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, February 20, 2017

Strategic CSR - Nationalism

I have been thinking about the primary cause said to have driven the two major controversial political decisions of 2016 – Brexit and Trump. In almost every account I have seen seeking to explain those decisions, it all seems to boil down to globalization. What this generally means at the local level is the failure of capitalism to spread wealth (the benefits of globalization) more evenly. The resulting inequality then drives the economic protectionism and anti-immigration that allow political movements, such as UKIP and Trump, to take advantage and secure previously unimaginable victories.
 
While I get this explanation, it only works if you care primarily about your country. That is, there is a belief that American workers 'lose' jobs to Chinese workers, for example. But, as an immigrant here in the US, I find that this nationalistic argument fails to resonate. To me, an American does not have any more 'right' to a job than a Chinese, Indian, South African, or anyone else anywhere in the world. The reason why a multi-national firm might close a US factory and open one in China is that the Chinese factory is more efficient. In other words, it produces a product of the same or better quality for less money. As a result, the Chinese employee gets better training, higher income, etc., etc., and the Chinese economy progresses. Similarly, the US gets to export all the jobs that do not add much value (i.e., they do not pay well) and (and this is where the story appears to break down, I guess) they re-train their citizens to do higher-skilled jobs that pay more (because they add more value) and the US economy also progresses.
 
I appreciate that a key element of the nationalistic argument is that politics is largely local and most democratic systems are based on geographic representation (rather than, for example, doing what is 'best' for the country or, heaven forbid, the world). I also appreciate that the rise of the robots seems to be accelerating this trend, although I can't help but think this is overblown. We have faced many technological shifts in our time and, always, the new technology has ended-up producing more work than it replaced.
 
To me, though, it just seems like a level-of-analysis issue. If we all thought of ourselves as citizens of the world (whatever Theresa May thinks), it would enable us to tackle problems that we do not see at present. For example, if a factory closes in California and relocates to Texas, while the workers are annoyed, it is not perceived in the same light as when a factory closes in North Carolina and opens in India. Yet, it is exactly the same economic process. It is just that our perspective is clouded by arbitrary national borders that were determined decades or centuries ago, either as a result of military might (e.g., pick your war), geographic protection (e.g., an island), or bureaucratic incompetence (e.g., the role of the UK and other colonial powers in over-riding centuries of history by drawing straight lines in the Middle East). If we could see through these clouds, we would understand that we are one world (geographic fact) before we are one nation (historical anomaly).
 
What is essential for CSR to move the needle, therefore, is an ability to think in terms of the group, the much larger group, and begin to suppress our extremely unhealthy current preoccupation with the narrower nation/racial/ethnic-based group. CSR is, by definition, of concern to society at large and, at a fundamental level, it prioritizes the interests of the majority over those of the minority. The issues it deals with (including economic inequality) are, at a minimum, societal-wide and, more likely, global. In other words, while it may be true that "all politics is local," CSR is global. And, until we start thinking that way, it will be hard to progress together.
 
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/
 

Friday, February 17, 2017

Strategic CSR - Uber

The article in the url below raises an interesting question:
 
"What if Uber kills off public transport instead of cars?"
 
While this may not be a very pressing concern in most U.S. cities, where public transport is generally less well-developed; in Europe, public transport is central to most city life:
 
"The perceived wisdom is that Uber has disrupted taxis and that private automobiles are next, but what if we've misread what is happening in our cities? Traditional thinking would suggest that UberPool, which allows users to split the cost of trips with other Uber riders heading in the same direction, will always be inferior to public transport. Sitting in the backseat of a Prius may be more comfortable than standing on a crowded bus or train, continues this reasoning, but carpooling can't substitute for mass transit at rush hours without massively increasing congestion."
 
Rather than simply offering an alternative method of transportation for those who can afford it, the aggressive pricing on Uber Pool appears aimed directly at public transportation – seemingly with the goal of eventually replacing it:
 
"This is wrong. In the last six months, Uber has begun offering shared rides for as little as $1 (81p), introduced optimised pickup points that algorithmically recreate bus stops, and started testing semi-autonomous vehicles it hopes will solve its increasingly contentious labour issues."
 
