Strategic CSR - Dementia

Here is a story to brighten your day. The article in the url below reports the opening of a restaurant in Tokyo named the 'Restaurant of Mistaken Orders.' The restaurant was named this way because all the servers are patients dealing with dementia who, as the restaurant acknowledges, may get your order wrong:

 

"If you've ever been to Japan, you'll know that in Japanese restaurants, mistakes are not made. … But as its name suggests, the Tokyo pop-up Restaurant of Mistaken Orders does things a bit differently. 'You might think it's crazy. A restaurant that can't even get your order right,' says its English introduction page. 'All of our servers are people living with dementia. They may, or may not, get your order right.'"

 

The restaurant released a video promoting what it does and the purpose behind it: https://youtu.be/su34Gx-STQk

 

As you will see if you watch the video, the food is good and the atmosphere is happy and, for the vast majority of customers, if you are worried about getting the wrong order, you are clearly missing the point:

 

"37% of orders were mistaken, but 99% of customers said they were happy."

 

Here is a longer version of the video: https://youtu.be/6D8uPmWUQRc

 

Have a good weekend

David

 

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (5e)

© Sage Publications, 2020

 

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler5e 

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

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

The Restaurant of Mistaken Orders: A Tokyo Restaurant Where All the Servers Are People Living with Dementia

By Colin Marshall

August 21, 2019

Open Culture

http://www.openculture.com/2019/08/the-restaurant-of-mistaken-orders.html

 

Strategic CSR - Greta

The article in the url below is the best article I have seen about the Swedish teenager, Greta Thunberg, who is campaigning to reverse climate change and, as a result, appears to be changing the world. By starting her no school on Fridays campaign, Greta has shifted the conversation and achieved a significant amount in a very short period. Not many of us can say we had a global impact at 16 years old.

 

Recognizing this, the article focuses on the consequences of her success in terms of our collective fixation on her (both idolizing her and mean personal attacks) and subjugating her message to the background. While criticizing those who have targeted Greta to serve their own ideological goals (various forms of climate change denial), the author turns the argument on those who say they support the young campaigner:

 

"However, the uncomfortable question for Thunberg's supporters is whether their virtual canonisation of her has presented a gift to their opponents. Making a young and idealistic teenager the figurehead of a movement makes it too easy to dismiss the campaign as a whole as naive and idealistic. Indeed, the commentator Christopher Caldwell, who is supportive of the cause, worries that the rallying around Thunberg reflects a refusal to engage with complexity. 'People have had enough of balance and perspective,' he wrote in the New York Times, 'They want single-minded devotion to the task at hand.' That is exactly what Thunberg has come to represent."

 

The author continues with a point that I think is particularly insightful:

 

"The French philosopher Raphaël Enthoven hinted at another problem in a Delphic tweet in which he called her 'an anti-product product' that we use to buy virtue with our support and retweets without actually having to do anything ourselves. Many of those who ostentatiously bid her bon voyage across the Atlantic [recently] are hardly strangers to airports. 'When you consume Greta, you do not help the planet,' wrote Enthoven. 'You play the game of the system that destroys it.'"

 

This reminds me of the research on moral license – where a minor positive act allows us the liberty to do something much more harmful and negative. For example, you feel good about recycling an aluminum can, which then allows you to ignore the fact that you drive a Ford F-350 truck. Similarly, you personally donate to a worthwhile cause, while working for a company that trades with authoritarian regimes. In other words, believing in Greta and supporting her in superficial ways (e.g., liking one of her social media posts) then allows us to overlook the fact that we have not actually changed anything personally and, as such, are part of the problem:

 

"Thunberg has been clearer than anyone that it is a mistake to place too much attention on her. 'I think there is a lot of focus on me as an individual and not on the climate itself,' she told the German broadcaster Deutsche Welle. 'I think we should focus more on the climate issue because this is not about me.'"

 

Greta is clearly wise beyond her years. She is also an example to many of her followers/admirers who need to act rather than merely applaud from the sidelines.

 

Take care

David

 

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (5e)

© Sage Publications, 2020

 

Instructor Teaching and Student Study Site: http://studysites.sagepub.comstudy.sagepub.com/chandler5e 

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

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

Greta Thunberg's attackers are morally bankrupt, but her deification isn't helpful

By Julian Baggini

August 19, 2019

The Guardian

https://www.theguardian.com/commentisfree/2019/aug/19/greta-thunberg-attackers-climate-crisis-activist

 

Strategic CSR - Business Roundtable

A number of you kindly forwarded variations of the article in the url below to me:

 

"Nearly 200 chief executives, including the leaders of Apple, Pepsi and Walmart, tried on Monday to redefine the role of business in society — and how companies are perceived by an increasingly skeptical public."

