Strategic CSR - Executive pay

Another indication that the ESG fad has run its course (and was always a distraction) is the decoupling of executive pay from specific associated metrics:

"Two years ago, many of America’s largest companies began stripping diversity targets out of executive pay packages. Now, environmental measures—including goals tied to climate emissions—are beginning to face a similar fate."

In particular, the article in the url below highlights a more recent decision by Apple: 

"Apple Inc. quietly dropped a so-called 'ESG modifier' from its 2025 pay packages for Chief Executive Officer Tim Cook and other top executives, according to a corporate filing last month. The provision, in place since 2021, had allowed Apple’s board to adjust annual bonuses up or down by as much as 10% depending on the company’s performance on a variety of measures, including greenhouse-gas reductions and renewable energy use among suppliers."

But, Apple is not alone:

"Apple’s move follows similar decisions at dozens of companies, including Starbucks, Salesforce, Mastercard and P&G, which have recently weakened or severed ties between environmental performance and the size of their executives’ paychecks."

As a result, the more important underlying principle, the need to align compensation with the most essential performance metrics, is being lost due to the shallowness of the ESG discussion:

"The shift is beginning to show up in the numbers. The share of S&P 500 companies tying executive compensation to environmental metrics fell to 46.7% in 2025, down from a peak of 52.6% two years earlier."

Ultimately, in spite of the good intentions driving the ESG 'movement,' the rush to establish it opened the door to easy criticism, and therefore setback the conversation, because it was so ill-thought-through.

 

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 is archived at: https://strategiccsr-sage.blogspot.com/

Apple Drops ESG Links From Top Executives' Pay Packages

By Ben Elgin and Jeff Green

February 18, 2026

Bloomberg

https://www.bloomberg.com/news/articles/2026-02-18/apple-quietly-unlinks-environmental-performance-from-pay-packages

Strategic CSR - Earnings guidance

Well, this isn't exactly the rationale I was hoping for, but the article in the url below notes that more companies are refusing to issue quarterly earnings guidance -- a blow to the short-term thinking (and misguided focus on shareholder value) that dominates our economic system: 

"Et tu, Walmart. Analysts covering the world's largest retailer will have to sharpen their pencils now that it has joined several other companies in scrapping quarterly earnings guidance (it kept it for the full year)."

It seems that the uncertainty injected into the economy, in recent months, is the 'excuse' CEOs are drawing on to avoid the glare of quarterly expectations:

"'Uncertainty' is practically a dirty word on Wall Street. After competitors scrapped their public forecasts, United Airlines instead took the unusual step last month of publishing two scenarios—one for a recession and another for an expansion."

As the author notes, however, the better approach might have been to scrap earnings guidance (i.e., not earnings reports) altogether:

"Unfortunately, that is a luxury mainly available to elite CEOs who are extremely secure in their jobs: Apple's Tim Cook, JPMorgan Chase's Jamie Dimon and, of course, Warren Buffett, who recently announced his impending retirement after six decades running Berkshire Hathaway."

Such a narrow focus on shareholder value, of course, is a relatively recent phenomenon, driven by neoliberal economic theory in the twentieth century (which resulted in most CEOs today being paid using stock options). But there is a strong argument to say that, not only is shareholder value a theory (rather than a legal fact), but that a singular (or even primary) focus on delivering it can be counterproductive to the long-term interests of the organization:

"Henry Singleton might be the greatest example of an executive who delivered with minimum regard for what Wall Street thought. Teledyne, the conglomerate he founded and ran for almost three decades, was a hot stock in the 1960s. … He was 'the smartest businessman I ever knew,' said the late Charlie Munger, who was vice chairman of Berkshire Hathaway."

 

Broad stakeholder support for not issuing guidance, particularly from the board and other key stakeholders, is what is required for CEOs to have the confidence to make decisions for the medium to long term, which is how the optimal level of value is created. While somewhat regular earnings reports are essential to allow for adequate oversight and governance mechanisms, quarterly earnings guidance is an unnecessary legacy of a disproportionate focus on shareholder value, which can be unhealthy, as noted in the article in the second url below:

 

"What would not be painful: a voluntary reduction in 'quarterly guidance,' or forecasts, by executives about how they expect their companies to fare. Warren Buffett of Berkshire Hathaway and Jamie Dimon of JPMorgan Chase recommended this change in a Wall Street Journal essay in 2018. Companies routinely use these forecasts to manipulate the expectations of financial analysts so that when earnings reports ultimately arrive, they constitute 'positive surprises' that set off rallies in the companies' shares."

