Strategic CSR - Microsoft (+ Delta)

The article in the url below from Bloomberg Green Daily's newsletter is disappointing, for many reasons:

"Staff at Microsoft have told some developers of carbon removal credits that the company is pausing what is currently the world’s biggest program for financing the extraction of CO2 from the atmosphere."

To give you an idea of how big a blow this is to the market for carbon removal credits, the chart accompanying the article makes the extent of Microsoft's impact abundantly clear:

 

 To be specific:

"Microsoft is by far the largest investor in removal credits, having set an ambitious goal to be carbon negative by 2030. The company is engaged in deals across a variety of technologies, with Bloomberg estimating that its purchases in 2025 accounted for 96% of the entire market."

The article develops a line of argument that seeks to explain the decision to pull back but, in the process, instead makes clear why Microsoft's continued engagement is more essential than ever:

"While Microsoft has expanded its carbon removals program, the company’s greenhouse gas emissions have increased significantly on the back of its investment in data centers needed to power artificial intelligence."

Microsoft has been progressive on this issue for a long time, and was one of the first companies to account for an internal carbon price to help assess the ROI on projects (see Strategic CSR - Carbon tax). It is disappointing to see them pull back from this market, especially when technological innovation seems at a formative stage. But, they are clearly not alone -- on this or other related stories. To learn about companies dropping their 'net zero' targets, for example, see the article in the second url, below:

"Delta Air Lines Inc. quietly scrubbed a pair of key environmental targets from its sustainability web page. The Atlanta-based carrier deleted its pledge to use sustainable aviation fuel (SAF) for 10% of its jet fuel by 2030. It also rephrased its quest to achieve net-zero emissions by 2050 as an “aspiration,” rather than a 'goal.'”

As the graphic accompanying that article shows, Delta is far from where it would need to be to achieve the targets it (voluntarily) set itself -- unfortunately, they are not an outlier in the airline industry (see also Strategic CSR - Executive pay):

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/

Microsoft Staff Tell Some Carbon Capture Companies It's Pausing Deals

By Alastair Marsh and Ishika Mookerjee

April 13, 2026

Bloomberg Green Daily

https://www.bloomberg.com/news/newsletters/2026-04-13/microsoft-staff-say-carbon-removal-deals-paused-in-program-shakeup

Delta Waters Down Net Zero Target to an 'Aspiration'

By Ben Elgin and Kyle Stock

April 14, 2026

Bloomberg Green Daily

https://origin.www.bloomberg.com/news/newsletters/2026-04-14/delta-waters-down-net-zero-target-to-an-aspiration

Strategic CSR - 40-hour workweek

The article in the url below charts the development of the 40-hour workweek in the U.S. As the author argues, while the story of its evolution is interesting, it is more interesting that something we take for granted today is a relatively recent innovation. In spite of some industry-specific legislation, along with experiments by companies such as Ford, the norm for workers in the early 20th Century remained long hours and a six-day week -- a situation that only really changed with The Great Depression:

"Amid mass unemployment, a bipartisan consensus developed in Washington around work sharing: more people working shorter hours. In 1938, President Franklin D. Roosevelt signed the Fair Labor Standards Act into law. It set a minimum wage of 25 cents an hour and a standard workweek of 44 hours initially, reduced to 40 hours by 1940, with anybody who worked longer hours being entitled to time-and-a-half overtime pay."

This idea spread after the end of WWII:

"In postwar America, the 40-hour week became the norm for millions of workers, with overtime pay acting as a disincentive for employers to require longer hours."

Having won this progress, the author argues that the U.S. worker is now voluntarily surrendering it. Starting in the 1970s, the average workweek has increased in length, and all in the name of individual freedom:

"In the new millennium, the U.S. workweek varies widely for different kinds of workers. Email and the internet, laptops and smartphones, and tools like Zoom and Slack have liberated many office workers from the physical office, but at the cost of an increasingly porous boundary between work and home life."

In other words, you can work whenever you like, as long as it is most of the time:

"A 2025 Gallup poll found that 40% of full-time employees work 40 hours in a typical week, while 38% work from 41 to 59 and 15% work more than 60 hours a week. Only 8% work less than 40 hours."

