Strategic CSR - Recycling

The article in the url below lays out in detail the deteriorating situation in the recycling industry:

 

"Prices for scrap paper and plastic have collapsed, leading local officials across the [U.S.] to charge residents more to collect recyclables and send some to landfills. Used newspapers, cardboard boxes and plastic bottles are piling up at plants that can't make a profit processing them for export or domestic markets."

 

The extent of the problem is illustrated in the chart accompanying the story, which shows the dramatically decreasing average prices for recycled "old cardboard" and "mixed paper" since the beginning of 2017:

 

 

This situation has arisen due largely to two driving forces: First, ironically, is the rising popularity of recycling. As cities and counties have moved to expand their recycling in an effort to reduce the amount of waste being redirected to landfills, the quality of that recycling material has decreased. That is, the waste has become 'contaminated':

 

"U.S. recycling programs took off in the 1990s as calls to bury less trash in landfills coincided with China's demand for materials such as corrugated cardboard to feed its economic boom. Shipping lines eagerly filled containers that had brought manufactured goods to the U.S. with paper, scrap metal and plastic bottles for the return trip to China. As cities aggressively expanded recycling programs to keep more discarded household items out of landfills, the purity of U.S. scrap deteriorated as more trash infiltrated the recyclables. Discarded food, liquid-soaked paper and other contaminants recently accounted for as much as 20% of the material shipped to China, according to Waste Management Inc.'s estimates, double from five years ago."

 

Second, and more dramatically, is the action taken by the Chinese government at the start of 2018 to limit the amount of recycling waste being imported into their country:

 

"The tedious and sometimes dangerous work of separating out that detritus at processing plants in China prompted officials there to slash the contaminants limit this year to 0.5%. … The changes have effectively cut off exports from the U.S., the world's largest generator of scrap paper and plastic."

 

The extent of the impact of this decision is illustrated by the second chart accompanying the article, which shows the large percentage of all exported waste that was previously exported to China:

 

 

The combined effect of these two drivers is to place recycling in the U.S. in grave danger. We have to rethink our approach to recycling on a community-wide basis or the incentives to recycle our waste will gradually disappear:

 

"The waste-management authority in Lancaster County this spring more than doubled the charge per ton that residential trash collectors must pay to deposit recyclables at its transfer station, starting June 1. … The additional transfer-station proceeds will help offset a $40-a-ton fee that the authority will start paying this summer to a company to process the county's recyclables. Before China raised its quality standards at the beginning of this year, that company was paying Lancaster County $4 for every ton of recyclables."

 

The economics of the present system simply no longer make any sense:

 

"China stopped taking shipments of U.S. mixed paper and mixed plastic in January. … mixed-paper shipments to other Asian countries now fetch $5 a ton, down from as much as $150 last year. Other buyers such as Vietnam and India have been flooded with scrap paper and plastic that would have been sold to China in years past. … Sacramento County, which collects trash and recyclables from 151,000 homes, used to earn $1.2 million a year selling the scrap to Waste Management and another processor from scrap. Now, the county is paying what will amount to about $1 million a year, or roughly $35 a ton, to defray the processors' costs."

 

Ultimately, at a minimum, we are going to have to separate our recycling before it is picked-up (as the citizens of many European countries already do), with recyclers refusing to pick-up waste that is not pre-separated or cities/counties fining residents for failing to do so:

 

"Some recyclers said residents and municipalities need to give up the "single-stream" approach of lumping used paper and cardboard together with glass, cans and plastic in one collection truck. … Collecting paper separately would make curbside recycling service more expensive but cut down on contamination."

 

Take care

David

 

David Chandler

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

© Sage Publications, 2017

 

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

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

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

 

 

Recycling Firms Hit by Crushing Economics

By Bob Tita

May 12, 2018

The Wall Street Journal

Late Edition – Final

B1

https://www.wsj.com/articles/recycling-once-embraced-by-businesses-and-environmentalists-now-under-siege-1526209200

 

Strategic CSR - Extinction

The article in the url below quantifies the effect humanity has had on the other animals sharing our planet:

 

"Humankind is revealed as simultaneously insignificant and utterly dominant in the grand scheme of life on Earth by a groundbreaking new assessment of all life on the planet."

 

Specifically:

 

"The world's 7.6 billion people represent just 0.01% of all living things, according to the study. Yet since the dawn of civilisation, humanity has caused the loss of 83% of all wild mammals and half of plants, while livestock kept by humans abounds."

 

As noted in earlier Newsletters, the impact of humanity is leading to the declaration of a new era, the Anthropocene (see Strategic CSR – Anthropocene), but this article suggests a new indicator of this impact:

 

"One suggested marker for this change are the bones of the domestic chicken, now ubiquitous across the globe. The new work reveals that farmed poultry today makes up 70% of all birds on the planet, with just 30% being wild. The picture is even more stark for mammals – 60% of all mammals on Earth are livestock, mostly cattle and pigs, 36% are human and just 4% are wild animals."

