Strategic CSR - Mining

The article in the url below makes the case for reviving mining in the U.S. for the key raw materials required to transition to a more sustainable energy industry:

"Although America has abundant deposits of many of the critical minerals that go into our vehicles, electronics and buildings, these materials are mostly mined abroad in poorer nations where labor is cheap (or worse, workers are enslaved) and environmental laws are more permissive, rarely enforced or easily sidestepped with bribes."

The argument is that, by outsourcing much of this extraction, we currently focus on poorer societies where the materials can be mined more cheaply, primarily because the standards to do so are so low:

"The decline of domestic mining means that Americans are outsourcing the environmental and social costs of our inexpensive consumer goods to lower-income nations. More than 70 percent of the world's cobalt, sometimes called the blood diamond of electric vehicle batteries, comes from the Democratic Republic of Congo, where child labor and sexual violence are rampant in mines. About half of the world's nickel, another key ingredient in electric vehicle batteries, comes from mines in Indonesia, some of which have wiped out almost 200,000 acres of rainforest amid allegations of operating illegally on Indigenous land."

So, mining domestically would introduce higher standards, by definition; it is also required so that increased supply can match growing demand:

"A United Nations study found that meeting international climate goals by 2030 could require building as many as 80 copper mines, 70 lithium mines and 70 nickel mines to supply the materials for electric vehicles, solar panels and a host of other low-carbon technologies."

And, the article advocates for a consumer-led component to the economic equation, with individual customers willing to pay the (relatively) small premium that domestic production would generate:

"Many of us are already paying more for responsibly sourced goods, such as chocolate and coffee. We should demand the same for our smartphones and batteries. … Although mining will never be zero-impact, it has the potential to be fair and responsible."

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  

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This Dirty Industry Is Better Off Operating in America

By Stephen Lezak

July 28, 2024

The New York Times

Late Edition – Final

SR8

https://www.nytimes.com/2024/07/23/opinion/lithium-copper-minerals-mining.html

 

Strategic CSR - Trees

The article in the url below reports on an encouraging application of science by a U.S.-based nonprofit (World Forest ID) to solve a specific supply chain challenge:

"Scientists are embarking on an effort to keep sanctioned Russian timber out of Europe by mapping the unique chemical fingerprints of trees, a process that could be used to vet corporate supply chains for other banned commodities."

In this case, the technology was used to enforce economic sanctions, but it is a small step to imagine how it could be used to verify the source of other rare and/or protected raw materials:

"The project aims to bring science to bear in a fight by companies and governments to stop illegal wood from seeping into timber supply chains—complex, difficult-to-police networks of logging companies, sawmills, wood manufacturers and traders."

It is encouraging to see that some companies see the potential application:

"Although work on the database is ongoing, furniture giant IKEA has already used it to vet suppliers for sanctioned timber after the war forced it to revamp its supply chain. Belgian authorities have also employed it to seize more than 260 tons of illegally shipped Russian timber."

And, the potential seems clear:

"If scaled up, the project could have broad implications for how companies source a range of other agricultural commodities, such as cotton and cacao, which have been linked to environmental and human rights abuses."

The science, with the aid of artificial intelligence, is logical in its approach:

"World Forest ID currently uses two tests to identify the chemical composition of wood samples. One measures the ratios of stable isotopes, which vary based on factors such as rainfall or temperature. The other test measures trace elements such as magnesium and copper, which vary based on the soils in which trees grow."

The results are encouraging:

"World Forest ID's model identified false origin claims in 40% to 60% of cases. … [Victor Deklerck, World Forest ID's head of science] said the test was designed to be conservative to minimize the chance of incorrectly identifying shipments as illegal."

