Strategic CSR - Allbirds

The article in the url below records the rapid rise and equally dramatic fall of Allbirds – the once trendy "eco-friendly wool sneakers worn by Silicon Valley tech bros." The story also highlights the obvious fact about business (life?), which has always been true – good intentions do not necessarily lead to good outcomes. And, in particular in the marketplace, good intentions do not replace the need to have a great product:

"It turns out that not everyone wants to dress head-to-toe in merino wool, which although better for the environment than nylon or polyester, isn't as durable. Customers complained of holes in their sneakers months after buying them. And the leggings, which were made from a blend of wool and other fibers, in addition to being see-through, didn't hold their shape, the people said. Allbirds said the sheerness was limited to one light color and that it was a minor issue caught at an early stage."

The case is an insightful story of how to attract a loyal following among customers, and then lose it just as quickly:

"[Co-founder] Zwillinger has a saying: Customers will accept one degree of weirdness, but not two. Iterations of existing styles are preferred over brands pushing too far into new categories. He said in an interview that shoppers who came to Allbirds for its original shoes weren't ready to buy technical gear such as running shoes or workout clothes from the brand. He acknowledged problems with the leggings and other workout clothes. 'You've got to get [the] fit right,' he said."

The ultimate takeaway has implications well beyond the lifespan of a marginal apparel company:

"Allbirds said it isn't changing its commitment to sustainability, even though it doesn't always drive shoppers to buy its products. Emails sent to customers touting the environmental benefits of Allbirds shoes and clothing produced fewer sales than messages that prioritized comfort among other attributes. Environmental concerns are among the least important attributes consumers look for when buying shoes and clothing, according to a survey in March of 750 U.S. consumers by Wedbush Securities. Comfort and price are among the most important."

Take care

David

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (6e)

© 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/

How a Hot Allbirds Lost Its Way

By Suzanne Kapner

July 17, 2023

The Wall Street Journal

Late Edition – Final

A1, A10

https://www.wsj.com/articles/how-allbirds-lost-its-way-a44d5415

 

Strategic CSR - Plastic bags

The article in the url below presents a great example of a well-intentioned market intervention that produced unintended consequences:

"Almost a decade ago, California became the first state in the United States to ban single-use plastic bags in an effort to tackle an intractable plastic waste problem."

Predictably, the market reacted:

"Then came the reusable, heavy-duty plastic bags, offered to shoppers for ten cents. Designed to withstand dozens of uses, and technically recyclable, many retailers treated them as exempt from the ban."

But, less predictably, the consequences generated by the adaptation produced the exact opposite of what was originally intended:

"But because they didn't look much different from the flimsy bags they replaced, lots of people didn't actually reuse them. And though they came emblazoned with a recycling symbol, it turned out that few, if any, actually were recycled."

Ultimately:

"Last year, Californians threw away more plastic bags, by weight, than when the law first passed, according to figures from CalRecycle, California's recycling agency."

In short, the mainstream CSR discussion in action.

Take care

David

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (6e)

© 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/

California Hopes to Fix Flawed Plastic-Bag Ban

By Hiroko Tabuchi

February 18, 2024

The New York Times

Late Edition – Final

p20

https://www.nytimes.com/2024/02/15/climate/california-plastic-bag-ban.html

 

Strategic CSR - Sea temperatures

The article in the url below hints at the extent to which climate change is accelerating:

"The exceptional warmth that first enveloped the planet last summer is continuing strong into 2024: Last month clocked in as the hottest January ever measured. … It was the hottest January on record for the oceans, too. … Sea surface temperatures were just slightly lower than in August 2023, the oceans' warmest month on the books. And sea temperatures kept on climbing in the first few days of February, surpassing the daily records set last August."

The graphic accompanying the article makes the difference from prior years explicit:

 

Tellingly, in terms of how much we now take such headlines for granted, the story was on the back page of the main NYT section (hard copy) – in essence, ensuring that few people see it.

