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

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


Monday, December 5, 2016

Strategic CSR - HFCs

The article in the url below reveals a recent "sequel" meeting to the COP 21 accord signed in Paris last December:
 
"When negotiators from nearly 200 countries gathered outside Paris in December for the United Nations summit meeting on climate change, they reached the first agreement to take action on curbing their planet-warming pollution. This weekend in Vienna, with far less attention, negotiators from those same countries neared a deal that many environmentalists have called the most significant action this year to reduce global warming."
 
What is interesting about the Vienna meeting is not that it is happening (there are many loopholes and weaknesses in the COP 21 that need to be addressed if the agreement is to result in meaningful change), but that it was being done almost secretly. The effect of reduced media coverage (and, as a result, reduced pressure) is what might turn out to make a more effective agreement:
 
"While the Paris agreement aims to reduce the use of coal and oil, which produce the carbon dioxide emissions that are the chief cause of global warming, negotiators in Vienna pushed ahead on a deal to ban the use of hydrofluorocarbons, chemicals used in air-conditioners and refrigerators. Although they contribute only a small percentage of the world's greenhouse gases, these chemicals, known as HFCs, can trap heat in the atmosphere at levels a thousand times higher than carbon dioxide can, according to published scientific studies. Negotiations to ban HFCs have dragged on for seven years. But the draft language emerging from the Vienna talks could lead to a final deal ready to be signed during an October conference in Kigali, Rwanda."
 
As such, the Vienna meeting is not designed to amend the COP 21 agreement, but would be an amendment to the Montreal Protocol of 1989 that dealt specifically with gasses (CFCs, in particular) that cause the ozone hole in the Earth's atmosphere. As with many governmental interventions, the Montreal Protocol had a particularly damaging unintended consequence:
 
"In response, chemical companies developed HFCs, which do not harm the ozone. But the substitute had the wholly unexpected side effect of increasing heat trapped in the atmosphere, which worsened climate change."
 
The value of amending an existing protocol is that the amendment is immediately binding on all signatory countries:
 
"An amendment to the Montreal Protocol would have the force of law in almost every country, which could give it more potency than the Paris Agreement, a legal hybrid that lacks the binding force of a treaty. While some portions of the Paris Agreement are legally binding, the specific actions taken by countries to reduce their emissions are voluntary. And there are already questions about whether some countries will follow through on their Paris pledges."
 
This is particularly encouraging since the COP 21 agreement already looks endangered:
 
"In Brazil, the impeachment proceedings against President Dilma Rousseff have thrown the fate of her Paris promise into question. Rodrigo Duterte, the new president of the Philippines, said this month that he would not honor the Paris agreement. And in the United States, Donald J. Trump, the Republican presidential nominee, has vowed to 'cancel' the Paris accord."
 
For additional details of the agreement reached at the Vienna meeting, see: http://www.climatenetwork.org/press-release/montreal-protocol-vienna-talks-pave-way-ambitious-plan-phase-down-hfcs
 
Take care
David
 
 
Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler4e
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/
 
 
A Sequel to the Paris Climate Accord Takes Shape in Vienna
By Coral Davenport
July 23, 2016
The New York Times
 

Thursday, December 1, 2016

Strategic CSR - Canada

The article in the url below reveals a dramatic shift in government policy towards climate change that is happening just north of the border (for those of you living in the U.S.):
 
"By 2030, Canada intends to see its greenhouse gas emissions fall 30% from the 2005 levels of 749 megatonnes. To get there, the country expects its businesses to play an important role in a new plan that will include a program to make companies pay for their carbon emissions. Under the new government, led by Prime Minister Justin Trudeau, Canada expects to unveil a carbon pricing program as early as this fall. 'We're going to make sure there is a strong price on carbon right across the country,' Trudeau said during a TV interview [over the summer]."
 
The government subsequently launched a carbon pricing plan this past October (for details, see here), an approach that stands in stark contrast to the previous government of Stephen Harper, under which Canada announced it would be unable to meet its commitments signed under the Kyoto Protocol of 1992 (which committed the country to only a 6% reduction of greenhouse gasses by 2012 compared to 1990 levels). But, this low starting point just indicates how far Canada has to go to catch-up. Even the 30% reduction commitment by 2030 is considered by the international community to be weak, given that it "falls far below those set by the European Union and the US":
 
"Around 40 countries and more than 20 cities, states and regions are putting in place or already have a price on carbon, which translates to 12% of global emissions and an annual value of $50bn, according to the World Bank. The European Union runs the world's largest cap-and-trade program, launched in 2005, which involves 31 countries and covers 45% of its greenhouse gas emissions. The US Congress attempted to create a carbon pricing program after Barack Obama became president but failed to gain enough support."
 