 

Specifically, it is the Business Roundtable making this announcement on behalf of its members:

 

"Breaking with decades of long-held corporate orthodoxy, the Business Roundtable issued a statement on 'the purpose of a corporation,' arguing that companies should no longer advance only the interests of shareholders. Instead, the group said, they must also invest in their employees, protect the environment and deal fairly and ethically with their suppliers."

 

My immediate reaction is incredulity – do they mean that they do not understand their firms are already doing this? The stakeholder version of CSR is not either/or so much as it is more/less. In other words, all firms are already doing it; sure, they could be doing more of it, but they are already doing it to some extent. The fact that the Business Roundtable was not able to express itself in this way is shocking and demonstrates the amount of thought they put into the statement ahead of time. As The Wall Street Journal put it in its editorial response to the statement (August 20, 2019, pA14):

 

"At a practical level this is largely symbolic. … To be successful, any company must serve its customers, adequately reward its employees, cultivate the loyalty of suppliers, and maintain good relations with the communities where it operates. At the Business Roundtable's level of high-toned generality, who could disagree?"

 

At a deeper level and on reflection, I have a number of reactions to the statement that, in essence, add up to the reason that I wrote my book. In short, I think it is interesting that the Business Roundtable is announcing this change, but it is not very clear that they mean much by it. For a start, the framing is very mainstream. That is, while they pay lip service to the idea of value creation for stakeholders, they fail to demonstrate that they understand how that process actually occurs and that it encompasses 100% of what the firm does.

 

They also, of course, do not recognize that shareholder primacy is a theory (rather than a legal obligation), yet this is implicit in the statement and central to what they are saying. By announcing they are able to unilaterally shift the purpose of the firm to serving all stakeholders, the Business Roundtable is recognizing that there is currently no legal obligation to maximize shareholder value. If there was a legal obligation, then they couldn't just change it with a white paper policy statement. It would have been helpful if they had explicitly stated this (and it is concerning that they do not appear to make the connection), but the outcome is the same. 

Related to this point, one group whose purpose is undermined by this decision is B-lab, which advocates for Benefit Corporations (hence, B-Lab's somewhat desperate full-page ad response in Sunday's New York Times, https://images.app.goo.gl/vAPqG491URyzFykn8). As I have long argued, Benefit Corporations are premised on a misunderstanding of the legal relationship between shareholders and the firm. If, according to the Business Roundtable's new announcement, all firms can do what Benefit Corporations can do, why do we need Benefit Corporations?

 

Overall, therefore, this looks like business as usual to me. It seems as though the Business Roundtable felt like it needed to say this, but it is not quite sure why it is saying it and, by extension, what implications it will/should have for its members. In other words, it is an exercise in impression management, largely driven by growing societal criticism of CEOs/firms/capitalism (take your pick):

 

"The shift comes at a moment of increasing distress in corporate America, as big companies face mounting global discontent over income inequality, harmful products and poor working conditions."

 

Rather than take on the (valid) criticisms with an intellectual defense of the value creation process (with a commitment to elevate all stakeholders and demote shareholders because their legal standing is no different), they instead engage in what one of you phrased to me as "all words," with little prospect for substantive action. It is notable, for example, that the Council of Institutional Investors (whose membership overlaps significantly with the Business Roundtable) issued its own response, criticizing the announcement because it "undercuts notions of managerial accountability to shareholders."

 

Take care

David

 

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (5e)

© Sage Publications, 2020

 

Instructor Teaching and Student Study Site: http://studysites.sagepub.comstudy.sagepub.com/chandler5e 

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

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


Shareholder Value is no Longer Everything, Top C.E.O.s Say

By David Gelles and David Yaffe-Bellany

August 19, 2019

The New York Times

Late Edition – Final

A1, A15

https://www.nytimes.com/2019/08/19/business/business-roundtable-ceos-corporations.html

 

Strategic CSR - Welcome back!

Welcome back to the Strategic CSR Newsletter! The first newsletter of the Fall semester is below. As always, your comments and ideas are welcome.