Take care

David

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (6e)

© 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/

2024 Begins With More Record Heat Worldwide

By Raymond Zhong and Elena Shao

February 9, 2024

The New York Times

Late Edition – Final

A24

https://www.nytimes.com/2024/02/07/climate/2024-hottest-january-data.html

 

Strategic CSR - LGBTQ+

The article in the url below frames one of the most challenging issues in implementing strategic CSR – how does a company know what their stakeholders truly care about? In other words, how can company leaders better understand the real interests and demands of the firm's stakeholders. There are certainly plenty of examples to demonstrate that what stakeholders say and what they do are different (and potentially diametrically opposed – see Strategic CSR – Uber, Strategic CSR – United, and Strategic CSR – Accountability):

"Most consumers want brands to support inclusion. But when they do, they face a potentially negative backlash. … Just ask Bud Light."

Social response bias tells us that, when asked, we will say what we think is the socially appropriate thing to say. What we do when the spotlight is off, however, could easily be something completely different. This makes it challenging for leaders to create value for those stakeholders, as noted by the author of the article, the CEO and president of "the LGBTQ advocacy group Glaad":

"Reading the headlines in 2023, it may have seemed as if consumer brands lost big when it came to LGBTQ issues. Dozens of companies faced social-media attacks—in some cases boycotts—over their support for Pride month, among other things. And some of those corporations took a sales hit during the furor."

When the reality is quite different:

"But that's just the headlines. The real picture shows that corporations are continuing their support for LGBTQ inclusion and representation in marketing—despite threats and boycotts. More than 60 companies from a variety of industries, for instance, signed Glaad's joint statement of support for LGBTQ people at the end of June."

In spite of broad support throughout the U.S. for LGBTQ+ rights, there remains a significant amount of institutional resistance:

"[In 2023], the ACLU reported that more than 500 bills targeting the LGBTQ community were introduced in 47 states. Most of those bills singled out transgender youth."

The other part of this that is so challenging is that, if a leader fails to respond to stakeholders who say they want to see a certain kind of behavior, they are criticized. Equally, if they implement behavior that stakeholders say they want (but really don't), then they get punished in the market. By resisting or parrying all social pressure, therefore, leaders can avoid some of the backlash, but no one was ever rewarded for avoiding a disaster. In our society, we reward people who clean up after a disaster, and we criticize those who don't do what we say – what we do not do is reward someone for preventing a crisis, since we can never be sure the crisis was guaranteed to happen. Much better to stand for something, therefore, rather than against that thing (or attempt to ignore the issue altogether). The danger for firms who misjudge their stakeholders' position on sensitive topics, of course, can be severe – just ask Anheuser-Busch and Target. Similarly, due directly to stakeholder criticism:

"Bud Light dropped from its position as top-selling beer in the U.S. by dollar sales. For the year, Bud Light says, it remains the No. 1 brand in the U.S. nationally by volume. Target removed some items from its Pride selection and in some cases moved the displays from the front of the store. The retailer's sales dropped due to the controversy."

The only answer that makes sense is to build strong, trust-based relationships with all stakeholders, based on genuine commitments by the firm. Doing so ensures that (a) the firm has a better idea about what stakeholders truly care about and (b) if a disaster happens, you have a well of trust for those stakeholders to draw from, so they are much more likely to give you the benefit of doubt. The problem with that, of course, is that building trust-based relationships with all stakeholders takes a huge amount of commitment and runs counter to the way that capitalism has been practiced in the West for so long.

