BIG NEWS: My blog is moving!!!

I've redesigned this blog, and am now hosting it on typepad instead. Here is the cool new url that will take you there:

www.capitalism4good.com

See you on the other site!

Two sides to every CSR story?

When I put together my news briefs, I like to think that I present a balanced view. Often, this means including articles that take opposing positions on a topic - but lately, I've started to wonder if this approach doesn't introduce a different sort of bias.

I was thinking about this as I cut-and-pasted a DiversityInc article about Wal-Mart being the recent target of the Largest Discrimination Case in History, and then added another article suggesting that the big-box retailer may be creating A Blueprint for Reviving Black-Owned Banks. One count against Wal-Mart's diversity policies, and one count in favor.

But is it truly balanced?

I remembered how Wal-Mart has a "war room" of PR professionals managing its reputation, and wondered if they had been calling every news outlet in the country, trying desperately to place a pro-diversity story in order to counter news of the lawsuit. It wouldn't have surprised me; anyone in their position might do the same thing.

Next I noticed another article in The Guardian blaming a recent UK ban on junk-food advertising for draining needed funding from children's television programing. I had covered news of the ban before, and wondered if this was somehow the junk food manufacturers' response to it. Or maybe it was just reflected a reporter who, like me, wanted to present a "balanced" view.

But are two sides to a story equally valid? And in this age of proliferating information, isn't it the job of the news media (and of columnists and bloggers) to help us filter the relevant from the irrelevant, and the better arguments from the less-tenable ones?

It's a tough tightrope to walk, and reminds me of a previous post self-critical post on how our perception of the CSR news landscape can easily become skewed.

Is CSR Getting a Boost from the White House?

I realize that the title of this post is absurd: the Bush administration hasn't been all that gung-ho about climate change - or any other issues that lie at the heart of CSR.

But as Americans increasingly oppose the war in Iraq, and are increasingly frustrated with the Bush administration's obtuseness, it seems to me that backlash against the White House has taken on a more general form.

Perhaps the best thing Bush can do for climate change is to ignore it, because Americans, and even the world at large, are eager to stand for something that our President is against.

The good, the bad, and the in-between

I've been researching CSR benchmarking recently - the awards and rankings that separate the "good" companies from the "bad" ones. As I compiled a lengthy list of these, I came across an article by David Vogel, who not long ago wrote The Market for Virtue.

His article ("When do 'good' firms go 'bad'?"; L.A. Times 2/13) argues that corporations are never entirely virtuous nor entirely evil, and that to say they are is an oversimplification. He points to half a dozen extremely compelling examples:

• British Petroleum (BP), which embraced alternative energy development but has struggled with industrial accidents that killed workers and destroyed Alaskan tundra.
• Microsoft, despised for monopolization but forgiven for it's founders charitable deeds - even if the Gates Foundation itself has been under recent scrutiny for its investment activities.
• Merck, which gives away river-blindness drugs but also failed to recall the blockbuster drug Vioxx after evidence of heart damage surfaced.
• Altria, the parent company of Philip Morris, which manufactures tobacco but does so on family farms owned mostly by minorities, and gives generously to charitable causes.

As more consumers, and more companies, pay attention to the reputational value of CSR, it's important to keep in mind that companies are complex organizations with many people, and people are complex organisms with many motivations.

People-to-People Power

Have you ever tried to take out a short-term loan? If so, you might have discovered that banks don't like lending to people who actually need the money. Often, it makes more sense to ask a good friend for a loan, and let him or her benefit from your interest payment. But what if we didn’t have flushed friends to take pity on us? Where would we go?

Well, now there’s hope: at least two new websites are enabling person-to-person lending among strangers, and they’re finding some brilliantly sensible ways to do it.

The most well-known in the U.S. is Prosper, which launched in February of 2006 and already has over 100,000 members. On the site you’ll see profiles of would-be borrowers that include a photo, a description of what they plan to use the money for, and some credit ratings. Lenders can distribute funds to several borrowers in small amounts, to diversify their risk. Borrowers specify the highest interest rate they are willing to pay, the total amount they want to borrow, and the time period during which lenders can “bid” on their business. Once there are enough lenders to fund the borrower’s request, new lenders can offer lower interest rates to take the place of other bids – until the bidding period is over.

For example, Listing #90006 writes:

"Hello, I am trying to get a loan so that I can pay for advertising for my glass business that I have owned for 8 years. I also want to help my wife get her website up for her home based business so that she can stay at home with our kids. Any help would greatly be appreciated and we would also like to loan in the future. Thanks and God Bless"

He is requesting $10,000, of which 24% is already funded. His credit rating is a C, with a debt-income ratio of 19%, and he is a homeowner. He is willing to pay up to 15% interest, and plans to repay over a three-year period. The funding promised to him so far is divided among 21 different “bids” – mostly in increments of $50 or $100. The bidding is open for another six days, but the site’s forecasting chart indicates he won’t gather quite enough to make his total loan. Perhaps he’ll try again, offering a higher rate.

