CSR News & Analysis

New Address!!!

2007-04-22T15:10:00.000-04:00

Some readers have mentioned that I seem to have disappeared from the face of the Earth... but no, never fear! I just switched my blogging platform to typepad. If you're using a newsreader, please update your links. To check out the new site directly, here's my forwarding url: www.capitalism4good.com

See you there!!!

BIG NEWS: My blog is moving!!!

2007-02-22T11:33:00.000-05:00

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?

2007-02-19T13:29:00.000-05:00

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?

2007-02-17T22:01:00.000-05:00

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

2007-02-16T22:13:00.000-05:00

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

2007-02-15T16:06:00.000-05:00

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?

2007-02-13T13:57:00.000-05:00

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

2007-02-12T10:40:00.000-05:00

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

2007-02-11T20:17:00.000-05:00

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

2007-02-08T10:31:00.000-05:00

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

2007-02-06T09:34:00.000-05:00

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

2007-02-05T15:06:00.000-05:00

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

2007-02-01T15:46:00.000-05:00

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.

Polluters, permits and profits

2007-01-30T09:22:00.000-05:00

The Financial Times recently reported that “loopholes” in climate change regulations are allowing Chinese factories to profit from installing scrubbers on local chemical plants (see “Chinese plants and carbon traders exploit loophole,” 1/18/07).

Personally, I thought this was actually the point of the regulations, and represented a welcome evolution from command-and-control regulations. In fact, this is essentially what I wrote my undergraduate thesis on, though I discussed the SO2 market rather than the CO2 market.

The idea of tradable pollution permits is that imposing uniform standards on all producers is disproportionately expensive for some of them. So they'll fight the policy, rightfully arguing that it would put them out of business - and policymakers respond by watering down the regulations, leading to less total abatement.

An alternative that economists tend to favor is to set the total amount of pollution that you "want" (i.e., can stand) - generally at less than its current level. Then you allocate "rights" to it, and those companies that can reduce their pollution with the lowest cost do so in order to trade their rights for money. Companies that find abatement more expensive buy these rights. The net result is that you get the amount of abatement you originally wanted, and the polluters work out among themselves who can physically accomplish it at the lowest cost - which is the economically efficient thing to do.

So, the article says that Chinese companies are installing scrubbers, and making a huge profit from cheaply reducing their pollution that way. So what? If the total amount of CO2 reduction doesn't seem like enough, it should have been set differently at the beginning. But this is exactly the sort of behavior that the system is designed to encourage.

Two neat research sites for CSR and BBOP

2007-01-25T15:04:00.000-05:00

I've just discovered a very rough beta-version of "csr-literature.net" - which promises to be a wonderful resource of CSR-related academic papers. It seems to be affiliated with "csr-news.net/" - another great resource, but more useful if you speak German.

Also, Harvard Business School's Baker Library staff has consolidated (and in some cases summarized) a great volume of research on private-sector involvement in poverty alleviation - with the memorable acronym "BBOP" (for "Business at the Base of the Pyramid"). Those outside the Harvard intranet won't necessarily be able to link to Harvard-owned articles, but can at least know what papers and other resources to look up elsewhere.

NEWS SUMMARY -- 1/16-1/21

2007-01-21T21:07:00.000-05:00

It seems that everyone took a couple of weeks to wake up from their holidays, but now the world wide web is overflowing with interesting CSR news. Here is a start on some of the most interesting issues and articles:

As the United Nations makes the transition to new leadership under Sec-Gen Bank Ki-Moon, it will be just as focused on CSR (“United Nations Underlines Supports for Corporate Social Responsibility” CSRwire 1/17). In fact, the UN will even be expanding the Global Compact to include schools who pledge to make CSR part of their curricula (see “A degree of ethical leadership” Financial Express 1/18).
In the wake of the Fortune survey of workplace satisfaction, the week’s news had a distinct bent toward employees. The most relevant of the magazine’s special section may be “Best employers, great returns” (Fortune 1/18); also, another survey shows that “In the War for Talent, Good Companies Finish First” (CSRwire 1/22). Finally, Diversity Inc's January issue examines “Workplace Diversity: How Do Companies Handle It Abroad?"
Supermarkets are caught between conflicting causes. On the one hand, in the UK they are making great progress in helping consumers reduce their carbon impact (see “Tesco follows M&S with climate change move” (The Independent 1/16) and “Sustainable supermarkets” (Ethical Corporation 1/12), but shifting to local production can have a detrimental effect on African economic welfare (see “Africa’s supermarkets and the poor” Ethical Corporation 1/12).
BP’s safety practices were lambasted by a panel led by James Baker, former US secretary of state but still “BP denies that it put profit over plant safety” (Financial Times 1/17).
The very concept of CSR is being examined and debated heavily, particularly in the UK as the Labour and Conservative parties embrace different philosophies (see “Carrots and sticks needed for business, say Tories” Financial Times 1/16; “Private squalor, public affluence” MP Cheryl Gillian 1/16; and “I caught a glimpse of the Cameron future: alarm bells rang”; Sunday Telegraph 1/21).
In the US, the major issue seems to be whether voluntary initiatives can ever be enough, as a Harvard study claims that “The Problem with Voluntary Corporate Initiatives Is -- Well, They Are Voluntary” (SocialFunds 1/16) and in the meantime a new voluntary partnerships and initiatives are touted in the press (see “Six power groups back bill to curb emissions” Financial Times 1/18 and “Beyond The Green Corporation” BusinessWeek 1/29).

Recycline - truly obsessive, but kinda cool

2007-01-19T18:46:00.000-05:00

The other day I went out to dinner with some Net Impact folks, and one of them showed up with a stack of toothbrushes for us. For some reason, he thought it was funny when I assumed he was a dentist.

Anyway, it turns out that he works for Recyline, purveyor of several obsessively-environmental products, including toothbrushes. The handle is made entirely of old yogurt containers. The paper in the packaging is 100% recycled (50% post-consumer). The plastic in the packaging is touted as a re-usable carrying case (with ventilation holes!). When you're done with the toothbrush, you can send it in a pre-paid envelope back to the company, where it eventually joins other used recycline toothbrushes to become a park bench. They've truly thought of everything.

Even though I'm making it sound pretty dorky, I'm actually quite taken with the idea. Recycline is wisely founded on the belief that recycling only works if there's a market for the materials we put in those blue bins. Every trash day, I wonder if the carefully-washed tubs and milk bottles really go anywhere other than a landfill. Recycline has given me a little more faith that it does.

The company doesn't have many products yet - just dental care, razors, and disposable (I mean recyclable!) tableware. But they expect to expand the product line soon.

The Wal-Mart Conundrum

2007-01-18T14:05:00.000-05:00

Today's post will be devoted exclusively to that behemoth of modern capitalism: Wal-Mart. Is it good or evil? Both or neither? And what can we do to steer it right?

In his aptly-named book, The Wal-Mart Effect, author Charles Fishman writes:

"Wal-Mart isn't just a store, or a huge company, or a phenomenon anymore. Wal-Mart shapes where we shop, the products we by, and the prices we pay -- even for people who never shop there.... Wal-Mart reaches around the globe, shaping the work and the lives of people who make toys in China, or raise salmon in Chile, or sew shirts in Bangladesh, even though they may never visit a Wal-Mart store in their lives."