 

I am happy to report that the fifth edition of Strategic CSR will be published later this week. The publisher's page for the book is here (including the option to order review copies):

https://us.sagepub.com/en-us/nam/strategic-corporate-social-responsibility/book258527

 

The Instructor resource site and the Student resource site for the book are here:

https://study.sagepub.com/chandler5e

 

As always, these Newsletters are archived on my blog, which is fully searchable and intended to be a resource for both instructors and students:

http://strategiccsr-sage.blogspot.com/

 

And, if you are interested in a simulation for your course, please see here:

http://www.strategiccsrsim.com/

 

I you have any questions about the fifth edition, Newsletters, simulation (or anything else), please let me know.

 

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/

 

Strategic CSR - Facebook

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

 

The 5e of Strategic CSR contains a new case-study on the media, in general, and Facebook and related issues, in particular. The article in the url below builds on an earlier Newsletter (Strategic CSR – Facebook) to add an interesting twist:

 

"Facebook may eventually have more dead users than living ones. If Facebook continues to grow at its current rate, the site could have 4.9 billion deceased members by 2100, according to [new research]. Even if growth had stopped entirely last year, the study finds, Facebook would be looking at about 1.4 billion dead members by 2100. By 2070, in that scenario, the dead would already outnumber the living."

 

This, of course, raises the interesting question of who owns the data of these people's profiles and pages, filled with their histories, captured in words and photos. The scale of Facebook's success raises the stakes in terms of what to do with these data:

 

"'Never before in history has such a vast archive of human behavior and culture been assembled in one place.' … 'Controlling this archive will, in a sense, be to control our history.'"

 

Facebook is aware of this problem and is responding, somewhat:

 

"As it stands, Facebook users who are alive can choose a 'legacy contact' who gets access to much of the account's data after the original user dies – at which point the account can be 'memorialized.' Others, however, cannot log into it, posing a potential problem if a person dies before designating a legacy contact."

 

In other words, the issue of real death and virtual life remains a legal and ethical challenge:

 

"Is it time to appoint social media executors? Should we collect our passwords and include them in our wills? Should our Instagram accounts become part of the historical record?"

 

Have a great summer.

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/

 

 

Facebook could have 4.9bn dead users by 2100, study finds

By Matthew Cantor

April 24, 2019

The Guardian

https://www.theguardian.com/technology/2019/apr/29/facebook-dead-users-2100-oxford

 

Strategic CSR - Dick's + Guns

The article in the url below puts a price on principle. In particular, it reports the estimated cost to Dick's Sporting Goods of its decision last year to stop selling guns in the aftermath of yet another school mass shooting here in the U.S. (this time, in Parkland, FL):

 

"Last February, when Dick's Sporting Goods boss Ed Stack announced he was restricting gun sales at the country's largest sports retailer, he knew it'd be costly. At the time, Dick's was a major seller of firearms. Guns also drove the sale of soft goods—boots, hats, jackets. What's more, Stack, the retailer's chief executive officer, suspected the position could drive off some of his customers on political principle. He was right. Dick's estimates the policy change cost the company about $150 million in lost sales, an amount equivalent to 1.7 percent of annual revenue. Stack says it was worth it."

 

It is worth noting that this figure is not a total cost, but one for last year only. In other words, if the company continues not to sell guns, there will be a cumulative effect. Nevertheless, rather than regret his decision, Stack has doubled-down:

 

"'The system does not work,' Stack said. 'It's important that when you know there's something that's not working, and it's to the detriment of the public, you have to stand up.'"

 

It turned out that there was a direct connection between Dick's and this particular shooting:

 

"The 2018 school massacre at Parkland, Florida, touched a nerve for the company. Nikolas Cruz, the shooter, had legally purchased a shotgun from Dick's a few months before the attack. A day after Cruz was arrested, police in Vermont apprehended a teenager with plans to shoot up his high school. He, too, had legally purchased a shotgun from Dick's."

 

This is a significant cost that Dick's is enduring. In order to justify it, it would be helpful if the firm's stakeholders demonstrated their support (if they truly support the policy). Here, there is some good news and some bad news. In terms of shareholders, there still appears to be broad support for the company;

 

"The stock price hasn't suffered. Dick's shares, which didn't move much following the announcement last February, have climbed 14 percent in the 13 months since, outpacing the 4 percent rise in the benchmark Russell 3000 Index."

 

Consumers, it seems, are less committed:

 

"Some people applauded the CEO's decision and promised to show their appreciation with their business—a phenomenon called 'buycotting'—but those people didn't stick around."