There are hundreds of other stories on the site too – people who want to buy an engagement ring, put inventory in a new store, send the kids to camp, or pay off credit card debt. It makes for addictive reading.

In the United Kingdom, Zopa is a similar site, and prominently displays its average gross return of 6.75% interest, after accounting for bad debt. Not too shabby. The site doesn’t let you browse borrower profiles until you sign up for an account, which is a real pain, but maybe it ensures that only serious participants are there. Or maybe it’s just a pain. It’s hard to say since I didn’t succeed in getting an account myself – the site wouldn’t accept my U.S.-format phone number.

All in all, I’m excited about the potential for sites like Prosper and Zopa to revolutionize micro-lending. They offer a many-to-many interface that can transcend both national and organizational boundaries. At the same time, there’s so much more that could be done. Many of the borrowers right now – perhaps a majority – are looking for a quick financial fix after racking up high-interest debt, sometimes carelessly. Others want to pay for things that they’ll never be able to afford, based on their current jobs and lifestyles. Some are like I was at the start of graduate school – in a tight spot for the short term.

Very, very few are entrepreneurs and small-business owners.

Even fewer are social entrepreneurs.

I think that these websites could serve a new purpose, channeling private funds from small-time investors to social-sector ventures. Right now, it’s hard to engage in socially-responsible investing that is truly tailored to your values unless you’re very wealthy. The rest of us are stuck with choosing the one “social” index in a slew of mutual funds, and hoping that whoever is throwing stocks into that pot is doing a good job. How much more exciting would it be to choose your own social investments, choose their interest rates and your risk tolerance, and allocate your meager savings across several of them?

Person-to-person lending could, in the very immediate future, allow us to choose individual investments based on their financial, social, and environmental values – in whatever balance we choose, and for whatever amount we have to invest. As social entrepreneurs, this can also become a vehicle for raising funds to jump-start our ventures. After all, wouldn’t someone rather lend money to your AIDS-education initiative than to someone else’s new-car fund? (Already, the international microfinance site Kiva does something similar for developing-world entrepreneurs.)

In fact, there’s an opportunity here for someone, or several people, to start a “fund” of social-sector projects on Prosper – by directing social entrepreneurs to the site and grouping the projects together under a guarantor’s umbrella. Then lenders who are short on time can put money in the fund, and the fund manager scours the site for appropriate projects and diversifies investments among them. Ideally, the fund manager has a good credit rating, and that helps lower the interest rates that lenders are willing to accept.

This isn’t just your ordinary microfinance. This is connecting social entrepreneurship with socially responsible investing at a micro level, through the series of tubes known as the Internet. Is there anything cooler? (Why are you still reading? Go get started!)

Note: this post is adapted from an article I wrote for 1bloc (see www.1bloc.com)

Valentine's Day: A Good Time to Buy Organic?

A friend sent me this New York Times article (from 2/12/07) on the international flower-growing industry, and it looks pretty dismal: Valentine Roses Hit With Toxic Chemicals.

Some intense pesticides and fungicides are used to grow flowers in hot buggy climates and still get them through strict U.S. import criteria. The article is downright depressing, but the solution seems fairly simple - support organic growers.

I did a quick search online, and found Organic Bouquet. They're expensive - at least $50 for a dozen red roses - but for a product that's really a luxury to begin with, it seems only fair.

And besides, what better way to show how sensitive a guy you are??

NEWS SUMMARY -- 2/5 - 2/12

• CSR is in fashion, quite literally, as the trend hits the catwalk at the Copenhagen International Fashion Fair. Meanwhile, an Ethical Corporation columnist argues that making CSR a “fad” is both more difficult and more valuable than many practitioners might think (see “Reaching Beyond the Usual Suspects,” 2/6/07).

• Climate change continues to dominate the CSR news, and in particular this week Virgin’s Richard Branson offered a $25 Million prize (New York Times, 2/9/07) to whoever comes up with the best technology to absorb carbon from our atmosphere. The socially-responsible index FTSE4Good also put its foot down on climate change, telling companies to clean up carbon or face de-listing (see “Firms Told to Cut CO2,” The Guardian, 2/6/07). Despite these powerful calls for action, BP is halting plans to build one of the world’s first “zero emissions” power plants due to doubts over the government’s willingness to subsidize it (see “BP Defers Decision,” The Guardian, 2/7/07).