 

This era is characterized not only by the indicators of human life (such as plastic and nuclear fallout), which will remain for millennia, but also by the devastation that humanity as caused:

 

"The destruction of wild habitat for farming, logging and development has resulted in the start of what many scientists consider the sixth mass extinction of life to occur in the Earth's four billion year history. About half the Earth's animals are thought to have been lost in the last 50 years. ... Just one-sixth of wild mammals, from mice to elephants, remain, surprising even the scientists. In the oceans, three centuries of whaling has left just a fifth of marine mammals in the oceans."

 

The graphics accompanying the article demonstrate this effect particularly well, for example:

 

https://interactive.guim.co.uk/uploader/embed/2018/05/wildlifelosses-zip/giv-39025SaTVRineiu5/

 

Take care

David

 

David Chandler

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

© Sage Publications, 2017

 

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

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

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

 

 

Humans just 0.01% of all life but have destroyed 83% of wild mammals

By Damian Carrington

May 21, 2018

The Guardian

https://www.theguardian.com/environment/2018/may/21/human-race-just-001-of-all-life-but-has-destroyed-over-80-of-wild-mammals-study

 

Strategic CSR - Patriotism

The article in the url below tackles the issue of active stakeholder engagement. In particular, it discusses the politicization of sports here in the U.S. in the aftermath of the September 11 attacks:

 

"I think back to that Tuesday morning nearly 17 years ago. I was living with my fiancée on 49th Street and 10th Avenue in New York, Hell's Kitchen, covering the Yankees for The Bergen Record, when the World Trade Center fell. It changed many things. For any American born after, say, 1985, it became the most defining day of their life — their Pearl Harbor, their Cold War, their Vietnam and Watergate. But it also changed how sports were sold, packaged, perceived and marketed."

 

The author, who has just published a book on this subject (The Heritage: Black Athletes, a Divided America, and the Politics of Patriotism), argues that, what was originally intended to be a unifying force for a wounded country has been corrupted into paid advertisements designed to encourage military recruitment. More importantly, it has had a damaging effect on public discourse, where any attempt to divert from the accepted norm becomes an act of disloyalty:

"It all felt right, until temporary grieving turned into a permanent, commercial bonanza — and a chilling referendum on who gets to be American. But then it didn't feel right, like when in 2008, a New York police officer ejected a fan at a Red Sox-Yankees game after he left his seat during a seventh-inning-stretch recording of 'God Bless America.' Recently a high-ranking Red Sox official told me — nearly 17 years after the towers fell — that he really doesn't know why the team still plays 'God Bless America,' but he knows this: The team would 'get killed' publicly if it was the first team to stop doing it."

A good example of the 'corruption' of the patriotic displays at sports events is the extent to which they are manufactured, rather than being organic and spontaneous:

 

"There was another major pivot when the Department of Defense surreptitiously began paying sports teams to embed the military in the game — paying to have servicemen strategically seated at games, surprise homecomings as in-game entertainment, American flags the size of the football field — as recruiting tools. The public wasn't told that the displays weren't organic support of the troops but a business transaction between military and team. The commercials followed."

 

The author argues, persuasively I think, that this has had ramifications for those athletes who seek to use their platforms to promote social change; in particular, it has served to further smother the voice of African-American athletes. The conclusion is that this has been allowed to happen by everyone else. At some level we know, but we either no longer care or are too nervous to speak up:

 

"On it goes, the perfectly scripted games, with Law Enforcement Appreciation Night in Dallas and anti-police protests outside a Kings game in Sacramento. Sports have been remade since Sept. 11, and nobody seems to care. People even acknowledge paid patriotism to be a deception, but have decided incongruously that it's a 'harmless deception.' Ultimately, I reached another conclusion: I no longer ask 'How did we get here?' but 'How do we get out of here?' and do we even care enough to try?"

The tie-in to Strategic CSR is the idea of stakeholder engagement – that, much of what our society has become (the freedoms and rights that we have) has been won at great cost. In other words, what we take for granted is not the natural state of being, but something that has to be constantly fought for and renewed. To the extent that we give up that fight, then society can quickly revert to what was before. If we are doing that consciously (if it is change we are choosing), it is OK. If we are doing it negligently, however, then we are sacrificing much of what many others before us struggled to achieve, and we will be worse off as a result.

 

Take care

David

 

David Chandler

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

© Sage Publications, 2017

 

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

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

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

 

 

How Did Our Sports Get So Divisive?