 

Unfortunately, recent research shows that Dick's (or any other company that stands on principle) may see similar reactions, at least among consumers:

 

"What happened at Dick's confirms new study results out of Stanford University. Respondents said they were more likely to buy a product to support a CEO's political stance than they were to boycott in disagreement, but their actions revealed the opposite. When asked for specific examples, 69 percent could name a product they'd stopped buying, and only 21 percent could recall a product they started buying."

 

Or, as Stack puts it:

 

"Love is fleeting. Hate is forever."

 

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/


Restricting Gun Sales Cost Dick's $150 Million Last Year

By Eben Novy-Williams

March 29, 2019

Bloomberg Businessweek

https://www.bloomberg.com/news/articles/2019-03-29/dick-s-dks-ceo-ed-stack-says-gun-shift-cut-sales-by-150m

 

Strategic CSR - Aluminum

In contrast to most of the recycling industry, which is suffering due to the decision by China to stop accepting imports of scrap materials (for example, see Strategic CSR – Recycling and Strategic CSR - Recycling), the article in the url below reports that the trade in recycled aluminum is booming:

"Companies in the U.S. that turn junked cars and beer cans into fresh aluminum are seeing business boom thanks to the trade fight between Washington and Beijing."

 

While the domestic industry is doing well primarily because the tariffs are driving up the price of imports, it is particularly encouraging to see that the use of recycled aluminum is flourishing:
 

"Aluminum made from recycled scrap made up the majority of the aluminum used in the U.S. for the first time last year, according to market forecaster Harbor Aluminum Intelligence Unit LLC, which tracks U.S. government reports on aluminum production and scrap usage back to the 1920s."

 

It appears that this is mostly due to the lack of capacity for virgin aluminum, which is forcing the recycled industry to step up in order to meet growing demand:

 

"… domestic smelters that make new aluminum from bauxite aren't able to supply more than a fraction of the aluminum consumed, even with higher production last year. Instead, much of the increase in domestic production to offset lower imports has come from the processors that make aluminum from scrap."

 

What the article doesn't get into, but is more important for long-term trends, is the relative costs of new versus recycled aluminum. Right now, it seems the industry will take whatever aluminum it can get from whatever sources. If the tariffs are removed, however, what does the future hold? Will the industry revert to favoring sources of new aluminum or can the recycling process be made more cost effective to drive further innovation and encourage more recycling?

 

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/

 

 

Aluminum Rules the Scrapheap

By Bob Tita

January 17, 2019

The Wall Street Journal

Late Edition – Final

B2

https://www.wsj.com/articles/aluminum-scrap-abounds-thanks-to-tariffs-11547641945

 

Strategic CSR - Amazon

The article in the first url below discusses Amazon's announcement last year that it would raise the minimum wage of its employees in the US and UK. In particular, the author argues that, while economics and a tightening labor market no doubt played a role, the primary motivation for the decision was political. That is, in the aftermath of Bernie Sander's Stop BEZOS proposed legislation (and the accompanying publicity around the extent to which Amazon employees rely on state welfare to subsist), the company felt it was advisable to appease the politicians:

 

"For months, Sanders has been criticizing the company for paying its workers too little. He went so far as to offer a bill called the 'Stop BEZOS Act,' for Jeff Bezos, Amazon's C.E.O. The bill was deeply flawed, but it still served to call more attention to the issue."

 

As the author notes, "this is how democracy and capitalism are supposed to work." More specifically, it is a great example of stakeholder pressure (government and the media) being brought to bear in a way that forced a change in corporate behavior. While the details of the policies in Sander's bill were problematic (in the sense that they essentially constituted a tax on employment, which might easily have led to a reduction in jobs for the people Sanders was most seeking to help), the problem he raised was real and something that, ultimately, Amazon felt uncomfortable with once it was exposed:

 

"All of this attention wasn't pleasant for Amazon. It cares about its image. … [Subsequently], Amazon announced that it was raising its minimum hourly pay to $15. About 350,000 workers will receive an immediate raise as a result. Amazon also called on other companies to do the same and said it would lobby Washington to increase the federal minimum wage."

 

This reflects the extent to which Amazon's higher profile exposes it to greater stakeholder pressure. The article in the second url below, for example, shows how employees (emboldened by action taken in the IT sector in recent months – e.g., Strategic CSR – Google), are beginning to become more aggressive in their demands of their employer:

 

"This week, more than 4,200 Amazon employees called on the company to rethink how it addresses and contributes to a warming planet. The action is the largest employee-driven movement on climate change to take place in the influential tech industry."