Take care

David

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (6e)

© 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 Challenge Facing Companies When Dealing With LGBTQ Issues

By Sarah Kate Ellis

December 10, 2023

The Wall Street Journal

Late Edition – Final

https://www.wsj.com/business/lgbtq-challenges-business-2024-868cc7d1

 

Strategic CSR - Child labor (II)

The article in the url below provides an update on my recent newsletter about child labor in the U.S. (see Strategic CSR – Child labor (in the U.S.)). I think the report reveals a remarkably quick reaction from the companies that were named in The NYT's initial article:

"Now, McDonald's says it is requiring private inspectors to review overnight shifts at slaughterhouses that provide some of its meat, where children as young as 13 were cleaning heavy machinery. Suppliers for Ford Motor Company must now scrutinize the faces of employees when they arrive for work. Costco is commissioning more audits with Spanish-speaking inspectors."

The response illustrates the central concept within Strategic CSR of stakeholders holding firms to account for their actions. In this case, the key stakeholders (the media) exposed the offensive behavior, which generated additional backlash from other stakeholders, and a subsequent adjustment by the firms. In this sense, firms are merely the reflection of the aggregated interests of their collective set of stakeholders – they will do what their stakeholders (truly) want, which firms can identify when those stakeholders reward the behavior they support and punish the behavior they do not support:

"Along with McDonald's and Costco, Starbucks, Whole Foods and PepsiCo are revising the kinds of audits they require at their suppliers. The changes include enhancing reviews of night shifts and shifts run by outside contractors, such as cleaning companies, and moving away from announcing audits in advance."

Now, it is up to stakeholders to follow-up and ensure the announced response becomes actual behavior.

Take care

David

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (6e)

© 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/

Confronted With Child Labor in the U.S., Companies Move to Crack Down

By Hannah Dreier

February 8, 2024

The New York Times

Late Edition – Final

A22

https://www.nytimes.com/2024/02/07/us/child-labor-us-companies.html

 

Strategic CSR - ESG

The article in the url below updates a newsletter I sent in September about how executives, in the face of growing ideological polarization around ESG-related issues, are engaging in "green-hushing" by mentioning ESG less often on quarterly calls (see Strategic CSR – Green-hushing):

"Many companies no longer utter these three letters: E-S-G. Following years of simmering investor backlash, political pressure and legal threats over environmental, social and governance efforts, a number of business leaders are now making a conscious effort to avoid the once widely used acronym for such initiatives."

Instead:

"On earnings calls, many chief executives now employ new approaches. Some companies, including Coca-Cola, are rebranding corporate reports and committees, stripping ESG from titles. Advisers are coaching executives on alternative ways to describe their efforts, proposing new terms like 'responsible business.' On Wall Street, meanwhile, some firms are closing once-popular ESG funds as interest fades."

The chart accompanying the article, illustrating the number of S&P 500 firms that refer directly to "ESG" in their quarterly earnings calls, is instructive:

This pattern is replicated within firms, also, including some of the most high-profile advocates for ESG. For example, I saw this chart recently from Bloomberg about Larry Fink's BlackRock:

 

And, even more dire, in New Hampshire (and a few other U.S. states), the Republican-led legislature has tried to criminalize ESG investing:

"Republican lawmakers in New Hampshire are seeking to make using ESG criteria in state funds a crime in the latest attack on the beleaguered investing strategy."

My own reaction to this is that the pushback against the ESG 'industry' is justified, but is being motivated by the wrong reasons. Although the partisan rhetoric can be wildly misleading, the lack of consistent definitions and measurements, let alone agreement on what even should be measured, means the ESG industry only has itself to blame (see Strategic CSR – ESG). Moreover, the focus has been almost exclusively on the "E," with little discussion around the huge (and equally essential) areas of the "S" and the "G," which few people understand and even fewer know how to measure. The emergence (and advocacy) of ESG, although no doubt due to good intentions, has been a mess and has set-back the cause as a whole. Because it was so poorly thought-through, the opening was created for those with an ideological agenda (or even for those who just care to exploit the information asymmetry to make money) to wade in, and the result has been both ugly and extremely unhelpful.