By Howard Bryant

May 12, 2018

The New York Times

Late Edition – Final

A21

https://www.nytimes.com/2018/05/12/opinion/sports-colin-kaepernick-9-11.html

 

Strategic CSR - Welcome back!

Welcome back to the Strategic CSR Newsletter! The first newsletter of the Fall semester is below. I am on sabbatical this semester and travelling, so Newsletters may be more intermittent than usual. As always, your comments and ideas are welcome.

 

The radio segment in the url below contains a fascinating statistic that reflects the pace of change in the nature of work:

 

"… 6 in 10 children starting elementary school today will end up in jobs that don't yet exist."
   

This statistic, which comes from the World Economic Forum, inevitably leads to the question:

 

"How do you get a student ready for a future that you can't really describe?"

 

Naturally, this has implications for the education system, in general, but also in terms of specific issues/subjects, such as CSR:

 

"It means that you have to be training them on how to adapt to many tough situations, how to think critically and how to immerse them in today's real world problems. Today it's very different than maybe two decades ago, where you learned just a specific skill, and you had that skill and stayed in that career for the rest of your life. The economy is changing so rapidly, not just with tech but with globalization ... You use textbooks, but you also have to create real world situations to which they react."

 

I wonder how business schools are responding to these evolving needs? They need to be part of the solution, but are inhabited by the same inertial forces that characterize any organization.

 

Take care

David

 

David Chandler

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

© Sage Publications, 2017

 

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

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

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

 

 

Retiring Colorado Education Titans on How to Keep Schools Relevant in a Changing World

By Joella Baumann

July 25, 2018

Colorado Public Radio

http://www.cpr.org/news/story/retiring-colorado-community-college-denver-public-schools-nancy-mccallin-tom-boasberg

 

Strategic CSR - 5e

This is the last CSR Newsletter of the Spring semester. Have a great summer and I will see you in August!

 

I am happy to announce that Sage has asked me to write the fifth edition of Strategic CSR. I plan to do that this Fall, with a publication date in the summer of 2019.

 

As such, I would like to ask for your feedback on the 4e, please. Sage is conducting a formal review of the 4e, so has probably contacted some of you for your assistance with that. If you are an adopter and Sage contacts you, please help if you can. You know the book as well as anyone and your feedback is invaluable to making improvements for the 5e.

 

If Sage has not contacted you, however, and you have any thoughts/ideas on how the book can be improved, please let me know. This includes content currently in the 4e that you would like to see retained for the 5e, content that you think can be excluded in the 5e, as well as new content that is currently missing.

 

As ever, your thoughts and comments are welcome, as well as any questions you have about the book, online simulation (http://www.strategiccsrsim.com/), or, of course, the Newsletters.

 

Thank you for your support.

Take care

David

 

David Chandler

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

© Sage Publications, 2017

 

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

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

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

 

Strategic CSR - Inequality

I have been doing some thinking recently as to whether the bifurcation of society in terms of income/wealth disparity is a natural consequence of market forces. Is it an inherent aspect of capitalism that wealth will eventually concentrate among a small subset of the population? Or, alternatively, can capitalism be tweaked to ensure a more consistent, level (read sustainable) playing field that allows wealth to follow ability from generation to generation?

 

I was introduced to this challenge via the fantastic (and extremely prescient) work of the Human Services Coalition (now Catalyst Miami, http://catalystmiami.org/) in Miami in the early 2000s. Daniella Levine (now an elected official on the Board of County Commissioners in Miami), who founded HSC, saw earlier than most that the middle class in Miami was being hollowed-out and that this would be the future for other major US cities.

 

Given the political upheavals we have seen in the past couple of years in the developed economies, and that these have largely been attributed to social inequality (as a result of globalization), my question then is: Is this an inevitable outcome of capitalism? In other words, given human nature (and our tendency towards inertia, biases, and shortcuts), is it possible to design a market (driven largely by self-interest, which rewards specific skills/merit) that, over time, results in more equitable opportunity? My sense is that it might not be possible. If so, and if we accept that altruism is an unrealistic model on which to structure society (and every previous attempt suggests this is true), what alternative structure would produce something more equitable? And, more importantly, how do we get there? To some extent, this is accounted for in Strategic CSR via an empowered stakeholder model. But, in order for it to work at the extreme, requires a significant correction – an outcome that history teaches us is usually violent and, as a result, worth avoiding (if possible).

 

Over the summer, I plan to think more about this. If anyone has any ideas/thoughts, I would love to hear them.

 

Take care

David

 

David Chandler

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

© Sage Publications, 2017

 

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

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

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

 

Strategic CSR - Environmentalism

In celebration of Earth Day this past Sunday, the article in the url below summarizes the history of the environmental movement's evolving relationship with business:

 

"Now widely known as Third Wave environmentalism, the idea first became a reality in 1990, when McDonald's teamed up with my organization, the Environmental Defense Fund, to reduce more than 300 million pounds of solid waste by doing away with its foam-clamshell packaging. The Third Wave built on the progress of the first two: Teddy Roosevelt-era land conservation, followed by mid-20th-century antipollution laws like the Clean Air Act."