 

While the article in the third url below suggests this development is gaining momentum and possibly being extended to earnings reports:

"The Securities and Exchange Commission is preparing a proposal to eliminate the requirement to report earnings quarterly and instead give companies the option to share results twice a year, according to people familiar with the matter. The regulator could publish the proposal as soon as next month."

 

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/

 

Elite CEOs Don't Need Earnings Guidance

By Spencer Jakab

May 16, 2025

The Wall Street Journal

Late Edition – Final

B12

https://www.wsj.com/business/elite-ceos-dont-need-earnings-guidance-a0e5de93

 

Is The the Time to End Quarterly Earnings Reports?

By Jeff Sommer

October 5, 2025

The New York Times

Late Edition – Final

BU4

https://www.nytimes.com/2025/10/02/business/trump-earnings-reports-investing-stocks.html

 

SEC Prepares Proposal to Eliminate Quarterly Reporting Requirement

By Corrie Driebusch

March 16, 2025

The Wall Street Journal

https://www.wsj.com/finance/regulation/sec-prepares-proposal-to-eliminate-quarterly-reporting-requirement-1d700bbb

Strategic CSR - Satellites

This is the last CSR Newsletter of the Spring semester. Have a great summer and I will see you in the Fall!

Here is a fascinating quote that I saw, last week, from the article in the url below:

"Decommissioned satellites, which vaporize when they plunge through the atmosphere, are threatening the Earth's protective ozone layer. Last year, about 1,000 of them reentered, or about three a day. By 2035, the daily rate is estimated to rise as high as 50."

Amazing – 1,000 satellites re-entering our atmosphere every year; projected to rise to 20,000 a year, in the next 10 years. The article appeared the day after the latest Starlink satellite launch by SpaceX. Such sentiments always remind me of an image from the Pixar movie, Wall-e (released in 2007, the same year as the first iPhone) – one of the most prescient movies about the future of humanity that I have seen:

 

Hope you all have a good summer.

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/

Thousands of Falling Satellites Put the Atmosphere at Risk

By Eric Roston, Sana Pashankar, Hayley Warren, and Jin Wu

May 1, 2025

Bloomberg Green

https://www.bloomberg.com/graphics/2025-space-orbit-satellites-pollution/

 

Strategic CSR - SBTi

Over the summer, I don't know if you caught the backtracking by the Science Based Targets Initiative (SBTi) in terms of carbon credits. The article in the first url below summarizes the surprising policy shift:

"SBTi, whose blessing confers important credibility on corporate net zero plans, appeared to have reversed its stance on a controversial issue. The April 9 press release from its board said companies could use carbon credits to offset so-called Scope 3 emissions from their supply chains, an approach some scientists have warned could jeopardize the fight against global warming."

While staff initially thought the announcement was "a hoax," and removed it from the organization's website, they were shocked to discover it was both real and the result of a lengthy process characterized by conflict-of-interest issues among senior leaders:

"… interviews with current and former employees, as well as other people familiar with the decision, reveal how the seeds of the policy change were sown over the past year. According to them, things started to shift when SBTi went from being a collaboration of three non-governmental organizations and the United Nations to an independent entity governed by a board of trustees that included several people who want to grow the offsets market."

This is concerning because SBTi had become an important voice in the sustainability debate, having "validated the climate plans of more than 5,000 companies, from Apple Inc. to Volkswagen AG":

"SBTi's position has long been that companies should prioritize reducing emissions across their whole supply chain, and only use credits to offset the tiny amount that is impossible to cut. While some experts have lauded that rigorous approach, many corporate figures, and even some climate activists, have berated SBTi for being inflexible and acting as an impediment to helping critical funds reach developing countries."

It is refreshing to see there has been some backlash to this weakening of standards from industry. This is captured in the article in the second url below, which highlights resistance from H&M (a company not exactly known for its sustainability practices, given its role in promoting fast fashion):

"In a letter to the Science Based Targets initiative's board of trustees, Leyla Ertur, H&M's head of sustainability, said the company was concerned about the possibility of companies using carbon offsets to lower their overall carbon emissions by purchasing credits for carbon removal projects, saying that action should be taken by companies within their value chains to reduce greenhouse gas emissions."