A standard economic answer to this problem would be that Uber will only succeed in replacing public transportation if it ultimately adds more value than buses and trains. If it is cheaper (shared costs), more comfortable (no standing), and more convenient (picks you up at your house), then it may indeed add more value. The danger, I guess, is if Uber follows the pattern it has demonstrated with its drivers (see Strategic CSR – Gig economy and also here), where it offers financial incentives to sign-up, but then decreases those benefits slowly over time. The equivalent with public transportation is if it is initially much cheaper to use Uber, but becomes more expensive once government has cut the relevant funding.
 
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/
 
 
What if Uber kills off public transport rather than cars?
By Greg Lindsay
January 13, 2017
The Guardian
 

Tuesday, February 14, 2017

Strategic CSR - Nordstrom

The article in the url below describes how nervous companies in the U.S. are at the moment. CEOs and executives in prominent companies (and also some pretty obscure ones) apparently dread drawing the wrath of the Twitter monster. The example given was Nordstrom (a high-end department store), which was boycotted by customers when it stocked Ivanka's line of clothing and jewelry, and then boycotted again (by a different set of customers) when it removed the brand:
 
"These days, a shirt is not always just a shirt, and a store is not always just a store. Handbags, dresses and other ordinary items — and where they are bought — have become politicized, turning shopping decisions into acts of protest for the millions of people in pro- and anti-President Trump camps. Under Armour, L.L. Bean, T.J. Maxx and many other companies have already been pulled into a sort of ideological tug of war. But perhaps no retailer has been in the hot seat like Nordstrom."
 
The article's angle was that companies cannot win in this new reality:
 
"The sharp reaction before and after Nordstrom's decision — made quietly, with no announcement — highlights the tightrope companies must walk in this hyper-politicized environment. 'Companies are nervous,' said Andrew Gilman, chief executive of the crisis communications firm CommCore Consulting Group. 'I know several companies that have war rooms set up.' 'They have playbooks on what to do if there is a product recall or if the C.E.O. has a heart attack,' he added. 'Now they have a different chapter on how to deal with a tweet from the president.' Many retailers and brands would clearly prefer to fly below the political radar and stay away from the outrage on Twitter and Facebook."
 
My take on this, however, is that companies are feeling nervous mostly because they are being forced to take a position on issues. In other words, they are having to inject values into their business decisions in a way that makes them uncomfortable because they might make the 'wrong' decision and be blamed for doing so. CEO accountability – what a wonderful concept! The story unfolding around Under Armour is a great example of the fine line executives are being forced to walk:
 
"The athletic-gear maker Under Armour also encountered the perils this week, when its chief executive, Kevin Plank, called Mr. Trump a 'real asset' for the country. Within hours, the hashtag #boycottunderarmour emerged on social media."
 
I think this is great. Business is a force for economic, social, and moral change, even if executives try and pretend otherwise. Granted, it is just a bit more blatant at the moment because the atmosphere is so charged and the issues so contentious. The more companies take a stand, however, and I am thinking about companies on both sides of any debate (think Patagonia on the environment, but also Chick-fil-A on religion in the workplace), then the more the market can begin to help solve some of our most intractable problems. If stakeholders are aware of companies' positions on these issues, then they can choose which ones to support and the chance for progress is increased. In all likelihood, taking a stand on an issue that is of concern for stakeholders will be good for business. At a minimum, there is evidence (according to the article in the second url below) to suggest that firms are worrying too much about the consequences of being caught on the wrong side of Donald:
 
"The Financial Times has crunched data on 30 cases in which companies have been targeted by that @realDonaldTrump account. The sample size is small and the data only start on January 1. However, this limited analysis shows that Mr Trump's tweets have had surprisingly little effect on share prices so far, irrespective of the media hullabaloo."
 
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/
 
 
In the Era of Trump, Shopping is Political
By Julie Creswell and Rachel Abrams
February 11, 2017
The New York Times
Late Edition – Final
B1
 
The corporate benefits of a Trump tweet
By Gillian Tett
February 10, 2017
The Financial Times
Late Edition – Final
9
 

Monday, February 13, 2017

Strategic CSR - Silicon Valley

The article in the url below discusses the recent intervention by the information technology industry in the debate in the U.S. about immigration. In particular, the article demonstrates how important immigration is to IT firms, judging by the large number of well-known founders, CEOs, and senior executives who are foreign-born:
 
"Attracting hyper-brainy people from around the world is at the heart of the tech business model. Mr Brin was born in Moscow, Mr Pichai in Tamil Nadu and Satya Nadella, the head of Microsoft, in Hyderabad. The biological father of the late Steve Jobs was a Syrian who moved to America, a journey that as of this week would be impossible. Half of all the American startups that are worth more than $1bn were founded by migrants. Many of the engineers at tech firms were born abroad, too. In Cupertino, a posh suburb in Silicon Valley, half the population is foreign-born."
 