He's right -- Wal-Mart is more than just a store now. It's a force of capitalism. And that inevitably leads people to ask whether its influence is good or bad.

Recently, a colleague at 1bloc wrote an article entitled "A Reason To Like Wal-Mart?" in which she described the company's recent efforts to open low-fee banking institutions both in the U.S. and worldwide, arguing that such operations would provide many of the benefits of microfinance to communities who often lack access to formal banking. But what struck me was the title -- "A Reason...." I think there are many reasons to like Wal-Mart. There are also many reasons to despise Wal-Mart. Here's a quick overview of the company's recent pro's and con's:

Pro's:

recently introduced sustainable fishing practices
introducing more organic foods and making them affordable
developing hybrid trucks for its fleet
convincing consumers to buy energy-efficient bulbs
providing many commonly-prescribed drugs for only $4
ongoing pressure on suppliers to reduce packaging
low prices can help poor consumers buy things they need

[Actually, when I search on that last one, all I find are reference to the high cost of low prices!]

Con's:

infamously low wages and benefits
union-busting (except in China, where the union doesn't represent workers much anyway)
using its heft to re-zone property that disallows big-box stores
creating cultural homogenization but putting mom & pop stores out of business
encouraging needless consumerism (link is a parody... or is it?)
recent fake-blogging (i.e., "flogging") debacle
generally replacing aspects of American life that we've sort of grown to like

[For a great discussion of several of these issues, see "One Two Three Four We Don't Want Your Superstore" by PBS.]

When I first started hearing about Wal-Mart (it's been a very slow infiltration here in New England), I decided to boycott it - a major step for me because it was the only store I was boycotting. Then again, it wasn't as if I had a Wal-Mart anywhere nearby anyway... so this was more personally symbolic than anything else. But I told myself if I was ever in a Wal-Mart, I wouldn't buy anything. A year later, visiting Texas, I finally had the opportunity to not buy some very tempting 16-cent avocados.

In 2005, I noticed that Wal-Mart was finally paying attention to the negative attention it was receiving, and seemed to be trying to change. CEO Lee Scott was making speeches about going green. I'm sure this was financially-motivated, but that's alright by me. Most of business is financially-motivated, and I just want to do my part to align the financial and social motivations. Based on the company's changed behavior, I decided to end my mainly-hypothetical boycott, and eventually bought a set of cheap luggage from a Wal-Mart in New Hampshire.

Now, as we enter 2007, I am again re-thinking my Wal-Mart policy. The company seems to be doing a number of good things, but that will never change the fact that its purpose in life is to be a competitive big-box retailer. And I don't happen to like big-box retailers. They depress me, and their low prices don't seem to make up for their low wages. No matter how many efficient light bulbs they sell, I don't really want to live in a world of big-box retailers.

So what do I do? Buy at Wal-Mart to signal that I support the changes they're implementing? After all, if they have to exist, I'd rather they try to be socially and environmentally conscious. Or do I boycott once more, in the hopes that they will just go away and leave the planet alone?

Decisions about where to buy a few avocados and $35 worth of luggage are not enough to make a big impact - but I like to know where I stand.

NEWS SUMMARY - 1/9-1/16

2007-01-17T15:49:00.000-05:00

Global regulation took center stage last week:

The recently-appointed UN Sec-Gen Ban Ki-Moon addressed business leaders in New York (“Business Community and UN Must Carry On Partnership”; UN News Center; 01/10/07)
The United Nations Development Program announced an eight-country responsible-business project in Europe (“EC, UNDP Promote Responsible Business”; UNDP Newsroom; 01/11/07).
Ethical Corporation takes a step back to examine the usefulness of international law in CSR implementation (“Ultimate Governance”; 01/11/07)
Several major multinational retailers have voluntarily agreed to cooperate on supply-chain labor standards worldwide (“Big Retailers Join Forces”; Financial Times; 01/11/07).

In socially-responsible investing...

Domini charts new territory by creating two new funds focused outside the traditional investment geography; they are the “PacAsia” and “EuroPacific” Social Equity Funds (“New Domini Funds Invest in the World”; SocialFunds.com; 01/11/07)

In company news...

Bill and Melinda Gates had a busy week, as their Foundation prepares to engage in a wholesale review of investments following accusations that it funds the very social ills it seeks to repair (“Gates Foundation May Shift Billions”; The Guardian; 01/12/07); meanwhile, back at the office, Bill Gates is promoting Dell’s new tree-planting program (“Dell Unveils ‘Plant a Tree for Me’”) and encouraging other computer manufacturers to follow his lead in offering free recycling (“Dell Says Plant a Tree, Help the Envirnoment"; New York Times; 01/09/07)
Wal-Mart is also maintaining a steady stream of positive press, despite the recent fake blog scandal: a new set of TV ads touts the feel-good values of “Sam’s Dream” (Adweek, 01/09/07), and the Financial Times discusses the retailer’s recent efforts to develop a more fuel-efficient fleet (“Wal-Mart to Develop Hybrid Truck Venture”). Meanwhile, the conservative Townhall.com has the retailer in its sights for being too engaged in socially responsible practices (“Shining the Light…”; Townhall.com; 01/13/06).
General Motors seems to be leaping into the market for alternative-fuel vehicles with its development-stage Volt, an electric car that will contain both a battery and an on-board generator (“GM Looks To Electric Car To Spark Revival”; The Guardian; 01/08/07).

Finally, in academic news...

The Stanford Social Innovation Review contains an in-depth article, co-authored by social enterprise guru Jim Austin, on the trend toward blending the private and social sectors (“Capitalizing on Convergence”) - a trend also noted recently by my college at 1Bloc ("Sector Blending"; 01/02/07).
Knowledge@Wharton examines whether and when corporate philanthropy increases profits ("Corporate Philanthropy Inspires Trust; Does it Also Prompt Higher Profits?"; 01/10/07), with attention paid to the differences between 1) industries that are more competitive versus more oligopolistic/monopolistic, and 2) industries that rely more or less on marketing to drive their profits.

Green Buildings Are All The Rage

2007-01-15T14:11:00.000-05:00

The sustainability movement has been paired with construction practices to create a "green building" boom. Essentially, green buildings may: 1) make more sustainable use of natural resources for building materials, 2) be more are energy-efficient, 3) incorporate renewable energy sources such as solar panels, 4) be aesthetically integrated with the environment, and/or 5) feature "natural" aesthetics such as sunlight or running water indoors. Advantages can include lower environmental impacts, lower operations cost, and happier/healthier/more productive inhabitants. In the U.S., the generally-accepted certification for green buildings is the LEED Green Building Rating System™, where LEED stands for Leadership in Energy and Environmental Design.

I was only vaguely aware of this movement until I attended Andy Savitz's book launch at the new Boston Headquarters of Genzyme, which is considered a model of green building practices in a commercial office building. After that, I noticed that a fellow 1Bloc writer chose to explore the idea of Green Affordable Housing for her recent article.

Then, it was just everywhere. Was I just more attuned, or was this phenomenon really passing some sort of tipping point? I can't be sure, but in late December I learned that Boston planned to amend building codes to require all large-scale private construction to meet "green" standards, and that several other cities are making similar changes in legislation.