 

Interestingly, the employees are using a tool IT companies use to tie employees more closely to the firm – stock options:

 

"Like other shareholders, they can file a resolution urging a particular corporate change that investors vote on at a company's annual meeting. Historically, this approach has been used by outside activist investors, not employees."

 

As one Amazon employee put it:

 

"'It's exactly what Amazon has taught me to be: bold, audacious, and tackle big problems,' said Maren Costa, a principal user-experience designer who has been with the company for almost 15 years."

 

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/


Amazon's Surrender is Inspiring

By David Leonhardt

October 3, 2018

The New York Times

https://www.nytimes.com/2018/10/03/opinion/amazon-minimum-wage-bernie-sanders.html

 

Also here:

https://www.nytimes.com/2018/10/02/business/amazon-minimum-wage.html

Employees Push Amazon on Climate

By Karen Weise

April 11, 2019

The New York Times

Late Edition – Final

B1

https://www.nytimes.com/2019/04/10/technology/amazon-climate-change-letter.html

 

Strategic CSR - Seaweed

The article in the url below presents a good idea – replacing single-use plastics with seaweed. In particular, it outlines a plan for the London Marathon this year, which took place Sunday, to hand out seaweed pods filled with liquid for hydration in place of bottled water:

 

"More than 40,000 people plan to run the marathon on Sunday. And they're in for a bit of a different experience when they reach Mile 23 — Ooho seaweed capsules instead of plastic bottles or cups. The capsules can be filled with a variety of liquids, but the ones provided at the marathon will be filled with Lucozade Sport, an electrolyte drink."

 

Not only will the pods save plastic, but they are also more convenient for the runners:

 

"The small pods … are designed to be both edible and biodegradable — the pods themselves are tasteless, and if not consumed, they biodegrade within six weeks."

 

Apparently, the experience is similar to eating a cherry tomato. Here is what they look like:

 

 

There is also a video about the pods here: https://youtu.be/9-WY9ZTyKvM

 

The London Marathon says it is committed to advancing sustainability and has a list of actions it is taking to further reduce the marathon's carbon footprint in the article.

 

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/

 

 

Thousands of seaweed pods will replace single-use plastics at the London Marathon

By Sophie Lewis

April 27, 2019

CBS News

https://www.cbsnews.com/news/london-marathon-thousands-of-seaweed-pods-will-replace-single-use-plastics/

 

Strategic CSR - LTSE

The article in the url below reports on the latest developments with the proposed Long Term Stock exchange (LTSE):

 

"The founders of the Long-Term Stock Exchange (LTSE) want to operate a full-fledged US stock exchange, with a twist: The exchange aims to combat short-term thinking by introducing extra rules designed to reward long-term shareholding and long-term business strategies. The LTSE and Investor's Exchange (IEX) disclosed today that IEX, an upstart exchange already operating under US Securities and Exchange Commission approval, last week formally filed with the SEC for the LTSE to handle initial public offerings via special securities listings on IEX."

 

It is interesting that they are working with IEX, which is the stock exchange set-up by Brad Katsuyama to try and compete against the high-frequency trading algorithms (and featured in Michael Lewis' book, Flash Boys). The goal is to open an independent stock exchange with a long-term, sustainable focus:

 

"By piggybacking on IEX, the LTSE hopes to accelerate the ability of companies to go public with the LTSE's rules binding them and their investors. The LTSE plans to submit an application to become a full-fledged stock exchange, a significantly tougher proposition, after the SEC has ruled on its arrangement with IEX."

 

While certainly well-intentioned, I think the LTSE contains flaws that are similar to the Benefit Corporation project. First, if the main purpose is to raise money (as the founder states it is), there are many alternative sources of capital today. It is not clear that we need another stock exchange for IPOs:

 

"The LTSE, founded by San Francisco entrepreneur and The Lean Startup author Eric Ries, is an ambitious project to overhaul how companies raise money, allow employees to sell shares, and practice good corporate governance. It comes amid challenges to Wall Street's traditional approach to financing businesses, with many companies shunning public markets altogether, while others turn to newfangled fundraising methods like cryptocurrency initial coin offerings instead of stock offerings."

 

Second, the rules mentioned in the article seem pretty superficial. The most important, I think is the restriction on short-term incentives.