Take care

David

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (6e)

© 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/

Companies Avoid Mentioning ESG, The Latest No-No

By Chip Cutter and Emily Glazer

January 10, 2024

The Wall Street Journal

Late Edition – Final

A1, A6

https://www.wsj.com/business/the-latest-dirty-word-in-corporate-america-esg-9c776003

Strategic CSR - Ends vs. means

The article in the url below wrestles with the proposition that the ends justify the means. Specifically, that when the danger is existential (which is how many understandably frame the climate crisis), then attempting to force change in order to avert the crisis can be justified with extreme action. In particular, the article is an interview with the author (and activist), Andreas Malm:

"With the 2021 publication of his unsettling book, 'How to Blow Up a Pipeline,' Andreas Malm established himself as a leading thinker of climate radicalism. The provocatively titled manifesto, which, to be clear, does not actually provide instructions for destroying anything, functioned both as a question – why has climate activism remained so steadfastly peaceful in the face of minimal results? – and as a call for the escalation of protest tactics like sabotage."

The interview is fascinating, and I have a lot of sympathy with the points being made. Here is an exchange that is illustrative:

"Is there not a risk that smashing things would cause a backlash that would actually impede progress on climate? I fundamentally disagree with the idea that there is progress happening and that we might ruin it by escalating. In 2022, we had the largest windfall of profits in the fossil-fuel industry ever. These profits are reinvested into expanded production of fossil fuels. The progress that people talk about is often cast in terms of investment in renewables and expansion in the capacity of solar and wind power around the world. However, that is not a transition. That is an addition of one kind of energy on top of another. It doesn't matter how many solar panels we build if we also keep building more coal power plants, more oil pipelines, and on that crucial metric there simply is no progress. I struggle to see how anyone could interpret the trends as pointing in the right direction."

Equally fascinating/challenging/depressing:

"Could you give me a reason to live? What do you mean?

Your work is crushing. But I have optimism about the human project. I'm not an optimist about the human project. …

I'm not joking. Yeah, I'm not sure that I have the qualifications to give people advice about reasons to live. My daily affective state is one of great despair about the incredible destructive forces at work in this world – not only at the level of climate. What has been going on in the Middle East just adds to this feeling of destructive forces completely out of control. The situation in the world, as far as I can tell, is incredibly bleak. So how do we live with what we know about the climate crisis? Sometimes I think that the meaning of life is to not give up, to keep the resistance going even though the forces stacked against you are overwhelmingly strong. This often requires some kind of religious conviction, because sometimes it seems irrational."

Tactics similar to this are becoming more 'acceptable' among environmental activists for some time now (see Strategic CSR – Eco-activism). Whether they will be any more effective is yet to be determined.

Take care

David

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (6e)

© 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/

How This Climate Activist Justifies Violence

By David Marchese

January 21, 2024

The New York Times Magazine

Late Edition – Final

11-13

https://www.nytimes.com/interactive/2024/01/14/magazine/andreas-malm-interview.html

 

Strategic CSR - Zoom (II)

A quick follow-up on my recent newsletter highlighting that fully remote workers are more likely to miss out on promotions and mentoring (see Strategic CSR – Zoom). The article in the url below suggests they are also more likely to be fired:

"Workers logging on from home five days a week were 35% more likely to be laid off in 2023 than their peers who put in office time, according to an analysis of two million white-collar workers conducted by employment data provider Live Data Technologies. The analysis showed 10% of fully remote workers were laid off last year, compared with 7% of those working in an office full time or on a hybrid basis."

The argument is that, because managers have less close relationships with remote workers, it is psychologically easier to fire them:

"Much of the disparity, he says, is that it's simply harder to build attachments to people you don't see face to face."

And, it seems, leaders are becoming more explicit with their employees about the risk they run by not coming into the office, at least some of the time:

"Wayfair, the online home-goods retailer, recently told employees that remote workers would be more likely to be affected in company layoffs. Executives also told staff they believe most workers should be in an office most days."