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/

Science Used to Police Banned Russia Timber

By Dylan Tokar

June 11, 2024

The Wall Street Journal

Late Edition – Final

B1, B4

https://www.wsj.com/articles/keeping-sanctioned-russian-timber-out-of-the-eu-is-tricky-this-nonprofit-has-a-solution-1bf366b0

 

Strategic CSR - Clean tech

The graphic and quotes below were embedded in the April 11, 2024 issue of the Bloomberg Green newsletter, arguing that China's dominance of core technology in the sustainability space is increasing, with rapid investment having "pushed China's share of global production capacity above 80% in 11 clean technology value chain segments." The graphic accompanying the point, generated by BloomberNEF) is compelling:

It is important to note that this is data presented on a selected set of 11 technologies, so is certainly not everything. Nevertheless, the technologies on the list all seem central to any attempt by other countries around the world to develop a more sustainable economy, and with whom many of which China has strained relations (e.g., Strategic CSR – Geopolitics).

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/

Strategic CSR - SBTi

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

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

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

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

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

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

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

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

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

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

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

Take care

David

David Chandler

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

© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 

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

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

Carbon credit chaos

By Alastair Marsh

May 29, 2024

Bloomberg

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

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

By Yusuf Khan

June 15, 2023

The Wall Street Journal

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

 

Strategic CSR - Child labor (II)

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

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

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

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

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

Take care

David

David Chandler

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

© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 

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

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

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

By Hannah Dreier

February 8, 2024

The New York Times

Late Edition – Final

A22

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

 

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

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

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

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

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

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

Why does this still happen?

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

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

Take care

David

David Chandler

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

© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 

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

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

An Industry Paid to Find Child Laborers, Doesn't

By Hannah Dreier

December 31, 2023

The New York Times

Late Edition – Final

p1, 14-15

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

 

Strategic CSR - Diamonds

The article in the url below suggests that artificial (man-made) diamonds are beginning to make serious inroads into the market for natural diamonds:

"More than a third of all engagement rings with center stones purchased last year were created in a lab, according to an online survey of nearly 12,000 U.S. couples. … That's double the number from 2020."

Since the survey data are self-reports, the results might be dismissed by some but, if there is a bias, I would expect it to be in favor of inflated numbers for real diamonds. More important, I think (and missing from the report), is whether it is price or values that is driving demand. A natural diamond takes millions of years to be created and then, of course, needs to be mined under conditions that are often far from ideal. Artificial diamonds, on the other hand, clearly do not take quite so long and are much more accessible (and ethical):

"Man-made diamonds are grown by placing a diamond seed in a sealed chamber with a carbon-containing gas such as methane. The carbon atoms bond like a lattice to the seed, building up a diamond crystal. It takes about 600 hours to grow one carat depending on the method. Their appeal, according to lab-diamond makers, is that they cause less environmental and human damage than mining diamonds from the earth as well as their cheaper price."

As a result, it is assumed, their popularity is spreading:

"It's not just engagement rings. Diamonds grown in a lab accounted for 13.6% of the $88.6 billion in diamond jewelry sold globally in 2022, up from less than 1% in 2015 where they had hovered since the early 2000s."

Specifically, the goal (for supporters) is to eradicate the possibility of an unethical supply chain:

"Proponents of man-made diamonds say growing diamonds in a lab helps stamp out conflict diamonds, or diamonds mined in war-torn regions and used to fund insurgencies. [In response] The mining industry says it traces the origins of diamonds to help stop the flow of conflict diamonds under what is called the Kimberley Process."

But, even if the primary motivating factor is morality (and the environmental angle is interesting), it is not clear there is an easy choice, as the main lobbing group for the diamond industry is getting better at arguing:

"'Consumers are being told that lab-grown diamonds are sustainable and that couldn't be further from the truth,' says David Kellie, CEO of the Natural Diamond Council, a diamond mining trade group. The group began airing videos on social media in April as part of what it calls a 'myth-busting' campaign. According to a new report by the group, more than 60% of lab-grown diamonds are made in China and India, where climate-polluting coal is the major power source. The report also touts efforts by the mining industry to cut carbon emissions and boost the economies of countries with major diamond mines such as Botswana and Namibia."