The article suggests one reason for the lack of more substantive progress – business resistance, which is expected to be strong. As such, the government's commitment in practice has yet to be fully tested:
 
"Carbon pricing can be an effective weapon against global warming. But it's also a concept that historically has drawn a lukewarm reception from businesses, which tend to fight its financial impact on them."
 
In other words, while the initiative is hopeful, the details of implementation are yet to be worked out. Perhaps more importantly, early signs are mixed. For example, a quote toward the end of the article sums the general attitude most societies have taken on this issue, to date:
 
"Carbon prices vary considerably around the world, from less than $1 per tonne of emissions in countries such as Mexico to $130 per tonne in Sweden, with 85% of countries pricing carbon at below $10. [Mark Thurber of Stanford] believes Canada will set the price at around $15 per tonne. 'It's been pretty well established that that's a level that drives some abatement activities but the economic impact is fairly minor,' he said. 'It's big enough to be meaningful but it's not going to cripple them in the slightest.'"
 
But isn't the whole point to do something meaningful? If the goal is always to ensure "the economic impact is fairly minor," nothing will ever change. I may have missed something, but I thought the whole point is to punish behavior that is damaging to the collective, while at the same time rewarding behavior (e.g., investment in alternative energies) that promotes a healthy and strong society.
 
Take care
David
 
 
Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler4e
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/


Dear corporate Canada: It's time to pay for your part in climate change
By Alison Moodie
July 28, 2016
The Guardian
 

Tuesday, November 29, 2016

Strategic CSR - Gig economy

The article in the url below provides some fascinating insight into the lives of people working in the gig economy for firms like Uber, Deliveroo, and TaskRabbit:
 
"There are no good estimates on the global scale of the gig economy but in the US there are about 800,000 people earning money this way without being anyone's employee."
 
"Algorithmic management" is the term academics have devised to explain how the working lives of these people are increasingly being dictated by software (via apps) as opposed to by managers (as in a traditional organization and employer/employee relationship):
 
"For companies like Uber, which aspires to 'make transportation as reliable as running water,' algorithmic management solves a problem: how to instruct, track and evaluate a crowd of casual workers you do not employ, so they deliver a responsive, seamless, standardised service."
 
These algorithms essentially track every aspect of the work being conducted for the company as soon as each worker logs on to the app. It dictates everything from how quickly they must respond once an opportunity is sent to them (within 30 seconds for Deliveroo) to assessments of performance:
 
"Deliveroo's algorithm monitors couriers closely and sends them personalised monthly 'service level assessments' on their average 'time to accept orders,' 'travel time to restaurant,' 'travel time to customer,' 'time at customer,' 'late orders' and 'unassigned orders.' The algorithm compares each courier's performance to its own estimate of how fast they should have been. … Drivers for Uber's ride-hailing app, of which there are about a million around the world, are subject to similar algorithmic control. They choose when to work but once they log on to the app, they only have 10-20 seconds to respond to 'trip requests' routed to them by the algorithm. They are not told the customer's final destination until they have picked them up. If drivers miss three trip requests in a row, they are logged out automatically for two minutes. Uber sends drivers a weekly report including their confirmation rate and average customer rating (out of 5)."
 
Rather than something new, however, "algorithmic management" is increasingly thought of as an extension of innovations that were the foundation of the field of management:
 
"'Algorithmic management' might sound like the future but it has uncanny echoes from the past. A hundred years ago, a new theory called 'scientific management' swept through the factories of America. It was the brainchild of Frederick W Taylor, the son of a well-to-do Philadelphia family who dropped his preparations for Harvard to become an apprentice in a hydraulics factory. He saw a haphazard workplace where men worked as slowly as they could get away with while their bosses paid them as little as possible. Taylor wanted to replace this 'rule of thumb' approach with 'the establishment of many rules, laws and formulae which replace the judgment of the individual workman.' To that end, he sent managers with stopwatches and notebooks on to the shop floor. They observed, timed and recorded every stage of every job, and determined the most efficient way that each one should be done. … For Jeremias Prassl, a law professor at Oxford university, the algorithmic management techniques of Uber and Deliveroo are Taylorism 2.0. 'Algorithms are providing a degree of control and oversight that even the most hardened Taylorists could never have dreamt of,' he says."
 
As companies tighten the screws, however, these workers are beginning to pushback, complaining that they were lulled into working for these companies with elevated pay rates and conditions that are then gradually reduced. The recent lawsuit against Uber (in California and Massachusetts) is a good example of this. Something similar (although less formal) also occurred over the summer in London – "one of the first industrial disputes to hit the city's so-called gig economy":
 
"These are workers without a workplace, striking against a company that does not employ them. They are managed not by people but by an algorithm that communicates with them via their smartphones. And what they are rebelling against is an app update."
 