Around the same time, the business magazine Barron's quite appropriately announced that green buildings were going mainstream (see "As Green as the Grass Outside" from the 12/25/06 issue). The article reports that, according to The Green Building Council (which runs LEED), 5% of all new U.S. commercial from 2006 construction will be LEED-certified, if the certifiers can ever dig themselves out of their vast backlog of requests.

Finally, a couple of days ago, I received an email about a new website called Rate It Green (www.rateitgreen.com) which allows individuals and professionals to share ideas about green building practices and products.

What a huge surge of news about one topic! I'm sure there's plenty more, but that should provide an introduction if you're not familiar with the topic, and some useful links if you need to know more.

Base of the Pyramid book

2007-01-14T23:49:00.000-05:00

A quick note to regular readers: I just discovered that my blog setting was not automatically approving comments anymore, and I had quite a backlog! My apologies. I have no desire to censor any of them. Just a glitch.

Today I'd like to announce a new book that a friend of mine worked on extensively (go Brooke!), called Business Solutions for the Global Poor: Creating Social and Economic Value.

It is an edited compilation of papers and case studies presented at a Havard Business School conference in 2005. Each relates somehow to the private sector's role in poverty alleviation. Generally speaking, they are in the spirit of C.K. Prahalad's Fortune at the Bottom of the Pyramid; in fact Prahalad was a speaker at the conference.

The book is a bit pricey, but all royalties are being donated to the International Committee of the Red Cross.

I hope to read it soon and post a review - or to hear from blog readers who have read it. I swear, your comments will be posted this time!

NEWS SUMMARIES (belated)

2007-01-11T10:10:00.000-05:00

Happy New Year! And apologies for my long lapse. No, it is not a sign that the blog is dying – just that I had a busy holiday travel schedule. I’ll be blogging onward into 2007, but first let me provide some belated news tidbits:

Swiss Re Offers Employee Rebate to Reduce Carbon Footprint
(GreenBiz.com, 5 January 2006)
The company is offering to reimburse workers for half the money they spend on carbon offsets for their mobility, heating, and energy use.

An Ousted Chief’s Going-Away Pay Is Seen by Many as Typically Excessive
(New York Times, 4 January 2006)
Gadflies Get Respect, and Not Just at Home Depot
(New York Times, 5 January 2007)
The biggest corporate scandal right now is the “resignation” (a.k.a. firing) of Bob Nardelli, formerly the overpaid and under-performing CEO of Home Depot, who received a $210 million severance package for his trouble. This story is rapidly becoming an example of both successful shareholder activism (which forced the resignation) and of rampantly excessive executive compensation.

Top Corporate Social Responsibility News of 2006
(CSRwire, 4 January 2007)
Top Five Socially Responsible Investing News Stories of 2006
(SocialFunds.com, 5 January 2007)
No point in summarizing the summaries – just follow the links for a lighting-fast review of the top issues in CSR and SRI from the past year.

Independence from the Corporate Global Economy
(Yes! Magazine, Winter 2007 Issue)
A veritable manifesto on how to live without big corporations, through buying local, recognizing non-financial “economies” such as gifts and cooperation, and mobilizing for greater awareness of these types of alternatives.

Big Dig: Mongolia Is Roiled By Miner's Huge Plans
(The Wall Street Journal, 4 January 2007)
A businessman plans to operate one of the world’s biggest copper and gold mines in the poor and land-locked country of Mongolia, and expected local residents to welcome the boost to GDP – in fact, the project might double the national income. However, as developing nations worldwide have struggled with foreign mining companies that deplete their ecosystems and engage in human rights abuses, Mongolian activists are protesting the mine and Parliament is considering withholding permission for it to operate.

Fighting Over Gold In the Land of Dracula
(The New York Times, 3 January 2007)
A poor small-time farmer in the Transylvania province of Romania is fighting a multinational mining corporation that wants his land – and attracting support from a host of celebrities and activist organizations worldwide.

Be It Ever So Homespun, There's Nothing Like Spin
(The New York Times, 3 January 2007)
Companies are waking up to the fact that a growing segment of food-shoppers are leaning toward natural, environmentally-friendly and socially-conscious purchases. However, rather than simply spurring an increase in responsible sourcing, much of this shift is fueling a change in packaging design to evoke the feeling of healthy and earth-friendly foods. The greenwashing can sometimes be difficult to discern from the real thing.

Wal-Mart Puts Some Muscle Behind Power-Sipping Bulbs
(The New York Times, 2 January 2007)
The big-box retailer is throwing its impressive weight behind efforts to switch consumers from traditional incandescent bulbs to the more energy-efficient florescent bulbs. As part of the effort, it is also leaning on suppliers to find ways to accomplish the shift. If it succeeds in its goals, Americans stand to save $3 billion in energy costs by 2008.

When 'Refurbished' Takes On an Earth-Friendly Vibe
(The New York Times, 31 December 2006)
If you’re reading this, chances are you both, 1) care about the environment, and 2) use a computer. So how about applying your environmental values next time you buy a computer? This article discusses the eco-benefits of buying a “refurbished” computer, and also a new EPA-funded rating standard called Epeat, short for “Electronic Product Environmental Assessment Tool,” which considers factors such as energy efficiency and the levels of various hazardous chemicals. Finally, it may be worth waiting a bit to purchase, as more eco-friendly models are expected to be out in 2008, as manufacturers find ways to meet Europe’s new and stricter standards.

Gentlemen, Start Your Plug-Ins
(The Wall Street Journal, 30 December 2006)
A former head of Central Intelligence wants to convince you to strive for replacements to Middle-East oil, and his favorite substitute seems to be electricity, since there would be very little new infrastructure needed. In the long run, he sets great store by new genetically modified biocatalysts that enable ethanol to be produced from a wide variety of plants – a much more efficient strategy than corn-based ethanol production.

Launch of Three New Clean Tech Indexes Culminates Banner Year for Green Investing
(SocialFunds.com, 29 December 2006)
In what some are calling the "year of green investing," 2006 ended with New York City-based investment bank Jefferies Global Clean Technology Indexes introducing three new green indexes. Altogether, the number of these indexes more than doubled last year, from five at the start of 2006 five to eleven at the close of the year.

UN Global Compact to Delist Additional 203 "Inactive" Companies
(Press Release from United Nations Global Compact, 28 December 2006)
An early criticism of the Global Compact was that it required very little of its members, but recently the UN-run organization has shown an increasing willingness to boot those companies who don’t abide by its guidelines. Those who have failed to report their efforts via the Communication on Progress framework have been dismissed – 335 of them last October, and an additional 203 as of January 1, 2007.

Illegal Power Plants, Coal Mines In China Pose Challenge for Beijing
(The Wall Street Journal, 27 December 2006)
As the Chinese economy grows by leaps and bounds, higher energy demands have spawned illegal coal-fired power plants, which it turn have spawned illegal coal mines. These add to the country’s environmental woes, and tend to lack safety standards. A power plant in the province of Inner Mongolia was discovered recently when part of it collapsed, killing six workers. Last year, most of China’s nearly 6,000 coal-mining deaths occurred in illegal mines. Sometimes the central government is unaware that these operations exist, but in some cases officials are turning a blind eye; a recent investigation found that over 4,000 Chinese officials held financial stakes in illegal mines.