These executives are intervening on the side of more open immigration, therefore, because it is good for their business (and, by extension, good for the U.S. economy). What is interesting about the article, however, is not that the IT industry is being vocal in its opposition to efforts to limit immigration, but that the industry is so selective about which issues it chooses to protest. By taking such a high-profile stand now, therefore, the article suggests the industry risks exposing its hypocrisy:
 
"For decades tech bosses have pushed a convenient doublespeak to explain their firms' rise. Their dazzling products are the creations of their leaders. The resulting fortunes are these visionaries' just reward. But the economic and social consequences of the industry's output, not all of them good, are no one's responsibility. Instead, the industry argues, they are the result of unavoidable shifts in technology, in turn responding to society's broad demands. This logic has allowed tech firms to avoid responsibility for the stolen or bilious content that they publish and for the jobs that their algorithms help eliminate—to say nothing of their own oligopolistic market shares. Silicon Valley boasts of its own might and shrugs at its own impotence both at once."
 
The article goes on to note the various recent issues, other than immigration, where the industry has been slower to take action – such as, job losses (due to outsourcing and technological progress), fake news (enabled by social media), and income inequality (driven by pay disparities), and so on. In reality, the article concludes, the 'holier-than-thou' approach of the IT industry on the issue of immigration is merely dressed-up self-interest that is used selectively to advance goals that are, ultimately, very narrow:
 
"Often [tech firms] define virtue as what they judge to be in their business interests. Last year, Mr Cook dismissed a demand by the European Union to pay more tax as 'political crap.' In December Apple agreed to a state request to ban the New York Times's app in China, where the firm makes just over a fifth of its sales. Mr Zuckerberg fits the same pattern: he says he wants to give away 99% of his fortune and that he believes in the ideal of free expression, but his firm paid a tax rate of just 6% over the past half-decade, and he has toadied up to China's censors, too. Oligopolistic, hubristic and ruthless to its core, Silicon Valley is no beacon of moral leadership."
 
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/
 
 
Silicon Valiant
By Schumpeter
February 4, 2017
The Economist
Late Edition – Final
59
 

Wednesday, February 8, 2017

Strategic CSR - CEO Pay (II)

Continuing with this week's focus on CEO pay, the article in the url below reports progress in the UK with pay ratio disclosures that were designed to reduce the huge discrepancies between the pay at the top and the pay of the firm's median employee. Unfortunately, as with many laws motivated by good intentions, the results have not matched the design:

"CEO pay and its reflection of firm performance has been a preoccupation of U.K. policy makers for a while, and since 2002 companies have had to produce a directors' compensation report for shareholder vote, albeit a non-binding one. A few shareholder revolts later, executive pay became subject to a binding vote at least every three years from 2013, and the disclosure details were enhanced to provide more transparency for investors."
 
Given the complexity of the problem, there are plenty of loopholes in which to jump through:
 
"But the law stops short of requiring the publication of a ratio between the pay of top executives and average employee. 'Unfortunately, instead of disclosing this simple ratio, the final disclosure policy only mandates the disclosure of relative changes in pay, and the definition of pay doesn't include equity-based incentive compensation,' said Jenny Chu, university lecturer in the Finance and Accounting group at the Cambridge Judge Business School. Firms also can determine which group will be used in the calculation of change in employee pay, and companies tend to 'engage in more opportunistic reporting for the sake of reputation management rather than fundamental change in disclosure transparency.'"
 
The result has been little, if any, change:
 
"The study found that CEO-employee pay ratio at FTSE 100 companies 'barely budged' to 122.37 in 2014 from about 123 in the previous two years."
 
The key, as always in shaping firm behavior, is stakeholder pressure. Corporations are social constructions that are designed to advance social progress. As such, they reflect our collective set of values. To the extent that stakeholders are willing to hold firms to account, behavior is much more likely to be shaped in the way intended:
 
"Increased disclosure in and of itself won't result in changes to remuneration or design, but pressure from investors and shareholders or from other interested parties such as customers or potential recruits could do so, said Melissa Reid, an associate at law firm Cleary Gottlieb Steen & Hamilton LLP. 'I don't think that having an additional ratio would significantly, if at all, change pay structures, it would just be [an] additional compliance burden,' she said. But if shareholders' advisory bodies, for instance, advocate for ratios of a particular level to affect how votes on pay are exercised that could have a bigger impact, she said."
 