 

The article then goes beyond that to argue that this relationship has entered a new phase of much closer co-operation/co-ordination:

 

"Market-based approaches and corporate partnerships are standard practice today. Yet too many environmentalists still regard business as the enemy, and vice versa. That may finally be changing, because an emerging wave of environmental innovation is making these partnerships more productive, and their results more precisely measurable. Call it the Fourth Wave of environmental progress: Innovation that gives people new ways to solve environmental problems."

 

For example:

 

"Last year, … Smithfield Foods, the world's largest pork producer, joined with EDF and other groups to reduce fertilizer waste on the vast network of farms from which it purchases roughly two million tons of corn each year. The move is part of Smithfield's goal of cutting supply-chain greenhouse-gas emissions 25% by 2025. The company is the first in its industry to set such a target, and its progress is enabled by corn growers' increasing investment in tools that help determine the most efficient ways to apply fertilizer."

 

This line of argument is perhaps all the more surprising (and welcome) because it is written by the current president of the Environmental Defense Fund. He argues that the fourth wave of environmentalism is substantively different to each of the three preceding waves, principally in terms of the complexity of the co-operation between business and environmental activists:

 

"Where Third Wave partnerships tended to be one-on-one, the Fourth Wave boasts many multilateral partnerships. EDF's work to measure methane emissions from the oil-and-gas supply chain involved scores of academic institutions and energy companies, and now we're working with the Netherlands Institute for Space Research to derive emissions data from the European Space Agency's Sentinel-5P satellite, sent into orbit last year. More than 400 companies have joined Walmart in its effort to reduce greenhouse-gas emissions in its global supply chain by one billion tons—more than the total annual emissions of Germany."

 

The key seems to be to leverage evolving technology:

 

"In any era, those doing the hard work of solving environmental problems take advantage of the best available tools, and in this era those tools include innovations that can help drive transparency, responsibility and low-cost solutions. Technology can obviously be used for good or ill. But when sensors, machine learning and data analytics are used to shape smart policy, rein in free riders, and reward corporate responsibility, they will enable changes that help people and nature prosper."

 

Perhaps, but I would think the more difficult transition is mental. The shift from seeing business as the 'enemy' to seeing it as an essential part of the solution is transformational. It is hard for activists committed to an ideologically pure vision of the environment to shift to accepting that some pollution is an inevitable cost to economic and social progress.

Take care

David

 

David Chandler

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

© Sage Publications, 2017

 

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

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

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

 

 

Fourth Wave Environmentalism Fully Embraces Business

By Fred Krupp

March 21, 2018

The Wall Street Journal

Late Edition – Final

A17

https://www.wsj.com/articles/fourth-wave-environmentalism-fully-embraces-business-1521585072

 

Strategic CSR - Human psychology

The article in the url below presents a fascinating, counter-intuitive perspective on the SRI industry:

 

"An analysis of fund inflows into U.S. stock ETFs and mutual funds that invest with a social, governance or environmental purpose (often called sustainable, ESG or impact funds) paints an interesting picture of investor psychology. Namely, while most traditional investors run for the hills when news comes out that conflicts with their expectations or ideas about the world, sustainable investors appear to dedicate more of their money to the cause when news or policy decisions that go against their values are announced."

 

The empirical support for this conclusion is fascinating:

 

"In perhaps the clearest representation of this, during December 2016, one month after the election of Donald Trump, a staggering $2.1 billion flowed into U.S. equity sustainable funds—representing a 3.5% increase in the category's total assets under management as of Nov. 1."

 

How exceptional was this "Trump bump"?

 

"The 'Trump bump' (which was the largest single monthly increase into the sustainable-investing class ever) was 170% larger than the next-largest one-month inflow. And the growth has continued. Since the election, $8.1 billion has flowed into these funds, a 13.1% jump from the assets under management on the eve of the 2016 presidential election—by far the greatest percentage inflow into any class or style of fund (e.g., value, growth, small-cap funds) since the election."

 

The authors extended their investigation, also looking at flows into environmental funds following the passing of COP 21 in Paris and, later, the announcement by the U.S. that it was withdrawing from the pact:

 

"In the month following the Paris Climate Agreement (which was signed in December 2015), $50.1 million flowed out of environmental-focused funds (amounting to a 1.05% drop in assets under management from the previous month). Conversely, when President Trump withdrew the U.S. from the climate agreement in June 2017, $98.5 million flowed into them (a 1.32% increase in assets under management)."

