Strategic CSR - Values + Guns

I suspect that some CSR commentators have a problem with supporting the idea of values-based business. If you promote such a notion, then you have to give equal credibility to all values and not just the ones that you share. In other words, if you have trouble with the idea of calling Chick-fil-A a values-based business, or do not see that it is every bit as much a values-based business as Patagonia, then you do not support the idea in principle, but some biased version of the idea. Just because you may not agree with the values in question, does not make them any less valid or meaningful to those who do share them – they are just not values to which you ascribe. In line with this argument, the article in the url below places a values-based argument in the context of second amendment rights here in the U.S.:

"Louisiana is using the bond market to stick up for the Second Amendment. The state's bond commission voted 7 to 6 Thursday to ban Bank of America Corp. and Citigroup Inc. from working on its upcoming debt sale because of the banks' 'restrictive gun policies,' the state treasury said in a statement. Bank of America and Citigroup are the two top-ranked underwriters of long-term municipal debt, according to data compiled by Bloomberg."
 

The second amendment to the U.S. Constitution (the 'right' to bear arms) is an important part of this country's history. While I disagree with the modern interpretation of the amendment, and think the NRA's role in politics deliberately distorts the debate in a way that causes harm, I also recognize that there are many people who would disagree with what I just wrote:

 

"'I personally believe the policies of these banks are an infringement on the rights of Louisiana citizens,' Treasurer John Schroder said in a statement. 'As a veteran and former member of law enforcement, I take the Second Amendment very seriously.'"

 

The trouble for large, national companies dealing with guns to any extent (and, in some cases, it can be tangential), is that there are passionate feelings about this issue that vary considerably across the country. This makes implementing a consistent policy very challenging:

 

"The ban is the latest example of how corporate America has been drawn into the nation's polarizing debate over gun control. Earlier this year, Chicago Mayor Rahm Emanuel proposed using the city's business to push for stricter gun controls by limiting work with Wall Street firms that didn't cut ties with companies that sold firearms to people under the age of 21 or dealt in high-capacity magazines. The decision by Louisiana comes after Bank of America in April said it would stop making new loans to companies that make military-style rifles for civilian use. … Citigroup was the first major banking institution to set restrictions on the firearm industry in March, when it announced plans to prohibit retailers that are customers of the bank from offering bump stocks or selling guns to people who haven't passed a background check or are younger than 21."

 

From a Strategic CSR perspective, all this is well and good. In terms of the politicians (as opposed to the companies), what should happen is that, if the citizens of Louisiana do not support the actions their state representatives are taking on their behalf, they should vote them out of office and elect politicians/candidates that better represent their views (and values). Of course, that assumes an engaged electorate, and an honest campaign – in short, a well-functioning democratic system.

 

Take care

David

 

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (4e)

© Sage Publications, 2017

 

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler4e

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

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

 

 

Louisiana Bans Bank of America, Citi from Bond Sale Over Gun Policies

By Amanda Albright & Jennifer Surane

August 17, 2018

Bloomberg Businessweek

https://www.bloomberg.com/news/articles/2018-08-17/bofa-citi-banned-from-louisiana-bond-sale-due-to-gun-policies

 

Strategic CSR - Guns

At first glance, the article in the url below contains an interesting proposal – that the credit card companies prohibit the purchase of guns using their products:

 

"Here's an idea. What if the finance industry — credit card companies like Visa, Mastercard and American Express; credit card processors like First Data; and banks like JPMorgan Chase and Wells Fargo — were to effectively set new rules for the sales of guns in America? Collectively, they have more leverage over the gun industry than any lawmaker. And it wouldn't be hard for them to take a stand."

 

The idea is that, by prohibiting gun sales using Visa and MC, the stores would be faced with either accepting credit cards or selling guns, but could not do both. The effect, the author believes, would be to remove guns from most stores across the country:

 

"For example, Visa, which published a 71-page paper in 2016 espousing its 'corporate responsibility,' could easily change its terms of service to say that it won't do business with retailers that sell assault weapons, high-capacity magazines and bump stocks, which make semiautomatic rifles fire faster. … If Mastercard were to do the same, assault weapons would be eliminated from virtually every firearms store in America because otherwise the sellers would be cut off from the credit card system."

 

Although interesting, the logic on which this idea is based is flawed. The author uses Bitcoin as an example of the credit card companies' ability to enact the changes he is proposing:

 

"There is precedent for credit card issuers to ban the purchase of completely legal products. Just this month, JPMorgan Chase, Citigroup and Bank of America banned the use of their cards to buy Bitcoin and other cryptocurrencies. To be clear: Those three banks won't let you use your credit card to buy Bitcoin, but they will happily let you use it to buy an AR-15-style semiautomatic rifle — the same kind of gun used in mass shootings in Parkland; Newtown, Conn.; San Bernardino, Calif.; Las Vegas; and Sutherland Springs, Tex."