Stakeholders (in this case the shareholders) have the potential to deliver the results they say they want. If this pressure does not arise, then other stakeholders will either have to work out how to pressure the firm more directly (e.g., more effectively designed legislation) or they can pressure shareholders to demand the change from firms (e.g., increased demand for socially responsible investing products). If no stakeholders apply any pressure, of course, then the firm will continue to carry on as always (and would be correct to do so).
 
Note: Reported on the same day as the article below:

"Bosses of the largest 100 British companies saw their pay increase more than 10 percent to 5.48 million pounds ($7.2 million) last year, 140 times the average wage of their employees." (see http://www.bloomberg.com/news/articles/2016-08-08/top-u-k-bosses-get-10-pay-increase-as-may-urges-crackdown).
 
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/
 
 
CEO-Employee Pay Ratio Disclosure no Panacea
By Mara Lemos Stein
August 9, 2016
The Wall Street Journal
 

Tuesday, February 7, 2017

Strategic CSR - CEO pay (I)

This week's Newsletters focus on the contentious issue of CEO pay. To start us off, the article in the url below doesn't pull its punches in terms of the composition of CEO pay (i.e., performance-related), a practice that continues in spite of all the evidence that it is ineffective (in theory and practice), both in terms of motivating the CEO and improving the firm's performance:
 
"Verizon's purchase of Yahoo! for $4.83 billion, while an interesting exercise in combining content, networks and mobile services, highlights the broken norms for paying executives of U.S. corporations. The short version is that issuing and repricing of stock options compensates executives for bull markets rather than their own performance."
 
The purchase of Yahoo! by Verizon last summer is presented as simply the latest example of the corrupt process that generates massive (and often undeserved) compensation:
 
"When the deal is complete, Yahoo Chief Executive Officer Marissa Mayer will walk away with more than $200 million for doing little more than keeping the seat warm for the past four years."
 
The research is pretty clear on this issue:
 
"Research has shown that external influences account for the majority of a given company's share price. A rule of thumb is that the company itself is only responsible for about a third of its price movement. The market gets credit for about 40 percent, while the performance of the company's industry drives another 30 percent."
 
That doesn't leave much variance for the CEO to claim credit for, even though they persist in doing so:
 
"There are of course exceptions. Apple's incredible share run-up on the iPod, iPhone and iPad is hard to match. But most companies' share price gains and losses largely reflect things beyond the control of the company or its executives. … The counterargument is that you want a steady hand on the tiller when a storm strikes. I don't disagree, but I am suggesting that paying that steady hand for achieving a market-based performance is foolishness plain and simple."
 
Of course, the author is not arguing that all CEOs are equally good (or bad), but that the measures used to track their 'performance' (usually stock price via options) are flawed:
 
"Share price isn't a very precise way of compensating for value delivered. Indeed, share price may be one of the worst ways to judge an executive's performance. It rewards executives for positive events beyond their control, and doesn't do an effective job of measuring the impact of management on a company's overall performance."
 
In contrast, there are more effective (although harder to measure) metrics that are known:
 
"If shareholders are compensating CEOs and the rest of the management team for how well they are managing the company, then there should be some metrics that are easy to agree upon on advance. All of them can be readily identified and tracked versus peers. Consider these five things on a relative basis to the business's competitors:
1. Changes in revenue and earnings
2. Return on invested capital
3. Development of long-term strategy
4. Execution of current strategy
5. Innovation and intellectual-property development."
 
The alternative, of course, is to continue doing what we have been doing for several decades which, as the article in the second url summarizes, has produced counter-productive outcomes:
 
"The best-paid CEOs tend to run some of the worst-performing companies and vice versa—even when pay and performance are measured over the course of many years."
 
To see what this looks like when graphed, see:
 
 
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/
 
 
CEOs are Paid Fortunes Just to be Average
By Barry Ritholtz
July 25, 2016
Bloomberg Businessweek
 
Best-Paid CEOs Run Some of the Worst-Performing Companies
By Theo Francis
July 25, 2016
The Wall Street Journal
Late Edition – Final
B1
 

Friday, February 3, 2017

Strategic CSR - Russia

The article in the url below is a great example of where we are heading at the intersection of surveillance and social media:
 
"Imagine a smartphone app that lets anyone take a picture of anyone and then find that person on social networks. Now stop imagining."
 