While it is clear that many people self-select into these jobs because they fit their lifestyle at present ("Some 85 per cent of couriers have told Deliveroo they use it for 'a supplementary income, or short-term flexible work'"), it is also clear that the structure of these jobs are redefining the nature of 'employment' in a way that poses significant challenges to courts (that have to deal with grievances today) and public policy planners (who will have to deal with the social consequences in the future if these jobs fail to provide the healthcare and pension support these people will need at some point). There is also, of course, a moral component to the way these jobs are structured. While some see them as facilitating 'flexibility' and others see them as incentivizing 'abuse,' the danger is that whatever we gain in productivity in the short term ("Taylorism 2.0"), we lose in our humanity over the longer term.
 
Take care
David
 
 
Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler4e
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/


When the boss is an algorithm
By Sarah O'Conner
September 10/11, 2016
The Financial Times
Late Edition – Final
Life & Arts, 1
 

Friday, November 25, 2016

Strategic CSR - Black Friday

The article in the url below reports REI's decision last Thanksgiving to "cancel Black Friday":
 
"Outdoor gear and sporting goods retailer REI is canceling Black Friday this year. No promotions, no hourly sales, no doorbusters, no waiting in line."
 
Instead, the adventure retailer is encouraging consumers to #OptOutside:
 
"In an unprecedented move for the modern-day holiday shopping season, REI's 143 stores will be closed the day after Thanksgiving. The co-op business plans to launch a campaign Tuesday encouraging people to forgo shopping to spend time outside instead. With the hashtag #OptOutside, REI will ask people to share what they're doing on Black Friday on social media."
 
Of course, the cynical side of me notes that REI has a vested interest in everyone spending more time outside. I am sure the firm is hoping that they will buy lots of REI gear in order to do it. But, at least they will not be buying that stuff on Black Friday. And, any pushback against the relentless march of materialism in our society must be a good thing, right?
 
For more detail on REI's campaign (which continues this year) and its underlying motivations, see: http://optoutside.rei.com/
 
And for a list of companies that will not be open this year on Thanksgiving Day (and the few that will also be closed on Black Friday), see: http://bestblackfriday.com/blog/stores-closed-on-thanksgiving-and-black-friday-2016/
 
Have a good weekend
David
 
 
Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler4e
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/
 
 
REI Closing on Black Friday for 1st Time in push to #OptOutside
By Hadley Malcolm
October 26, 2015
USA Today
 

Wednesday, November 23, 2016

Strategic CSR - U.S. economy

I came across this website the other day: http://www.usdebtclock.org/
 
It is amazing to see the U.S. economy working in real time.
 
Happy Thanksgiving everyone!
David
 
 
Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler4e
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/
 

Monday, November 21, 2016

Strategic CSR - Self-interest

The article in the url below reviews a book by Samuel Bowles ('The Moral Economy: Why Good Incentives are No Substitute for Good Citizens,' Yale University Press) that challenges the central tenet of rational economic theory – that the pursuit of self-interest generates optimal societal-level outcomes:
 
"If there is a single dogma that has dominated mainstream economic and political thought since the 18th century, this is it. Samuel Bowles, an economist at the Santa Fe Institute, thinks this dogma is false. In his tightly argued and illuminating book, The Moral Economy: Why Good Incentives are No Substitute for Good Citizens, Bowles makes the case that appeals made to our self-interest can undercut instinctive moral impulses; and that when these impulses are weakened, crucial institutions work sub-optimally, if at all. This is the case even for markets, institutions which the dogma holds up as exemplars of the unique organising power of greed."

In order to make his point, Bowles presents examples of various research studies that show the potentially damaging influence of financial incentives:
 
"Fifteen years ago, the Boston Fire Department ended its policy of unlimited sick days, hoping to curb the flu outbreaks that seemed to happen on Mondays and Fridays. Fire fighters taking more than 15 sick days would have their pay docked. The following year, the number of sick days taken more than doubled. And sick days around the year-end holidays increased by an order of magnitude."
 
The reason offered to explain this phenomenon is that we work for multiple reasons. Of course, we seek financial remuneration, but the work that we do also shapes our identity, which is closely tied to our self-esteem. Belonging to an organization also fulfills our needs as social beings – the value we place on belonging to a group and working towards something that is bigger than ourselves:
 
"The change in sick-day policy replaced a relationship that respected the honour of the firefighters with one that put a price on their obedience. Instead of treating showing up to work over the holidays as a duty, it became something they could buy their way out of. Many decided the price was worth paying."
 
While I agree with all of this as an explanation as to why financial incentives will often produce unintended outcomes, whether this is the same as saying self-interest is not the primary driver of behavior overall seems less clear. My sense is that humans act largely according to their perceived self-interest. A broad definition of 'self-interest' therefore includes the need to build identities that enhance our self-esteem and satisfy our need to belong to a larger group. In other words, it is consistent with our self-interest for us to reject financial incentives when they harm our moral or psychological wellbeing:
 
"Prices crowd out goodwill because they are not just incentives. They convey messages too. In the simplest cases, they can signal that the domain of the incentive is not the proper home for moral concerns."
 