But, as some begin to question whether the level of productivity is correlated positively with the quantity of hours worked, a few companies are experimenting with a 4-day week (see Strategic CSR — 4-day workweek and Strategic CSR — Microsoft). The research on this so far suggests there are real benefits for organizations:

"Employers participating in the trial saw improvements in employee retention, with resignations falling from 1.8 a month before implementing the four-day week to 1.4 a month afterward. Sick and personal days declined from one day per employee a month to 0.8."

There are also benefits for workers:

"For employees, meanwhile, the main benefits were in well-being and work-life balance. … For example, 69% of participants experienced reduced burnout, nearly 40% were less stressed and anxious, 42% reported better mental health, and 37% percent saw improvements in physical health."

 

The latest twist in the story is the evolution of A.I, of course, which promises to reduce the amount of total work needed. But, it is unclear to the author if that promise will ever be realized, and whether whatever the new norm becomes will be beneficial for workers:

“… it’s not a foregone conclusion that the productivity gains from AI will usher in the age of 15-hour workweeks and abundant leisure time predicted somewhat prematurely by John Maynard Keynes back in 1930."

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 Did We Get A 40-hour Workweek?

By Andrew Blackman

December 1, 2025

The Wall Street Journal Report: The Business of Work

Late Edition – Final

R17

https://www.wsj.com/lifestyle/workplace/labor-activism-40-hour-work-week-edcd8305

Strategic CSR - Microsoft

So, what should Microsoft do when it provides a platform for its employees to communicate openly and then doesn't like what they talk about? Well, clearly, they should shut down the platform, as detailed in the article in the url below:

"The company has shut down an internal communication channel used by employees to question senior executives and discuss hot-button societal issues, according to an internal post reviewed by The Wall Street Journal. It has also restricted employees' ability to enter certain buildings on its Redmond, Wash., campus, according to people familiar with the matter."

While the company was reacting to behavior by employees, not only speech, it seems like curtailing speech was the company's response to curtailing the behavior it found objectionable. And, while they are at, how about back-tracking on promises made during Covid about working practices and company culture?

"On Tuesday, the company also told employees they will need to report to an office three days a week."

Sounds like a good week at the office.

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/

Microsoft Curbs Staff After Office Sit-In

By Sebastian Herrera

September 10, 2025

The Wall Street Journal

Late Edition – Final

B1, B4

https://www.wsj.com/tech/microsoft-cracks-down-on-work-speech-limits-remote-work-df9d469e

 

Strategic CSR - 4-day workweek

The article in the url below extolls the demonstrated value of the 4-day workweek – conclusions that have been derived after extensive study:

"In 2022, [the author] signed on as lead researcher at 4DWG, an international NGO that aims to make a four-day workweek the new standard. Since then, we have studied 245 businesses and nonprofits as they adopted four-day-week pilot programs for more than 8,700 workers, in countries including the U.S., U.K., Brazil, Portugal, Germany and South Africa."

First, for individual employees, who work 20% less but receive no reduction in pay:

"69% experience reduced burnout, 42% have better mental health, and 37% see improvements in physical health. Thirteen percent of participants say they wouldn't go back to a five-day schedule for any amount of money."

But, also, for the hiring organization:

"[The researchers asked participating companies] to rate the success of the trials, and they give consistently high scores—an average of 8.2 out of 10. After a year, only 20 companies, less than 10% of the total, decided to discontinue their four-day week. We also saw excellent results in performance metrics such as revenue, absenteeism and resignations."

The prime example for the potential in a 4-day workweek is apparently Microsoft, Japan (see also Strategic CSR – Microsoft):

"In 2019, it instituted a temporary four-day week, closing the office for five consecutive Fridays in August. To make it work, the company mandated that no meetings could go longer than 30 minutes. It also told managers to avoid unnecessary meetings and use face-to-face chats instead. Its widely reported results were striking: Productivity increased by 40% over the trial period, while time off fell by 25%."