Apparently, that app now exists. And you'll never guess who created it:
 
"[Last] year, a couple of Russian programmers released an app called FindFace. It lets people take pictures of complete strangers and then almost instantly find them on social networks. See a pretty girl or guy on the street? Snap a pic, get to know them. What could go wrong?"
 
The article online contains a video piece by one of Businessweek's journalists who went to Russia to investigate. Amazing, but also extremely concerning, especially when you hear that one of this company's first clients was the FSB. Other police agencies around the world are also very interested.
 
Hope you 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 Russian App That Has Destroyed Privacy Forever
By Ashlee Vance
December 6, 2016
Bloomberg Businessweek
 

Wednesday, February 1, 2017

Strategic CSR - Natural capital

Ensuring all costs (and benefits) are included in the final price that is charged to consumers for a product is essential if we are to take full advantage of the market forces that can allocate resources so efficiently. A big challenge for this lifecycle approach, of course, is the pricing of natural capital -- assets from the natural environment that, to date, have either been free or close-to-free and, as a result, have been taken-for-granted and over-consumed. The article in the url below illuminates this challenge by attempting to value the National Parks in the US:
 
"According to the National Park Service (NPS), over 300 million visitors collectively spent over a trillion hours at U.S. national parks in 2015. … Attendance numbers are often provided as a crude measure of how much people like and value America's national parks. But that is only a rough proxy for determining the parks' economic value—a number that could have implications for how the parks are managed and funded. So a group of researchers recently looked into that question: How much is the NPS—the parks and the services it provides—worth to Americans?"
 
The challenge, of course, is to quantify this value (beyond mere public popularity):
 
"[The researchers] estimate that NPS parks and programs are together worth about $92 billion. They arrived at this figure by using methods similar to those that federal agencies use in analyzing proposed regulations. First, they sent a survey to about 4,000 U.S. households asking how much residents were willing to pay in additional federal income taxes in order to keep America's national parks. An estimate was then made based on the answers of the 700 households that responded, and those who didn't respond were ascribed a value of zero. The $92 billion number breaks down into $62 billion for National Park lands and $30 billion for NPS programs, which include recreational activities, efforts to protect landmarks, and educational programs."
 
An important takeaway from the study was that the National Parks are valued not only by those who use them, but also as an idea that shapes the nature of the country:
 
"Sure, people who use national parks for hiking or camping value them, but what this estimate suggests is that for those who don't use the parks, it seems that just the idea of having national parks around is attractive enough to be worth tax dollars. Additionally, … $92 billion is a conservative estimate, since those who didn't answer the survey were given zero values and a post-survey audit found that most of those who didn't respond didn't have time to fill out the survey—so it's likely not the case that the parks are worth nothing to them. Separately, the demographics of park attendance could hurt the NPS's long-term valuation given that the majority of its visitors are older white Americans, even as the U.S. becomes increasingly diverse."
 
The conservative approach of valuing non-responses as zero likely makes up for the gap between what respondents say they are willing to spend and what they would actually spend if they had to part with their money. At a minimum, however, the $92 billion number puts the annual budget for the parks in greater context:
 
"[Last year] the Obama administration [submitted] a budget of $3.1 billion for the NPS for 2017—an amount that includes a bump for restoration and upgrades."
 
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/
 
 
How Much Are America's National Parks Worth?
By Bourree Lam
July 19, 2016
The Atlantic
 

Monday, January 30, 2017

Strategic CSR - Walmart + bribery

The article in the url below revisits Walmart's bribery scandal in Mexico (see Strategic CSR – Walmart in Mexico and Strategic CSR – Walmart), which I thought had wrapped-up a long time ago:
 
"Wal-Mart Stores Inc. tried and failed to settle a foreign-bribery probe that has stretched for five years and cost the company more than $820 million, according to people familiar with the federal investigation."
 
Since its original focus on operations in Mexico, the scope of the investigation has broadened considerably, which explains the growing cost to Walmart:
 
"The Justice Department and SEC investigations were largely driven by a 2012 series of articles in the New York Times portraying details of possible misconduct at Wal-Mart in Mexico. The investigation spread to other regions where Wal-Mart does business, including Brazil, India, and China. A final settlement is expected to cover multiple countries, the people said."
 