 

But, the primary reason Visa and MC ban Bitcoin purchases is risk mitigation. Bitcoins are a very risky investment. If I use my credit card to buy Bitcoin that then crashes in value, how am I going to repay my debt to the credit card companies? The comparison to purchasing a legal product for regular consumption is not valid (it would only be valid if the credit card companies could be sued if their cards were used to buy guns that later were used in a mass shooting, which is an interesting idea, but another story). If the credit card companies were to take the author's advice and start selecting which legal products to block, their task would never end. Tobacco kills ten times as many people in the U.S. as guns every year, should they prevent those products being bought? Alcohol is another big killer. What about cars, which kill tens of thousands of people every year in the U.S.? Or fast food, candy, or sodas, which all contribute significantly to a variety of health-related issues and premature deaths? The list is potentially endless. Blame is being misapplied here. More specifically, the burden of trying to find a solution is being conveniently shifted. This is not the credit card companies' problem to solve. It is our problem, together, as a society. If anything is to change regarding gun laws in the U.S., it is legislators that will need to take the lead, but that lead will need to come from us. If we say we support such action, then we need to vote for politicians who actually might do something about it. As Thomas Friedman puts it in the article in the second url below:

 

"… ultimately, nothing will change unless young and old who oppose the N.R.A. run for office, vote, help someone vote, register someone to vote or help fund someone's campaign — so we can threaten the same electoral pain as the National Rifle Association. … This is not about persuading people with better ideas. We tried that. It's about generating raw electoral power and pain."

 

In short, we need to follow the inspiring leadership of the Parkland, FL high school students most affected by this most recent tragedy and shame politicians into acting. They are a great example of what I would call engaged stakeholders!

 

Take care

David

 

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (4e)

© Sage Publications, 2017

 

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler4e

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

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


Congress Fails to Curb Guns. Could Banks?

By Andrew Ross Sorkin

February 20, 2018

The New York Times

Late Edition – Final

B1

https://www.nytimes.com/2018/02/19/business/banks-gun-sales.html

Stop Tweeting, and Get in the NRA's Face

By Thomas L. Friedman

February 21, 2018

The New York Times

Late Edition – Final

A23

https://www.nytimes.com/2018/02/20/opinion/get-out-of-facebook-and-into-the-nras-face.html

 

Strategic CSR - Finance

The article in the url below reports the latest success for environmental activists campaigning against banks that finance companies involved in strip coal mining:

 

"Last week, with little fanfare, PNC Financial, the nation's seventh-largest bank, disclosed a significant strategic shift. The bank said it would no longer finance coal-mining companies that pursue mountaintop removal of coal in Appalachia, an environmentally devastating practice that has long drawn opposition."

 

It seems that PNC was one of the few remaining banks willing to finance this industry:

 

"PNC had been a holdout; Bank of America, Citigroup, Morgan Stanley, JPMorgan Chase, Wells Fargo, Credit Suisse and others had already distanced themselves from coal companies involved in mountaintop removal."

 

As such, future options for the industry are running out:

 

"GE Capital and UBS appear to be the only large financial institutions in the country still willing to lend money to companies involved in this mountaintop mining, and even they are scrutinizing such activities."

 

The article suggests that this strategy of trying to cut-off supplies of finance is more effective for campaigners instead of trying to force investors to divest from carbon energy stocks:

 

"It's one thing for large investors like the Rockefeller family or Stanford University's endowment to pull out of fossil fuel companies. The result, maybe, is a marginally lower stock price for the big oil players. But it's quite another when the nation's banks decide, independently or collectively, to effectively shut off the financing for projects that require considerable capital. It has the effect of killing the business."

 

Take care

David

 

David Chandler & Bill Werther

Strategic Corporate Social Responsibility: Stakeholders, Globalization, and Sustainable Value Creation (3e)

© Sage Publications, 2014

 

Instructor Teaching and Student Study Site: http://www.sagepub.com/chandler3e/

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

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

 

 

A New Tack in the War on Mining Mountains

By Andrew Ross Sorkin

March 10, 2015

The New York Times

Late Edition – Final

B1

http://www.nytimes.com/2015/03/10/business/dealbook/pnc-joins-banks-not-financing-mountaintop-coal-removal.html

 

Strategic CSR - Financial Crisis

Some quotes from the article in the url below that should be of concern to anyone hoping that we had learned from the Financial Crisis:

 

“Five years after the system was held at gunpoint by a massively interconnected and over-risked Wall Street, the country’s six biggest banks—JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley—are now 37 percent larger than they were in the depths of the financial crisis. These institutions make more than four out of every 10 loans and tote two-thirds of the banking system’s $14.4 trillion in assets.”

