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.

Monday, October 17, 2011

Strategic CSR - Greenpeace

Thomas Friedman of The New York Times has been writing for a long time about the need to act in order to avoid an environmental catastrophe. Given the absence of change in public policy that his well-argued articles have generated, it is amazing that he finds the energy to keep repeating the same points. He is correct; but not enough people with the power to change things are listening. Nevertheless, continue writing he does, although with growing exasperation and increasingly dramatic rhetoric:

“You really do have to wonder whether a few years from now we’ll look back at the first decade of the 21st century … and ask ourselves: What were we thinking? How did we not panic when the evidence was so obvious that we’d crossed some growth/climate/natural resource/population redlines all at once?”

In the article in the url below, Friedman interviews Paul Gilding who used to be a Director of Greenpeace, but now works independently advocating for change in environmental policy around the world. He has recently published a new book, ‘The Great Disruption: Why the Climate Crisis Will Bring on the End of Shopping and the Birth of a New World’ (http://paulgilding.com/the-great-disruption).

The article is good (as always), but there were a couple of quotes that caught my eye and, I think, place the scale and urgency of the problem in some perspective:

“‘If you cut down more trees than you grow, you run out of trees,’ writes Gilding. ‘If you put additional nitrogen into a water system, you change the type and quantity of life that water can support. If you thicken the Earth’s CO2 blanket, the Earth gets warmer. If you do all these and many more things at once, you change the way the whole system of planet Earth behaves, with social, economic, and life support impacts. This is not speculation; this is high school science.’”
Posted by David Chandler at 7:25 AM

Friday, October 14, 2011

Strategic CSR - Executive Compensation

The article in the url below presents an enlightening perspective on reforms designed to allow shareholders to vote on executive compensation:

“Congress gave shareholders a new "say on pay" over executive compensation. And the returns are in: At 98.5% of companies, the answer was yes. Of 2532 companies reporting, shareholders at 39 of them rejected executive pay plans, according to Mark Borges, a principal at executive pay consultancy Compensia Inc. The tally, which includes Hewlett-Packard Co. and Stanley Black & Decker Inc., was roughly in line with expectations.”

The article makes an interesting comment on the value of shareholder/stakeholder involvement in active corporate governance. Either existing shareholders do not think there is a problem or sufficient numbers of shareholders that do think there is a problem are not engaging.

Either way, the result is not particularly encouraging (even though the votes are non-binding!!).
Posted by David Chandler at 7:26 AM

Wednesday, October 12, 2011

Strategic CSR - Death

In the aftermath of Steve Jobs’ death, I was prompted to watch his 2005 commencement address to the graduating class at Stanford (http://www.youtube.com/watch?v=UF8uR6Z6KLc). The speech is good (not great), but is remarkable for his views on death, which are summarized in the article in the url below:

“Jobs reflected at length on the undesirability of death from the individual point of view, and the usefulness of it from nature's point of view. He offered no comfort. … Jobs made it clear that he did not welcome death, but also that life could be more interesting knowing that death would be coming.”

In short, Jobs made the argument that the best way to ensure you live life to the full is to appreciate that your time is short and should not be wasted. As Jobs said to Stanford’s 2005 graduating class:

"No one wants to die. Even people who want to go to heaven don't want to die to get there. And yet death is the destination we all share. No one has ever escaped it. And that is as it should be, because death is very likely the single best invention of life. It's life's change agent; it clears out the old to make way for the new. Right now, the new is you. But someday, not too long from now, you will gradually become the old and be cleared away. Sorry to be so dramatic, but it's quite true. Your time is limited, so don't waste it living someone else's life. Don't be trapped by dogma, which is living with the results of other people's thinking. Don't let the noise of others' opinions drown out your own inner voice, heart and intuition. They somehow already know what you truly want to become."

The comments reminded me of Joseph Schumpeter’s work on creative destruction—we benefit when the weakest firms are replaced by new, innovative firms. In a similar way, Jobs was arguing that it is new life that innovates more readily than those who are older and, perhaps, more set in their ways. Jobs makes no mention of the value of wisdom and experience over youth and energy, but his point was clear and powerful, not least because he was willing to articulate it.