Apparently, towards the end of a presidential administration, firms with outstanding investigations push to settle them with the team they know (and who are familiar with the history of the case), rather than wait for the incoming team that may impose different and more burdensome terms. In this case, Walmart was unable to reach agreement with the DoJ and SEC before Obama left office:
 
"'Wal-Mart and the government are very far apart in terms of a settlement,' one of the people [familiar with the federal investigation] said Thursday."
 
Apart from learning that this investigation was still ongoing, however, I was more interested to see what appears to be the main obstacle to a conclusion:
 
"The people familiar with the probe said one major sticking point has been Wal-Mart's eligibility to continue accepting food stamps in its 5,300 Wal-Mart and Sam's Club stores in the U.S. after a settlement is reached. A company that pleads guilty to a federal crime can lose its right to win government contracts -- a penalty that could block Wal-Mart from the $71 billion food-stamp program. The retailer, one of the largest sellers of groceries, is also one of the biggest beneficiaries of food-stamp spending."
 
How important, exactly, are food stamp customers to Walmart?
 
"The loss of food-stamp shoppers would be a blow to Wal-Mart, which each year receives some 18% of the money spent through the Supplemental Nutrition Assistance Program, or SNAP. That represented about $13 billion in sales last year."
 
Although this is a small percentage of the firm's almost $500 billion annual revenues, it still represents a significant transfer of funds from the government. As such, this amount represents a subsidy that allows the firm to operate at a much lower cost than competitors. And I would guess that a similarly large number is involved in terms of Medicare and Medicaid healthcare payments for employees who do not receive insurance directly from the firm. Tax breaks to locate stores in particular geographic, economically-deprived regions also no doubt help pad Walmart's bottom-line. There are good arguments on both sides for these payments to exist and continue. What I find funny, though, is the widespread belief that the U.S. economy is a free market. The inefficiencies introduced by the various political biases on both sides of the fence reduce competition and support firms that would otherwise struggle or even fail, preventing the creative destruction that is so fundamental to the effective functioning of the capitalist system.
 
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/
 
 
Wal-Mart Stuck in Probe Limbo
By Joann S. Lublin, Aruna Viswanatha, and Sarah Nassauer
January 28-29, 2017
The Wall Street Journal
Late Edition – Final
B1
 

Wednesday, January 25, 2017

Strategic CSR - Fake news

The article in the url below discusses the impact of 'fake news,' a term that it defines as follows:
 
"Fake news has a real meaning — deliberately constructed lies, in the form of news articles, meant to mislead the public. For example: The one falsely claiming that Pope Francis had endorsed Donald Trump, or the one alleging without basis that Hillary Clinton would be indicted just before the election."
 
Beyond this already broad meaning, however, the author argues that the use of this term has become distorted and is now used deliberately to obfuscate any story that the target does not like:
 
"… though the term hasn't been around long, its meaning already is lost. Faster than you could say 'Pizzagate,' the label has been co-opted to mean any number of completely different things: Liberal claptrap. Or opinion from left-of-center. Or simply anything in the realm of news that the observer doesn't like to hear. … Glenn Kessler, who writes The [Washington] Post's Fact Checker, put it this way: 'People seem to confuse reporting mistakes by established news organizations with obviously fraudulent news produced by Macedonian teenagers.'"
 
While the author's conclusion is that we should do away with this "rhetorical weapon" and, "Instead, call a lie a lie. Call a hoax a hoax. Call a conspiracy theory by its rightful name," my interest is the extent to which the fake news phenomenon has the potential to impact companies (rather than political or social discourse). If fake news can skew people's opinions to the point that it influences voting behavior, the same process could certainly influence consumers' purchase behavior. After all, a purchase is nothing more than a vote of confidence for a particular product or business model.
 
Companies have to walk a fine line on this issue. On the one hand, they need to be responsive to their key stakeholders (and social media enables this). On the other hand, not everyone who has a voice is necessarily a legitimate stakeholder or, perhaps more accurately, does not necessarily represent the collective interests of a key stakeholder group. In other words, just because someone has a voice and the drive to use it does not make their concern one that the firm needs to address. When that occurs, it is up to the firm's other stakeholders to make sure a lone voice does not distort the firm's decision-making processes and implement a policy that does not serve the interests of a broad range of stakeholders. While social media has grown to the point that it can drive the news (across all segments in society), the phenomenon of fake news reinforces the idea that the motivation to voice is not always 'helpful' or in the interests of the majority.
 