• Entering the 2007 Proxy Season, CEO pay is on investors’ minds. SocialFunds.com (1/30/07) says that “Say on Pay” will be the big issue this year, and even overseas investors have “Lectures for America Inc” (Financial Times, 2/8/07). Already, however, companies are hoping to preempt shareholder action through initiatives such “UK-style executive pay votes,” Financial Times, 2/8/07).
  

• Private equity has been catapulted into the public consciousness over the past year, and the only thing that seems certain is that it's influence is growing rapidly. This week, then New Statesman (2/12/07) calls it “Capitalism's Dirty Business,” claiming that private equity "sacks staff, cuts wages, sells off assets, outsources, screws suppliers, and, more often than not, reduced services to customers."

• The International Business Leaders Forum simultaneously calls for companies to act on Malnutrition in the developing world and Obesity in more developed markets.
  

• In Russia, a new development in the Yukos story, as its former leader Mikhail Khodorkovsky has new charges brought against him - just in time to prevent his possible parole. This is a new chapter in a much longer story: Khodorkovsky made billions through the privatization of Russian oil assets, and was both despised as part of the "oligarchs" (who symbolized the country's rapidly-growing inequality), and also hailed as a leader in corporate social responsibility (for his company's community programs). When he seemed to have political aspirations, however, charges of tax evasion were bought against Yukos Oil - charges that many felt were flimsy and politically motivated. For more, see the Wall Street Journal, 2/9/07.
  

• Other companies in the news include:
• Wal-Mart is fighting a pay discrimination case (BBC, 2/6/07)
• Exxon-Mobil “just wants to be loved” (New York Times, 2/10/07)
• Syngenta is accused by the Brazilian government of illegally planting genetically-modified seeds near a nature reserve (Wall Street Journal, 2/7/07)
• McDonald’s is bringing Fair Trade coffee to the mainstream (Stanford Social Innovation Review, Winter 2007)
• Citigroup once led the financial industry in environmental awareness, but is now seen as a laggard (Wall Street Journal, 2/9/07)
  

Blood Oil: Nigeria

An in-depth article in Vanity Fair explores "Blood Oil" in Nigeria's delta region. While the perspective is one of oil-security in the U.S., the author does an excellent job describing the decades-old conflict in general: the poverty, inequality, environmental destruction, corruption, kidnappings, sabotage and violence that are part of oil sourcing in this troubled region.

Accompanying the article is a web-only slideshow of photos from the region, including some of the militants themselves - speeding through the delta with facemasks and guns. Other photos show the extreme poverty lying just outside an enormous infrastructure of oil production equipment.

My CSR Library

Last weekend, I hosted a bunch of Starting Bloc fellows, and they were all extremely interested in seeing "my library."

I do in fact have a small library of carefully-chosen CSR-related books. If you're looking to start reading about the field, perhaps I can save you some research time by listing them here:

• The Market for Virtue, by David Vogel
• HBR on Corporate Responsibility
• Strategic Corporate Social Responsibility, by Werther and Chandler
• Profits With Principles: by Ira A. Jackson and Jane Nelson
• Global Business Citizenship, but Donna Wood et. al.
• Capitalism at the Crossroad, by Stuart Hart
• The Wal-Mart Effect, by Charles Fishman
• The Civil Corporation, by Simon Zadek
• Corporate Social Responsibility, by Kotler and Lee
• The Triple Bottom Line, by Andrew W. Savitz
• How to Change the World, by David Bornstein
• True To Yourself, by Mark Albion
• WorldChanging: A User's Guide to the 21st Century
• Business Solutions for the Global Poor, by Rangan et. al.
• The End of Poverty, by Jeffrey D. Sachs
• A Corporate Solution to Global Poverty, by Lodge and Wilson
• Globalization and its Discontents, but Joseph E. Stiglitz
• Small Giants, by Bo Burlingham
• Democracy's Edge, by Frances Moore Lappe

Soon, I'll be upgrading my blog/website to a new combined format, and posting some real book reviews - but in the meantime you can see an expanded list that I've posted here.

Open Season for CSR Conferences

In the grander vision of this blog, I'll have an entire website with an "events" section for conferences and the like - so stay tuned! In the meantime, there's a very useful list of upcoming conferences at On Philathropy, including events by:

• The Conference Board (February 27-28 in New York City)
  
• Ethical Corporation (March 21-22 in London)
• The Center for Corporate Citizenship at Boston College (March 25-27 in San Francisco)
  
• Business for Social Responsibility (October 23-26 in San Francisco)

Also, Harvard Business School (my primary employer) is holding its annual Social Enterprise Conference on March 4th. Speakers include:

• Daniel Doctoroff, deputy NYC mayor
• Cheryl Dorsey, president of Echoing Green
  
• Victoria Hale, founder of One World Health
• Sara Horowitz, founder of the Freelancers Union

Lunchtime activities are the "Pitch for Change" competition (deadline Feb. 23) and several small-group lunches (sign up early!). The day ends with a Career Fair. Cost is $40 for students, $90 for professionals, discounted for Harvard affiliates.