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/

This Wedding Season, Diamonds Face a Challenge

By Suzanne Kapner

April 29-30, 2023

The Wall Street Journal

Late Edition – Final

B1, B6

https://www.wsj.com/articles/this-wedding-season-diamonds-face-a-challenge-171c9e7

 

Strategic CSR - Shein + Boohoo

Following on from Tuesday's newsletter, what evidence do we have that, given the opportunity, people will choose to do the right thing? The article in the first url below suggests, to the contrary, that they might not, and may even prefer not to. Specifically, the article profiles the company, Shein ("officially pronounced 'she-in,' though often pronounced 'sheen'"), which is described as a "Chinese fast-fashion company" and is becoming very popular in the U.S., its "most valuable market." Shein is becoming so popular that it "recently surpassed Amazon as the most downloaded shopping app in the United States." What consumers are attracted to is the shockingly low prices for most items ("things like $1 daisy earrings, $4 bucket hats, $12 cable-knit crop tops, $13 faux leather baguette bags and $29 neon PVC mule sandals"). What they are willing to ignore, it seems, is the ethical compromises that come with producing reasonable quality goods at those very low prices:

"… as Shein has grown, so have questions about its practices. Shein frequently makes headlines for its controversies, like selling a $2.50 swastika necklace or copying the work of designers. … Shein has also been accused of working with suppliers that violate labor laws, and failing to make necessary disclosures about factory conditions. … Last year, a CBC Marketplace investigation found elevated levels of lead in some Shein products, like a toddler's jacket and tiny purse."

As the article notes, fast fashion raises a number of issues that many consumers prefer to overlook:

"All of this has contributed to Shein becoming an archetype of a certain genre of supercheap clothing companies: It is the leader of a pack of Gen Z-favored brands, like Fashion Nova and Boohoo, accused by critics (including those from Gen Z) of contributing to overconsumption and waste. … Still, many of the videos on social platforms made about Shein … inspire comments raising these issues: How can a $4 top be made to last, so it doesn't end up in a landfill? How can the workers who sewed and shipped that garment be compensated fairly? Yet this hasn't deterred Shein's devotees, many of whom feel they haven't seen enough evidence to stop shopping with the brand."

In the article in the second url below, the influence of social media stars is explored in the context of the fast-fashion company, Boohoo. The article discusses how much influencers can increase sales, while at the same time encouraging the worst excesses of the fashion industry, even when "sustainability" is promised:

"Good news for people who like being lied to and wearing clothes that smell of petrochemicals: Boohoo, a UK-based online fast-fashion brand that has grown quickly in the US, has announced that they will be partnering with Kourtney Kardashian to embark on a 'sustainability journey.'"

The theory:

"The destination is unclear, but the 'journey'' will involve 46 limited-edition pieces of clothing made from 'recycled fibers, traceable cotton, recycled sequins and recycled polyester' as well as 'transparent practices for shoppers who want to learn more about the apparel.'"

And, the reality:

"It's unclear how sustainable any of the pieces in the upcoming collection – which ranges in price from $6 to $100 – actually are. The official press release includes absurdist statements such as '41/45 contain pieces that contain recycled fibres like recycles [sic] cotton' with no information about what percentage of the materials are recycled (Boohoo did not respond to repeated requests for clarification). Although the collection promises to be 'traceable,' only 2 items are made with cotton from CottonConnect, an agricultural project that promotes sustainable cotton farming practices with specific farms."

Ultimately, the underlying problem is that a small effort (even of questionable quality) often then excuses the rest of operations, which remain unhindered by even the promise of change:

"Even if Kardashian's range turns out to be as sustainable as Stella McCartney, her collection makes up less than 0.1% of the clothes available on Boohoo. Her endorsement, however, will help the whole company, including the 99.9% of their far less sustainable clothing."

And, the underlying challenge for the whole industry remains problematic:

"Anyone who says a company like Boohoo can create sustainable clothing is lying. Fast fashion retailers – from Shein and its lead-filled $1 sunglasses to Zara and their $50 polyester cardigans – are predicated on a system of always wanting more that is at odds with the environment."

As I have mentioned before (Strategic CSR – Jeans), sustainability, by definition, is the antithesis of fashion. Whenever the underlying goal is to get people to throw away what they have currently and replace it with something sustainable, there is a significant disconnect in coming to terms with the core problem.