Although for different reasons, the results are apparently replicated across all kinds of companies (see Strategic CSR – Unilever) and situations (see Strategic CSR – Productivity):

"Most of the companies in our trials are white-collar organizations, where eliminating meetings and other distractions goes a long way toward making a four-day week feasible. In industries such as manufacturing and construction, time savings are more likely to be found by making the flow of work more efficient through process engineering."

Personally, I do not have any desire to work less, but I do like the sound of enforced 30-minute meetings. Perhaps I'll give that a try, especially on Zoom.

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/

Of Course Workers Want a Four-Day Week. Companies Should Too.

By Juliet B. Schor

May 31 – June 1, 2025

The Wall Street Journal

Late Edition – Final

C3

https://www.wsj.com/lifestyle/workplace/of-course-workers-want-a-four-day-week-companies-should-too-0837a0a1

 

Strategic CSR - Three Mile Island

The article in the url below, covering the revival of Three Mile Island (the site of the worst nuclear accident in the U.S.), is interesting for a few reasons. First is that it can be revived at all – I had no idea it was only one reactor that failed – a second one is perfectly usable and had been operating up until a few years ago:

"Three Mile Island's undamaged Unit 1 reactor sits next to Unit 2, which was shut down after a partial core meltdown in 1979 led to five days of panic. The incident heightened awareness of nuclear plants' potential safety problems and contributed to a loss of enthusiasm for the industry that lasted decades. But the 835-megawatt Unit 1 continued operating and closed only under economic pressure five years ago."

 

The issue appears to have been the growing competitive pricing of renewable energy sources:

 

"Years of flat U.S. power demand had created a bruising battle for market share. Nuclear plants had a tough time competing against renewable energy and natural-gas-fired plants that tapped into a cheap source of fuel from the U.S. shale boom."

The second reason is Microsoft's creative decision to fund this revival in the form of an exclusive energy supply:

"Constellation expects to spend around $1.6 billion to restart the reactor by early 2028. Microsoft has signed a 20-year power-purchase agreement with Constellation, the companies said Friday. The deal would help Microsoft pair its 24-7 electricity use with a matching source of nearby clean power generation."

As a related story in Bloomberg noted:

"Microsoft has agreed to purchase the energy for two decades and declined to disclose financial terms. This is the first time Microsoft has secured a dedicated, 100% nuclear facility for its use."

And the third reason is what is driving the demand from Microsoft:

"A deal between Constellation Energy and Microsoft will restart Pennsylvania's Three Mile Island, the site of the country's worst nuclear power accident, to help power the tech giant's growing artificial intelligence ambitions. Under the agreement, Constellation would revive the plant's undamaged reactor, which was too costly to run and closed in 2019, and sell the power to Microsoft. The plan signals the gargantuan amount of power needed for data centers for AI, along with the tech industry's thirst for a carbon-free, round-the-clock electricity source needed to meet climate goals."

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/

Three Mile Island's Rebirth: Microsoft AI power Source

By Jennifer Hiller

September 21-22, 2024

The Wall Street Journal

Late Edition – Final

A1, A9

https://www.wsj.com/business/energy-oil/three-mile-islands-nuclear-plant-to-reopen-help-power-microsofts-ai-centers-aebfb3c8

 

Strategic CSR - Google

At various points, I have seen the claim that Google should be declared a public utility (and regulated as such), but never understood the arguments in detail. The article in the url below by the Republican Attorney General of Ohio does this effectively by explaining legal action that he had recently taken:

"As Ohio's attorney general, I went to court last month asking for a judicial declaration that Google has evolved into such an entity: a public utility of internet search."

The attorney general first makes his point, quite convincingly I think, that Google is a monopoly:

"Google is ubiquitous. More web traffic goes to Google and YouTube, a subsidiary of Google, than the other top 50 websites combined. And it's not just internet traffic: Google dominates internet search, cornering nearly 90 percent of the U.S. search market, and even more globally. Bing, the runner-up in internet search, claims a mere 6 percent of the U.S. market and 2 percent globally."