All the commentary I have seen suggests that, while employees prefer to be remote (and have the agency to choose how often they come into the office), the longer term trends suggest the current set-up will not last, simply because of the consequences of remaining remote:

"Other managerial perceptions could be at play, too, he adds. A Gartner survey in 2021 found that 68% of executives and managers believed in-office workers were higher performers than remote employees."

I have seen reports that CEOs believe most employees will be back at work, five days a week, in about 5 years' time:

"'If you have a person working in finance who's not coming to the office, why wouldn't you hire that same person in India or in the Philippines?' said Christian Ulbrich, chief executive of real-estate company Jones Lang LaSalle, noting that in many cases overseas workers can do the same job for less money."

Take care

David

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (6e)

© 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/

Remote Workers Feel Brunt of Layoffs

By Te-Ping Chen

January 30, 2024

The Wall Street Journal

Late Edition – Final

A9

https://www.wsj.com/lifestyle/careers/layoffs-remote-work-data-980ed59d

 

Strategic CSR - Child labor (in the U.S.)

A common conclusion reached by students discussing the Nike (sweatshop) case that I teach in my strategy classes is that firms should be held responsible for the whole supply chain. When I point out that there is a cost to this that many Western consumers are unwilling to bear, the students find the dissonance challenging. But, a significant reason why strategic CSR is more valuable than the mainstream CSR discussion is precisely because it deals with empirical reality – incorporating models of human behavior in line with the decisions people actually make, rather than decisions we might wish they made.

In terms of whether companies are willing to audit their own operations (let alone whether external stakeholders are willing to pay), the article in the url below offers an extensive look at where we are, currently. There is an industry of private auditors that companies use to deflect the suspicion/accusation of transgressions in their supply chain. Companies hire these auditors to audit suppliers, largely because federal government agencies are too understaffed to enforce the legislation intended to protect exploited worker populations:

"In the past two decades, private audits have become the solution to a host of public relations headaches for corporations. When scandal erupts over labor practices, or shareholders worry about legal risks, or advocacy groups demand a boycott, companies point to these inspections as evidence that they have eliminated abuses in their supply chains. Known as social compliance audits, they have grown into an $80 billion global industry, with firms performing hundreds of thousands of inspections each year."

Unfortunately, child workers, who often staff the overnight and cleaning shifts (especially in labor- and machinery-intensive industries), often evade inspections given the limited (day) time inspectors actually stay on site. The article makes it clear that this convenient reality seems to be in the best interests of all involved (apart from, perhaps, the child workers who slip under the radar of every regulation intended to protect them):

"Children were overlooked by auditors who were moving quickly, leaving early or simply not sent to the part of the supply chain where minors were working, The Times found in audits performed at 20 production facilities used by some of the nation's most recognizable brands. Auditors did not catch instances in which children were working on Skittles and Starburst candies, Hefty brand party cups, the pork in McDonald's sandwiches, Gerber baby snacks, Oreos, Cheez-Its or the milk that comes with Happy Meals."

Why does this still happen?

"Children often use forged documents that slip by auditors who check paperwork but do not speak with most workers face-to-face. Corporations suggest that supply chains are reviewed from start to finish, but sub-suppliers such as industrial farms remain almost entirely unscrutinized."

So, what is the solution? How do we fund federal agencies to enforce the legislation that already exists? More specifically, how do we incentivize companies to realize that ensuring a clean supply chain is in their best business interests? The key, I think, is that when abuses like those revealed in articles like this appear, we need to act rather than look the other way. As long as there are no substantive consequences, then this greenwashing will continue until we decide, at some point, that it is no longer acceptable. Ultimately, though, it comes down to a willingness to bear the cost burden. Auditing an entire supply chain is expensive – who is going to pick up the tab?

Take care

David

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (6e)

© 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/

An Industry Paid to Find Child Laborers, Doesn't

By Hannah Dreier

December 31, 2023

The New York Times

Late Edition – Final

p1, 14-15

https://www.nytimes.com/2023/12/28/us/migrant-child-labor-audits.html