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/

Overlooking Ethical Concerns for a $7 Tube Top

By Jessica Testa

September 1, 2022

The New York Times

Late Edition – Final

D5

https://www.nytimes.com/2022/09/01/style/shein-clothing.html

Kourtney Kardashian wants to make Boohoo's fast-fashion sustainable. Spoiler alert: she can't

By Niloufar Haidari

September 12, 2022

The Guardian

https://www.theguardian.com/fashion/2022/sep/12/kourtney-kardashian-boohoo-fast-fashion-sustainable

Strategic CSR - Mining

I have often thought how strange it is that we occasionally get angry at consumer-facing businesses and hold them to account (inconsistently) for their supply chains, but we are less effective at targeting those B2B firms that make up those supply chains (see also Strategic CSR – Distributors). This is particularly important in extractive industries with firms that, not only can cause harm when their products are consumed (e.g., burning coal), but can also cause harm in the way that they extract those resources. The article in the url below presents an interesting case where a local community tried to do it properly – targeting the mining company (Anglo American) that was extracting copper from their land:

"Deep in a valley, at 3,500 metres in the Andes near Moquegua in southern Peru, giant terraces are being carved from the mountainside. Diggers load loose rock into 320-tonne driverless trucks which carry it to a conveyor belt. They pass by a dam built to hold back the Asana river in case it overflows the tunnel which carries it for almost eight kilometres beneath Quellaveco. This is a new $5.5bn copper mine operated by Anglo American, a London-listed multinational mining company, and part-owned by Mitsubishi of Japan."

And, the attention seems to have generated a response from the company. There is some indication that this story might not be your usual extraction industry disaster:

 

"The diggers and trucks are 'pre-mining,' stripping away surface rock to expose the copper ore below. Nearby, workers are putting the finishing touches to the plant which will extract the metal from its ore. In the next few weeks mining proper will start. It has taken more than a decade to get to this stage. With blanket Wi-Fi as well as its driverless trucks, Quellaveco is perhaps the most technologically advanced mine in Latin America. It is also a test of whether big mining has a future in a country and region in which social conflict threatens to banish extractive industries."

The article contains many examples that suggest this is a genuine attempt by the mining company to retain the support of local communities. The company had to redirect a river so that the water was not polluted, while also securing supply for local farmers:

"Other commitments came from 18 months of talks between the company, local officials and community groups. … Anglo agreed to pay for a $1bn development fund, to be spent over the 30-year life of the mine, and to fund small community projects. Perhaps its most important commitment was to hire local people, many of whom it has trained, and to give opportunities to local suppliers. Of the mine's permanent workforce of 2,500, the company says 71% are from Moquegua and 28% are women (compared with an average of 10% at mines in Peru)."

As the company transitions from construction to operation (which requires far fewer workers), the key is to retain local support. The company seems genuine in its commitment to doing so – the rationalization that is offered is consistent with a strategic CSR approach to business:

"'It's very different from ten or 30 years ago, it's not just about a mining business where you try to be efficient,' says Adolfo Heeren, Anglo American's boss in Peru. 'You have to renew your social license every day.' That costs more upfront. But if it allows continuous operations, it saves money in the long run."

Take care

David

David Chandler

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

© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 

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

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

The wealth of the Andes

May 28, 2022

The Economist

Late Edition – Final

27

https://www.economist.com/the-americas/2022/05/26/a-test-of-whether-big-mining-is-socially-sustainable

 

Strategic CSR - Cobalt

The book review in the url below highlights the challenges we face in moving to an electric future. In short, there are constraints on many fronts. Not only is there ideological resistance and inertia in all aspects of the economy (including capital investments), but there are challenges simply finding and extracting the raw materials we need to effect the change we are (slowly) working towards:

"Why cobalt? Because today's smartphones, laptops, leaf blowers, toys and so much more owe their revolutionary portability to the advent of cobalt-infused lithium batteries. Up until the late 1990s, the uses for cobalt—in magnets, dyes, inks, chemical catalysts and little else—required some 20 kilotons of the mineral a year, a relatively modest figure by mining standards and one that had remained little changed over the previous three decades. Then the first lithium decade vaulted annual cobalt demand to about 60 kilotons."