In this way, it is easy to arrive at the conclusion that true altruism does not exist. In other words, people donate to charities or volunteer their time (or work as firefighters) because doing so makes them feel better about themselves – it reinforces their perception of themselves as being the kind of person that helps others. The key seems to me to be the importance of instilling certain values in people at an early age (e.g., good parenting and good education) that builds the need to define an individual's self-interest in terms of the wellbeing of the society in which they are based, rather than in terms of a narrow focus on personal success and material gain.
 
Take care
David
 
 
Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler4e
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/
 
 
When greed isn't good
By Robert Armstrong
August 20/21, 2016
Financial Times Weekend, Life & Arts
Late Edition – Final
8
 

Friday, November 18, 2016

Strategic CSR - Biometric data

The article in the url below highlights the growing complexity of the task facing companies that are collecting ever growing amounts of their employees' personal data:
 
"As the advent of widescale use of biometric data approaches, companies already struggling to protect the personal information of their employees and business partners will have to ramp up their security to even higher levels to protect the even-more-sensitive fingerprints and iris scans that will be in their possession."
 
In particular, the concern is with innovations that are designed in to increase security by relying on biometric data for identification. The reason these data are more secure is because they are unique to the individual. While this increases security, however, it also raises the stakes should those data be compromised:
 
"While the ramifications of a stolen password can be a pain for the affected person or company, the password can be changed and the damage limited. But stealing someone's fingerprint, palm print or iris scan can lead to a lifetime of problems, said David Meyer, vice president of products, OneLogin, an identity and access-management firm. 'The risks or consequences if biometric data get compromised are larger than if a password secret gets compromised,' said Mr. Meyer. A person can always change their password or get a new ID badge, 'but they can't change their fingerprint or facial geometry.'"
 
Hmmmmmm. In practice, however, I wonder how different this is. While a password can certainly be reset, I am not sure that a social security number (National Insurance number in the UK) can be changed nearly so easily – perhaps about as easily as someone's "facial geometry." And, as far as I am aware, my SSN has been compromised so many times, it is surely available to the highest bidder on various dodgy websites. Clearly there is an emerging business opportunity for someone who can develop a cosmetic surgery process to alter fingerprints – no doubt, iris scans will be a little more complicated.
 
Have a good weekend
David
 
 
Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler4e
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/
 
 
Biometric Data Raises Privacy Stakes
By Ben DiPietro
July 25, 2016
The Wall Street Journal
 

Wednesday, November 16, 2016

Strategic CSR - Exxon

The article in the url below contains good news from Exxon:
 
"Exxon Mobil Corp. is ramping up its lobbying of other energy companies to support a carbon tax, marking a shift in the oil giant's approach to climate change as the industry faces growing pressure to address the politically charged issue."
 
The shift is not in terms of policy, but the level of effort Exxon is willing to invest in bringing about a carbon tax:
 
"Exxon's official position has long been the same—a carbon tax is the best way to address the risks of warming temperatures—but it has done little to actively advocate for that goal in recent years. Lately, Exxon has been making the case with its U.S. counterparts to support a carbon tax, arguing that the industry must not oppose all climate policies, according to people familiar with Exxon's thinking."
 
In spite of what you might think due to the company's ongoing tussle with the NY Attorney General, the article reports that Exxon's interest appears to be genuine:
 
"Top Exxon officials have been more vocal about their support for a carbon tax and have met with Capitol Hill offices about related legislation, according to the company's recent lobby disclosure forms. For the past six months, Exxon has been asserting its position more in meetings within trade associations, including the American Petroleum Institute and American Fuel and Petrochemical Manufacturers, according to multiple reports from people who have attended meetings with Exxon officials."
 
The cynical side of me is guessing Exxon's enthusiasm is based on its relative efficiency. In other words, if costs are pushed up for the industry as a whole, they will have a greater impact on less efficient companies, while more efficient companies (such as Exxon) will be better able to absorb the additional costs. This is why Walmart has long-supported an increase in the minimum wage – the firm pays above industry average and is more efficient than its competitors. The fear for companies with low-cost business-level strategies (such as Exxon and Walmart) is that costs will be implemented selectively or that they will be pressured to voluntarily take on additional costs to which other firms are not exposed. A carbon tax, of course, represents an increase in costs relative to the amount of carbon produced (and sold).
 
Having said that, a carbon tax is uniformly recognized by economists to be the best way to tackle climate change. Similarly, any solution to the consumption of fossil fuels has to involve the biggest industry players. As such, the fact that Exxon is willing to raise its public profile in support of a tax is absolutely a step in the right direction. In an ideal world, Exxon, and BP, and Shell, and Chevron, etc., will be incentivized by their stakeholders to shift their efforts (in particular, R&D) towards renewable energies, and shift quickly.
 