 

"The rules for companies listing via the LTSE include:

• Increased voting rights for shareholders who hold company stock for long periods of time
• Restrictions on offering short-term incentives to executives
• Additional disclosures, such as clearly showing the impact of any stock buybacks
• A board-level long-term product and strategy committee, to focus on issues of governance and sustainability"

It will be interesting to see if that gets any traction. A stronger rule would be no stock-based compensation at all, which is what I would like to see firms adopt. If I can do my job without performance incentives, I am not sure why executives cannot. Just pay them a salary! But, this speaks to a more fundamental issue, which is that all firms can already adopt these measures, if they wanted to:

 

"The LTSE acknowledges in the SEC filing that companies could voluntarily adopt the rules it has drawn up without listing through the LTSE. But it contends that the structure it has created allows for regulatory enforcement of the rules, giving them more impact."

 

Finally, I am somewhat sympathetic to the argument in the article that we might lose some of the shareholder oversight. Short-sellers, in particular, perform a valuable buffer against corruption:

 

"Critics say that the LTSE's rules would overly insulate company executives from shareholders, reducing the accountability that can help boost performance over the long term."

 

While I do not trust shareholders much, I am not sure I would rather trust executives to act with any less oversight than at present! :-)

 

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/

 

 

The company aiming to create a long term-focused stock exchange has applied to handle IPOs

By Kevin Delaney

March 19, 2018

Quartz

https://qz.com/1232025/eric-riess-ltse-which-aims-to-create-a-new-us-stock-exchange-has-filed-with-the-sec-to-handle-ipos/

 

Strategic CSR - 1,000th

 

Today's Strategic CSR Newsletter is the 1,000th I have sent! The first Newsletter was sent on October 31, 2007. Thank you all for your support. As always, your comments and ideas are welcome.

 

Following-on from the ToC for the fifth edition of Strategic CSR that I sent out a few weeks ago (Strategic CSR – 5e ToC), I am happy to circulate the cover artwork. The organic pattern is intended to invoke the dynamic nature of this topic, as well as the inter-related complexity of stakeholder relations.

 

The book should be published by mid-August, hopefully with a review copy available at the Sage stand at AOM in Boston.

 

 

 

Please let me know if you have any questions about the 5e or its publication timetable.

 

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 - Moral assumptions

Given that Monday is Earth Day, today's Newsletter highlights the article in the url below, which explores the moral assumptions that underpin economic models of climate change. Specifically, the article argues that, beyond the inherent complexity of climate change (replete, at least in the US, with large segments of deniers of science), there is an essential economic challenge:

 

"Humanity must work out how many resources should be diverted from other valuable uses—from life-enriching consumer goods to funding for pensions—to the task of limiting global warming."

 

In essence, the core question of economics applies—how do we allocate scarce resources to address needs/wants in ways that create optimal outcomes? The additional challenge here is that, in spite of economics' insistence for many years to the contrary, this is not purely a mathematical problem:

 

"These calculations may look bloodless, but they are built on weighty moral assumptions, namely, how to value people's lives."

 

For the author of the article, having a discussion around these moral assumptions may increase the perceived level of importance of climate change:

 

"Though it is hard to know what might finally impel humanity to take the threat of climate change seriously, speaking more plainly about its moral costs might help."

 

Take, for instance, the discount rate, which is an essential component of any attempt to place a value on wealth that is deferred today for future benefit. Up until now, economists have used knowledge about our consumption patterns to determine how much we would be willing to sacrifice today for some future, unspecified benefit:

 

"But it is far from clear that the rates people have in mind when deciding whether to attend university or save for retirement should be applied to questions of social policy that will affect billions of lives. Climate policy does not simply shift a bit of ill-defined utility from one pile to another, after all. It determines how much life-threatening environmental harm the current generation will impose on scores of future ones."

 

This is where it gets interesting because we have the knowledge to make these tradeoffs; it is just not something that economists have spent a lot of time thinking about:

 

"Philosophers are accustomed to discussions about how to value lives distant from our own in time and place; economists are not. But [new research] puts the results of discounting in evocative terms: given a 5% rate of discount, one human life today is worth 132 a century hence. Is it really ethically acceptable to save one life now at the expense of so many in the future? … Economists should treat threats to future lives as just as morally reprehensible as present threats to our own."