Not only is it challenging to identify sufficient quantities of cobalt, but most of our known supplies are located in countries with poor labor and environmental laws:

"Three-fourths of that cobalt comes from the Congo, a market share that's more than double OPEC's claim on oil. Now comes the electric vehicle's half-ton battery, each one using thousands of smartphones' worth of minerals. Even at only 10% of global auto sales, electric vehicles have already pushed annual cobalt demand to 140 kilotons; it is expected to exceed 200 kilotons by 2026 as new battery factories come online and will explode from there when proposed EV mandates are supposed to kick in, many within the coming decade."

So, ironically, extracting the materials we need to build an electric future increases the level of environmental pollution and leads to horrendous human suffering:

"The heart of Mr. Kara's mission is to document the use of artisanal mining—that is, human digging and toting by manual, brute force rather than using trucks and backhoes. You're halfway through the book before Mr. Kara's bombshell: The artisanal share of the Congo's output, often dismissed as negligible, may exceed 30%. As the author warns: 'Do not be fooled by the word 'artisanal''—it's far from 'pleasant mining activities conducted by skilled artisans.' In place after place he visited, whether with official escorts or by surreptitious entry, what he saw was 'a hellscape of craters and tunnels, patrolled by maniacs with guns.' It was a 'lunar wasteland,' a 'devastated landscape' that 'resembled a battlefield after an aerial bombardment.'"

It is hard to even begin to imagine the hardships of those who mine this material that we need in order to feel better about the products we purchase and the lifestyle we live:

"The reader senses that the author has been left shell-shocked, not from the aesthetic carnage but from seeing thousands of people mining by hand, hammer and shovel in vast open pits hundreds of feet deep, most of the pits arrayed with hand-dug tunnels. Mr. Kara reports visiting a typical mine where 'more than three thousand women, children, and men shoveled, scraped, and scrounged … under a ferocious sun and a haze of dust.' The book has no photographs, an understandable absence given the risks of using a camera with armed guards everywhere. Instead Mr. Kara captures the impact of artisanal mining through the powerful stories of the miners—men, women and children—that he has gleaned through interviews. It's often hard to read his descriptions of the miners' daily lives, the risks, accidents, promises unfulfilled and, too often, heart-wrenching tales of maimed or dead children."

As the review of the same book (Cobalt Red) in the second url below concludes:

"How is your phone powered? Problematically. … [the author] writes, 'there is no such thing as a clean supply chain of cobalt from the Congo.' … Returning from his travels, [the author] sees Western prosperity with new eyes. 'The world back home no longer makes sense,' he writes. 'Clean air and water feels like a crime.'"

Take care

David

David Chandler

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

© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 

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

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

The Human Price of Cobalt

By Mark P. Mills

February 2, 2023

The Wall Street Journal

Late Edition – Final

A15

https://www.wsj.com/articles/cobalt-red-review-the-human-price-of-cobalt-11675293373

Assault and Batteries

By Matthieu Aikins

January 29, 2023

The New York Times Book Review

Late Edition – Final

16

https://www.nytimes.com/2023/01/23/books/review/cobalt-red-siddharth-kara.html

 

Strategic CSR - Unintended consequences

The article in the url below is interesting because it demonstrates what can happen when good intentions disrupt well-established market practices/solutions:

"When one of the best-known supermarket chains in the U.K. decided to remove plastic from its products, it hadn't anticipated a spike in shoplifting. Yet that is what happened when Iceland Foods Ltd. started selling steak in recyclable paper trays. Some customers bent the pliable containers in half and stuffed them down their trousers, executives said. Such theft wasn't as easy when the steaks came wrapped in more rigid plastic packaging."

Such unintended consequences have arisen at the supermarket (named Iceland), in part, because the company has pledged to remove single-use plastic (e.g., packaging) from "its hundreds of store-brand products" by the end of 2023. This tight, self-imposed deadline has resulted in the implementation of rushed solutions that haven't yet been tested properly:

"Disentangling plastic packaging from food can be exceptionally hard in the best of times. A surge in demand for plastic-wrapped food during the pandemic and recent supply-chain disruptions caused by the war in Ukraine are making this objective even harder. More-expensive paper packaging is proving to be a liability at a time of rampant inflation, particularly because Iceland typically caters to more price-sensitive consumers."