Even better, H&M made their argument based on a foundation of the value of science:

"Ertur added that it also would represent a move away from 'a robust scientific foundation and a governance structure that allows for transparent and independent science-based standards, [which] would undermine principles that we believe are fundamental for real climate action.'"

Shortly after this story garnered headlines critical of the organization over the summer, SBTi's CEO resigned.

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/

Carbon credit chaos

By Alastair Marsh

May 29, 2024

Bloomberg

https://www.bloomberg.com/news/articles/2024-05-29/inside-the-sbti-scope-3-scandal-how-the-group-is-rethinking-carbon-offsets

H&M Comes Out Against Carbon Offset Plan From Climate Targets Group

By Yusuf Khan

June 15, 2023

The Wall Street Journal

https://www.wsj.com/articles/h-m-comes-out-against-carbon-offset-plan-from-climate-targets-group-538c21df

 

Strategic CSR - Ford F-150

As noted in the article in the url below, we have made great progress in introducing EVs, and sales are increasing. The article also notes, however, that the overall effect will remain limited until we can ensure mainstream adoption of this technology. And that is only going to happen if the biggest selling makes and models are available as EVs. In the U.S., at least, this means a truck and, in particular, the Ford F-150 truck:

"As the top-selling model line in the U.S. for 40 years, Ford Motor Co.'s F-Series pickups hold special weight in the auto ecosystem. The lineup, led by the F-150, generates more than $40 billion in annual revenue. Only one other U.S. product—Apple Inc.'s iPhone—tops F-Series sales."

Thus, the strategic imperative of Ford offering an electric version of the F-150 and the estimated impact this launch is expected to have:

"Given this, Ford's decision to electrify the F-150 stands as one of the boldest strategic decisions in 21st century business. An electric F-150, more than any other vehicle, will persuade rural America to go green, leading the way for almost every automaker that finds itself challenged by the electric transition."

If nothing else, an electric F-150 will force all the other car manufacturers to compete in the EV space. In short, the U.S. needs an electric F-150 in order to achieve its environmental goals, which the article presents in a timeline:

• 2022 First deliveries of the F-150 Lightning are expected in April or May. Ford has 200,000 reservations.
• 2026 Date Ford set to reach annual EV production of 2 million.
• 2030 Goal leading automakers set for 40%-50% of new-vehicle sales to be electric. President Joe Biden's target is half.
• 2040 Sales of new gas-powered vehicles are set to end as Ford, GM, Mercedes, and others will sell only zero-emission cars.
• 2050 The U.S. government's goal for economy-wide net-zero 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 

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

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

How Ford's Electric F-150 Pickup Truck Will Cut Carbon Pollution

By Keith Naughton and Kyle Stock

April 9, 2022

Bloomberg Businessweek

https://www.bloomberg.com/news/articles/2022-04-09/how-ford-s-electric-f-150-pickup-truck-will-cut-carbon-pollution

 

Strategic CSR - CDs

In Strategic CSR, a large part of Chapter 11 is dedicated to a discussion around waste, looking at the consequences of our convenient, high-tech lifestyle from the perspective of the amount of plastic and e-waste that we generate and throw away. The article in the url below adds to that growing pile of detritus, and the sense that we don't know how to deal with it, by highlighting the challenges of recycling old CDs:

"The CD recycling process [involves the discs being] … granulated into raw polycarbonate plastic, resulting in a white and clear powdery material that glints and resembles large snowflake crystals stuck together."

Why is the recycling of CDs important?

"The material, which takes one million years to decompose in a landfill, can eventually be used to mold durable items for cars, home building materials and eyeglasses. But that's assuming anybody buys the raw material."

But, as we know with the markets for several recycled materials, those buyers have disappeared in recent years, and especially since China stopped being willing to act as the recycler of last resort for the rest of the world:

"The polycarbonate granules used to be sold mostly to China, where the United States sent the bulk of its recycling until 2018 before China restricted imports of mixed paper and most plastic. The price that China was willing to pay per pound of granulated polycarbonate began to dip in 2008, … and by 2011 it had plummeted."