He then explains what it would mean if the courts decided in favor of his case, and suggests it would be a lot less traumatic for the company than the alternative of antitrust action that is currently being considered in Washington:

"As a common-law public utility, Google would then have a legal duty to act with consideration of the public interest, to provide equal access to all users and all information providers and to act without unreasonable bias against information providers, particularly Google's competitors in other business lines. That's it. As legal touches go, it's a lot lighter than what antitrust law would demand."

Then, he details the consequences of the decision for the public at large:

"The subtle common-carrier changes for users will be positive, such as showing you the results you requested instead of being steered to Google products. My lawsuit alleges that Google prioritizes its own products and platforms in search results. … As a public utility, Google search would have to give others a better shot. Those searching would get results that are not skewed to Google, and the marketplace would be a bit more competitive."

And, finally, he rebuts some of the more common objections he sees made to defend the company. For example:

"Critics of Ohio's lawsuit abound, of course. To knock down a few straw men: Ohio's action is not chilling Google's right to free speech. To the contrary, Google will remain free to say anything it pleases. … Critics also say that this creates a dormant commerce clause problem — that one state among 50 is using its law in a manner that burdens interstate commerce, a violation of sovereignty and federalism. But Google can geo-fence Ohio (and the other states that will most likely follow Ohio's lead) if it chooses. The truth of the matter is that foreign governments already are regulating cyberspaces around the world, and with a far heavier hand."

Ultimately, however, his argument relies on the point that Google's dominance undermines the competitive market. That is, whether Google is currently abusing its position is beside the point for two reasons: first, the company might be doing so in a way that is currently unobservable to many and, second, left unchecked, it could do so at some point in the future. The author provides an anecdote, taken from U.S. history, which helped motivate the original antitrust legislation by Congress:

"The duty for a public utility to operate in the public interest dates back to English common law, when key economic players such as ferry operators had to fulfill certain obligations to the public. During the Gilded Age, the railroad magnate Cornelius Vanderbilt controlled a bridge that was key to getting to New York City by train. In the late 1860s, he closed the bridge to rivals, effectively shutting the rest of the country out of its largest port, and the city off from food supplies from the west. As the competing railroads' stock crashed, he quickly bought up a controlling position. As a result, Vanderbilt used his control of a chokepoint to help establish a monopoly. To curb such predations, Congress passed the Sherman Antitrust Act in 1890 and subsequently began codifying common-carrier and public-utility law."

His conclusion is that, if Google's current market position is not addressed, it is society that will suffer:

"The preface to Google's parent company's code of conduct says, 'Do the right thing — follow the law, act honorably and treat co-workers with courtesy, support and respect.' Google could do that by acknowledging what is obvious: It's so dominant that the rules of private companies no longer apply to it."

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/

Let's Make Google a Public Good

By Dave Yost

July 11, 2021

The New York Times

Late Edition – Final

SR2

https://www.nytimes.com/2021/07/07/opinion/google-utility-antitrust-technology.html

 

Strategic CSR - Greenwashing (II)

Following on from the newsletter sent earlier this week, the articles in the two urls below also both tackle the issue of greenwashing, but in different ways. The first article looks at the role of carbon offsets in allowing firms with polluting operations to present a much more favorable carbon image, while the second article looks at how firms are increasingly setting aggressive sustainability targets, but failing to begin the hard work of delivering on their promises.

The key to the first article about carbon offsets is twofold – first, firms may be committing to offsets, but then not being transparent in terms of whether they are actually bought (or achieve the reduction in carbon promised) and, second, using the offsets to cloak the fact that nothing has changed in their underlying business model/operations. And, given that the goal is to get to zero emissions, rather than net zero emissions, such businesses are avoiding the harder task of changing their operations to produce less emissions. This emphasis on carbon reduction techniques (rather than carbon offsets) will become even more essential as the price of offsets rises in line with anticipated increases in demand:

"Companies face rising costs of carbon dioxide emissions. European Union credit costs reached a record high of nearly €40 a metric ton, or about $48, this month. Levies of over $100 are expected in many countries by 2030. Given the very limited information available about companies' carbon footprints and cleanup plans, analyzing how they use CO2 reduction techniques can be a helpful shortcut to identify risky businesses."