But, aside from cost-related issues, I find the unintended consequences to be far more interesting:

"When Iceland wrapped bananas in paper bands instead of plastic bags, the fruit rotted more quickly or snapped off. When it packed bread in opaque paper bags, sales fell as shoppers balked at buying something they couldn't see. When it punched holes in paper bags filled with potatoes to make the contents more visible, the bags ripped."

Plastic has become as widely-used as it is for a very good reason. Single-use plastic, in particular, is extremely important, especially in any scenario were hygiene (food) or cleanliness (healthcare) is a priority. If there were better options out there, you would think they would be used instead. So, now that we realize the damage plastic is doing, firms are being rushed into optimistic, perhaps reckless deadlines (something that could easily be a metaphor for the whole climate change conversation), without having ready solutions in place. So, the innovation timeline is being forced, with the resulting consequences we are witnessing:

"Plastics and food have a long and complex relationship. After World War II, plastics such as cellophane played a pivotal role in creating the modern grocery store, allowing retailers to bring precut, pre-wrapped meat, fish and produce under one roof and obviating the need for counter-staff at butchers, fishmongers and greengrocers. Concerns about a lack of recycling, litter and greenhouse gas emissions from plastics began swirling in the 1970s, accelerating toward the end of the following decade and picking up momentum again in recent years."

In spite of knowing these negative consequences since "the 1970s," countries like Britain are late to the game in trying to implement change, with all the trial and error consequences we would expect. The popularity of plastic today, merely increases the scale at which change must be introduced. The article, therefore, is not a critique of Iceland, which is actually being more creative than most in terms of trying to find a solution, quickly; more, it is reflective of the scale of the challenge and demonstrates how unprepared we are currently to meet it:

"Scrapping plastic is particularly tricky for a number of products Iceland offers. Bacon that isn't wrapped in plastic quickly discolors, salad leaves wilt and unwrapped cucumbers rot more quickly. When Iceland first replaced the roughly 10 million plastic bags it used for bunches of bananas with paper bands, the switch lasted just a couple of months. The bananas shrank 20%, snapped off and rotted more quickly. The grocer scrapped a separate trial selling loose bananas and other produce after customers found it inconvenient and sales dropped 30%. … The greasier the product, the more plastic it needs to stop the grease seeping out of the pack. A paper bag for frozen shrimp needs a thinner coating than one for chicken nuggets, for instance."

Take care

David

David Chandler

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

© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 

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

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

The Price of No Plastic? Stolen Steak

By Saabira Chaudhuri

June 18-19, 2022

The Wall Street Journal

Late Edition – Final

B6

https://www.wsj.com/articles/one-grocer-wanted-to-give-up-plastic-it-got-rotting-bananas-11655482334

 

Strategic CSR - Supply chains

The article in the url below demonstrates the challenges associated with legislation that is passed with good intention, but not much forethought:

"The law, which went into effect on Tuesday, bars products from entering the United States if they have any links to Xinjiang, the far-western region where the Chinese authorities have carried out an extensive crackdown on Uyghur Muslims and other ethnic minorities."

The impact will be broad:

"That could affect a wide range of products, including those using any raw materials from Xinjiang or with a connection to the type of Chinese labor and poverty alleviation programs the U.S. government has deemed coercive — even if the finished product used just a tiny amount of material from Xinjiang somewhere along its journey."

The main trouble is that the burden has been placed on companies to demonstrate a negative:

"The law, called the Uyghur Forced Labor Prevention Act, presumes that all of these goods are made with forced labor, and stops them at the U.S. border, until importers can produce evidence that their supply chains do not touch on Xinjiang, or involve slavery or coercive practices."

The consequences, as a result, are dramatic:

"Evan Smith, the chief executive at the supply chain technology company Altana AI, said his company calculated that roughly a million companies globally would be subject to enforcement action under the full letter of the law, out of about 10 million businesses worldwide that are buying, selling or manufacturing physical things. 'This is not like a 'picking needles out of a haystack' problem,' he said. 'This is touching a meaningful percentage of all of the world's everyday goods.'"