 

By valuing the future in proportion to the present (there is a lot more of the future), we should be able to arrive at a conclusion of how much that future is worth, relative to our current wealth, and how much of an obligation we have to deliver it:

 

"… there is a risk that humanity will no longer be around a few centuries from now—for example, if a large comet hits the Earth, or if a supervolcanoes erupt and cloak the Earth in choking debris. It makes sense to discount future lives by a tiny amount to take account of the possibility that they will never come to be. That would nonetheless mean that humanity ought to be willing to bear substantial costs now to reduce eventual climate harms."

 

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/

 

 

Future lives matter

December 8, 2018

The Economist

Late Edition – Final

75

https://www.economist.com/finance-and-economics/2018/12/08/the-moral-assumptions-embedded-in-economic-models-of-climate-change

 

Strategic CSR - Napalm

The article in the url below comments on the recent uprisings among the employees of tech companies who are objecting to their employer's involvement with U.S. military agencies (see also Strategic CSR – Google):

 

"Over the past few months, a fierce debate has erupted in Silicon Valley over whether large technology companies like Amazon, Google and Microsoft should join forces with the United States military, along with agencies like Immigration and Customs Enforcement."

 

As the author notes, so far the "debate has been conducted along ethical lines." He cites a recent example at Microsoft, whose employees drafted an open-letter to management expressing their concerns about the company's adaptation of its virtual reality hardware for application on the battlefield:

 

"'We did not sign up to develop weapons, and we demand a say in how our work is used,' the Microsoft employees wrote."

 

In contrast, the author wants to take the conversation in what he sees as a different direction:

 

"This is a debate worth having. But there is a more pragmatic question swirling around it, one surprisingly few people are asking. Namely: Could Big Tech's decision to pursue controversial defense and law enforcement contracts be a financial mistake?"

 

He then cites the value of some of these contracts, noting that, on the face of it, they make sense. The costs come in the shape of potential reputation damage – among customers, to be sure, but also among potential employees who may think twice before working for such companies. The dramatic comparison used, to maximum journalistic effect, is with Dow Chemical's decision to supply the U.S. military with napalm during the Vietnam War:

 

"Dow Chemical stopped making napalm for the military in 1969, just four years after it had begun. But the reputational damage haunted the company for decades. … All told, the $5 million napalm contract most likely cost Dow Chemical billions of dollars. And it was the kind of unforced error that could have been avoided if company executives had listened to early signs of opposition, done some risk analysis and changed course."

 

The author's point is that, once a technology is developed for the military, the companies lose control over how it is used, forever. And, given that we are unable to predict how society's definitions of acceptable behavior will evolve into the future, even if we suppose that there is general support for these firms to work with the government today, that does not mean that support will always be there. And, as with Dow, if things go badly, they can go very badly for everyone:

 

"Already, there are signs of trouble on the horizon. At Stanford, fliers recently appeared on campus walls urging students not to work for Amazon, Microsoft, Palantir and other companies with reported contracts with ICE and law enforcement agencies. And artificial intelligence experts caution that the stigma of being seen as a war profiteer could repel idealistic recruits for years to come. … In fact, in today's corporate operating environment, turning down controversial military and government contracts could be a selling point."

 

All of this is fine. My point is to push back on the idea that this "financial perspective" is a different question to the "ethical" one the author begins with. I would say, instead, that it is the same question reframed using a financial lens. This is a lot of what Strategic CSR seeks to do. The basic argument is that, since most (if not all) company transactions can be monetized at some level (i.e., all stakeholder interactions have the potential to affect profit, either positively or negatively), then focusing on the finances is a more revealing analysis. But, it is not a different question and to focus on the finances does not remove the ethics from the decision. All decisions that we make, as humans, are based on our values/ethics/morals, the precise mix of which are unique to each of us. I have a different set of values than you do. We probably agree on many of them, but also probably, not 100% of them. As such, at the margins, I make slightly different decisions to you. But, where we are talking about our interactions with companies as stakeholders, the effect of our decisions (our values/ethics/morals in action) increase the firm's profit (when we engage) and decrease its profit (when we boycott). Like many in the mainstream CSR community, this author is drawing a clear distinction between the two (ethics and finances) while, from a Strategic CSR perspective, they are essentially indistinguishable.