While all industries, ultimately, will be affected, there are some that are more likely to struggle:

"Oil and coal producers face existential questions. The challenge is also particularly acute in so-called hard-to-abate industries: airlines, cement, long-haul trucking, plastics, shipping and steel. Many investors would like to distinguish the leaders from the laggards."

For now, however, we are where we are due to the challenge of measurement and financial reporting requirements, which still allow companies to select what information they release and when:

"In an ideal world, detailed, comparable carbon exposure data would be published alongside financial information to help investors assess risks. That should be available eventually. Until then, a company's use of carbon offsets provides a helpful shortcut to divine some insight."

The key to the second article is the disconnect between what companies are proclaiming and what they are actually doing:

"Household names like Costco and Netflix have not provided emissions reduction targets despite saying they want to reduce their impact on climate change. Others, like the agricultural giant Cargill and the clothing company Levi Strauss, have made commitments but have struggled to cut emissions. Technology companies like Google and Microsoft, which run power-hungry data centers, have slashed emissions, but even they are finding that the technology often doesn't yet exist to carry out their 'moonshot' objectives."

Again, transparency and reporting requirements are allowing companies to get away with symbolic behavior:

"… determining how hard companies are really trying can be very difficult when there are no regulatory standards that require uniform disclosures of important information like emissions."

In contrast, those companies that stick to measurable targets tend to be a lot more effective in achieving substantive change:

"For example, Walmart discloses its targets for emissions reductions and the progress it has made to the CDP, including a goal for emissions from its suppliers, and its plan has been vetted by Science Based Targets. But Costco doesn't expect to have commitments to reduce emissions until the end of next year. Costco executives declined to comment."

The conclusion is that, ultimately due to the variance in corporate attitudes to real change, regulation is most likely to move the needle:

"'If we are going to achieve a net-zero carbon economy for real, we will need everyone to act,' said Lucas Joppa, Microsoft's chief environmental officer. 'And that means action can't be voluntary. We need requirements and standards that everyone is expected to meet.'"

An example of the challenges that remain, however, is the extent of creative accounting that characterizes carbon offsetting. The most devious form of this is where firms claim for avoiding carbon emissions that would otherwise have happened. For example, they could support the production of renewable energy and claim that, by doing so, they have avoided the emissions that would have occurred if they had used regular fossil fuels, instead. Clearly, however, no carbon was removed from the atmosphere. In other words, such a trick is not even net zero, it is net positive emissions (overall), even though firms are using such claims to 'reduce' their total carbon account.

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/

Investors, Research Green Ambitions

By Rochelle Toplensky

February 23, 2021

The Wall Street Journal

Late Edition – Final

B11

https://www.wsj.com/articles/an-investor-shortcut-for-net-zero-ambitions-11613995380

The Climate Talk vs. the Walk

By Peter Eavis and Clifford Krauss

February 23, 2021

The New York Times

Late Edition – Final

B1, B5

https://www.nytimes.com/2021/02/22/business/energy-environment/corporations-climate-change.html

 

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 - Bubbles

The article in the url below draws a fascinating distinction between investment bubbles that are "hugely destructive" and those that are "socially useful." While the housing bubble that led to the financial crisis a decade ago falls into the former category, the current inflated stock price of Tesla and associated bubble around green energy are (according to the author) examples of the latter category:

"Whether investors one day regret paying so much for Tesla Inc. stock, they have done the planet a favor. Their enthusiasm enabled the company to raise enough money to stay afloat until it could profitably mass produce electric cars while accelerating other manufacturers' rollouts."

The bubble these investments have created is partly due to fascination with individual personalities, such as Elon Musk (Tesla is currently "trading at more than 1,000 times trailing earnings"), but is also partly due to the increased interest with ESG funds (and the younger retail investors driving their growth). And this fascination seems to be growing, irrespective of whether the firms themselves are profitable:

"From the end of 2019 through Tuesday, a fund that tracks a Nasdaq clean energy index had risen 191% compared with the broad market's 15%. It trades at 52 times trailing earnings, nearly double the overall market's already-historically high multiple. More than a third of its 44 constituents are losing money. On Wednesday afternoon it was up 7% on expectations Democratic control of the Senate would lead to more support for renewable energy."