 

Similarly, the #MeToo movement appears to have influenced money flows into and out of social funds that employ gender or diversity filters:

 

"Surrounding the accusations of sexual abuse that came to light around Hollywood's Harvey Weinstein, Kevin Spacey and other celebrities, iShares MSCI KLD 400 Social ETF (DSI)—the largest socially conscious ETF—saw inflows of $48 million during November 2017. This was the fund's single largest monthly inflow, pushing it close to the $1 billion mark in assets. And, it isn't just individual investors who seem to be moving their money. In the four months following the news about Mr. Weinstein, TIAA-CREF Social Choice Equity Fund institutional class (TISCX) jumped $211 million (starting from $1.9 billion)—a striking 11% inflow."

 

People are both fascinating and frustrating, which at least keeps all of us social scientists in a job!

 

"Many factors are driving the increasing popularity of sustainable investing, including demographic demand (high among millennials and women), generational wealth transfer, a strong market and new sustainable financial products. But macro political and cultural trends are clearly the largest drivers—specifically, negative news that conflicts with sustainable investors' views of the world. Asset managers and wealth advisers should take note: Politics is personal, especially when it comes to investing."

 

This study reminds me of patterns around gun sales – when Obama (a proponent of gun reform) was elected, gun sales spiked (due to a fear that he wanted to remove guns from society by making them illegal), while sales dropped after the election of Trump (a Second Amendment supporter), leading to the bankruptcy of the 200-year-old gun-maker Remington in March. It also reminded me of subscriptions to The New York Times or viewership of CNN, which jumped the more that these media institutions have come under attack for their supposedly biased reporting.

 

Take care

David

 

David Chandler

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

© Sage Publications, 2017

 

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

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

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

 

 

Ethical Investing Seems to Thrive on 'Bad' News

By Derek Horstmeyer

April 9, 2018

The Wall Street Journal

Late Edition – Final

R5

https://www.wsj.com/articles/ethical-investing-thrives-when-theres-bad-news-1522941625

 

Strategic CSR - Carbon emissions

The article in the url below demonstrates how far we have to go before we can even begin to think about achieving sustainability. In spite of all the warning signals, we refuse to even begin taking the steps necessary to preserve the planet:

 

"For now, however, we're still moving in the opposite direction: Carbon dioxide emissions from the use of coal, oil and natural gas increased 1.4 percent globally in 2017 after holding steady for the previous three years, the International Energy Agency reported on Thursday. That's the equivalent of adding 170 million new cars to the road worldwide."

 

In particular, there are five drivers of increased carbon emissions identified by the article, each of which would be difficult to surmount (given human nature and the rapidly expanding middle class worldwide); together, they represent a formidable challenge. First, is the growth in Asia:

 

"Roughly two-thirds of last year's emissions increase came from Asia, where fast-growing countries like China, India and Indonesia continue to rely heavily on fossil fuels as they lift themselves out of poverty."

 

Second, is the insufficient growth of renewable energy:

 

"Last year's 'unprecedented' growth in renewables, the I.E.A. said, satisfied only about one-quarter of the increase in global energy demand as the world's economy boomed. Fossil fuels supplied the rest."

 

Third, is the resilience of coal:

 

"… coal use rebounded slightly in 2017, rising by 1 percent, driven in part by an increase in coal-fired power in Southeast Asia. A particularly hot summer in China also led the country to run its existing coal plants more often to power air conditioning."

 

Fourth, is growing affluence and the purchases we make that reflect it, in particular cars:

 

"Demand for oil rose 1.6 percent last year, much faster than the average annual pace over the previous decade. As oil prices have declined, more people in the United States and Europe are buying larger S.U.V.s, pushing up transportation emissions further."

 

Fifth, is the insufficient gains in energy efficiency:

 

"In 2017, the energy intensity of the global economy — a measure of efficiency — improved by just 1.7 percent, a slower pace than in each of the previous three years. The agency noted that many countries appear to be easing up on government policies to improve energy efficiency."

 

A second article on the same day and the same page of The New York Times reminds us that carbon is only one of the many toxic materials we pump into the environment at an unsustainable rate:

 

"In the Pacific Ocean between California and Hawaii, hundreds of miles from any major city, plastic bottles, children's toys, broken electronics, abandoned fishing nets and millions more fragments of debris are floating in the water — at least 87,000 tons' worth, researchers said. …  [The so-called garbage patch] is four to 16 times bigger than previously thought, occupying an area roughly four times the size of California and comprising an estimated 1.8 trillion pieces of rubbish."