As Green as the Grass Outside
(Barron's, 25 December 2006)
It looks like “green buildings” are going mainstream. The U.S. Green Building Council, which offers the Leadership in Energy and Environmental Design (LEED) certification, has a backlog of nearly 5,000 buildings to certify, and an estimated 5% of all new 2006 commercial construction will be LEED-certified once the agency can squeeze it all in. Why? Not only is it trendy and cool, but there are financial benefits too. Genzyme’s new Boston headquarters, for example, uses 42% less energy and 34% less water than other buildings its size. Plus, studies show that ecologically-designed workplaces make employees healthier, happier, and more productive. So, why only 5%?!

New Certification Standard Proposed for Climate Offset Products
(GreenBiz.com, 21 December 2006)
The Center for Resource Solutions, along with Green-e GHG Advisory Group, is proposing a new standard for carbon offsets, to ensure that providers are really offsetting the amounts they claim. The groups hope the new standard will ensure credibility and increase transparency, thereby encouraging more individuals and businesses to engage in carbon-offset practices. The draft standard, available online, will be out for comment until the end of January 2007, and a stakeholder conference call will be held in late January. For more information, contact Alex Pennock at alex@resource-solutions.org.

U.S. Companies Show Progress in Role of 'Good Corporate Citizens'
(The Chronicle of Philanthropy, 20 December 2006)
A report by the PR firm GolinHarris explores the latest trends in public perception of corporate responsibility. Dozens of companies are ranked, with high marks going to Ben & Jerry’s, Target, and Patagonia, and low marks going to Exxon, Philip-Morris, and Shell. Survey participants also ranked the factors that are most important to them in assessing a company’s goodwill: top priorities were treatment of employees and ethical business practices, and less-important was corporate philanthropy. Two-thirds said that companies should focus more on social responsibility, and nearly half believe that business today is moving in the wrong direction.

A corroded culture? How accidents in Alaska forced BP on to the defensive
(Financial Times, 18 December 2006)
British Petroleum may have re-branded itself as “Beyond Petroleum” is now struggling to maintain its reputation for enlightenment and responsibility (at least relative to its peers). After several industrial accidents and pipeline leaks over the past few years, observers are starting to claim that BP isn’t just unlucky – it has systematic problems creating a safe workplace and maintaining its operations. This investigative report pieces together the personal stories of injured workers and questions the general safety culture – or lack thereof.

How Suite It Isn’t: A Dearth of Female Bosses
(New York Times, 17 December 2006)
Since the feminist movement of the 1970s, women have been graduating from top colleges and MBA programs in ever-larger numbers – so why aren’t they taking boardrooms equally by storm? In the Fortune 500, only 16% of corporate officers and less than 2% of CEOs are women. This article explores possible reasons that women aren’t reaching the top, and what might be done to change that.
Note: for similar coverage of the same issue in the UK, see the Financial Times article of 5 January 2007: “Size of gender gap in top jobs 'woeful'” which is based on a report by the Equal Opportunities Commission.

Values-based shopping at Alonovo.com

2006-12-23T12:27:00.000-05:00

A few days ago I came across a website that fits nicely with my shopping-season mantra of values-based consumerism: www.alonovo.com. It's slogan is "intelligent marketplace" and it's mission is "to connect the concept of corporate behavior directly to the profit motive."

Shopping from this site helps you save the world in several ways, each of which I happen to think is pretty neat:

Like many online shopping sites, this one collects revenue from Amazon for directing buyers to them - but these guys donate at least 20% of their ad revenues to charity. If you register with the site, you can choose which charity you'd like to support from a long list, but registration is not required to shop.
Next to each product is an easy-to-spot and easy-to-read chart with a "value rating" for the company that sells it, based primarily on data from KLD and the Federal Elections Commission. You can view five sub-ratings (CSR, environment, workplace, ethics, and customer focus) without registering, and more detail after you register.
After registering, you can also set your own relative values, so that the ratings become personalized to the issues that are most important to you.

There are a bunch of things that I like about this set-up. One is that it's as easy as you want it to be - no registration required and easy-t0-read charts. And yet, the more detailed data is there. In fact, accessing KLD's Socrates database is usually quite expensive, so having some of its data available for free is a huge plus. Also, indicating what's important to you as an individual has the potential to educate companies much more rapidly on what's really important to consumers. Finally, if you're using the site as an alternative to a trip to the mall, think of all that petroleum and CO2 you're saving!

GOOD's new social-networking feature

2006-12-22T13:13:00.000-05:00

I've blogged before about the new socially-oriented social networking site Rethos and 1Bloc - and now I know of a third: the GOOD Community. This once takes being hip much more seriously as a way to engage young people in worthwhile causes. The website is still a little rough, but it's generated a lot of excitement - over 10,000 subscribers already!

Also, GOOD had an event right around the time I was writing about "Shopping for Values" - it was hosted by the Ralph Lauren "Rugby" store on Boston's swanky Newbury Street, and a portion of proceeds from sales that night went to a few GOOD-linked charities.

I met Ben Goldhirsh there, and pitched an idea to him - it's a book proposal I've been working on for a while, for something that would generate more thoughtfulness and enthusiasm among mainstream audences about the social/environmental impacts of their purchases, investments, jobs, commutes, etc. More on that idea later. It deserves it's own blog post.

Oxfam and Unilever: understanding the BoP

2006-12-19T19:18:00.000-05:00

I was just at a meeting with Oxfam representatives, who came to Harvard Business School for feedback on a recent report, for which they had partnered with Unilever to study they company's impacts in Indonesia. The report covers a broad range of impacts - supply chain practices, value to consumers, the distribution of company profits among stakeholders, and much more. It's very lengthy, and full of useful data.

Essentially, Oxfam wants to figure out how to calculate a "poverty footprint" for a given company in a given country, and this report is the first attempt. They are now examining the methodology, and looking at what might be done better in the future.

This sort of exercise seems especially wise and timely as people in all sectors are getting excited about the "BoP" - or the Bottom of the Pyramid, a phrase coined by author C.K. Prahalad. The excitement has been good for getting business engaged in poverty reduction, but I've also been bothered by the lack of critical thought in some of these discussions. More business doesn't always or automatically help the poor. I'm glad Oxfam is trying to understand when it helps, when it hurts - and what can be done better.

NEWS SUMMARY - 12/11-12/18

2006-12-19T18:31:00.000-05:00

News Highlights:

Viral marketing seems to be a new area in which companies can have fiascos. In fact, this week I’ve seen a new term: a “flog” is shorthand for a “fake blog.” This is being used to describe corporate PR masquerading as unaffiliated content, and people are not reacting well to it. Last week’s News Brief covered YouTube’s cigarette videos and Wal-Mart’s fake-blog controversy. This week, Sony was also called out for its less-than-transparent hip-hop blog, alliwantforxmasisapsp.com. (See “Business Blogging Lesson Still Not Learned”)
Consumer-driven CSR continues to gain ground, as alonovo.com transforms Its cause-based "social values shopping program" for 2007.
Lots of regulatory news this week, in several countries:

Australia’ Corporations and Markets Advisory Committee decided to leave its Corporation Act unchanged, rejecting proposals to force companies to further incorporate the interests of a broad range of stakeholders. Commentators say that the decision may be made for now, but the debate has only begun.
SocialFunds.com ran an interview with Ambassador Elisabeth Dahlin explores how the Swedish government facilitates corporate responsibility.
U.S. officials participated in conference on CSR inBrazil; but the Justice Department abandoned some of the tough tactics it used to fight corporate crime in the post-Enron era.
Starting in 2007, we can expect the Chinese government to start buying green as new "green procurement" policies are implemented for both central and provincial governments.