Of course, impactful legislation is not the concern; the issue is whether the disruption is worth it. The forced reorientation of the global supply chain is not only expensive, but will have unintended consequences, both good and bad (e.g., on employment, prices, etc.). The government is an important stakeholder of the firm, but it is not the only stakeholder. The danger is, if not all stakeholders are onboard with this action, the disruption will occur to no discernable end or improved outcome:

"'The public is not prepared for what's going to happen,' said Alan Bersin, a former commissioner of U.S. Customs and Border Protection who is now the executive chairman at Altana AI. 'The impact of this on the global economy, and on the U.S. economy, is measured in the many billions of dollars, not in the millions of dollars.'"

The complexity of the global supply chain is immense – something it seems that politicians reacting to emotional issues appear not to comprehend:

"At the heart of the problem is the complexity and opacity of the supply chains that run through China, the world's largest manufacturing hub. Goods often pass through many layers of companies as they make their way from fields, mines and factories to a warehouse or a store shelf. … Take carmakers, who may need to procure thousands of components, like semiconductors, aluminum, glass, engines and seat fabric. The average carmaker has about 250 tier-one suppliers but exposure to 18,000 other companies across its full supply chain, according to research by McKinsey & Company, the consultancy firm."

Whether we get involved in such issues, attempting to shape outcomes, is not the issue. What is at issue is the extent to which such decisions are informed, both by the facts at hand and the support of the stakeholders who are affected. Decisions taken in the abstract, or intended only to add value to a minority of stakeholders, usually result in sub-optimal outcomes.

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/

Law Fighting Forced Labor to Hit Trade

By Ana Swanson

June 22, 2022

The New York Times

Late Edition – Final

B1, B5

https://www.nytimes.com/2022/06/22/us/politics/xinjiang-uyghur-forced-labor-law.html

 

Strategic CSR - Jeans

The article in the url below is a review of a new book, Unraveled, by Maxine Bédat. The book highlights the devastating amount of waste (and overall harm) generated by the global clothing and fast fashion industry. This particular book explores the industry's supply chain using the example of a pair of jeans – how they are made and find their way to consumers across the world. As the review notes, however, the punchline is not necessarily news – there is now a growing library of books that take a similar approach to highlighting the mess we are getting ourselves into:

"In [highlighting 'the pretty awful reality' of the global fashion supply chain, the book] joins Lucy Siegle's To Die For: Is Fashion Wearing Out the World?, Elizabeth Cline's Overdressed: The Shockingly High Cost of Cheap Fashion and, most recently, Dana Thomas's Fashionopolis: The Price of Fast Fashion and the Future of Clothes (along with documentaries like The True Cost)."

Beyond the great harms that are identified in the review, however, it is the final four paragraphs that caught my attention. The writing is tight and the points damning, but the idea that our concern about sustainability has become part of the problem is what I took away:

"Because now, much in the way a sale price tag can seduce us into thinking we should buy a garment we might otherwise pass up, the fact that a dress is made from, say, recycled polyester or orange peel has become part of its allure.

Just as the opportunity to recycle an old garment becomes part of the rationale for replacing it, because in doing so you will not be adding to your closet — even though, as Ms. Bédat makes clear, you will still be adding to the volume of clothes in the world, which adds to the problem. Personal math and public math don't always equate.

And one of the unforeseen, ironic results of the genuinely valuable conversation and consciousness raising that books like 'Unraveled' have spurred is that sustainability itself has been transformed into a selling point.

That may be the most horrifying development of all."

To me, this speaks to the superficiality with which we continue to approach the core problem. Our economic system is unsustainable, so what are we going to do about it? 'Buy more stuff,' even if it is more sustainably produced than before (while still being fundamentally unsustainable), is clearly not the answer. The idea of 'sustainability' can only be 'fashionable' in a society that has completely missed the point. If that is our proposed solution to this existential problem, then all the issues the books quoted above have raised in recent years have clearly fell largely on deaf ears.