For more on this topic, the article in the second url below contains advice from "several crisis management executives" as to how firms should respond if they become the target of fake news.
 
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/


It's time to retire the tainted term 'fake news'
By Margaret Sullivan
January 8, 2017
The Washington Post
By Ben DiPietro
January 20, 2017
The Wall Street Journal
 

Monday, January 23, 2017

Strategic CSR - Star Wars

The movie industry today is big business, with ever-larger sums riding on the backs of what seem like fewer and fewer franchises and their associated stars. The article in the url below indicates the extent to which the movie studios understand this and are seeking to monetize the risks involved:
 
"The death of Carrie Fisher, a much-loved actor in the 'Star Wars' movies, left a hole in the force for fans. It may also burn a hole in the pockets of underwriters, syndicated under Lloyds of London. They may have to fork out as much as $50m to meet Disney's claim for its loss. The studio, which owns the sci-fi saga, had wisely taken out so-called contractual-protection insurance (CPI) in case death thwarted a contractual obligation: in Ms Fisher's case to film and promote future 'Star Wars' episodes."
 
I have discussed the social and ethical issues surrounding the ability of firms to insure the lives of their employees before (see Strategic CSR – Employees). What is interesting in the article below is the extent to which it demonstrates movie studios rely on specific individuals:
 
"When Paul Walker, an actor in 'The Fast and the Furious,' a series of action movies, died in 2013 while filming the seventh instalment, Universal Pictures had to spend considerable effort (and dollars) to make his on-screen persona live on. This included hiring body-doubles and digitally inserting Mr Walker into the movie with hundreds of computer-generated images."
 
Beyond a basic functional ability, franchise movies (and popular sports teams) become associated with specific individuals, faces, voices, which are hard to replace. While companies understand this, it doesn't mean it is always easy to quantify the value of such individuals. CPI has been developed by the insurance industry to deal with this problem:
 
"… the value of a film star to a studio, or a striker to a football club, … depends on all sorts of things, especially timing. This is where contingency insurance, such as CPI, comes in. Unlike a life policy, how much of the $50m Disney receives depends on how it now calculates and justifies the losses caused by Ms Fisher's death. This could include, for example, her role in boosting sales of storm-trooper figurines."
 
While CPI establishes a process (and, over time, precedent) for valuing the life of someone who is essential, it is less easy to pinpoint the extent to which such quantification eats away at our moral foundations. In spite of knowing that a firm's investment in an employee (particularly a star actor or athlete) constitutes an asset that should be protected, it still feels as though the company is taking something that doesn't belong to it. This is especially so when the quantification of the employee's future value remains subjective and ambiguous. Perhaps this should be irrelevant, but this feeling is enhanced if the employee has not taken out life insurance themselves. While this may not matter or apply in Ms. Fisher's case (or of other stars), increasingly firms are taking out insurance on more and more of their employees, some (many?) of whom cannot afford to take out life insurance themselves. In doing so, firms use the criteria, not that the employees are essential to the business, but that it would be inconvenient to replace them. While I understand that the firm pays the premium levied by the insurance company and this is a risk/reward transaction somewhat removed from the individual themselves, what happens when a badly written policy builds-in incentives for firms to profit from the employee's death? Additionally, should the firm be allowed to benefit more than the employee's family from the event? To what extent is an employee's life something that can be hedged by the firm?
 
"With rock stars remaining on stage into their dotage and long-running sequels one of the surest ways to make money in Tinseltown, the risks of losing a 'key human' (or on occasion animal) are growing. That creates business opportunities for insurers, so long as they remain prudent and don't become star-struck."
 
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/
 
 
Death Star
January 7, 2017
The Economist
Late Edition – Final
57
 

Thursday, January 19, 2017

Strategic CSR - Welcome back!

 
Welcome back to the Strategic CSR Newsletter!
The first newsletter of the Spring semester is below.
As always, your comments and ideas are welcome.
 
 
The debate between voluntary and mandatory compliance is central to promoting CSR. Whether you think more socially-responsible behavior can be imposed or coerced, as opposed to incentivized, speaks volumes as to where you stand on many CSR issues. With this in mind, the new year brought a raft of new laws in cities and states across the U.S. (and overseas)—all related to topics that are of concern to the CSR community. The article in the first url below chronicles some of these new laws:
 
"In cities and states across the U.S., the new year brings a flurry of new laws addressing everything from soda consumption and sick leave, to semiautomatic weapons and catfish catching."
 