Transparency in the News Media: A Moment of Self-Criticism

2006-12-17T12:31:00.000-05:00

As many of you may know, I have a part-time gig with the Center for Corporate Citizenship at Boston College. Every week, I review all the CSR-related news that I can get my hands on, decide what's most interesting or important, and compile that into a News Brief that goes out to staff members of the Center. I also forward a copy to my boss at Harvard Business School, to keep him up-to-date as well.

The main reason I do this is to force myself to keep abreast of all the latest developments in the field. It's a big time commitment, and often I wish I had my weekends back - but I always end up feeling glad to be so well-informed.

Lately, I've been trying to leverage this knowledge in different ways - as has the Center. Because most of the articles are copyrighted, we can't distribute the News Brief itself, but I've begun posting news summaries on this blog every Monday, with the goal of helping anyone interested in the field stay current without a big time commitment. Also, a few months ago Martin Smith read this blog and decided that similar content would be great for 1Bloc - so I'm now writing an occasional article for that, and working toward some weekly news summaries.

Meanwhile, the Center has also been trying to leverage my time investment. I've started sending extra emails on new trends and key highlights to the woman who compiles the news section of the Center's newsletter, which is distributed more widely. Also, someone else at the Center is planning to send the headlines-only section of my News Brief, with links, to all corporate members.

So my research is becoming the basis of three different communications at Boston College, and for three different personal purposes. In some ways, this is great - but in others, I'm starting to get concerned.

The other day, I was talking to my boss following his seminar on "CSR and the 7 Deadly Sins" when BC professor Sandra Waddock stopped to introduce herself. As I listened to the two of them talk, I heard them confirming each other's assessment of the key issues in the CSR field - and I wondered, how much of an influence did I have?

These two professors thought they were coming from different schools and with different experiences - but each reads my News Brief every week. In their brief discussion, they seemed to be validating each other's perceptions of current trends in the field. But if each of them was relying on the same source, the similar perceptions would be a false reassurance.

Not to overstate the issues, but Noam Chomsky makes a similar argument about the New York Times - that it sets the news agenda more than people realize. Seeing a topic come up in multiple news sources seems to give it more validity, and we often don't notice if all those mentions are tracing back to a single source.

The CSR world is very very small. Walk into a conference or cocktail party, and you're bound to know several people from several organizations. This can be reassuring, but it can also be counterproductive. We can end up feeling reassured that we know what's going on, simply because we share perceptions with the other members of a very small and closely-interconnected group.

I don't know exactly what to do about my newfound concern. Transparency, I suppose, is one part of an answer - and that's what I'm trying to provide in this blog-posting. Thoughtfulness in compiling my news summaries should also help - it should be an extra reason to read as much as I can and to include a diversity of opinions.

Another part of the solution would be for you, as a reader of this blog, to email me with news stories you've read, with comments when you think I've gone wrong, and with direct advice on how to address this issue in general.

One problem, however, is that I can't cover all the news that's out there - there's simply too much volume, both in terms of the hours I can devote (10 per week), and the page limit I've been given (~60 pages of articles per week). So I frequently miss out on articles. My job has not been defined as covering everything - just as putting an interesting News Brief together. But is it my social responsibility to cover more, in order to present current trends more accurately?

Shopping for Values

2006-12-15T11:01:00.000-05:00

Exciting news for me - I have an article of my own posted on the 1Bloc website! Here is the link: http://www.1bloc.com/default.aspx

For those who don't know it, 1Bloc is a new social-networking site for "social innovators" to connect with each other. The founder ran across my blog, and invited me to apply for the editorial board - so that is the basis of my involvement with them.

1Bloc is an outgrowth of StartingBloc, which seems to be the most widely-known and respected organization for social entrepreneurship at the undergraduate level. StartingBloc has a fellowship program, which allows undergrads and young professionals to participate in several "institutes" over the course of a year. These sessions seek to provide the "training, experience, and networks necessary to drive social, economic, and environmental innovation through their careers and lives as engaged citizens."

I'm very proud to be part of the new site, and to be allied with the great work StartingBloc has been doing. I see some of these networks layered by age or education level, and I'm hoping to help connect those layers over time - or at least see what's going on in each of them.

Please consider joining 1Bloc. (Remember, if you join early you get the best usernames!)

CSR and the 7 deadly sins

2006-12-14T22:29:00.000-05:00

Today I attended a talk by Dutch Leonard, a professor at both Harvard Business School and at the Kennedy School (and who just happens to be my boss) - it was on the topic of "CSR and the 7 deadly sins." He said he's never had a topic attract so much attention simply from the title alone.

I'm excited to be able to post about this idea, because it's something we've discussed before, but I didn't think it would be fair to blog about it before it's been presented publicly.

The basic argument is that certain traits are part of human nature - and that's why we have moral codes against them. In the case of the seven deadly sins, these are Sloth, Greed, Wrath, Lust, Gluttony, Envy and Pride.

If you think about this from an evolutionary perspective, these traits are adapted to a much earlier environment - one that was calorie-scarece and didn't involve so many close neighbors. But today's world is quite different, and evolution is a slow process, so at this point they are mal-adaptations. They are human weaknesses.

In the business world, there is a school of thought which says that choice and freedom are inherently good, and more of them is better, consumers are rational, and if people make "bad" decisions they have the right to. I find this to be one of the more compelling arguments in the anti-CSR contingent.

However, when you look at human nature and the choices we make in terms of evolutionary weaknesses that have been hard-wired into us (or, if you take a religious perspective, that have been part of man's downfall for millenia) - then the "choice" defense isn't so air-tight.

Dutch makes the point that corporations can have several level of engagement with these human weaknesses. They can:

ignore them, but offer what people want to buy.
purposefully neglect to disclose some of the ill effects of products such as junk food and cigarettes.
proactively design products that exploit these weaknesses in order to activate customers.

In the tobacco industry, all of these things happened - and that may be why the public outcry was so intense. It's one thing to offer freedom of choice, but another to adapt your products to take advantage of people's baser instincts.

This is a new vein of research for him, so the "answers" are still in development, but he mentioned "consumer-driven CSR" as one key area that might drive companies to design products with better morals in mind.

Coincidentally, I've been working hard on my own article about just that! Stay tuned for more on that.

NEWS SUMMARY - 12/3-12/11

2006-12-11T08:37:00.000-05:00

Harvard Business Review has come out with a lengthy article on Strategy & Society, written by Michael Porter and Mark Kramer.
Consumer buying habits are key around the holidays, and Golin/Harris has released its fourth national survey, "Doing Well by Doing Good 2006." In the Economist, ethical food shopping is explored in "Voting With Your Trolley."
A look behind the scenes at Wal-Mart shows how a savvy political advisory group has managed to improve the image of “Candidate Wal-Mart" considerably.
As the major reporting season approaches, the Prince of Wales announced his new “kitemark,” which will signal high-quality environmental reporting. This is particularly useful as the number of social responsibility reports skyrockets – the Christian Science Monitor puts the number at about 2,000, up from several hundred a couple of years ago.
The obesity issue is gaining ground, as New York City health officials unanimously vote in favor of the proposed ban on trans fats from the city’s restaurants and food stands, and Boston officials consider doing the same thing. Overseas, McDonald’s tries to head off criticism in China by designing a nutrition curriculum for elementary schools (Financial Times, 11/25/06), while Burger King fails to head off such problems in Spain, where it’s XXL burger advertising drew the ire of regulators.