In addition to highlighting the importance of recycling CDs, and also spelling out how difficult it is, the article looks at how the CD became such an important part of our lives:

"CDs may seem like a relic, but when they entered consumer homes in the 1980s, they were a revelation in information sharing. 'In the early '80s, information storage was mainly in magnetic tape and magnetic devices,' said Kees Immink, who was one of eight engineers to create the CD in 1979. 'The CD was groundbreaking.'"

Of course, it was the shift from vinyl to CDs that led to this growth:

"CDs became ubiquitous: In the 1990s, AOL sent them to potential internet subscribers. In the mid-'90s, makers of video games began to shift away from cartridges and toward discs. By 2000, more than 900 million music CDs were sold, a record number that was never surpassed again, according to the Recording Industry Association of America. (Eminem, Destiny's Child and Britney Spears were all top sellers.) And then, just a year later, Apple released the first iPod, which allowed users to carry 1,000 CD-quality songs in a six-ounce device in their pocket."

But, in the U.S. at least, it wasn't playing music that caused the rapid expansion of the number of CDs produced, but the emergence of the internet:

"In a recent interview, Janice Brandt, a former senior consultant at AOL and the marketing guru behind the company's 1990s campaign that produced millions of CDs for potential customers, reflected on how much has changed, technologically, in just a few decades. The AOL campaign, which at one point in the late 1990s had a budget of $750 million, was a huge moneymaker for AOL that brought millions of new users to the internet. Ms. Brandt said she thought that probably every other CD in existence is an AOL CD."

For now, however, CDs continue to be replaced by other, more efficient storage technologies:

"This month brings another small blow to CDs as Sony and Microsoft are releasing the latest editions of their game consoles, the PlayStation 5 and the Xbox Series X, without disc drives."

Even though CDs are not as omnipresent as they once were, there are still hundreds of millions of them out there and, at some point, something has to be done with them:

"In a global sense, recycling CDs is not a big environmental priority right now, according to Judith Enck, a former E.P.A. regional administrator, who founded Beyond Plastics, an anti-plastic project based at Bennington College in Vermont. … 'You look at other materials, like cardboard and glass and aluminum, and that's all included in curbside recycling programs because there are businesses that will buy all of that for a reliable market,' Ms. Enck said. 'There just aren't markets for this type of plastic.' So, for now, old CDs languish in basement or attics, or just end up with other plastics -- in the trash."

Take care

David

David Chandler

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

© Sage Publications, 2020

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

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

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

The Uneasy Afterlife of Our Dazzling Trash

By Sandra E. Garcia

November 7, 2020

The New York Times

https://www.nytimes.com/2020/11/07/style/the-uneasy-afterlife-of-our-dazzling-trash.html

Strategic CSR - Free speech

The articles in the two urls below, together, cover both sides of an issue that is becoming ever-more pressing for corporate leaders – whether employees should be encouraged to debate topics of concern, irrespective of whether they relate directly to operations. Facebook and Google have been wrestling with this issue publicly (see Strategic CSR – Google); the articles summarized here focus on two smaller firms (Coinbase and Spotify), but illustrate both the empowering benefits of allowing employees to vent, as well as the potential distractions such debates can become.

The article in the first url below is about Coinbase (a digital currency exchange), which I think tracks more closely to the Strategic CSR framework – i.e., that, for the most part, the firm should stick to issues most directly related to operations and, by extension, avoid social or political issues that are unrelated:

"Specifically, [CEO and co-founder, Brian] Armstrong said that the company 'won't debate causes or political candidates internally,' and will not engage when the issues are 'unrelated to our core mission, because we believe impact only comes with focus.' The cryptocurrency company is 'laser focused' on the use of digital currencies, and on profits, Armstrong said."

More controversially, Coinbase's CEO does not hesitate to say that those employees who do not like the focus of his company should leave:

"Coinbase is offering to pay employees who decide to quit the cryptocurrency company after it discouraged employee activism and discussing of political and social issues at work.

CEO Brian Armstrong told Coinbase staff in an email that the company would offer severance packages for anyone 'who doesn't feel comfortable with this new direction.' The pay packages range from four to six months, depending on how long an employee had been with the company."

In many ways, it is difficult to argue with the CEO's perspective:

"'Life is too short to work at a company that you aren't excited about,' Armstrong said in the email. …. 'Hopefully this package helps create a win-win outcome for those who choose to opt out.'"