A range of new soda taxes is highlighted in the article:
 
"More than a year after Berkeley, Calif., introduced the nation's first tax on sweetened drinks, other cities are jumping on the bandwagon. Philadelphia's 1.5-cent-per-ounce tax on sugary and artificially sweetened drinks has taken effect. Bay Area voters in San Francisco and Oakland also approved a penny-per-ounce tax on sugary beverages, the same rate as Berkeley's. And Boulder, Colo., residents, approved the nation's steepest soda levy, at two pennies an ounce—or a $1.35 extra—for a two-liter bottle."
 
In contrast to these laws, which are all designed to curb anti-social behavior, the article in the second url below introduces a new French law that is designed to promote socially-beneficial behavior:
 
"If the world does not envy the French enough already for their generous vacations, universal health care and fine food and wine, the arrival of 2017 brings this: a newly created 'right to disconnect.' Though ridiculed in some quarters as a ban on work-related email after hours, it is not quite that. But it is born of the enlightened view that it is actually beneficial for people not to work all the time, and that workers have the right to occasionally draw the line when their employer's demands intrude on evenings at home, treasured vacations or Sundays with friends and family."
 
While the issue of banning after-hours email has caught all the media attention, there is evidence to suggest that not being constantly on-call benefits both employees and employers. As noted in an earlier Newsletter (Strategic CSR – Productivity), past experience suggests that employees that work less intensively are more productive:
 
"The new provision in the labor law does not ban work-related emails, but does require that companies with more than 50 employees negotiate a new protocol to ensure that work does not spill into days off or after-work hours."
 
There are a number of other French laws mentioned in the article that will be of interest to the CSR community.
 
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/

 
Taxes, Guns, Beer Included in New Laws
By Jacob Gershman
January 5, 2017
The Wall Street Journal
Late Edition – Final
A3
 
 
'Right to Disconnect' From Work Email and Other Laws Go Into Effect in France
By Alissa J. Rubin
January 3, 2017
The New York Times
Late Edition – Final
A6
 
 

Tuesday, December 6, 2016

Strategic CSR - Longevity

 
This is the last CSR Newsletter of the Fall semester.
Have a great holiday break and I will see you in the New Year!
 
 
The article in the url below presents a new take on longevity:
 
"There are Methuselahs among us. These aged wonders of the natural world do not stalk the earth but glide through Arctic waters. Scientists surveying Greenland sharks, previously thought to live up to 200 years, found that they have far longer lifespans. One specimen was calculated, give or take a century, to be nearly 400 years old, born more than a century before the US was founded."
 
It is believed that studying animals such as the Greenland shark can have implications for human lifespans:
 
"Anti-ageing enthusiasts insist that life is merely the absence of the processes that lead to death, and that human lifespan could be extended dramatically. Their philosophy is to treat ageing as a disease: treat the disease and life need not end."
 
Research in this area has already generated remarkable progress and altered our perceptions of the limits of human existence:
 
"After all, life expectancy has been rising for decades as we conquer the challenges – malnutrition, disease, war, mishap – that hasten our passing. Three centuries ago, a person would be hard pushed to reach 40; some scientists think those born today stand a fighting chance of reaching 150."
 
My reaction is to wonder what implications this has for the debate around climate change. Clearly, we do not have 150 years before we need to get serious about sustainability, but a growing awareness that we can live longer might influence the debate. At the moment, I am integrating concepts of time/history/the past into my research. One takeaway is the notion that human perceptions of time are defined largely by our own mortality. In other words, we think 80 years is a long period of time purely because that is our expected lifespan. In terms of the planet (about 4.5 billion years old), simple life forms (about 3.5 billion years), pre-human existence (about 6 million years), and modern humans (about 200,000 years), however, 80 years is barely a rounding error. But, 80 years is meaningful to us because we are sufficiently self-absorbed to think that we matter. In reality, of course, we do not matter much and life will continue perfectly well without us (as long as we can avoid destroying the planet). With that goal in mind, I wonder if the prospect of our children and grandchildren living much longer lives will affect their perspective on how long is a long time.
 
See you in the New Year.
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/
 
 
Centuries-old sharks hold the secret to a longer life
By Anjana Ahuja
August 15, 2016
Financial Times
Late Edition – Final
9
 

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