 

Take care

David

 

David Chandler

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

© Sage Publications, 2017

 

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

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

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

 

 

Behind the Increase in Gas Emissions Last Year

By Brad Plumer

March 23, 2018

The New York Times

Late Edition – Final

A8

https://www.nytimes.com/2018/03/22/climate/global-energy-demand.html

 

Strategic CSR - Carbon pricing

This week's Newsletters will focus on our consumption of carbon, either directly (via emission levels) or indirectly (via market pricing). To begin, the article in the url below discusses the range of efforts being implemented to tackle climate change in the way recommended by most economists – to price carbon emissions. At some level, this is gaining traction among some governments that are finally beginning to take climate change policy seriously:

 

"A total of 41 OECD and G20 governments have announced either a carbon tax or a cap-and-trade scheme, or both. Add state and local schemes, and they cover 15% of the world's emissions, up from 4% in 2010."

 

While impressive on the surface, such schemes (cap-and-trade, in particular) are not comprehensively exposed to market forces and, as such, are subject to distorting political influences. Seeing the day when carbon taxes are coming, however, companies are not waiting to be told what to do:

 

"Companies are moving faster than many governments on carbon pricing. Nearly 1,400 firms globally with combined revenues of $7trn already use, or soon will, 'internal carbon prices.'"

 

This is happening at a pace that is not widely recognized:

 

"Of the 6,100-odd firms which report climate-related data to CDP, a British watchdog, 607 now claim to use 'internal carbon prices.' The number has quadrupled since CDP first began posing the query in its annual questionnaire three years ago. Another 782 companies say they will introduce similar measures within two years. Total annual revenues of these 1,389 carbon-price champions amount to a hefty $7trn. Most come from rich countries, but more developing-world firms are joining them."

 

In most cases, firms charge departments internally for the amount of carbon they use (whether in production or executives flying to meetings overseas), with the goal of reducing the firm-level total. Microsoft and Disney are both mentioned in the article as early adopters. Shell is also a proponent:

 

"In his day job as chief executive of Royal DSM, Mr Sijbesma has made the Dutch food producer examine all proposed ventures to check whether the sums still add up if a ton of carbon dioxide cost €50 ($60), well above the going rate of €6 or so in the European Union's emissions-trading system, which is kept low by an oversupply of permits. Where they do not, alternative feedstocks or cleaner energy suppliers must be found. If a project still looks unprofitable, it could be discarded altogether."

 

What I found interesting in the article, however, is the extent to which firms are differentiating between the short and long term in their planning:

 

"Besides assessing capital projects at €30 per ton of carbon dioxide, Saint-Gobain, a French maker of building materials, factors in a higher price of €100 per ton when choosing between long-term research-and-development projects. AkzoNobel, a Dutch chemicals giant, uses €50 per ton for most investments, but double that for those with lifetimes of 30 years or more."

 

Needless to say, implementation is inconsistent across firms. Nevertheless, the fact that so many firms are innovating in this area suggests there is support for governments to introduce a carbon tax, which immediately exposes all carbon-pricing schemes to market forces and all firms to the full costs of production. When (not if) this happens, those firms that are being the most creative and experimental today will see the largest and quickest benefit.

 

"Such voluntary steps will not stop the planet sizzling. But they help firms prepare for when governments do bring in pricing schemes. In December China launched a market for trading carbon emissions which is the world's largest. The clearest sign of progress would be for similar policies elsewhere to render internal exercises redundant."

 

Take care

David

 

David Chandler

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

© Sage Publications, 2017

 

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

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

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

 

 

Low-carb diet

January 13, 2018

The Economist

58

https://www.economist.com/news/business/21734487-nearly-1400-firms-globally-combined-revenues-7trn-already-use-or-soon-will-internal

 

Strategic CSR - Shareholder democracy

If the fiction of shareholder democracy needed any more exposure, the article in the url below highlights the weak powers that shareholders have to influence directly the running of corporations. In particular, the article focuses on what it terms "zombie directors":

 

"They're board members who've failed to get a majority of shareholder votes in elections but continue to serve. From 2012 to 2016 there were a total of 225 instances where directors of public companies got less than half the votes cast, but only 44 directors, or 20 percent, left within the next election cycle, according to a Bloomberg analysis of data from ISS Corporate Solutions Inc. The directors who stayed included 30 who were snubbed by shareholders more than once."

 

In contrast to many shareholder votes, where the results are nonbinding on management, director elections are binding. Rather than a majority needed to be elected, however, most firms allow directors to be elected with a plurality of votes. This means merely that they need more votes than any other candidate and, since most directors run unopposed, 1 vote is all they need to be duly elected:

 

"In response to investor and activist complaints, companies have been agreeing to new standards under which directors who don't receive a majority of votes have to submit a letter of resignation. Currently, 54 percent of companies require a director to do so. The hitch: The board usually isn't required to accept those resignations and can reinstate the unelected director."