I introduce these ideas to the Newsletter because I think they are relevant to the CSR debate. Death is clearly a personal event and matters to each of us individually and to those who are closest to us. Unless you are someone like Steve Jobs, however, your death is unlikely to matter more broadly. The predominant view of death from a personal perspective reflects the emphasis we place on the individual at the expense of the societal—a shift that occurred around the middle of the twentieth century. Today, we care more about ourselves and less about society, more about our rights and less about our responsibilities, more about our wellbeing and less about the impact the pursuit of that wellbeing may have on others. It is not clear we are individually better off as a result of this shift, but society suffers and ideas, such as CSR, face greater resistance.
Posted by David Chandler at 7:37 AM

Monday, October 10, 2011

Strategic CSR - Puma

The article in the url below by Mallen Baker (Foreword, pxvii) highlights the futility of relying solely on quantitative metrics to capture a firm’s CSR performance. The comment was initially prompted by a BBC News story (http://www.bbc.co.uk/news/business-13410397), which reported that Puma was the “first major corporation to publish its environmental impact costs”:

“The combined cost of the carbon PUMA emitted and water it used in 2010 was 94.4m euros.”

Baker quickly deconstructs the figure by questioning the assumptions that were necessary to generate such a number that is supposed to represent the environmental damage done by Puma’s operations:

“Let's suppose changes in average world temperature lead to the extinction of, let's say Blue Whales, and an obscure currently undiscovered insect in the Amazon. What valuation would we place on the Blue Whale, and how would we calculate it? On the potential economic value of products that might be extracted from it? On the basis of what someone would be prepared to pay for it's existence to be preserved? And what about the insect we never even heard of? Suppose it might hold the secret of a new pharmaceutical discovery? Or then again, it might not.”

His conclusion, which it is difficult to disagree with, is:

“So the figures are bogus. Unquantifiable. Why would the BBC cover such a story? Oh, yes, that's right. Because the figures have been produced by PwC amongst others. The magical power of auditors to give credibility to numbers.”

Additional comment by Toby Webb (of Ethical Corporation Magazine) welcoming Puma’s report can be found at: http://ethicalcorp.blogspot.com/2011/05/well-done-puma-some-serious-research-on.html

In spite of the futility involved in this exercise to measure perfectly a firm’s CSR/sustainability profile, does that mean we have to throw our hands up in the air and surrender, returning to moral/ethical arguments designed to persuade executives to ‘do the right thing’?

Baker’s point that, as a society, we place great faith in the face-value of numbers (and are less likely to question the underlying methodology) provides the ammunition he needs to deconstruct the figure Puma arrives at; it also, however, provides the logic for continuing the pursuit of effective metrics for measuring CSR activity.

To the extent that we can arrive at a standardized way of measuring what we agree should be measured, then we will be able to compare one firm’s activity with another’s. Whether those figures are 100 percent accurate is less important than whether any biases are applied equally to all firms. So many of our measurements involve subjective interpretations and assumptions, but have become accepted as objective statements of fact (albeit socially constructed). Placing a value on the extinction of the Blue Whale versus the potential damage of an unrealized pharmaceutical discovery will always involve some element of subjectivity (and, therefore, be open to contestation).

There is a great deal of value, however, in identifying a relative measure of which firms are better or worse performers. This speaks to continued investigation in this difficult area and the application of standardized measures across all firms. As Baker concludes:

“… the point is not the answer – it is that you haven't sufficiently well-defined the question.”

The work that Walmart (and other retailers) is doing to create standardized “eco-labels” across all its products is important and carries the potential to change the game in this area (see: http://www.ecoindexbeta.org/ and http://earth911.com/news/2011/03/01/nike-walmart-target-other-brands-launch-eco-clothing-index/).
Posted by David Chandler at 7:38 AM

Friday, October 7, 2011

Strategic CSR - Zappos

Over the summer, I saw the CEO of Zappos, Tony Hsieh, interview on The Colbert Report (http://www.colbertnation.com/the-colbert-report-videos/393612/august-01-2011/tony-hsieh).

He talked about Zappos’ core values, so I looked them up (http://about.zappos.com/our-unique-culture/zappos-core-values):

  1. Deliver WOW Through Service
  2. Embrace and Drive Change
  3. Create Fun and A Little Weirdness
  4. Be Adventurous, Creative, and Open-Minded
  5. Pursue Growth and Learning
  6. Build Open and Honest Relationships With Communication
  7. Build a Positive Team and Family Spirit
  8. Do More With Less
  9. Be Passionate and Determined
  10. Be Humble

I have long been interested in Zappos (see CSR Newsletter: October 6, 2008, http://strategiccsr-sage.blogspot.com/search/label/Zappos). Partly this is because my wife has told me about the firm’s phenomenal customer service, but also because Zappos offers its new employees $2,000  to leave the firm after they have finished their orientation training (http://www.businessweek.com/smallbiz/content/sep2008/sb20080916_288698.htm, previously, the figure was $1,000). The idea is that those who take the money are not that committed to the firm and would not make good colleagues, whereas those who stay are likely to be more committed.