The rapid growth in investments flowing into these funds is apparent from the chart accompanying the article:

 

 

Although elements of these investments may be irrational, as the article notes, that does not mean the resulting bubble does not have any redeeming features:

"Stupid, however, isn't the same as useless. Some bubbles can be hugely destructive, as we saw with housing 13 years ago. Others are socially useful. Private markets generally provide too little incentive for risky innovation because shareholders only capture a small part of an innovation's benefit; most goes to consumers (think of a life-saving drug). A bubble can overcome that market failure as investors shower capital on countless new ventures they hope will be the next Microsoft Corp. or Amgen Inc. Even as most of those ventures fail, they extend the technological frontier."

This is true of elements of the dotcom bubble around the turn of the century. Similarly, it is true of a number of unicorns in recent years, and the green energy bubble today. The competition that leads to the failure of (most) companies will also produce the (much fewer) success stories that define the future:

"In the late 1990s and early 2000s, investors snapped up the stocks and bonds of money-losing technology, media and telecom companies. The mania financed a glut of fiber optic that drove the price of bandwidth down enough to bankrupt many telecom companies while allowing countless new businesses to emerge. It also enabled Amazon.com Inc. to raise enough money to keep growing until it had proven its business model could work. Green energy faces obstacles the dot-com boom didn't. It mostly does what fossil fuels already do—just with less carbon dioxide emissions, a benefit that accrues to the entire world rather than producers or consumers."

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/

Market Euphoria Helps Fuel Green Energy

By Greg Ip

January 7, 2021

The Wall Street Journal

Late Edition – Final

A8

https://www.wsj.com/articles/green-euphoria-may-cost-investors-but-planet-says-thank-you-11609949560

Strategic CSR - Unilever

The article in the url below caught my eye, first because of the four day work week (at full pay), and then because it is Unilever making the announcement:

"Consumer goods giant Unilever will trial a four-day working week in New Zealand to enhance worker wellbeing and boost productivity."

Some detail:

"All 81 workers will be eligible to work for four days on full pay, New Zealand Managing Director Nick Bangs said in a statement Tuesday. Most of the staff are based at Unilever's Auckland headquarters and distribution center after the company closed manufacturing operations in 2015."

The motivation for the trial is the shift in working practices that have been accelerated by the pandemic. Unilever sees the 'old' way of working as gone, so plans to use the opportunity to try something new. What is interesting is that most of these kind of stories that I have seen recently tend to involve IT/Silicon Valley-type companies. Much less common to see manufacturing/consumer product companies being similarly adventurous:

"The trial, which starts this month and will run for a year, is limited to New Zealand at this stage. Unilever will work with Sydney's University of Technology Business School to measure results, and will explore the possibility of what it could mean on a broader scale. The company employs 150,000 people worldwide."

As the NZ director makes clear, this is solely a business decision:

"'Maintaining competitive edge, increasing productivity and improving wellbeing sit at the heart of the four-day week,' [he] said. 'This is about removing the barriers that limit value creation and slow us down.'"

There are a few companies that are implementing something close to the Strategic CSR framework (e.g., Salesforce and Nike), but Unilever is the company that seems to get it the most. At least, they did under Paul Polman (who retired in December 2018). I presume they are continuing his managerial ethos, although I haven't heard much from them of late, which is another reason why I was pleased to see this announcement. The research on employee productivity has been pretty conclusive for a while now (see Strategic CSR – Microsoft and Strategic CSR – Productivity), but it is good to see a company as large as Unilever taking the risk. Being a manager is incredibly difficult, but the research shows that a focus on intrinsic (rather than extrinsic) motivation is the key to getting the most out of your employees, while providing them with meaning and purpose in what they do. Unilever has been in this space for a while now. It is not rocket science, but that doesn't mean it is widely practiced.

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/ 

Unilever to Trial Four-day Working Week in New Zealand

By Tracy Withers

November 30, 2020

Bloomberg Businessweek

https://www.msn.com/en-us/money/news/unilever-to-trial-four-day-working-week-in-new-zealand/ar-BB1bvgVD

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