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/

Jeans Are the Villain of a Horror Story

By Vanessa Friedman

June 3, 2021

The New York Times

Late Edition – Final

D3

https://www.nytimes.com/2021/06/03/style/jeans-fashion-sustainability-.html

 

Strategic CSR - Food waste

Following on from Tuesday's newsletter, the article in the url below profiles the CEO of Apeel – James Rogers, who was a Ph.D. student in materials science when he founded his company dedicated to the reduction of food waste in food supply chains around the world:

"Mr. Rogers … company, Apeel, applies an edible, plant-based coating to fruits and vegetables that extends their shelf life without refrigeration. Apeel-treated avocados, limes, apples and cucumbers are already in some of the largest grocery chains in the U.S. and Europe. The startup now plans to expand into markets in Asia, Africa and Latin America, thanks to a $30 million investment from the International Finance Corp., the World Bank's private-sector arm. The company Mr. Rogers launched in 2012 as a Ph.D. student is now valued at more than $1 billion."

It is clear that there will be demand for his services for many years to come, since there is currently no shortage of food waste:

"'Perishability governs every element of the food system,' Mr. Rogers says. Fruits and vegetables start to lose their value once they are picked, and producers, suppliers, retailers and consumers all race to get those berries and leaves into someone's mouth before they spoil. This urgency forces trade-offs. Most retailers arrange produce in unrefrigerated displays, which sells food faster but ensures that everything rots sooner. … Despite this haste, there is plenty of waste. More than a third of the food produced today is never eaten, at a global cost of $2.6 trillion a year, according to the U.N.'s Food and Agriculture Organization."

I found Rogers' description of how he problematized the global food supply chain fascinating. Specifically, he talks in terms of the "time value of food" in an attempt to answer the question, "Why do so many people go hungry when there is so much food in the world?":

"The answer, he discovered, is that food is an intermittent asset ('Either it's in season and you have more than you know what to do with, or it's out of season and there's not enough'), and most farmers lack the time and wherewithal to bring their harvest to market. If produce took longer to spoil, poor farmers could sell their wares to distant customers. But how, he wondered, could he 'create more time for food?'"

More specifically:

"He began to study the differences between foods that 'had time,' such as lemons and oranges, and those that didn't, like strawberries and cucumbers. He discovered that the exteriors of both sorts of fruit are composed of the same molecules, just arranged differently. He hoped to use the lessons of lemon peels to sustain strawberries, but he wasn't sure how. To move forward, he needed money."

This is where it gets a little technical:

"All fruits and vegetables spoil by the same process—water goes out, oxygen comes in—but creating an invisible barrier that locks in moisture requires a different formula for each one. Using the lipids and glycerolipids of existing peels, seeds and pulp (i.e., things we already eat), Apeel has created a safe, flavorless, FDA-approved solution for dozens of products, which it applies while wet to the surface of harvested produce on specially outfitted conveyor belts just before everything is packaged for export. This invisible 'peel' can double or triple the lifespan of a product, the firm says."

The next task was to convince producers and retailers that it is in their interests to increase the shelf lives of their food products:

"But adding shelf life to produce is one thing; convincing suppliers and retailers that this time has value is another. 'What we found was there wasn't a market for longer-lasting produce,' Mr. Rogers says with a chuckle. Most businesses told him that perishability kept their customer coming back for more."

Then, he had to wrap his head around the complexity of the global supply chain for food:

"He has discovered, for example, that every fruit and vegetable has its own idiosyncratic supply chain, and Apeel works to pinpoint where time has the most value. He has also learned that delivering avocados to Europeans throughout the year means working with lots of different countries (Chile, Israel, Morocco, South Africa, etc.), each of which has its own unique supply chain, regulatory hurdles and distinct avocado."

The key to his business model (and Apeel is now valued at more than $1 billion) is to differentiate on quality and efficiency, and purpose:

"Because these deals save retailers money, Apeel products aren't pricier than more perishable alternatives, Mr. Rogers says: 'We're saying when you purchase this item for the same or lower cost, you are voting for a food system that will look after more people and our planet.'"

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/

James Rogers

By Emily Bobrow

January 9-10, 2021

The Wall Street Journal

Late Edition – Final

C6

https://www.wsj.com/articles/apeel-ceo-james-rogers-wants-to-extend-the-shelf-life-of-your-avocados-and-oranges-11610128693