The impression created is a very positive one (i.e., the values seem genuine). Zappos is a great place to buy from and appears to be a good place to work. Hopefully, they will continue to be successful.

Have a good weekend
David

Bill Werther & David Chandler
Strategic Corporate Social Responsibility: Stakeholders in a Global Environment (2e)
© Sage Publications, 2011
http://www.sagepub.com/strategiccsr2e/

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

Posted by David Chandler at 7:26 AM

Wednesday, October 5, 2011

Strategic CSR - Localism

The concept of “localism” refers to the process by which decision-making power over local government issues is devolved to the citizens who live in the area and are most affected by the outcomes. The article in the url below reports on a “localism bill’ that was introduced in the UK Parliament at the end of 2010 and represents “the biggest upheaval in the English and Welsh planning system in more than 60 years”:

“In essence it will mean communities are able to plan where they most want to see new homes and businesses. There will also be a right to bid to run public services. So instead of losing amenities that play a vital role in the community, such as meeting rooms, swimming pools, village shops, markets or pubs, the bill will give community groups a right to express an interest in running those local services.”

In particular:

“The government has set up a pilot scheme in which 17 communities across the UK – Neighbourhood Planning Front Runners – will receive £20,000 each to test radical new rights to decide what gets built, where and what it should look like.”

In terms of converting ideas into policies:

“If the communities’ proposals meet certain basic criteria, do not cut across the local authority’s own policies and are cleared by a local authority inspector, a referendum (paid for and administered by the local authority) must then be held. If the majority votes in favour then the local authority must make the plan.”

The bill is on schedule to be passed into law by the end of 2011 (http://services.parliament.uk/bills/2010-11/localism.html) and “should come into effect on April 6 2012.”
Posted by David Chandler at 7:31 AM

Monday, October 3, 2011

Strategic CSR - Investors vs. Speculators

If you haven’t seen it yet, this YouTube video is compelling TV:

http://www.youtube.com/watch?v=aC19fEqR5bA

The video is a BBC interview with Alessio Rastani, an investor who presents a starkly honest perspective on the Euro zone economic crisis from his view as someone whose job it is to prosper from such events.

As explained in the article in the url below:

“Wall Street now has its equivalent of a reality TV star. A clip from the BBC of a self-described trader admitting to dreaming of financial doom as a money spinner has spread like wildfire over the Internet. The would-be Gordon Gekko doesn’t work for a Wall Street firm, but his vulgar amorality offers a description of trading that has struck a chord with a public smoldering over bank bailouts. Alessio Rastani, an ersatz trader, wasn’t a big name in finance. He was nobody until this week. Still, he has some claim to represent the primitive id of traders everywhere. His obvious indifference to the human suffering caused by financial collapses and economic downturns — in this case the crisis facing European nations — seemingly shocked the public, not to mention the BBC anchors who let him rant ad nauseam.”

The disconnect between the core purpose of the stockmarket (a vehicle for firms to raise capital) and investors today (who act more like gamblers) is undermining much of the good work being done within CSR (The Shareholder Shift—From Investor to Speculator, pp. 44-46). CEOs and executives who recognize the potential of for-profit firms to be the core of the solution, rather than the problem, are constrained in their ability to act in the long-term interests of their organizations and respond to the demands of a broad base of stakeholder groups. Understanding that we all choose which jobs/careers we do and whether we decide to act in the broader, societal interest or our own narrow, short term interest is essential to determining the future society we will create.

Take care
David

Bill Werther & David Chandler
Strategic Corporate Social Responsibility: Stakeholders in a Global Environment (2e)
© Sage Publications, 2011
http://www.sagepub.com/strategiccsr2e/


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


A reality star in trading
Reuters Breaking News
September 30, 2011
The New York Times
B2
http://www.nytimes.com/2011/09/30/business/alessio-rastani-a-reality-star-in-trading.html
Posted by David Chandler at 7:23 AM

Friday, September 30, 2011

Strategic CSR - CSR Jobs

The article in the url below contains some good employment news, especially in terms of CSR jobs:

“In the past two years, the number of online job postings containing the keyword "sustainability" has more than quadrupled to 8,245 in May, according to Indeed.com, which aggregates online job postings. The number containing "wind" and "solar" more than doubled in the same time period.”