After that, we can work out what to do about the really big players in the global energy markets – the state backed companies, such as Aramco (Saudi Arabia), Sinopec (China), and Gazprom (Russia). As I said, in an ideal world …. And, suddenly, we are in a world that is far from ideal.
 
Take care
David
 
 
Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler4e
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/
 
 
Exxon Touts Carbon Tax to Rivals
By Amy Harder and Bradley Olsen
July 1, 2016
The Wall Street Journal
Late Edition – Final
B6
 
 

Tuesday, November 15, 2016

Strategic CSR - Ethics and compliance

The field of ethics and compliance has long been conflicted. This is demonstrated in the range of titles assigned to people responsible for ethics/compliance in organizations – are they Ethics Officers or Compliance Officers or Ethics and Compliance Officers (or any of the other myriad of titles assigned to people essentially doing the same job)? This conflict is also apparent in the name of the leading association representing these managers, which was originally the Ethics Officers Association (EOA), then it became the Ethics and Compliance Officers Association (ECOA), and now, for some reason, is called the Ethics and Compliance Initiative (ECI) – an "initiative," to me, seems much weaker than an "association."
 
But, anyway. In general, my sense is that the tail has been wagging the dog a bit. In an effort to broaden their appeal to as many managers as possible (and, therefore, maintain or increase membership), the ECI has twisted itself to reflect the morphing field, rather than standing on principle for something 'pure' and shaping the field. The article in the url below supports this argument, suggesting that the consequences of this passive approach might be causing confusion in the executive suite about the role of these essential managers (note: the SCCE is a separate organization representing ethics and compliance officers):
 
"A survey of compliance and ethics professionals by the Society of Corporate Compliance and Ethics found 50% said promoting an ethical culture is the top job for an ethics and compliance program, while 35% said it is to prevent and detect misconduct."
 
In particular:
 
"When asked what they thought management believed the top objective is, 43% said meeting regulatory requirements, while 29% said preventing and detecting misconduct. When asked what they thought the board believed, 28% said to prevent and detect misconduct."
 
These survey results reflect confusion as to whether the role of these officers is to build an ethical culture that is likely to prevent misconduct (ethics) or to comply with existing legislation that minimizes the impact of any misconduct should it occur (compliance). While it is clearly more effective for a firm to prevent misconduct, that is also the more expensive option since it involves investment across the whole organization in multiple initiatives, some of which may help prevent misconduct while others are probably unnecessary. The cheaper (and more cynical) option is to wait for misconduct to emerge and then act to minimize the fallout. While this latter approach might be cheaper in the short-term, however, the danger is that it generates much longer-term issues that can seriously threaten the organization's viability (e.g. VW, Wells Fargo, etc.). My suggestion to the ethics and compliance field, therefore, is to start shaping the field in a way that corrects misunderstandings among firms' senior ranks, rather than merely trying to reflect it.
 
Take care
David
 
 
Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler4e
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/
 
 
Differing Views on Ethics & Compliance
By Ben DiPietro
July 25, 2016
The Wall Street Journal
 

Friday, November 11, 2016

Strategic CSR - McDonald's

Anyone who has worked in the restaurant industry knows that many chefs like fast-food. The article in the url below challenges some of the best chefs in the world to apply their discerning palates to identify which fast food chain is getting it right (or at least, less wrong). The results indicate the scale of the challenge facing McDonald's as the fast-food industry responds to consumer demands for healthier (yet, good tasting and cheap) meals. While different chefs liked different chains, it seems that none of them think McDonald's food is worth eating:
 
"At the airport. En route to another critical meeting. Fast food is everywhere, and unavoidable. Even celebrity chefs producing the world's most-praised meals have an occasional hankering. So where do they get their fix? We asked them, and alongside the predictable Shake Shack and KFC were some surprising results. More were notable by their absence. We're looking at you, McDonald's."
 
The range of fast-food outlets selected is impressive. In terms of burgers, Shake Shack and In-N-Out Burger both get mentioned twice, while Five Guys also gets noted. As the quote indicates, however, McDonald's is notable by its absence from consideration.
 
Hope you all have a good weekend.
David
 
 
Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler4e
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/
 
 
The Best Fast Food, Picked by the World's Top Chefs
By Richard Vines
July 21, 2016
Bloomberg Businessweek
 

Monday, November 7, 2016

Strategic CSR - Tesla

The article in the url below poses an ethical challenge for Tesla that stems directly from the company's growing economic success:
 
"What Happens When You Die Waiting for a Tesla?"
 
