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

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

Showing posts with label Whole Foods. Show all posts
Showing posts with label Whole Foods. Show all posts

Thursday, February 15, 2024

Strategic CSR - Child labor (II)

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

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

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

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

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

Take care
David

David Chandler
© Sage Publications, 2023

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


Confronted With Child Labor in the U.S., Companies Move to Crack Down
By Hannah Dreier
February 8, 2024
The New York Times
Late Edition – Final
A22
 

Wednesday, September 6, 2017

Strategic CSR - Whole Foods

The article in the url below about Whole Foods' recent struggles is half right. It is correct in noting that Whole Foods is struggling, but incorrect in the underlying reasons for its difficulties:
 
"It's hard to think of a better poster child for 'conscious capitalism' than Whole Foods Market, the high-end grocery store that made a name for itself selling organic produce in feel-good, mood-lit stores. These days, the chain is floundering and a potential buyout is on the horizon. What does that say about the conscious capitalism it championed? … Whole Foods was supposed to be different. John Mackey, the company's chief executive, has long argued that Whole Foods is wired differently — that it runs on a 'conscious capitalism' model that outsmarts the competitive pressures of our for-profit system through creativity and innovation. … The Whole Foods founder penned his treatise in response to the growing consensus that capitalism is doing irreparable harm to the planet and the people who live on it. Our for-profit system is increasingly viewed as a zero-sum game in which ecological destruction, climate change and rising inequality are firmly linked to the rapacious behavior of multinational corporations. Mackey agrees that humans are harming the planet, but he doesn't think the problem lies in capitalism. Free-market capitalism, according to Mackey, is actually a 'beautiful,' 'heroic' system that, properly harnessed, can operate 'in harmony with the fundamentals of human nature' and the planet."
 
All of this is true. Fundamentally, however, the article misses the point about the root causes of Whole Foods' struggles. Yes, there are business decisions that the firm could have made that would have better protected it from competition. But, conscious capitalism is not the reason for the firm's decline. In essence, Whole Foods' sales are declining due to a lack of stakeholder support, particularly customers, who have been persuaded that products on offer at Walmart and Kroger (for example) are essentially the same as those offered at Whole Foods. As such, they see no reason to pay the higher prices that Whole Foods generally charges.
 
In reality, however, these customers are failing to distinguish between the low cost model pursued by most supermarkets and the differentiated model pursued by Whole Foods (something that might be threatened under Amazon's control). With food, as with many products, you get what you pay for and there is a price premium associated with quality. To draw an analogy, people are confusing a Toyota Corolla with a BMW 7 series because both cars are capable of getting you from A to B. Just because this is true, however, does not mean the two cars are comparable or even close to being the same product.
 
With all business models, stakeholder engagement represents either an endorsement or a rejection of what is on offer. Irrespective of what might be in our best interests, our perceived best interests take precedent. And, if customers no longer perceive Whole Foods to be a better value proposition, or they perceive a different company to be offering the same value at a lower price point, they will go elsewhere.
 
Whole Foods is essentially a premium product that, by definition, has a ceiling to its potential growth. Not everyone can afford or wants to shop at Whole Foods, just like not everyone can afford or wants to drive a BMW 7-series. The key, however, is to understand the underlying economic drivers – not be confused that products that are fundamentally different are really the same thing:
 
"Attractive as the conscious capitalism model may be, we simply can't rely on companies to deliver dignified workplaces, equitable models of food production or a better relationship between consumers and the planet. All stakeholders are not equal in our global economy, and even the best intentioned businesses run up against the implacable foes of profit and competition. Ultimately, the thorny problem of sustaining both decent livelihoods and a livable planet won't be solved by buying better things. It'll be solved through political struggle and demands that put people before profit."
 
Incorrect. Firms provide stakeholders with what they want and are willing to reward. Once we understand that good quality food is more expensive than poor quality food and are willing to pay for that product, then Whole Foods will have the success it deserves (and also be able to help improve the health of the general public and also the planet). We are not at that point at present.
 
Take care
David
 
 
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/
 
 
Whole Foods represents the failure of 'conscious capitalism'
By Nicole Aschoff
May 29, 2017
The Guardian
 

Monday, May 4, 2015

Strategic CSR - Chipotle

The article in the url below covers a recent announcement by Chipotle:
 
"In a first for a major restaurant chain, Chipotle Mexican Grill on Monday will begin serving only food that is free of genetically engineered ingredients."
 