The reasoning behind his uncompromising stance, at least to Armstrong, is clear:

"'While I think these efforts [to discuss social and political issues] are well intentioned, they have the potential to destroy a lot of value at most companies, both by being a distraction, and by creating internal division,' Armstrong said. 'I believe most employees don't want to work in these divisive environments.' The approach stands apart from many Silicon Valley companies, which have embraced social justice causes in the wake of widespread protests over racial injustice this year."

In contrast, the article in the second url below is about Spotify (the streaming music company), which has benefitted from signing the controversial podcaster, Joe Rogan, to its streaming service:

"The deal to bring Mr. Rogan to Spotify is already showing signs of success. His millions of loyal fans have made 'The Joe Rogan Experience' podcast Spotify's No. 1 show since arriving on the platform in September, 'outperforming our audience expectations,' the company said when reporting its earnings Thursday. The company's stock has run up more than 50% since the deal was announced in May."

As controversial guests have been interviewed on Rogan's show, however, the signing has increasingly distressed employees:

"Recent appearances on the show from two guests—first Abigail Shrier, an author critical of transgender issues; then Alex Jones, a radio host and the publisher of InfoWars, whose content has been removed from Facebook, Apple, YouTube and Spotify—have sparked outrage from listeners inside and outside the company who have posted on social media to express their disagreement."

Spotify encourages debate among employees on all manner of topics on its online forum, which is divided into specific "clubs":

"A recent thread in the company's #ethics-club channel centered on Mr. Rogan's episode with Mr. Jones. Employees circulated information on how to flag content for review by Spotify's trust-and-safety team, according to people familiar with the matter. That team is responsible for determining whether shows or music on the platform violate company policies barring content that incites violence or hatred, and can remove content if it crosses those lines."

Spotify is standing by Rogan for now, saying none of his content has breached the company's rules. Even so, it is clear that many employees feel offended by the platform Spotify is providing for Rogan:

"The deal with Mr. Rogan, a comedian and former mixed-martial-arts commentator who last year said his show had 190 million monthly downloads, brings the Stockholm-based Spotify into more edgy territory. The reaction to his arrival suggests that listeners and employees are increasingly trying to hold the company responsible for the content it hosts, similar to the issues encountered by Silicon Valley tech companies."

In other words, Rogan's signing illustrates the potential exception to the 'related to operations' rule of Strategic CSR – i.e., that, any issue can be justified as 'operationally relevant' if it is valued by a key stakeholder group. This applies particularly in the case of employees, whose morale and productivity can be directly affected if an issue that is important to them is left unaddressed. But, this does not mean it is necessarily easy for the company to determine where to draw the line, particularly on sensitive issues such as free speech:

"Mr. Rogan retains full creative control in his licensing deal with Spotify, he has said, though his show is subject to the company's content policy guidelines. At one point in September amid discontent over the episode with Ms. Shrier, some Spotify employees asked for editorial supervision over Mr. Rogan's podcast, according to people familiar with the matter. The company denied the request and stood with Mr. Rogan, who later retweeted an internet comedian's video mocking the employees as oversensitive."

In looking at the response of these two companies to expansive debate among their employees, what is interesting is that Coinbase's Armstrong does not hesitate to define his company as "mission focused" (see here). The value of a strong mission, of course, is that it identifies what the firm does (and, therefore, is 'ok' for employees to discuss) and what it does not do (and, therefore, is 'off limits'):

"In short, I want Coinbase to be laser focused on achieving its mission, because I believe that this is the way that we can have the biggest impact on the world. … Change happens in the world only when a smart, talented, group of people come together to focus on a hard problem for a decade or more. Many companies never stand the test of time, because they decide to dabble in unrelated efforts, and distract and divide their workforce in the process. Paradoxically, by being laser focused on our mission, we will likely have an even greater impact on the world, through our products and growing customer base."

I guess the difference between the two, ultimately, comes down to whether that mission is defined narrowly and is disciplined, or whether it is defined broadly and is more abstract. My sense is that those firms who apply this framework with greater discipline, as a general rule, are going to create greater stakeholder value over the medium to long term.