This information is portrayed graphically in the article and demonstrates strong growth:

http://si.wsj.net/public/resources/images/MK-BN409A_GREEN_NS_20110710182408.jpg

The important question, of course, is: Why is this happening?

One explanation is that it is happening because firms are convinced they are able to better manage risk and achieve lower costs if they implement CSR/sustainability more substantively.

An alternative explanation is that, as general awareness of CSR/sustainability issues spread, firms feel the need to be seen to be acting in this respect. During an economic recession, the most cost efficient way of doing this (without substantially altering operations) is to appoint a figurehead to create the impression of action among the firm’s external stakeholders.

Both motivations produce the same result (more sustainability officers being hired), but with very different consequences for firm operations. The article presents multiple examples that suggests the changes are meaningful in some firms that are beginning to establish strong CSR track-records:

“In May, Coca-Cola Co. appointed a new chief sustainability officer and created an office of sustainability, tasked with overseeing the company's efforts around areas such as recycling, water management and climate protection. In the past two years, Coca-Cola accelerated its hiring related to green jobs across functions including sustainable sourcing of ingredients and water efficiency.”

As the article notes, however, another explanation is that $100 billion of the federal government’s $800 billion stimulus package was “devoted to green-related projects.”

Have a good weekend.
David

Bill Werther & David Chandler
Strategic Corporate Social Responsibility: Stakeholders in a Global Environment (2e)
© Sage Publications, 2011
http://www.sagepub.com/strategiccsr2e/

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


Sustainability Jobs Get Green Light at Large Firms
By Joe Light
July 12, 2011
The Wall Street Journal
B5
http://online.wsj.com/article/SB10001424052702304793504576434301780569100.html
Posted by David Chandler at 7:21 AM

Wednesday, September 28, 2011

Strategic CSR - Adam Smith

The article in the url below is a review of a book titled SuperCooperators: Altruism, Evolution, and Why We Need Each Other to Succeed. The review is by David Willetts, currently Britain’s Minister for Universities and Science, but someone who rose through the political ranks via Margaret Thatcher’s policy unit when she was Prime Minister.

Essentially, Willetts is using the review to advocate on behalf of the current UK Prime Minister’s push for a “Big Society,” an idea which softens the right-wing emphasis on the preeminence of markets by incorporating the importance of the social relations in which we are all embedded and rely on (think George W. Bush’s “compassionate conservatism” or a 21st century version of George H.W. Bush’s “1,000 points of light”).

Rather than summarize the book’s (and review’s) arguments, which are complex (focusing on the “nexus of evolutionary biology, game theory, and neuroscience”), I quote the first paragraph as the framing of the article and encourage all who are interested to read further:

“Adam Smith’s Wealth of Nations outlines the logic of modern capitalism; a world of competition in which benevolence is irrelevant. But in The Theory of Moral Sentiments he gave an account of morality resting on empathy and conscience as an impartial spectator observing our actions. The Adam Smith problem – how to reconcile these two great books – is also the challenge of how to order a society in which competition and ethical sensibility are combined.”
Posted by David Chandler at 7:23 AM

Monday, September 26, 2011

Strategic CSR - Human Rights

In case you missed it over the summer, in June, the United Nations announced a set of guiding principles designed to avoid human rights abuses involving businesses.

Comment on the UN report can be found here: http://ethicalcorp.blogspot.com/2011/06/business-and-human-rights-now-it-gets.html

The UN’s press release can be found here: http://www.business-humanrights.org/media/documents/ruggie/ruggie-guiding-principles-endorsed-16-jun-2011.pdf

And, the report itself can be found here: http://www.ohchr.org/documents/issues/business/A.HRC.17.31.pdf

In particular, the guiding principles are designed to:

“…  provide--for the first time--a global standard for preventing and addressing the risk of adverse impacts on human rights linked to business activity.”

The principles are designed around three pillars that are intended to act in concert in order to protect basic human rights:

“The first is the State duty to protect against human rights abuses by third parties, including business enterprises, through appropriate policies, regulation, and adjudication. The second is the corporate responsibility to respect human rights, which means that business enterprises should act with due diligence to avoid infringing on the rights of others and to address adverse impacts with which they are involved. The third is the need for greater access by victims to effective remedy, both judicial and non-judicial. Each pillar is an essential component in an inter-related and dynamic system of preventative and remedial measures: the State duty to protect because it lies at the very core of the international human rights regime; the corporate responsibility to respect because it is the basic expectation society has of business in relation to human rights; and access to remedy because even the most concerted efforts cannot prevent all abuse.”