 

The article lists a number of such examples, with some directors failing to receive a majority of votes multiple times:

 

"In each case, the directors reviewed the voting results and chose not to accept the resignations, citing their colleagues' value to the company, according to regulatory filings."

 

Take care

David

 

David Chandler

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

© Sage Publications, 2017

 

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

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

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

 

 

With 'Zombie' Directors, It's the Board of the Living Dead

By Jeff Green and Alicia Ritcey

August 10, 2017

Bloomberg Businessweek

https://www.bloomberg.com/news/articles/2017-08-10/with-zombie-directors-it-s-the-board-of-the-living-dead

 

Strategic CSR - A 'professional'

The article in the url below was written by Frank Abrams for HBR in 1951. At the time, Abrams was 'chairman' of Standard Oil of New Jersey (which later became Exxon). I learned two things about this article from the late, great Bill Frederick. First, that this article (and not the better-known 1953 book by Howard Bowen, Social Responsibilities of the Businessman) represented the beginning of the CSR movement in the U.S.; and, second, that the article was actually ghost-authored by Courtney Brown when she was Dean of the Business School at Columbia University – Brown had previously worked for Abrams at Standard Oil.

 

I assign this article for my students in the first class of my strategic management course. I do so because Abrams' main point is that, in 1951, the job of being a manager was about to become a profession (and, by implication, the MBA was the vehicle by which this was to occur):

 

"Briefly, it seems to me that business management in the United States is acquiring more and more the characteristics of a profession."

 

As I point out to my students, however, today, we are further from that point than we were in 1951. This is clear when you consider the three main characteristics that define what it means to be a professional:

1. A sense of duty beyond the self.
2. A certified body of knowledge (governed by an accreditation organization).
3. A code of ethics.

By these criteria, clearly, a manager is not a professional, even though most business schools label their MBA programs things like the 'professional program.' Nevertheless, it is worth emphasizing what might have been. What strikes me in particular about the article is Abram's vision of the high sense of duty that a manager has to society:

 

"There is no higher responsibility, there is no higher duty, of professional management than to gain the respect of the general public through objective participation in, and consideration of, national questions, even though these questions in many cases do not relate directly to their immediate business problems."

 

In fact, Abrams refers to the work of a manager as something closer to a patriotic duty:

 

"There is an underlying patriotic motive in all of this which an intelligent management thoroughly understands. In a democratic state, only those institutions which so conduct themselves as to deserve, secure, and hold public confidence can survive and prosper. It is a plain ordinary fact that our country, to be strong and constructive in a troubled world, is dependent upon free, competitive institutions to give its people opportunity of self-expression and advancement. If we are to be helpful in advancing our American way of life, we must be willing to show by example that individual objectives can best be served when they are identified with the common good."

 

The reason that society confers professional status on a particular job is, essentially, for protection. For example, there is a reason why society does not let me open a hospital and start operating on people (like a medical doctor), because they would die if I did. That is the same reason why society does not let me design and build buildings (like an architect), because those structures would fall down. In other words, in order to protect against the potential harm that can be caused by poorly-trained people doing those essential jobs (even if they are confident that they can), society sets very high standards (a form of quality assurance) to minimize the risks. In return for the strict requirements demanded in order to become a professional, society grants a monopoly to that group to practice that particular job (and reap the rewards for doing so).

 

What is important about this is that there is no such requirements to start up a business and call yourself a manager. Society has decided that it is willing to make the trade-off between risk and reward for business. If you have an idea and think it will be successful in the marketplace, you can form a company and try it out with very few barriers in your way. Of course, if you fail, the business can cause harm, but society is willing to take that risk in the hope of fostering the next Google, or Amazon, or Apple, or whatever the next life-changing company will be.

 

That is why managers are not professionals and the MBA is not the certified gateway to becoming a manager that it could have been. I'm not saying we would have been better off if the manager was a true professional, but I like to teach this to students to open their eyes about the risks/rewards of business, as well as the lack of understanding in most business schools about what it means to be a true professional. I also like to emphasize the business school's role in failing to create the conditions necessary to bring this about. Having said that, I make the point that, just because management is not a profession does not mean that they, as MBA graduates, cannot carry themselves as a professional by adopting the characteristics of a professional. To this end, the MBA Oath (http://mbaoath.org/, see also Strategic CSR – MBA Oath) initiated by Harvard MBAs for graduating students, is a good start.

 

Take care

David

 

David Chandler

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

© Sage Publications, 2017

 

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

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

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

 

 

Management's Responsibilities in a Complex World

By Frank W. Abrams

May, 1951

Harvard Business Review

Vol. 29, No. 3

29-34

http://www.worldcat.org/title/managements-responsabilities-in-a-complex-world/oclc/601804766

 

Strategic CSR - Stakeholder expectations

The article in the url below contains some interesting statistics on the extent to which businesses are internalizing and responding to evolving societal concerns:

 

"On politics, business leaders are risk-averse. They prioritize stability and the status quo. What has changed is the definition of the status quo. Gay and transgender rights, and action on climate change, were once liberal causes. They are now largely mainstream, particularly in big cities that are home to corporate head offices and the educated workers they covet. Businesses have adapted their own plans, policies and attitudes to this new mainstream."