 

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/

 

 

Why Napalm is a Cautionary Tale for Tech Giants

By Kevin Roose

March 6, 2019

The New York Times

Late Edition – Final

B1

https://www.nytimes.com/2019/03/04/technology/technology-military-contracts.html

 

Strategic CSR - McDonald's (II)

The article in the url below shows how fast food in the U.S. has evolved over the past 30 years. Of course, the term "evolved" sounds inherently progressive – in that fast food evolved in a way that promotes health. In reality, the opposite is closer to reality. While it is true that menu options have expanded and often include salads (which are healthier only as long as you don't drown them in dressing), it is the size of the portions and their makeup of fat and salt that caught my attention in this article:

 

"But as menus swelled over the past three decades with grilled chicken wraps (McDonald's) and 'fresco' burritos (Taco Bell), many options grew in size and the calories and sodium in them surged, according to new study from researchers at Boston University and Tufts."

 

The research was recently published in The Journal of the Academy of Nutrition and Dietetics and consisted of a study of multiple fast-food chains over 30 years:

 

"The researchers studied 1,787 entrees, sides and desserts at 10 chains — Arby's, Burger King, Carl's Jr., Dairy Queen, Hardee's, Jack in the Box, KFC, Long John Silver's, McDonald's and Wendy's — from 1986 to 2016. In that time, the number of items in those three categories rose 226 percent."

 

The results are not encouraging:

 

"Across the 10 chains, the researchers found, the average entree weighed 39 grams more in 2016 than in 1986 and had 90 more calories. It also had 41.6 percent of the recommended daily allotment of sodium, up from 27.8 percent."

 

The same pattern is evident in the desserts on offer:

 

"In 2016, the average fast food dessert weighed an extra 71 grams and had 186 more calories than the average dessert 30 years earlier, the researchers found."

 

And don't forget the sides:

 

"The researchers found that there were 42 more calories on average in items like chips, soups and French fries in 2016 than there were in 1986. Sodium content rose to 23.2 percent of the recommended daily allotment from 11.6 percent, even though portion size did not grow substantially."

 

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/

 

 

Bigger, Saltier, Heavier: How Fast Food Changed Over 30 Years

By Tiffany Hsu

March 4, 2019

The New York Times

Late Edition – Final

B3

https://www.nytimes.com/2019/03/03/business/fast-food-health-salt-calories-portions.html

 

Strategic CSR - McDonald's (I)

The article in the url below demonstrates the range of issues facing a company as it tries to create value for its diverse set of stakeholders. This is true even for a firm as large and complex as McDonald's ("Every day McDonald's serves 69m customers, more than the population of Britain or France"), which wouldn't normally spring to mind as the epitome of a socially responsible organization. The article profiles the career of Bob Langert, who converted a short-term assignment in the firm in 1988 (dealing with a spat over polystyrene packaging) into a 25 year career as McDonald's CSR officer:

 

"It was a Herculean task. … Apart from litter, he had to deal with animal welfare, environmental destruction, obesity and worker's rights."

 

The opportunities, however, when a company the size of McDonald's decides to make a change in operating practices, are massive:

 

"McDonald's [often] took action even when there was little sign of public concern. Shaving one inch off the napkins saved 3m lbs of paper annually, for example, but few consumers noticed."

 

Another example is the firm's supply chain for eggs:

 

"In the late 1990s, after complaints from campaign groups about the living conditions of hens, Mr Langert visited an egg facility to find the conditions were indeed terrible. In August 2000 the firm said it would buy eggs only from suppliers that gave hens 72 square inches of space, compared with an industry average of 48 square inches. Suppliers resisted so strongly that McDonald's had to find new sources for its eggs. But those who complied found that the mortality rates of hens decreased and egg-laying rates increased, offsetting the extra costs."

 

The list of issues were endless:

 

"Human working conditions also caused the company trouble. … Another issue was the use of 'trans fats' to cook the restaurant fries, which were deemed to increase the risk of heart disease; it took six years for the chain to phase out the practice. But the company has also added more salads and healthy options."

 

Even if critics continue to campaign against McDonald's and hold it up as the anti-CSR company, it is clear from the article that the potential to change the world lies with these large organizations, much more than the Patagonias or NGOs of this world:

 

"Was all the effort worth it? It seems like that many of the people who care a lot about these issues would never eat a fast-food burger in the first place. But Mr Langert did more than most to reduce environmental waste and animal cruelty."

 

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/

 

 

Do you want ethics with that?

February 9, 2019

The Economist

Late Edition – Final

55

https://www.economist.com/business/2019/02/07/a-25-year-battle-to-improve-the-image-of-mcdonalds