Immediate criticism of the principles, however, centered around the lack of accountability for states and firms that sign up to the framework (for similar criticisms of the UN Global Compact, see: http://www.corpwatch.org/article.php?id=14549). Without a supranational entity with powers to enforce the principles and inspect signatories to ensure compliance, the potential for greenwash is great. In spite of these concerns, Tony Webb from Ethical Corporation Magazine is more optimistic, claiming the presence of a framework provides the groundwork for a standardized approach to this issue across firms and national boundaries:

“Despite the shortcomings of the UN Human Rights Council's proposed actions, the completion of John Ruggie's work is surely one of the most important milestones in the history of the field of corporate responsibility.”

Take care
David

Bill Werther & David Chandler
Strategic Corporate Social Responsibility: Stakeholders in a Global Environment (2e)
© Sage Publications, 2011
http://www.sagepub.com/strategiccsr2e/

Instructor Teaching Site: http://www.sagepub.com/strategiccsr/
The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/
Posted by David Chandler at 8:24 AM

Friday, September 23, 2011

Strategic CSR - Voluntary vs. Mandatory

The article in the url below focuses on the value of behavioral explanations of human behavior—i.e., explaining behavior in terms of empirical examination rather than theoretical assumptions. I thought it would be interesting for the Newsletter list because the arguments demonstrate how human action can be shaped dramatically by applying this knowledge to public policy (Chapter 8, Issues: Compliance, p310):

“When you renew your driver’s license, you have a chance to enroll in an organ donation program. In countries like Germany and the U.S., you have to check a box if you want to opt in. Roughly 14 percent of people do. But behavioral scientists have discovered that how you set the defaults is really important. So in other countries, like Poland or France, you have to check a box if you want to opt out. In these countries, more than 90 percent of people participate.”

Using this approach is often an effective way of achieving socially beneficial outcomes, while retaining the individual choice that is an essential component of an open society.
Posted by David Chandler at 7:32 AM

Wednesday, September 21, 2011

Strategic CSR - M&S

Over the summer, I read about a great idea by Marks & Spencer (M&S) that is called “Clothes Exchange.” The policy, which is a partnership developed in connection with the UK charity, Oxfam, is described on M&S’s website as:

“…the biggest programme in the UK to encourage consumers to recycle their clothes.”

The idea makes good business sense, while also helping the firm meet its aggressive “Plan A” goals (Case-studies: Primark vs. M&S, p198).

First, the socially-responsible benefit comes from encouraging more people to donate their old clothes to charity, rather than throwing them away (which, M&S claims, happens in 80% of cases currently). M&S’s solution, via the three-year old Clothes Exchange, is to “pay people to recycle”:

“Anyone who heads down to an Oxfam store with a bag of unwanted clothes gets a £5 shopping voucher. The idea has been a roaring success with us, the consuming public. Oxfam has collected over seven million garments – that's an item from almost one in every eight UK residents.”

Second, the business benefit comes from ensuring that the vouchers that people receive from Oxfam are spent at M&S, but in a way that generates additional business that may otherwise have gone to the firm’s competitors:

“There are two conditions to the scheme. First, at least one of the recycled items must be an M&S product. Second, the £5 can only be used against purchases in M&S of £35 or over. Both make eminent sense.”

The result is that M&S is able to reduce its environmental footprint (reducing waste and used landfill space), while supporting one of the UK’s most popular charities in its goal to reduce poverty, while also generating increased custom in its stores:

“Oxfam is in the business of reducing poverty. More clothing donations means more funds to do just that. M&S is in the business of making profits. Persuading people to come into its stores and spend is therefore fundamental. A voucher helps towards that. Consumers feel happy (they’ve collectively pocketed vouchers worth over £7.5 million so far), as does M&S (whose tills are busier).”

Ultimately, the plan is altering consumer behavior, which is essential if meaningful, lasting change is to be achieved:

“Companies can’t force us to ‘do the right thing’. But they can present us with options that take the hassle out of doing what – in our more principled moments – we know to be right.”

For more information about the M&S/Oxfam partnership, see: http://plana.marksandspencer.com/about/partnerships/oxfam%20
For more information about M&S’s Plan A, see: http://plana.marksandspencer.com/
Posted by David Chandler at 7:30 AM
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