According to actuary statistics, this is much more than an artificial thought exercise:
 
"There were 821.5 deaths in the U.S. per 100,000 people as of 2013, the most recent data available, and the newest car from Tesla Motors Inc. isn't scheduled to begin shipping until late 2017. That leaves at least 18 months during which one among the hundreds of thousands of Model 3 hopefuls could be found at the supercharger station in the sky. What's more, owners of Tesla's pricier Model S sedans have tended to be overwhelmingly male and over the age of 45, according to data from Edmunds.com, so we aren't exactly speculating about an actuarially invincible cohort here."
 
The lease governing the refundable deposits for the new Model 3 suggests the company did not think of this in advance – another indication that the success of the Model 3's launch vastly exceeded expectations:
 
"A deceased Model 3 buyer will have plopped down a refundable $1,000 deposit to hold a place on Tesla's waitlist, agreeing to a one-page contract that explicitly blocks transfers to another buyer. A particularly forward-looking person on the Model 3 waitlist might list the reservation in his or her will, but death doesn't invalidate the terms."
 
It seems that the deposit, in itself, does not provide the right to purchase a car – a clause in the contract designed to prevent a different problem:
 
"The contract warns that a 'reservation is not transferrable or assignable to another party without the prior written approval of Tesla,' and a Tesla representative said these terms are designed to prevent line squatters from hoarding reservations with plans to sell them off to the highest bidder as shipping day approaches."
 
Reassuringly:
 
"So far there have been no known deaths on the Model 3 waitlist."
 
Take care
David
 
 
Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler4e
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/
 
 
What Happens When You Die Waiting for a Tesla?
By Polly Mosendez
July 13, 2016
Bloomberg Businessweek
 

Thursday, November 3, 2016

Strategic CSR - GMOs

The article in the first url below provides an update on the Vermont law that went into effect earlier this year requiring firms to label products containing GMO ingredients (see Strategic CSR – GMOs). Rather than have firms deal with piecemeal legislation, state-by-state, Congress has now acted to pass federal law that supersedes any individual state's legislation. Unfortunately, the new law looks as though it is a victory for large companies and their lobbying budgets, rather than clarity for consumers:
 
"In a victory for food companies, Congress has passed a federal requirement for labeling products made with genetically modified organisms that will supersede tougher measures passed by one U.S. state and considered in others. The bill will require labels to be reworked or updated to show whether any of the ingredients had their natural DNA altered, but will take years to phase in and will give companies the option of using straightforward language, digital codes or a symbol to be designed later. The terms are in contrast to a law that went into effect this month in Vermont. That law required food manufacturers and grocers selling prepared foods explicitly to label items that contained GMO ingredients by January. Companies that violate the law face fines of as much as $1,000 a day."
 
By the time this law takes effect, at least in the US, it is going to be hard to find any food without ingredients that have "had their natural DNA altered" in some way:
 
"GMOs, used in the U.S. for about two decades with federal approval, are crops whose genes have been engineered to make them resistant to pests, better able to withstand drought and otherwise hardier. Federal regulators have approved the GMO seeds on the market, but environmentalists and natural food supporters say they can hurt the environment and rely on herbicides that could harm consumers. The vast majority of corn and soybeans grown in the U.S. is genetically engineered, and the Grocery Manufacturers Association trade group estimates that 70% to 80% of foods eaten in the U.S. contain ingredients that have been genetically modified."
 
While I support the science behind GMOs (which is pretty clear that there are no demonstrated negative effects from producing and consuming foods containing GMOs), I also believe that consumers should be able to decide for themselves whether they choose to ingest these products. As a general rule, transparency is always a good thing in communication between firms and all their stakeholders. Hopefully, those firms sufficiently progressive to see where the national debate is heading will voluntarily begin labelling their products accurately:
 
"Some big companies including Campbell Sound Co., General Mills Inc., Kellogg Co. and Mars Inc. went ahead and began placing GMO-labeled items on store shelves several months ago nationwide either in response to consumer demand or Vermont's law. Danone SA said on Thursday that it would also begin to label GMO ingredients in yogurts made for the U.S. market. A Campbell spokeswoman said the U.S.'s largest soup manufacturer will continue to print labels with words related to GMO ingredients, and the company is in discussions with federal regulators about the language. A Mars Inc. spokesman said the company is sticking with the text it has applied to products containing engineered ingredients for now. General Mills will review the regulations and assess consumer preference before developing its long-term plan on labeling, a spokesman said."
 
The article in the second url below reports on a more recent executive order that further standardizes what is considered to be a 'genetically-modified organism' and stipulates how companies will have to convey this information to their customers, even while breaking them in gently:
 
"The new law mandates that the Department of Agriculture define what constitutes a genetically modified food ingredient and then requires food manufacturers to label products that contain them. Disappointment among labeling proponents stems from the latitude the law gives food companies in how this labeling is done."
 