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/

Coinbase CEO discourages politics at work, offers generous severance to employees who want to quit

By Kate Rooney

September 30, 2020

CNBC

https://www.cnbc.com/2020/09/30/coinbase-ceo-offers-severance-to-employees-leaving-over-politics.html

Spotify Sticks by Rogan Amid Worker Discord

By Anne Steele

November 2, 2020

The Wall Street Journal

Late Edition – Final

B1

https://www.wsj.com/articles/joe-rogans-podcast-sparks-tensions-inside-spotify-11604156400

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 - Exxon

The article in the first url below offers some hope that investors are becoming more serious about the idea of climate change as a potential threat to business in certain industries. The focus is on Exxon's recent removal from The Dow Jones Industrial Average, which illustrates the growing weakness of the oil and gas industry:

 

"When trading begins next week, the blue-chip benchmark will include only one energy stock: Chevron Corp., which will represent just 2.1% of the price-weighted index, according to an S&P Dow Jones Indices analysis. In the broader S&P 500, the group isn't faring much better: Its weighting has shrunk to less than 2.5%, leaving energy as the least influential of the 11 represented industries. That is a dramatic fall from the end of 2011, when energy stocks accounted for 12% of the market."

 

There is historical context, too, that is specific to Exxon:

 

"Although the removal from the Dow is largely symbolic—much less money tracks the 30-stock index than follows the S&P 500—Exxon's departure has historical significance. The company is the longest-tenured member of the benchmark, having joined in 1928 as Standard Oil of New Jersey. It is also a reminder of Exxon's fall from the top echelon of American industry. As recently as 2013, Exxon was the largest U.S. company with a market value above $415 billion. It has since shrunk to less than $180 billion and has been eclipsed by the technology giants such as Apple Inc., Amazon.com Inc. and Microsoft Corp. that now drive the American economy."

 

The reaction by investors to Exxon's decline is as important as the news itself:

 

"Usually, market contrarians say a sector that is so beaten down should be ripe for bargains. But many investors remain skeptical of an energy rebound, pointing to muted expectations for global growth and spotty earnings. Energy is by far the worst-performing S&P 500 sector this year, down 40% while the index as a whole has gained 6.6%. The underperformance is nothing new: Energy was also the weakest performer in 2018 and 2019."

 

Of course, this decline partly reflects the dramatic drop in oil price in recent years (accelerated this year), but also reflects the news from oil and gas companies about large write-downs this year (see Strategic CSR – BP) that, in turn, represents a growing concern that a large part of each firm's value is based on reserves they will not be allowed to extract. As such, the headline here is Exxon, but the trend is industry-wide:

 

"Exxon shares are off 41% this year, while Chevron is down 29%. The pain is even more acute among some of the oil-field services companies and shale drillers. Schlumberger has dropped 52%, and EOG Resources Inc. has fallen 47%. Only one company in the S&P 500's energy sector, Cabot Oil & Gas Corp., is up for the year."

 

For more detail about what the WSJ describes as Exxon's "stunning fall from grace," see the article in the second url below:

 

"Just seven years ago, Exxon was the biggest U.S. company by market capitalization. It has since lost roughly 60% of its value, with its market cap now at around $160 billion. … Analysts estimate Exxon will lose more than $1 billion this year, compared with profits of $46 billion in 2008, then a record by an American corporation. … At the heart of the problem: Exxon doubled down on oil and gas at what now looks to be the worst possible time. While rivals have begun to pivot to renewable energy, it is standing pat. Investors are fleeing and workers are grumbling about the direction of a company some see as out of touch and stubborn."

 

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/

 

Exxon's Removal from the Dow Highlights Decline of Oil Sector

By Karen Langley

August 26, 2020

The Wall Street Journal

Late Edition – Final

B1

https://www.wsj.com/articles/exxons-departure-from-dow-highlights-markets-retreat-from-energy-bets-11598390465

 

Exxon's Bet on Oil and Gas Drags Down U.S. Titan

By Christopher M. Matthews

September 14, 2020

The Wall Street Journal

Late Edition – Final

A1

https://www.wsj.com/articles/exxon-used-to-be-americas-most-valuable-company-what-happened-oil-gas-11600037243

Strategic CSR - Philanthropy

I like Fast Company magazine. I find it a bit shallow, but it is useful to get a sense of current trends in business. The article in the url below is a good example – it is a response to the sudden increase in children who now need to be schooled at home:

 

"In the midst of COVID-19, schools across the country have closed their doors, and a majority of the 50 million K-12 students are now learning from home. For many, that means logging on to laptops to teleconference teachers who take digital attendance, then accessing lessons and homework to do on their own."