This is the latest step in a series of actions by various food companies to distance themselves from GMO-related foods:
 
"In 2013, Chipotle was the first restaurant chain to indicate which items contained genetically modified organisms, and a small but growing number of restaurants, largely in fine dining, also now label their menus. Grocers, too, are moving to offer consumers more products free of genetically altered ingredients. The shelves and cases in Whole Foods stores are to be free of products containing such ingredients by 2018, and Walmart is vastly expanding its selection of organic foods, which are free of genetic alteration by law."
 
The problem, of course, is whether this is possible in practice, now that GMO foods have worked themselves so far into the food-chain:
 
"Ridding the supply chain of genetically altered components is difficult. They lurk in baking powder, cornstarch and a variety of ingredients used as preservatives, coloring agents and added vitamins, as well as in commodities like canola and soy oils, corn meal and sugar."
 
In addition to identifying non-GMO foods, a significant challenge is finding the volume necessary to supply a national fast-food chain:
 
"Chipotle has run short of beef from time to time, and last December it announced that it could not supply all of its restaurants with the pork needed for carnitas after an audit found that one of its suppliers had failed to meet its standards for raising pigs. That shortage continues, cutting into the company's sales, and last week it said it probably would not be able to offer carnitas in all of its more than 1,800 restaurants until this fall."
 
In spite of these challenges, to the extent that food outlets continue to reject GMO ingredients, food producers (farmers, large agribusinesses) will face pressure to remove GMOs from the supply chain. Irrespective of the science behind these organisms, stakeholders should be active in shaping their societies and, if we do not want GMO foods, then we should be sending that signal to food companies who should stop producing them.
 
Take care
David
 
David Chandler & Bill Werther
 
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/
 
 
Chipotle to Stop Serving Genetically Altered Food
By Stephanie Strom
April 27, 2015
The New York Times
Late Edition – Final
B2
 

Monday, March 16, 2015

Strategic CSR - "The moral case for fossil fuels"

The article in the url below is a review of a recently published book, The Moral Case for Fossil Fuels. In the review, the author does a great job of highlighting much of the ignorance that underpins the argument used by many who protest fossil fuels. Not only are renewables nowhere nearly sufficiently developed to replace all our energy needs (and may not get there unless we introduce an appropriate market incentive, such as a carbon tax), but most also ignore or are unaware of the extent to which carbon is the foundation of almost everything we do. Essentially, without oil:
 
"… the country goes dark. Transportation stops. Schools, hospitals and businesses close down. We are left to grow our own scrawny vegetables and slaughter our own animals for meat. We cannot even text."
 
More specifically:
 
"… if all you had to rely on were the good intentions of environmentalists, you would be soon plunged back into a pre-industrial hell. Life expectancy would plummet, climate-related deaths would soar, and the only way that Timberland and Whole Foods could ship their environmentally friendly clothing and food would be by mule."
 
The foundation for the book's argument rests on the extent to which fossil fuels have made possible the economy (and standard of living) that we enjoy today:
 
"We use fossil fuels and their by-products in everything we do and rarely consider it a vice. A pang of conscience may strike us when we read of oil spills or melting icebergs. But not when we are sitting on a plastic chair, visiting a power-guzzling hospital or turning on our computers. To call fossil fuels 'immoral' is to tarnish our entire civilization and should plunge us all into a permanent state of guilt, which seems a bit strong."
 
In contrast to any arguments to the contrary, therefore, the book (and reviewer) suggest that fossil fuels are supremely virtuous:
 
"Mr. Epstein argues that our history with fossil fuels has been one of constant innovation and improvements in technology. Not only do we keep finding more sources of energy, nixing the predictions of those who say we are about to run out, but we find ever cleaner, more efficient ways to use it."
 
Take care
David
 
David Chandler & Bill Werther
 
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/
 
 
Go Ahead, Fill 'Er Up
By Philip Delves Broughton
December 2, 2014
The Wall Street Journal
Late Edition – Final
A15
 

Wednesday, April 10, 2013

Strategic CSR - Purpose marketing

One of the biggest dangers to the CSR project is the prospect of greenwashing. The more stakeholders (and consumers, in particular) suspect that CSR is a symbolic exercise, the less likely they are to fully engage. With this in mind, the article in the url below is concerning. It discusses the idea of “Purpose marketing,” which is “also called pro-social marketing, advertising for good and conscious capitalism.” On the surface, the effort seems like it would advance the cause of CSR:
 
“The goal is to convince potential customers that the companies operate in a socially responsible manner — marketing ‘meaningful brands,’ to borrow a term from the Havas Media division of Havas — that goes beyond tactics like making charitable contributions or selling a product or two in recyclable packaging.”
 