As the article concludes, however, GMOs are only one (and far from the most pressing) among many issues surrounding food quality and labeling:
 
"Of course, there is much more we could know about our food than whether it was genetically engineered. Now that we're 'allowed' to know about G.M.O.s, there are some other questions about the food we buy that we might like answered. For example: Where are the ingredients from? Were antibiotics routinely administered to animals? What pesticides and other chemicals were used, and do traces of these chemicals remain? Was animal welfare considered, and how? What farming practices were used? How much water was required? Let's really get down to it. Were the workers who sweated to put food on my table paid at least minimum wage? Did they get health benefits? Overtime? Were they unionized? Protected from pesticide exposure?"
 
Take care
David
 
 
Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler4e
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/
 
 
Congress Sets Rules for GMO Labels
By Heather Haddon
July 15, 2016
The Wall Street Journal
Late Edition – Final
B3
 
G.M.O. Labeling Law Could Stir a Revolution
By Mark Bittman
September 2, 2016
The New York Times
Late Edition – Final
A19
 

Monday, October 31, 2016

Strategic CSR - GAAP

The article in the url below reveals the extent to which large U.S. firms are now manipulating their quarterly results by presenting adjusted (i.e., non-GAAP) earnings in addition to their standard accounting results:
 
"Just 29 companies in the S&P 500 index—or 5.7% of the total—closed their books for 2015 exclusively using U.S. Generally Accepted Accounting Principles, or GAAP. That's a sharp decline from 25% in 2006, according to research firm Audit Analytics."
 
The reasons why firms do this do not seem to be in doubt:
 
"The purists are dwindling as companies struggle to increase their earnings in the wake of the 2008 financial crisis, analysts and accountants say. … The adjusted, or customized, figures many finance chiefs use to supplement their company's standard financial reports inflate income by an average of 44% at profitable companies, according to new research. … Adjustments can exclude the effects of such factors as currency swings, noncash charges like restructuring costs and one-time charges. That can help mask the impact of tepid global economic growth, which has left many businesses unable to raise prices and hindered sales growth."
 
As one accountant quoted in the article succinctly puts it:
 
"If everything is rosy and GAAP looks great, there is no need to include a non-GAAP metric."
 
The graphic accompanying the article demonstrates the speed with which firms have adopted this practice:
 
 
The interesting thing about this story, however, is not that this is happening so much as that investors are letting firms get away with it. In other words, although the information on the number of firms employing this practice is freely available, investors either do not know or do not care. Clearly, executives do not feel there is a penalty to be paid if they continue this practice. But, it seems reasonable to conclude that, the longer they are allowed to get away with it, the more they will push the boundaries of what is considered 'acceptable':
 
"U.S. companies are allowed to report non-GAAP metrics so long as they are labeled, justified and reconciled with comparable standard accounting figures, but there is little oversight of how these adjusted figures are calculated."
 
Ultimately, where is the line between presenting a more 'realistic' version of the firm's operations and outright lying about performance? Given the jump in use in recent years, this is something that is of concern to regulators:
 
"SEC Chairman Mary Jo White has warned against giving adjusted earnings more prominence than standard numbers, because it might mislead investors. In May, the agency issued new guidance on using and publicizing non-GAAP measures and signaled it may issue new rules to curtail the practice."
 
What might provide a bit more of an incentive for executives to curtail this practice is if SEC queries to specific firms about questionable practices are immediately made available to investors, rather than delayed as at present. Until there is some meaningful pushback from stakeholders, behavior is unlikely to change.
 
Take care
David
 
 
Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler4e
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/


Accounting Blurs Profit Picture
By Tatyana Shumsky and Theo Francis
June 28, 2016
The Wall Street Journal
Late Edition – Final
B1
 

Friday, October 28, 2016

Strategic CSR - Upcycling

The photos accompanying the article in the url below contain some great examples of clothing and accessory companies that are shifting our definitions of sustainable apparel:
 
"From selling clothes with a 30 year guarantee to touring Europe in a repair shop – these brands are advancing the circular economy within fashion."
 
One good example:
 
"Elvis & Kresse collect decommissioned firehoses from fire brigades across the UK and turn them into bags. The hoses, (some of which have spent over 20 years fighting fire) are saved from landfill and 50% of profits from the range is donated to The Fire Fighters Charity."
 
Similarly:
 
"If you send your old shirts to Netherlands based Van Hulley, they'll turn them into new boxer shorts and send them back to you. The idea came to founder Jolijn Creutzberg over 15 years ago. … In 2012 Creutzberg turned her idea into a social enterprise which employs women who are otherwise distanced from the labour market.
 
As well as creating new products using recycled materials, there is also value in repairing old products, whether they were made by your company or someone else's:
 
"Outdoor clothing company Patagonia is currently on a five-country, 50-stop tour around Europe in two mobile repair shops. The shops are open to anyone with a garment in need of repair, regardless of brand. 'We want to empower our customers to be owners, not just consumers,' says Patagonia CEO Rose Marcario. 'It's a simple but critical message: keep your gear in action longer and take some pressure off our planet.'"
 