 

One of the main challenges this creates, of course, is that many of those children do not have access to the hardware (or internet connection) they need to study properly:

 

"The crisis will be the great stress test of digital learning, but one failure is already known: Roughly one in five teens reported having difficulty doing their homework because of a lack of access to computers and the internet. Chicago Public School principals are begging for hardware for students, while hundreds of thousands of children in NYC are still without laptops as teaching goes virtual."

 

Given this problem, the author has a potential solution:

 

"Ten million students need computers and internet access now. So who should provide it? Three of the most valuable companies in the world, each with more than $100 billion in cash for a combined pile of over $400 billion to weather the storm. Apple, Google (Alphabet), and Microsoft. Together, they could buy every vulnerable student in America a $1,000 laptop. Actually, they could buy every vulnerable student 40 laptops, or every K-12 student eight laptops, or every single American a laptop and then some. … At the bare minimum, each company could chip in $3.3 billion dollars to outfit the 10 million low-income students with a laptop or a tablet with a keyboard. Better still, these devices would be bundled with free LTE internet access."

 

And, from the author's perspective, this was not a request, but a demand:

 

"… the big three have enough cash on hand to outfit every student in America with respectable technology to learn remotely, without depleting their generous cash reserves. And let me be clear: They should. Each of these companies is individually wealthy enough to tackle this challenge entirely on their own, or they could team up. As we face this pandemic, the three greatest American technology companies should be paying back their profits, not to stockholders on dividends, but to the consumers who stacked their profits in the first place."

 

Of course, these are complicated issues and there are other nuances I could mention, but I had three responses to this core idea that came immediately to mind:

 

First, the way the article is written suggests that the money is just sitting around or would otherwise be wasted if the companies did not 'donate' it to all these kids. Of course, that is not the case, and Apple and Google are some of the largest companies investing in R&D (as well as distributing their profits to many other stakeholders in different ways). So the money is still circulating and adding value, even if the companies do not do what the author suggests.

 

Second, the key question the article raises is, which option creates the most value (and for whom)? Should the companies donate the money to help the kids or should they reinvest it in their businesses? This is the essential question from a societal perspective. Companies are not the government and do not run the educational system. That is the responsibility of the government and you could easily argue that the government could/should buy the laptops for every kid instead of buying a few nuclear weapons (not recommending that, just saying the opportunity cost is high). The 'responsibility' of the firm is to create value for its broad set of stakeholders. If a firm has an extra $1 to spare, therefore, they should invest it in the way that creates the most value for the most stakeholders. One reason for the firms' collective success (which the author seems to suggest is a gift from society), is that they already create so much value. So, you could argue that the largest benefit gained from an extra $1 would be to reinvest it in their core business – making their products and services even better than they already are.

 

This leads me to my third point: It is no doubt that the companies would create value by making this donation, but what would their 'return' be? If a fraction of those kids or their parents became lifelong fans (and customers) or future employees, maybe that would be worthwhile. The danger, from the companies' perspective however, is that 'society' would simply pocket the gift and give the companies nothing in return. This would be a very expensive way to get a headline in the papers. I think a potential 'return' on the investment could be measured in many ways (it is not simply a matter of a direct exchange of money). Customer loyalty, for example, is an 'investment' made by the customer in the company, and the company values it and returns it to the customers in terms of express delivery, better service, etc. – in other words, capitalism at its best! :-)

 

There are many new challenges we are all facing as a result of the current pandemic and associated economic dislocation. As ever, for-profit firms are often the best answer to these challenges, but we do not need to throw out economic principles in order to access those solutions.

 

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/

 

Apple, Google, and Microsoft are failing U.S. students during the COVID-19 crisis

By Mark Wilson

March 30, 2020

Fast Company Magazine

https://www.fastcompany.com/90482278/apple-google-and-microsoft-are-failing-u-s-students-during-the-covid-19-crisis

 

Strategic CSR - Babies

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Take care

David

 

David Chandler

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

© Sage Publications, 2020

 

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

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

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

Fert perks

August 10, 2019

The Economist

Late Edition – Final

51

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