NEWS SUMMARY - 11/27-12/03

2006-12-04T19:21:00.000-05:00

December 1 was World Aids Day, and many publications recognized it through thoughtful articles. In particular, the Financial Times ran a piece on “Business and Aids” that urged the private sector to do more.
The EPA has been arguing before the Supreme Court that its mandate does not include carbon dioxide, while a coalition of states is arguing that it does. Plenty of news outlets are covering the regulatory dispute, including the New York Times (see “Justices' First Brush With Global Warming," 11/30/06).
Several news items from the auto industry: Apparently, General Motors has seen the light, and is now investing in electric cars and hybrid technology, which it hopes will not only boost sales of those cars at some point in the future, but also help with the company's flagging image today. Meanwhile, Volkswagen AG and DaimlerChrysler AG are experimenting with cleaner forms of diesel - clean enough to meet Californa's strict environmental regulations.
For researchers in environmental science, the big news of the week is the just-unveiled GEONETCast tool, which can provide environmental data worldwide and free of charge (see “The Pulse of the Planet”; The Economist 12/02/06).
Starbucks is in the news, getting a bad rap for opposing an Ethiopian effort to trademark natively-grown coffee beans (The Times Online, 11/27/06); some feel that while Starbucks had generally been seen as a good corporate citizen, this move will just make it seem greedy.
BP is also being called out for hypocrisy (see TownHall.com 11/25/06), as the company settled a lawsuit related to its Texas City refinery accident of last year, which killed 15 workers and injured 170. The company's environmental marketing had been quite compelling, but Forbes also noticed the discrepency this week in its article "When is Being Good Not Good Enough?" (Forbes, 11/28/06)
Also, check out this WorldChanging piece on a very creative and beneficial use of advertising space - a billboard that is also a solar panel, used to power the local school!

Forbes Magazine on Corporate Citizenship

2006-12-03T23:00:00.000-05:00

Check out the extensive "special report" section in the latest issue of Forbes. These articles address some great big-picture questions. Here is the list of articles, as the magazine describes them:

"Can Corporations Save the World?" (Businesses have donated nearly $14 billion to cure society's many ills. But are they funding hope or hype?)
"The Best Corporate Citizens" (When consumers were asked to name the most socially responsible companies around the world, they had some surprising answers.)
"When is being good, not good enough?" (Despite their relatively progressive practices, Starbucks and other socially minded firms can’t seem to help being slammed by activists.)
"New Lessons in Corporate Citizenship" (Courses in corporate social responsibility are becoming a requirement at most B-schools. But can you teach an MBA to care about CSR?
"Is Corporate Social Responsibility Responsible?" (Not if companies spend shareholder assets on unprofitable causes.
"Going With the Flow" (Clean water brings health and prosperity to the developing world –while improving Coca-Cola’s image.)
"Achieving Corporate Citizenship" (How to merge profit, principle and purpose to serve an expanding list of constituencies.)

Quite coincidentally, I sort of know Steve Forbes. He started a student business magazine with a couple of friends when he was at Princeton as an undergraduate. It's called Business Today, and it's still going strong. I was Editor-in-Chief from 1997 to 1999.

Anyway, having met Forbes and worked on his brainchild, I'm very struck by the evolution in thinking about what topics are germane to business leaders and to a business magazine. It's remarkable to think that in just a few years, the dialogue has expanded so much.

The Upcoming Crisis in Microfinance

2006-12-02T16:02:00.000-05:00

I recently wrote a case on a microfinance organization, and that gave me the opportunity to learn a great deal about the field. Microfinance is an amazing idea that took a long time to gain acceptance, but it's also a limited tool that is becoming too popular for its own good. Fortune Magazine seems to be the first major publication to point this out, with a very thoughtful article called "Easy Money" (11/27/06).

Decades ago, helping the poor was about charity. Then, about 35 years ago, came the bright idea that loans could help the poor start businesses, and the businesses could allow people to pay back the loans and to work their way out of poverty - in a dignified and sustainable way. At first, many observers were repelled by the idea of asking disenfranchised people to repay the small sums they borrowed, at what seemed like very high interest rates. But the idea caught on - slowly at first, and then very rapidly over the last decade. Finally, 2005 was declared by the UN to be the "Year of Microcredit" and in 2006 the Nobel Peace Prize went to microfinance pioneer Muhammad Yunus. Today, nearly everyone seems to be keen on microfinance.

The problem is, microfinance is not a panacea. It can help a great deal in certain situations, but it can hurt in others. Take the example of a woman in rural India who operates a small produce stand, and who cannot afford to buy enough inventory to expand her business or to buy at bulk prices. She can benefit from a loan because it will directly contribute to her revenues and profit margin.

On the other hand, take the example of a woman who is struggling to afford school fees for her children, or medicine for her baby; she needs the money, but how will she pay it back? Also, some microcredit programs have adopted "client retention" as an organizational goal, and are pushing borrowers to come back for more and larger loans - potentially trapping them in a cycle of debt while promising a way out of poverty.

Microcredit can be a powerful tool, under the right circumstances, but a blind push for more and more of it is dangerous. Even more worrisome, perhaps, is that when the microcredit bubble bursts, its supporters will be disappointed and disillusioned. Will they be less likely to pin their hopes on other idealistic plans in the future?

There are plenty of good (yet imperfect) ideas for helping to end world poverty. They all need people who believe in them. We need to use the tool of microcredit wisely, so that it can bring as many people as possible out of poverty, trap as few people as possible in debt, and inspire as many supporters as possible so that they can find more good ideas in the future.

CSR resources galore!

2006-11-30T17:10:00.000-05:00

Today at lunch, I attended a seminar by Sandra Waddock, a well-recognized professor at Boston College who is also closely associated with BC's Center for Corporate Citizenship. She is on sabbatical this year at Harvard, as a visiting scholar at the Kennedy School's CSR Initiative.

Waddock has made the brave move of doing descriptive work in the CSR field - I say brave because it's highly useful, and yet academics often turn their noses down at anything that doesn't involve opinionated analysis into a highly-specific area.

She has compiled a wealth of information about what comprises the CSR landscape - the guidelines, instututions, terms, publications, etc. It's much like my own "resource website" (see link at right), but on steroids.

Here is a direct link to Prof. Waddock's paper and also to her powerpoint presentation. Check it out - it's amazing!

Curriculum Change - the Reality

2006-11-29T16:19:00.000-05:00

I was at a meeting yesterday for Harvard Business School's "Social Enterprise Initiative" - a group of professors and administrators who are each individually very dedicated to topics such as corporate social responsibility, social entrepreneurship, climate change, non-profit management, etc. The reason I say this is to point out that the group as a whole is very much in favor of changing the MBA curriculum to include more of these topics, and they are particularly well-positioned to do so.

The interesting thing is that this isn't at all easy.