In reality, however, when the goal is to “woo consumers,” the temptation for abuse is too great. My skepticism is increased when the first and primary driver of purpose marketing is to increase sales, rather than raise awareness and understanding:
 
“Purpose marketing is becoming popular on Madison Avenue because of the growing number of shoppers who say that what a company stands for makes a difference in what they do and do not buy.”
 
Call me cynical, but when proponents of purpose marketing say things like “Consumers are seeking ‘authentic emotional connections’ with brands, … and the perception that certain ‘shared values’ can increase loyalty,” I am ready to run in the opposite direction. The danger is that the actions of seemingly genuine companies, such as Panera Bread (see ad here), are lost among a general increase of emotive-laden ads, designed to appeal to the segment of consumers willing to educate themselves about firm behavior and discriminate in their purchase decisions. By virtue of their increased engagement, however, these same consumers will also be quicker to see through the attempts of firms that seek to mislead them in pursuit of inflating sales via vague and, ultimately meaningless, slogans:
 
“Other brands known for purpose marketing include Kashi, sold by Kellogg, and Whole Foods Market. A newcomer to the trend, Union Bank, is introducing a campaign … in San Francisco that carries the theme ‘Doing right, it’s just good business.’”
 
Take care
David
 
 
Instructor Teaching Site: http://www.sagepub.com/strategiccsr/
The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/
 
 
Selling Products by Selling Shared Values
By Stuart Elliott
February 14, 2013
The New York Times
Late Edition – Final
B3
 

Wednesday, February 6, 2013

Strategic CSR - Mandatory vs. Voluntary

The article in the url below raises an important issue in the CSR debate, although it does not do it directly and does it in a context not related to CSR. Applied to a discussion about CSR, however, the article is instructive—Can and/or should firms be compelled to behavior more responsibly? Specifically, the article focuses on the absence of law compelling people to help others in distress. Even when the risk and cost to the person in a position to help is low, the social consequences of not helping are high:

“‘The expert swimmer, with a boat and a rope at hand, who sees another drowning before his eyes, is not required to do anything at all about it, but may sit on the dock, smoke his cigarette, and watch the man drown.’”

What is worse is that:

“If you voluntarily try to rescue someone, you may be liable if you then stop and the victim is harmed.”

The article explains the evolution of this situation in language commonly used to describe the laissez faire approach to capitalism often promulgated in the U.S.:

“The ‘no duty’ rule can be traced to the spirit of rugged capitalist individualism, the Darwinist idea that the common good is advanced through the struggles of selfish individuals.”

As such, the current law is defended in terms of its defining goals:

“One defense of the no-duty rule is that common law exists to prevent people from harming one another, not to compel people to help one another.”

A big part of the core argument behind Strategic CSR is a debate about whether more socially responsible behavior is best encouraged via mandated or voluntary actions. The resolution we settled on is that firms are more likely to implement CSR genuinely and substantively if they are convinced it is in their self-interest to do to (hence the focus on medium- to long-term stakeholder value). Central to this argument is the belief that firms are more likely to avoid or try and circumvent legislation if they are compelled to act. This debate is not fully resolved in my mind, however, as there are many grey areas in between the extremes (e.g., the rise of behavioral economics, see: Strategic CSR – Nudge) and the article below taps into these internal debates:

“A duty to help would not require bystanders to endanger themselves or provide help beyond their abilities; it could simply require warning someone of imminent danger or calling 911. … it would require us to accept our fundamental moral duty to help those in grave peril.”

The concept of moral duty is difficult to quantify because morals and values are subjective. As such, who gets to decide which morals/values apply and in what situations? More importantly, if I disagree with those morals/values, why should I be forced to comply with them? In spite of these very valid questions, however, asking them does not feel very satisfactory. I am currently drafting the third edition to the book and have made a more conscious effort to move beyond a self-interest argument alone, reemphasizing the importance of a CSR Filter as integral to the strategic process (a central argument in the second edition), but strengthening the need to embed that whole process within a framework of guiding values that set the parameters of decisions and guide all employees through the construction of the firm’s strategy, as well as the day-to-day implementation via operations. The work of John Mackey (Whole Foods Market) on conscious capitalism (http://consciouscapitalism.org/) is highly complementary to the argument we present in Strategic CSR and was instructive.