 

“The total roster of U.S. banks is at all-time record low. In 1985, there were more than 18,000, compared with 6,891 now. … ‘The federal government has been keeping track of the number of banks since 1934 and this year is the very first time that the number has fallen below 7,000.’ [writes economics author and blogger Michael Snyder].”

 

“JPMorgan Chase is about the size of the entire British economy and holds 12 percent of all cash in the U.S.”

 

“Four U.S. banks now lug total derivatives exposure well north of $40 trillion, or more than the combined value of U.S. gross domestic product and the national debt.”

 

Too big to fail is not only alive and well, it is the global financial system! The graphic that accompanies the article demonstrates clearly how the banking industry has consolidated over the last two decades:

 

http://images.bwbx.io/cms/2013-12-09/1209-bank-popup-6301.jpg

 

Have a good weekend.
David

 

David Chandler & Bill Werther

Strategic Corporate Social Responsibility: Stakeholders, Globalization, and Sustainable Value Creation (3e)

© Sage Publications, 2014

 

Instructor Teaching and Student Study Site: http://www.sagepub.com/chandler3e/

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

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

 

 

Is Wall Street Now Too Big to Care?

By Roben Farzad

December 10, 2013

Bloomberg Businessweek

http://www.businessweek.com/articles/2013-12-10/is-todays-wall-street-now-too-big-to-care

 

Strategic CSR - Financial Crisis

The article in the url below provides an update on the cost of the recent Financial Crisis:

 

“Wall Street could pay nearly $50 billion to buy peace from federal authorities who are taking aim at the banks over their role in the mortgage crisis, according to interviews and a confidential analysis of the industry’s potential legal exposure. … The $50 billion figure does not include JPMorgan’s $13 billion payout, which means the ultimate industry tab could exceed $60 billion, according to the analysis.”

 

The basis for these estimates is the $13 billion settlement announced at the end of last year between the government and JP Morgan. Based on the relative amounts of mortgages issued by each of the largest banks from 2005-2008 (see accompanying graphic) and comparing to the JP Morgan settlement, the article arrives at estimates for each of the banks, individually:

 

“The analysis, which lawyers prepared for one of the financial institutions and which was reviewed by The New York Times, indicates that Bank of America could ultimately settle for $11.7 billion in penalties, with an additional $5 billion in relief to homeowners. Morgan Stanley’s combined tally, the analysis shows, could be around $3 billion, with roughly a third going to consumer relief, while Goldman Sachs’s total could come to roughly $3.4 billion. For the Royal Bank of Scotland, the total price could be around $10 billion, which might prompt an outcry in Britain, where the government owns a majority stake in the bank. Citigroup could pay roughly $1 billion, the analysis shows. The potential penalties for other banks are under $1 billion, the analysis shows.”

 

It is encouraging to see the government act as a concerned stakeholder … at last. Of course, all pain is relative:

 

“A payment of $50 billion, made up of a string of separate deals, would amount to roughly half the total annual profit of large American banks in 2012.”

 

Have a good weekend

David

 

David Chandler & Bill Werther

Strategic Corporate Social Responsibility: Stakeholders, Globalization, and Sustainable Value Creation (3e)

© Sage Publications, 2014

 

Instructor Teaching and Student Study Site: http://www.sagepub.com/chandler3e/

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

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

 

 

Wall Street Predicts $50 Billion Bill to Settle U.S. Mortgage Suits

By Jessica Silver-Greenberg and Peter Eavis

January 10, 2014

The New York Times

Late Edition – Final

A1

http://dealbook.nytimes.com/2014/01/09/wall-street-predicts-50-billion-bill-to-settle-u-s-mortgage-suits/

 

Strategic CSR - Greed

The blog posting in the url below by Mallen Baker (Foreword, pxvii) cuts through much of the comment over recent executive pay discomfort suffered by many firms. Earlier this year, companies from Aviva to Barclays to Citigroup all had strong protest votes registered against executive compensation packages as a result of increased requirements on firms to put the compensation packages of their senior employees to shareholder vote at their annual general meetings:

“It's an interesting point to note, that suddenly shareholders have become lauded as this group that has the power to stick it to the greedy bad bosses.”

Baker, however, recognizes that, rather than a long-awaited exercise in shareholder democracy, this is a case of one highly-criticized group holding another highly-criticized group to account. Or, as Baker puts it:

“For [shareholders], the point is more one of disappointment that they are not earning similarly high returns through the value of the shares that they own. If they were, they would smile warmly on inflated executive bonuses because they had been 'earned.'”

Baker reminds us not to kid ourselves that shareholders are acting on behalf of the wider, social interest:

“This is not a benign force for good. It is the demand of shareholders for 'above average' returns that drove many of the financial institutions to bring in high-risk high-return policies in the first place, which led to the financial crisis. Now they complain that the bosses at Aviva have 'destroyed shareholder value.'”