Essentially, the aspects that drive topic selection for cases, and case selection for courses, are twofold: 1) what the course itself needs in terms of conceptual learning, and 2) what the professor happens to bump into and be intrigued by.

A professor would be foolish to waste class time on something that doesn't have a useful teaching purpose - so, for example, the Patrimonio Hoy case can't be taught in a finance class if it's just about helping poor people build homes, but if it's re-written to bring out the lessons on time-value of money in an environment where discount rates are extremely high, then suddenly it becomes "worth" the class time. If the case can engage students on an important issue at the same time, that's fantastic - but professors won't teach it for that purpose alone. They see, quite reasonably, their primary role as teaching business skills not advocacy.

But will a professor say to himself or herself, "gee, I need a case on the time value of money, what can I find that will have a social purpose as well?" Not often. Instead, good professors are buffeted by interesting ideas all the time, and it become a matter of sorting through what's already in front of them. Screening out unsolicited suggestions becomes a defense mechanism for their time and sanity, and so they end up listening to trusted colleagues when thinking about which cases are worth using in class, or worth writing from scratch.

So for groups out there who want to get more CSR into b-school curricular, these are your challenges and also your advice - find ways to make it relevant, talke to professors you know or others who know them well, and then further tailor the ideas to fit even better with that particular professor's teaching agenda.

Most people want to help the good causes of the world, but with so many competing demands, it helps to make it easy for them.

NEWS SUMMARY - 11/21-11/27

2006-11-28T15:06:00.000-05:00

In recent CSR news...

Milton Friedman' s death caused columnists everywhere to ponder his famous statement that "The Business of Business is Business" - and what Friedman himself really meant by that. The Wall Street Journal ("Milton Friedman Was Right" 11/24/06), The Age ("The Blurred Lines of Being Responsible" 11/22/06) and WorldChanging (Milton Friedman and the Social Responsibility of Business 11/18/06) are just some of the articles that touch on this theme.
As the holiday shopping season gets underway, sustainable gift ideas are all the rage. For example: the Wall Street Journal' s "Rudolph the Recycled Reindeer" (11/24/06).
Some big companies are battling reputational crisis, as " Coke Joins the Battle for the Brand" (Financial Times 11/21/06), Johnson & Johnson deals with allegations that its stents are " Dangerous Devices" (Forbes 11/27/06), and Nike fires Pakistani soccer-ball manufacturers for sub-contracting to at-home workers who cannot be adequately monitored ("Nike Says Monitoring System Working," Associated Press 11/21/06).
In the latest instance of an issue made more complicated by the Internet, advertising bans on smoking don' t do much good if tobacco firms have easy and free access to millions of teens via YouTube, where videos of sexy, smoking teens are possibly being posted by tobacco manufacturers to recruit the next generation of smokers. (See " Whiff of Tobacco Firms on Net" )
While the previous decade saw the Internet spur the rise and fall of fortunes, a Times (UK) columnist and managing principal of Green Order argues that this decade will see the environment change everything. He predicts that the "next Bill Gates" will be an environmental entrepreneur, because solving the climate change challenge is the greatest economic opportunity of our time. (See " Coming Soon: a Green Bill Gates" )

New site: www.DoTheRightThing.com

2006-11-22T09:41:00.000-05:00

I love this new site! One of the co-founders (Rod) contacted me directly with a pre-launch password, and I explored it just now - it's awesome.

Basically, Do The Right Thing is a grassroots system for evaluating the social impact (positive or negative) of various companies. You can post news stories/summaries/analysis, rate others' postings, and look directly at company profiles. The site seems to use a technology similar to Digg, but has tweaked the software to suit its own purposes. The result, hopefully, will be that a quick visit to the site will allow a busy person to read something interesting and relevant right away - while at the same time allowing enthusiasts to add real depth to the content.

On a systemic level, this is an incredibly important tool. I'm a huge proponent of individuals acting on their values in their purchasing, investing, and other economic decisions - because that provides incentives for companies to adopt those values. But there's an information gap, since individuals have limited time to research these issues, and the information itself is both scattered and biased.

As corporations pay more and more attention to CSR, they increasingly focus on PR strategies to appear responsible - and these can be difficult to distinguish from real action. Having a very democratic system of filtering through all this information can allow individuals to see what other like-minded individuals have to say about certain companies.

If, for example, Company X were to be involved in a scandal, this network could quickly organize a boycott to show its disapproval. Alternatively, if Company X were to launch a product with impressive environmental qualities, individuals might buy it as gifts for family and friends. If a company wanted to know how a certain incident or product was affecting its reputation, it could look on the website to see how related posts were being ranked (each receives a score for impact, either negative or positive). These are all ways in which DoTheRightThing could, to put it in economist terms, make the market for values more efficient.

They launch in a few days, so check it out!

NEWS SUMMARY: 11/13-11/20

2006-11-21T10:59:00.000-05:00

Last week, in CSR news:

Perhaps because the buying season precedes the giving season, everyone seems to be writing about consumer habits – first, an extensive report by the World Wildlife Foundation (“Let Them Eat Cake”) proclaims a new surge of interest in responsible brands. Then the New York Times discusses how retailers are tying an increasing variety of products (“Candles, Jeans and Lipstick,” 11/13/06) to social marketing campaigns, and donating a share of product profits to charity. Looking at how consumers say they intend to spend their money, Boston-based Cone Communications finds that “Holiday Shoppers Want Businesses to Help Them Do Good” (SocialFunds.com, 11/13/06).

Grocery-store purchases are showing a trend toward ethical consumerism, as “PepsiCo Launches Products at Whole Foods” (Associated Press, 11/13/06) to reach consumers interested in health and organics, and Fair Trade is launching Oké Banana in the US, so American consumers can now buy “A Banana That Makes You Feel Oké” (Press Release by Oké USA, 11/14/06)

The past week has also seen a couple of articles with interesting critiques of the CSR field. In particular, a New York Times piece questions the effectiveness of a field that has become a “safe space” for businesses rather than a vehicle for fundamental change to the system in which they operate (“The Paradoxes of Business as Do-Gooders,” 11/11/06). The second proclaims that the CSR movement is a political tool of the Progressive Left, and has become a bigger threat since the recent elections – making the business sector a “trojan horse” through which to implement policies that voters rejected at the ballot box (see “CSR and the Democratic Takeover,” Townhall.com 11/17/06).

Finally, the trend toward hybrid models of business and philanthropy is getting noticed, in particular through an in-depth article in the New York Times called “What’s Wrong with Profit?” (11/13/06); the Wall Street Journal covers a case in point – a bank that invests in ventures that aid the environment (see “Business Technology: New Resource Bank…” 11/14/06) .

Global CSR and "The Responsibility Paradox"

2006-11-17T14:12:00.000-05:00

I'd like to link you to my very favorite academic paper on CSR - it's by some professors at the Univeristy of Michigan and it's called "The Responsibility Paradox: Multinational Firms and Global Corporate Social Responsibility." You can download it here.

This paper does an amazing job of following the social role of the corporation through time, from the late-18th century through today, and tying different trends together. For example, prior to globalization it was relatively easy to identify a firm's "community" - headquarters, manufacturing, retail and waste disposal would all happen in more or less the same place. It was easier to invest in the community, because the company itself could reap the rewards of that investment. This was the "factory town" model.