Take care
David


Instructor Teaching Site: http://www.sagepub.com/strategiccsr/
The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/


Can the Law Make Us Be Decent?
By Jay Sterling Silver
November 7, 2012
The New York Times
Late Edition – Final
A25

Friday, February 1, 2013

Strategic CSR - 2012

As the article in the url below reminds us, when there are so many reasons to criticize, you can sometimes lose sight of all the good things that are happening in CSR:

“It’s easy, amid the daily churn of downer headlines, to lose sight of the good stuff, the developments that signifies a marker for progress.”

With this in mind, here are a selection of the fifteen highlights of the best that happened in terms of sustainability in 2012 (according to GreenBiz.com):
  • Marks & Spencer announced that it had sold one billion sustainable products. Over a third of the items it sells now boast some form of sustainability credential.
  • The U.K. government said it will introduce mandatory carbon reporting rules requiring around 1,800 of the country's largest listed companies to report annually on their greenhouse gas emissions.
  • Whole Foods became the first major North American retailer to stop selling unsustainable, or red-listed, seafood, a determination by the Monterey Bay Aquarium and the Blue Ocean Institute that the fish species is being overfished or that current fishing methods harm non-target marine life or habitats. 
  • Nike’s adopted a waterless dyeing technology that uses recycled carbon dioxide to color synthetic textiles. The process could eliminate the use of countless billions of gallons of polluted discharges into waterways near manufacturing plants in Asia.
  • Puma published a detailed environmental profit & loss statement for 2010, valuing the costs to the planet incurred by its operations across its supply chain.
This list reminds me again that for-profit firms are central to the kind of society that we want to construct. They are the best way that we have found to organize and distribute scarce resources in the most efficient and socially constructive way. For-profit firms need to be a big part of the solution, which is why the business school is such an important part of a university education.

Take care
David


Instructor Teaching Site: http://www.sagepub.com/strategiccsr/
The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/


2012 was the year that …
By Joel Makower
December 31, 2012
GreenBiz.com

Monday, October 8, 2012

Strategic CSR - Whole Foods

The article in the url below discusses a part of the 2010 Dodd-Frank legislation that I had not heard of before—the “internal pay equity provision”:

“At issue is a rule that could force [firms] to disclose the gap between what they pay their CEO and their median pay for employees, a potentially embarrassing figure that many companies would like to keep private.”

Supporters of the clause:

“… a group that includes labor unions, institutional shareholders and left-leaning activists—say it would force companies to consider rank-and-file workers during boardroom discussions over CEO pay and could put the brakes on executive compensation, which has been rising faster than inflation and the average worker's pay.”

Firms, in response, suggest that such assessments would be challenging to calculate, making any published numbers misleading:

“Companies say they have a rough sense of their internal pay ratios, but they argue that their global workforces and varied payroll systems make calculating the median cumbersome, if not virtually impossible.”

This argument is difficult to accept when you look at the proactive, progressive stance firms like Whole Foods have adopted regarding firm-wide compensation. Similar to Ben & Jerry’s (Case-study: Ben & Jerry’s, p374), Whole Foods introduced a salary cap for all employees over a decade ago, limiting the highest earning employee to be paid no more than 19 times the lowest-paid employee:

“That means the typical full-time worker earned about $38,000 last year, and no one earned more than $721,000.”

Although, even here, the policy carries an important qualification:

“… the cap doesn't factor in stock options or pension benefits, which would be required under the proposed rule, and it considers average, rather than median, salaries.”

While the majority of U.S.-listed firms might shirk from such transparency, the dangers of rejecting progressive ideas are outlined as part of ‘A Rational Argument for CSR’ (Chapter, 1, p16). They are illustrated in this case by the threat of legislation in Europe:

“European Union officials are debating letting bank shareholders limit the pay ratios between the highest- and lowest-paid employees.”

The result of the absence of any limits is that, overall, CEO pay is spiraling out of control:

“Total direct compensation for 248 CEOs at public companies rose 2.8% last year, to a median of $10.3 million, according to an analysis by The Wall Street Journal and Hay Group. A separate AFL-CIO analysis of CEO pay across a broad sample of S&P 500 firms showed the average CEO earned 380 times more than the typical U.S. worker. In 1980, that multiple was 42.”