NEWS SUMMARY - 1/29-2/5

• The recent meeting of the Intergovernmental Panel on Climate Change spurred a surge in climate change news. For example:
• Despite its notoriety among green activists, even “ExxonMobil seeks to take its business to greener pastures” (Financial Times 2/1/07),
  
• Lehman Brothers published a study examining how firms are adapting to the increasing relevance of climate change to their businesses, discussed by its author (“Companies must adapt or die in a changing climate”; Financial Times 1/30/07),
  
• Goldman Sachs announced ambitious environmental measures and its general stance that climate change is both a risk and an opportunity throughout the economy ("Goldman Sachs Expects Big Returns from Going Green"; Ecosytem Marketplace 1/23/07),
• Business schools are increasinly going green as the Financial Times reports that "Global Warming Has Become a Hot Topic"
  

• A a new magazine, The Corporate Citizen, is now being published by one of my employers, the Center for Corporate Citizenship at Boston College. It will have a controlled print circulation of 50,000 - making it the most widely circulated publication in the field. The inaugural issue (available free online) "reflects much of the content from The Center’s annual conference and the practices of many of its 350-member companies."
  

• Without explicitly mentioning the Killer Coke campaign, a Coca-Cola executive discussed the company's constructive partnerships with some external critics, and defended its choice to "vigorously confront" those who are less amenable to dialogue; see his comments in "Things Go Better With Social Justice" (Wall Street Journal, 2/3/07)

• In a move that might not be so significant were it made in isolation, “Asda pledges to cut food packaging” (Financial Times 2/2/07). This follows recent eco-friendly moves by UK rivals Tesco (which plans to introduce carbon labeling on its products) and Marks & Spencer (which pledged to go carbon-neutral within five years), as well as by its parent company, Wal-Mart.

• A recent HarrisInteractive poll on corporate reputation, Microsoft scored high due to its founder's personal charitable work ("How a Boss's Deeds Buff a Firm's Reputation"; Wall Street Journal 1/31/07)

• As biofuels are increasingly examined for their alternative energy promise, many turn out to be somewhat less than miracles. This week the New York Times looks at palm oil and the devastating effect it can have on land in Indonesia as vast tracts of land are cleared by burning and chemical fertilizers are used indiscriminately (see "Once a Dream Fuel, Palm Oil May be an Eco-Nightmare"; 1/31/07).

• The jury is still out for voluntarism, as critics say that UN Global Compact is a “Victim of Voluntarism” (Financial Express 1/30/07) while others are placing hope in new voluntary initiatives such as a new initiative to “Improve Job Prospects for Women” in the UK (Financial Times 1/30/07). Carnival Cruises voluntarily paid $30k more than necessary in an attempt at “Discharging Goodwill” after being fined for illegal pollution, but that's peanuts compared to the $20 billion that activists are asking Shell to put toward human rights issues (“Campaigners Urge Shell to Put Profits Into Clean-Up”; The Guardian 1/31/07).

NEWS SUMMARY - 1/22-1/29

• Ten companies have teamed up with a surprising array of environmental activists to lobby the Bush administration for more action on climate change. The list includes General Electric, Alcoa, Dupont, BP, PG&E, Caterpillar, and others. (see, “A Coalition For Firm Limit On Emissions,” New York Times, 01/19/07)

• Looking for the best blogs? On Philanthropy has gathered a list of those that are blogging about corporate philanthropy. The article “Who’s Blogging Corporate Giving?” includes links to the relevant websites.

• China is awaking to the concept of CSR, as evidenced by an article in the major newspaper People’s Daily by a professor at the country’s top-ranked university; the article, entitled “Multinationals must shoulder more responsibility,” advocates that MNC’s should be treated less like guests and more like family – and be expected to contribute as family members are. Separately, Starbucks has created a “Storm in a coffee cup” over its outlet within the walls of the Forbidden City, which some activists see as an insult to Chinese culture.

• As profits and mission increasingly overlap, more and more social sector organizations are creating profit-making businesses on the side, a trend covered in the Chronicle of Philanthropy’s “Making Money With a Mission.”

• Also, there’s an article in the Harvard Business Review by C.K. Prahalad entitled “Cocreating Business’s New Social Compact” which describes how corporations and NGOs are increasingly working together to create economic and social success stories.