however, is the nature of the defense it is employing – specifically, it is using ESG risk as a reason to argue that the acquisition will ultimately damage Teck as a company:

"Teck has rejected Glencore's offer in part because it doesn't want exposure to Glencore's coal business. It also raised concerns about Glencore's oil-trading business and what it said are potential geopolitical risks in certain countries where Glencore operates. … In a presentation to investors laying out its rationale for rejecting Glencore's offer, Teck cited its higher ranking in some ESG indexes relative to Glencore's, pointing to a 'significant ESG misalignment' between the two companies, according to one slide."

Even more interesting, rather than deny or attempt to deflect the accusation, Glencore has instead defended itself on similar terrain:

"Glencore has said the combined metals business would be a leading player in cobalt, copper and zinc, crucial for the transition to less polluting forms of energy. Glencore has said its oil-trading business is becoming a less significant part of its energy-trading division."

For its argument, Teck points to specific aspects of the two companies' business that appear to conflict, from an ESG perspective:

"Teck said earlier this year that it plans to spin off its coal business from its metals business. Glencore, meanwhile, has said it would run down its coal operations by 2050 and spin its coal business off completely if a majority of its shareholders approves. When Glencore came calling, Teck cited Glencore's continued coal business as part of its rationale for rejecting the deal."

Apparently, this is going to be a feature of future M&A activity (and also IPOs):

"Teck's scrutiny of Glencore's ESG bona fides comes as companies increasingly want to know whether deal targets—and suitors—are a match from an ESG perspective, bankers and lawyers say. It is now becoming part of the due diligence process."

Essential, of course, is whether Teck is genuine in its stance, or whether it is just the latest tactic firms will utilize to try and increase their purchase price:

"Teck may change its tune if Glencore sweetens its offer. Last week, Teck called off a shareholder vote on its plan to spin off its coal business, a surprise that analysts said suggested investors are open to a better offer from Glencore or others."

While Glencore, for its part, may deploy a tactic used in the oil and gas industry, whereby companies spin off the dirtiest parts of their operations to appear more sustainable overall. The operations that are spun off, however, are mostly going private and escaping the kind of oversight and accountability to which publicly-traded firms are exposed:

"Glencore's initial bid, which became public last month, proposed two separate companies for Glencore's and Teck's merged metals and coal businesses. It would then spin off the combined coal business."

Take care
David

David Chandler
© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/


Social Issues Dog Glencore's $23 Billion Merger Fight
By Julie Steinberg
May 6-7, 2023
The Wall Street Journal
Late Edition – Final
B2
 

Thursday, October 12, 2023

Strategic CSR - Taylor Swift

The article in the url below offers a contemplation on what it means to be a successful artist, in terms of a commentary on Taylor Swift's dominant year in the mainstream popular conversation:

"Did you know you'll soon be able to take a course in Taylor Swift at Queen Mary University of London? There's already one of these at a university in Belgium: it's called Literature: (Taylor's Version), and starts this autumn. In February, academics will gather in Australia for a high-level 'Swiftposium.' In the US, meanwhile, people fret over the pop star's political power. Last week, with a single Instagram post, she helped register 35,000 new voters in a day. Others concern themselves with Swiftonomics: where Taylor steps, businesses grow and bloom. Three concert nights in Chicago were enough to revive its tourism industry, according to the governor of Illinois. News recently got out that Swift is dating NFL player Travis Kelce. Sales of his jersey are up 400%."

But, the article is also an insight into distorted economies, where an extremely small minority take a lion's share of the wealth generated in those economies:

"'If Swift were an economy,' the president of a major online research company has said, 'she'd be bigger than 50 countries… her loyalty numbers mimic those of subjects to a royal crown.'"

While those artists who earn the majority of the wealth are arguably the most talented, their success is undoubtedly disproportionate. In other words, an artist that is only slightly less talented receives a very small fraction of the wealth of those who are the most talented (or popular):

"Swift, like Bob Dylan, to whom she is often compared, is probably a genius. But is she really 50 countries more of a genius than all those almost-Taylors, artists whose economies still amount to the size of a room in their parents' basements? For Swift stands a Gulliver among Lilliputians: the prize for being one scintilla less talented or lucky is, generally, a life scraping minimum wage. And there's another world too, perhaps a mere breath from this one, where a 33-year-old Swift still struggles in country music clubs and another artist is reigning king or queen."

As in any competitive market, the incentive is to win, and if you win then, increasingly it seems, you do so disproportionately:

"One per cent of musicians hog 90% of the takings. Gaming looks similar, as do the visual arts. As these industries are increasingly globalised, things are getting worse. There is no striving middle class."

This commentary is all an excuse to get to the quote that I found the most alarming in the article:

"On Spotify, artists need 6m streams to achieve the equivalent of a year on the UK's minimum wage."

This evidence is taken from a much drier document – evidence submitted to the Digital, Culture, Media and Sport Parliamentary Select Committee, in the UK:

"Taking Spotify as an example, it is estimated that on average an artist will receive £0.0028 per stream. That means that it would take roughly 3000 steams to make one hour of the UK minimum wage. If you were to have a full-time job, you would work somewhere in the region of 2000 hours a year, with that in mind to make the minimum living wage for the year in the UK you would need 6 Million streams."

I knew Spotify was hard going for artists, but not that hard going. It places a lot in perspective around the economics of music streaming, and why so many content producers see it as a double-edged sword, even while us content consumers revel in the technological advances that are breaking down barriers to access. I always suspected that, while the music is free to me, the cost was being paid by others elsewhere in the system – artists who do not have anywhere near the success of Taylor Swift, even though many of them are nearly as talented (or maybe even as talented, but not as lucky) as she has been in her amazing career.

Take care
David

David Chandler
© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/


We should celebrate Taylor Swift. But her success shouldn't crowd out others
By Martha Gill
September 30, 2023
The Guardian