Meanwhile, the SEC continues to struggle in its attempt to write the rules that will enact the Dodd-Frank legislation. More than two years after its passage, most of its meaningful (read, controversial) provisions are yet to be implemented.

Take care
David


Instructor Teaching Site: http://www.sagepub.com/strategiccsr/
The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/


Firms Resist New Pay-Equity Rules
By Leslie Kwoh
June 27, 2012
The Wall Street Journal
Late Edition – Final
B8

Monday, November 15, 2010

Strategic CSR - Measuring CSR (Lifecycle Pricing)

One of the most pressing and contentious areas of the CSR debate today revolves around the following question: How do we measure CSR?

How can we develop an accurate and consistent measure of CSR that allows stakeholders to evaluate the social and environmental impact of different products and firms, and compare them to other products and firms (i.e., compare apples with oranges along common metrics)? If we can’t measure CSR, how can we tell whether and when it matters? I have been thinking about this issue for a while now and will focus the next few Newsletters on some interesting and innovative steps firms are taking to address it.

One of the primary goals of measuring CSR should be to move towards some form of product lifecycle pricing.

Lifecycle pricing supports the idea that we need to develop an economic model that is no longer founded on waste by accounting for externalities in pricing (i.e., similar to the idea of Pigovian taxes). In other words, the price of a product should not only include the cost of production, but also include the costs associated with replenishing the raw materials used and disposing/recycling of the waste after consumption. Attempts to put a price on carbon reflect this process (either through a carbon tax or some form of cap-and-trade), while firms’ efforts to develop carbon footprints (e.g., http://www.walkerscarbonfootprint.co.uk/ and http://www.nytimes.com/2009/01/22/business/22pepsi.html) provide a possible means of implementation.

If all firms are forced to incorporate externalities into the price of a finished product or service, many of the cheap items in our disposable economy will become significantly more expensive and businesses will be incentivized to produce sustainable alternatives. The market remains the most effective means we know of allocating scarce and valuable resources in ways that maximize social outcomes. Rather than subsidizing specific industries, adequately pricing the ‘true’ cost of a product allows for a less distorted competition of ideas in the marketplace that should also generate socially responsible outcomes.

The articles in the two urls below contain examples of firms that are leading the way in this area. The article in the first url details attempts by the apparel industry to incorporate lifecycle product information into all the clothing we buy:

“More than 200 clothing manufacturers and retailers have joined together to create an industry-wide sustainability rating, the Eco Index, which will assess the environmental impact of products along their entire life-cycle chain. … The Eco Index, currently at the “beta” stage of development, provides three types of tools – guidelines, indicators and metrics. These can be used together or separately, and enable any company to participate, whether seasoned in sustainability or not. Each tool assesses a product’s impact within six life-cycle stages: materials; packaging; product manufacturing and assembly; transport and distribution; use and service; and end of life. … The stakeholder engagement process should be complete by the end of 2010, with the formal phase 1 index to launch in early 2011.”

The article in the second url looks at Whole Foods’ attempts to assess and support sustainable seafood products:

“[Whole Foods Market Inc.] on Monday launched a new color-coded rating program — with the help of Monterey Bay Aquarium and Blue Ocean Institute — that measures the environmental impact of its wild-caught seafood. … Similar to a stoplight, seafood is given a green, yellow or red rating. A green rating indicates the species is relatively abundant and is caught in environmentally friendly ways. Yellow means some concerns exist with the species' status or the methods by which it was caught. And a red rating means the species is suffering from overfishing, or the methods used to catch it harm other marine life or habitats. … Whole Foods also announced Monday that it will end sales of red-rated species by Earth Day 2013. The company has already phased out a number of such products.”

It is encouraging to see these firms collaborating on industry-wide standards that move us closer to understanding the holistic impact of our current economic system and business practices. What is not clear (and is not necessarily relevant) is the extent to which consumers want this information and whether they are willing to act on it.

Take care
David


Bill Werther & David Chandler
Strategic Corporate Social Responsibility: Stakeholders in a Global Environment (2e)
© Sage Publications, 2011

Instructor Teaching Site: http://www.sagepub.com/strategiccsr/
The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/



Eco Index: How green are your clothes?

Manufacturers and retailers are developing an ambitious rating system for the ecological impact of their clothes
Jeni Bauser
Ethical Corporate Magazine
October 15, 2010

Whole Foods to label seafood's sustainability
Green, yellow and red stickers to show if food is endangered or overfished
Sarah Skidmore
msnbc.com
September 17, 2010