As such, rather than a liberation, Baker pierces the rhetoric behind these new “say-on-pay” requirements to call it as it is—an exercise in self-deception:

“We may think they are now meting out the justice we have been so long denied by giving certain individuals a huge roasting. Actually, they are standing up for their right to demand financial performance that is unreasonable in the face of the current state of the marketplace. The fact that some of those individuals may deserve their roasting (others were just in the wrong place at the wrong time) shouldn't get in the way of the fact that the process is simply keeping us on the path that caused the problems in the first place.”

Have a good weekend.

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility: Stakeholders in a Global Environment (2e)

© Sage Publications, 2011

http://www.sagepub.com/strategiccsr2e/

Instructor Teaching Site: http://www.sagepub.com/strategiccsr/

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

Greedy bosses get punished by ... um ... greedy shareholders

By Mallen Baker

May 7, 2012

http://www.mallenbaker.net/csr/post.php?id=438

Strategic CSR - Financial Crisis

The article in the url below contains an update on the prosecution by the Obama administration of the recent financial crisis (Issues: Financial Crisis, p235):

“Four years after the disintegration of the financial system, Americans have, rightfully, a gnawing feeling that justice has not been served. Claims of financial fraud against companies like Citigroup and Bank of America have been settled for pennies on the dollar, with no admission of wrongdoing. Executives who ran companies that made, packaged and sold trillions of dollars in toxic mortgages and mortgage-backed securities remain largely unscathed. … In contrast, after the savings-and-loan debacle of the late 1980s, more than 1,000 bank and thrift executives were convicted of felonies.”

Given the level of resources invested in solving the problem, it is not clear that any of this is likely to change:

“Meager resources have been applied to investigate the financial assault on our country, which wiped away trillions of dollars in household wealth and has resulted in 24 million people jobless or underemployed. The Financial Crisis Inquiry Commission, which Congress created to examine the full scope of the crisis, was given a budget of $9.8 million — roughly one-seventh of the budget of Oliver Stone’s “Wall Street: Money Never Sleeps.” The Senate Permanent Subcommittee on Investigations did its work on the financial crisis with only a dozen or so Congressional staff members.”

The author, a former state treasurer of California, was the Chair of the Financial Crisis Inquiry Commission.

Have a good weekend

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility: Stakeholders in a Global Environment (2e)

© Sage Publications, 2011

http://www.sagepub.com/strategiccsr2e/

Instructor Teaching Site: http://www.sagepub.com/strategiccsr/

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

Will Wall Street Ever Face Justice?

By Phil Angelides

March 2, 2012

The New York Times

Late Edition – Final

A23

http://www.nytimes.com/2012/03/02/opinion/will-wall-street-ever-face-justice.html

Strategic CSR - Banks

The article in the url below generates contradictory feelings (Issues: Finance, p180; Investing, p184; Loans, p188). At first, when I read it I thought firms were innovatively expanding access to credit to previously excluded segments of the market (a positive). Then I realized that less affluent customers are more likely to use credit heavily and get caught up in cycles of repayment and high interest rates (a negative). It is important, however, to recognize that consumer credit is far more preferable to the “neighborhood loan shops” that can charge “more than 200% annual interest” and having a credit card helps build credit history (positives). But, then I read that such private label cards tend to charge higher interest rates than regular credit cards (negative). In general, however, I like the Citigroup policy:

“Citigroup lets consumers build a credit history with a MasterCard secured with money the consumer puts in a certificate of deposit. After 18 months, consumers deemed creditworthy may be offered a regular Citigroup credit card, and the original deposit, plus interest, is put into the holder's credit-card account. Others can renew the CD or close the account and get the deposit back, with interest.”

And also aspects of the GE plan:

“The issuers say they are treading carefully and tracking payment habits closely, so they aren't saddled with bad loans to nonpaying customers. GE, for example, calls new customers to make sure they understand their bills, interest rates and potential late fees.”

The oversight role played by consumer advocates, discussed in the article, should help keep the banks reasonably honest. Ultimately, I think extending the banking system to serve the huge number of people in the US who do not have either a bank account or access to credit of some sort, providing them with legitimate alternatives to the “neighborhood loan shops,” generates a great deal of social value:

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther

Private-Label Card Program From GE Offers 'Road to Credit' To Tap Greater Portion of Market
By Kathryn Kranhold and Robin Sidel
1104 words
6 July 2006
The Wall Street Journal
C1
http://online.wsj.com/article/SB115214210537198943.html

A freely accessible version of this article can be found at:
http://www.nabble.com/Article-(07-06-2006):-Private-Label-Card-Program-from-GE-Offers-'Road-to-Credit'-p5210720.html