 

As society evolves, companies need to evolve with them. Those companies that evolve most effectively (a combination of speed and content) will be more successful:

 

"This changes [CEOs'] cost-benefit calculus: Speak up and embroil yourself in unwelcome controversy, or stay silent and invite the opprobrium of customers, employees, social media and, for some, their own families and consciences. Increasingly, they have concluded that inaction is the riskier path."

 

What does this shift look like in terms of concrete policies and practices?

 

"Half of Fortune 500 companies provide transgender inclusive health benefits—up from none in 2002—and 61% offer domestic-partner benefits to gay couples, according to the Human Rights Campaign. … Similarly, nearly half the Fortune 500 has some sort of internal target for greenhouse-gas emissions, renewable energy or efficiency, according to the Carbon Disclosure Project."

 

Firms reflect the collective set of values held by key stakeholders. As such, they will do what their stakeholders hold them accountable for. To continue down this path, therefore, stakeholders need to be sure to reward those companies that match the values they want to see businesses adopt and punish those firms that transgress those values.

 

Have a good weekend

David

 

David Chandler

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

© Sage Publications, 2017

 

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

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

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

 

 

For Business, a New Political Status Quo

By Greg Ip

August 17, 2017

The Wall Street Journal

Late Edition – Final

A2

https://www.wsj.com/articles/in-new-political-status-quo-big-business-bucks-the-right-1502899710

 

Strategic CSR - Business schools

Over the winter break, I started reading the book From Higher Aims to Hired Hands by Rakesh Khurana. The main message is that business schools have not lived up to the intentions behind their creation. That, rather than build a platform to train managers as professionals (in the true meaning of that term), they have instead morphed into money machines for universities, where revenue generation trumps their educational mission. This message was reinforced by the article in the url below, which is a review of the book The Golden Passport published last year by Duff McDonald. The critique offered by the book (and summarized in the review) is damning:

 

"Anthropologists in the distant future will make their careers investigating the extraordinary rituals of American business education. As they sift through the wreckage of a civilization that bestowed its highest rewards on individuals trained to ignore its deepest problems, they will be lucky to have as their guidebook Duff McDonald's deliciously iconoclastic history of the Harvard Business School, 'The Golden Passport.'"

 

The overall message is that business schools have played a large part in producing the managers who have shaped the economy into something that serves the interests of the minority at the expense of the majority. Although HBS is not the only problem, the institution is singled out for particular disdain. Michael Jensen earns particular criticism for his role in propagating the diffusion of agency theory throughout business schools. Michael Porter is also heavily criticized for creating a problem that he then magnanimously offered to help solve (for a price, of course):

 

"The Monitor Group, the consulting company Mr. porter co-founded, raked in over $100 million from AT&T in the early 1990s—just as the old phone company, flailing around in search of new sources of monopolistic advantage, launched a series of strategic acquisitions that landed it in a ditch. Starting in 2006, Monitor put its expertise in the service of a certain terrorist-sponsoring dictator in Libya. … The strategic foray into the tin-pot sector—which included contracts with the Assads in Syria, as well as the Russians and Saudis—did not keep the consulting firm from bankruptcy. Now, according to the author, Mr. Porter seems convinced his management magic will solve the problems of health care and education. Apparently all we need to get our schools and insurance companies back on track is a little 'strategy.'"

 

While the critique is good, there is not much offered by the book in terms of possible alternatives. The absence in the review of plausible ways forward is palpable. This applies to the general direction of business school education. I agree with the criticism, but haven't seen an accurate description of why previous models were 'wrong' (e.g., shareholders do not own the firm), or what should be taught in its place (e.g., sustainable value creation). In other words, the discussion around the book (and I read several reviews of it) is not very enlightening and further entrenches an 'unhelpful' view of the role of the firm in society.

 

I think the principles advocated in Strategic CSR are an important part of that discussion. Complementing these ideas is the work that all of you are doing in your classrooms every day to build a 'better' alternative. How to get HBS (or any other influential actor) to pay attention, though? That is the essential question.

 

Take care

David

 

David Chandler

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

© Sage Publications, 2017

 

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

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

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

 

 

Schools of Mismanagement

By Matthew Stewart

April 22-23, 2017

The Wall Street Journal

Late Edition – Final

C5

https://www.wsj.com/articles/the-business-school-boondoggle-1492809680