Have a good weekend
David
 
 
Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler4e
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/
 
 
Fish net bikinis and mushroom death suits – Eco fashion in pictures
By Hannah Gould
May 12, 2016
The Guardian
 

Wednesday, October 26, 2016

Strategic CSR - Dave's Killer Bread

Here's a good example of the power of business to transform lives – organizations offering opportunities for employment to people who have served time in prison:
 
"Bonnie Rice was released from prison last year. After a five-year, drug-related prison sentence, she knew she couldn't go back to any of the people who led her into trouble. … She managed to find a place to live in a halfway house. But even though she filled out lots and lots of job applications in the first few months out of prison, she didn't get many calls back. … Then she found Together We Bake. It's a bakery … that makes granola, cookies and kale chips for local eateries and a local Whole Foods store. It's also a job-training and coaching program for women who need a second chance — many of whom have served time in prison, or are on probation following criminal charges."
 
Together We Bake (http://www.togetherwebake.org/) operates in the Washington DC area and, as its website states, is set-up to provide opportunities to women who otherwise face limited employment options:
 
"Together We Bake's mission is to provide a comprehensive workforce training and personal development program to help women gain self-confidence, transferable workforce skills, and invaluable hands-on experience which will allow them to find sustainable employment and move toward self-sufficiency."
 
The radio story in the url below explores this issue in depth, profiling Together We Bake as well as other companies that see their role as employer as an opportunity to help a segment of the population that is ignored or excluded by most firms. In particular, it highlights a company and product that I have loved for some time now: Dave's Killer Bread (http://www.daveskillerbread.com/). As Dave's Killer Bread (DKB) announces proudly on its website:
 
"DKB is powerfully different. Packed with protein, fiber, and whole grains with no artificial anything. It will rock your world."
 
Dave's Killer Bread will rock your world, but it will also make you feel good about capitalism. It is a company whose values are founded around the concept of a second chance and, in particular, what it terms "second chance employment":
 
"One in three of our employee partners has a criminal background. At Dave's Killer Bread, we believe everyone is capable of greatness and that a second chance can lead to positive lasting change. In 2015 we introduced our non-profit, the Dave's Killer Bread Foundation, with the mission to inspire other businesses to become Second Chance Employers and affect positive societal change."
 
Dave's Killer Bread is both healthy and tasty and, believe me, your doctor recommends it!
 
Take care
David
 
 
Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler4e
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/
 
 
This Bakery Offers A Second Chance For Women After Prison
By Allison Aubrey
April 15, 2016
National Public Radio

Monday, October 24, 2016

Strategic CSR - Passive investing

The article in the url below focuses on the effects of the growing trend of passive investing (e.g., exchange-traded funds) on overall market performance. This is interesting because passive investing is being increasingly sold to armchair investors as a 'safe' way to invest in the market:
 
"The argument goes like this: the stock market will outperform other investments over the long term, yet no individual is in a position to outsmart the market as a whole. So the best way to reap the rewards of investing in stocks with minimal risk is to put your money in a fund that tracks the performance of some broad, indexed measure of the market, such as the S&P 500."
 
In reality, however, the greater the proportion of the total market that is invested in funds designed to track the overall market, the greater the extent to which these funds become a self-fulfilling prophecy. In other words, they become the market, rather than reflecting the market:
 
"It stands to reason that beyond some threshold, a market that has more passive than active investors will behave differently than markets have in the past. One way to think about this is to imagine that investment decisions are increasingly on autopilot: more and more money will pour into a set of firms largely independent of the considerations that have traditionally guided investors, such as supply, demand, management performance, growth potential, or broader economic factors."
 
The result is an even greater distortion of what the stock market represents (and the overall value that it adds):
 
"Typically, stocks are indexed by market capitalization—the value of a firm's share price times the number of shares—from highest to lowest. A market with more passive investors than active ones will continue to push money into the largest firms, whether these companies are actually performing strongly or not."
 
Inertia is a strong force, affecting everything from business school rankings to our weekly shopping list. It is not hard to see the potentially distorting effects it can have on the stock market:
 
"Timothy O'Neill, the global co-head of Goldman Sachs' investment-management division, [said] that essentially every new indexed dollar goes to the same places as previous dollars did. This 'guarantees that the most valuable company stays the most valuable, and gets more valuable and keeps going up. There's no valuation or other parameters around that decision,' he said. … Such effects already exist today, of course, but the market is able to rely on active investors to counteract them. The fewer active investors there are, however, the harder counteraction will be."
 
Other potentially damaging effects of the growing influence of passive investors/funds are discussed in the article.
 
Take care
David
 
 
Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler4e
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/


Is Passive Investing Actively Hurting the Economy?
By James Ledbetter
March 9, 201
The New Yorker
http://www.newyorker.com/business/currency/is-passive-investment-actively-hurting-the-economy