Over time, corporations have become what some would describe as a "nexus of independent contracts" - connecting a factory with a brand, a product with a market, and housing its official headquarters in an airport warehouse in some conveniently low-tax locale. So the question "to whom are corporations responsible?" becomes much more complex.

The authors (Gerald Davis, Marina Whitman, and Mayer Zald) say all this, and so much more, far more eloquently than I have here. If you read one "academic" paper this year, this wouldn't be a bad choice.

Innovative Financing for Social Enterprise

2006-11-10T08:50:00.000-05:00

It can be difficult to put boundaries on what falls within "corporate social responsibility," but a field that is at least closely related is Social Enterprise. It's not corporate, but instead it's another model that "business" can take, and one that puts greater emphasis on values and social change than on profits.

There's a new took for funding individual social enterprise, and Esquire Magazine is calling it "The E-Bay of Loans" (October 2006, p. 207). In particular, two companies (Prosper in the US and Zopa in the UK) are enabling individuals with money to invest to connect with people who need a loan - many of them social entrepreneurs. Investors can take into account the individual's credit rating, requested interest rate, and description of why he or she needs the money.

Also, there's a really neat auction-like feature that basically compiles all the willing lenders who offer money at less than the maximum interest rate that the borrower has set; after the total loan is full and before the bidding period is over, only lower interest rates are accepted - so that in the end, the borrower has the lowest possible rate.

Until now, it has been very difficult for a non-wealthy individual to have a significant amount of discretion over the values that he or she is embracing as an investor - usually all we can do is choose the "social" mutual fund out of the dozen choices we are given. This is a way in which indivuals can choose to invest as little as $20 on a project and a person they truly believe in.

News summary: 10/30-11/6

2006-11-07T13:41:00.000-05:00

Last week's CSR news was less voluminous than usual; I assume that a greater proportion the news is being devoted to poltics in the run-up to today's elections - and that next week may similarly focus on the effects of whatever happens today. Of course, it would be great if voters were really concerned with how these business issues are being regulated and represented by our politicians, but that's mainly an aspiration in the U.S.

The highlights in company news included:

KFC is phasing our trans fats from its fried chicken
Microsoft is reconsidering its China business for human rights reasons
BP apparently knew long ago about safety issues at its Texas City refinery

The mining industry had a couple of interesting (and opposing) articles. In Ghana, a reporter sharply criticized government promotion of mining due to its negative effects on the local population and environment. Meanwhile, in Venezuela, Hugo Chavez says he is shutting down various mining operations because of environmental concerns - but miners have protested the loss of their livelihood, causing Chavez to send in troops which have killed at least six miners.

I will try to keep new news round-up as a more regular feature.

Are social and environmental solutions on a collision course?

2006-11-07T09:56:00.000-05:00

At the WorldChanging book launch on October 28, Bruce Sterling made a quip about the most environmentally-sustainable people being dead people. He talked about how so much of what we do damages the environment, and most of our talk about environmentalism involves reducing the impacts - but is rarely about getting to the point of fully eliminating the harm we impose on the earth. He then expressed an aspiration to do better, though I wasn't quite clear on how he was proposing to do that.

On November 1, I attended the North America launch of the Global Alliance for Improved Nutrition (GAIN), and heard some compelling statistics about worldwide hunger and malnutrition. The most memorable was the number of child deaths that can be attributed to the underlying cause of malnutrition - each year, this number is approximately the population of Japan. And tragically, it isn't even particularly difficult or expensive to provide vitamin and mineral fortification. This is why the Gates Foundation is underwriting the GAIN - because the money invested has potentially very high social returns, in terms of lives saved.

Why am I telling these two stories back-to-back? Because they seem to shed light on a very difficult reality: the social and environmental causes are somewhat opposed. The Earth is suffering, in some sense, from overpopulation. We can do a lot to reduce each individual's impact on the earth, but we still don't know how to get that impact to zero. And humanity is suffering from poverty and disease, which are obviously in need of attention from those of us lucky enough to live healthy and wealthy lives.

Does anyone see the disconnect here? What if the world's population grew even faster than it is today - say, by the size of Japan every year? What would happen to the planet? Would our eco-friendly innovations be able to keep up?

The WorldChanging team embraces a philosophy of hope, with contributors promising to avoid "apocalism" and the presentation of problems without corollary solutions. I like that attitude, in the sense that it creates a website where people go for solutions. Such a website is a useful thing for the world to have.

At the same time, I can't be lulled into thinking that every problem has a known or easy solution. The conflict between saving lives and saving the earth appears to be a case in point. What are the solutions? Will we need to moved toward a worldwide "One Child" policy? Will our innovations be sufficient? I don't have the answers - but I hope that, by asking the toughest questions out loud, perhaps we can bring more attention to the search for solutions we haven't yet found.

If you believe that I'm wrong about this "collision course" (and I hope I am wrong), please write to tell me why. I'd be very happy to post another viewpoint on the issue.

WorldChanging: A User's Guide to the 21st Century

2006-11-04T14:39:00.000-05:00

Fortuitously, I happened to be in Seattle on October 31st for the launch of the WorldChanging book, aptly named A User's Guide to the 21st Century. This book is already becoming big news, so I'd like to put some early information and opinions here.

First of all, the website and blog WorldChanging.com are phenomenal - the issues are timely and signficant, the writing is excellent, the images bring the issues closer, and new posts come several times per day. Some of the WorldChanging blog entries appear to be the best source I can find on particular issues - for example they ran a great piece on the forthcoming Blood Diamonds movie. If you are one of the "practically-everyone" that takes procrastination breaks at work, it's a great site for that.

Secondly, a comment on the Seattle event: it was a little disappointing. The "tour" information on the website was sparse, so I didn't know what to expect - but it turned out to be a discussion between WorldChanging co-founder Alex Steffen and cyberpunk author Bruce Sterling. The latter seemed to be trying to live up to some sort of radical in-your-face image, but ended up rambling and coming up with preposterously simplistic aspirations. The crowd found his jokes funny sometimes, but I tend to resent people who waste activist energy trying to be edgy rather than practical. I don't know if this negative review will hurt my chances of joining the soon-to-be-established team of WorldChanging local bloggers, but so be it. This blog is my chance to express my candid and unaligned views about things that matter.

And finally, the book itself. WorldChanging: A User's Guide to the 21st Century is fantastic in a way, but also has its weaknesses. For the sheer amount informations about our world's social and economic problems (and real or potential solutions), it appears to be unrivaled - and therefore worth a spot on your bookshelf or even your coffee table. However, the weaknesses are that it's too much like an encyclopedia - without the benefit of an organizational structure that makes it useful for looking things up. So you don't quite read it from cover-to-cover, and you don't quite ask questions of it. What do you do with it? I think you just pick it up and open to a random page, potentially withing a broad topic that you find interesting - but it seems that so much more could be done with this information to make it accessible to readers. Given the unweildy format, I think the book may end up having only a niche audience of readers who already care enough to wade through 609 pages of pasted-together blogs. Regardless, pre-publication it was already in Amazon's Top 100, and a leading researcher I know received at least 5 emails about it just this past week.

Even if the book doesn't quite live up to my (very high) expectations, it's encouraging to see the phenomenal amount of interest it has generated - showing that there is an audience for this sort of book. And that says good things about the audience.

"Quick Wins" vs. "Thought Leadership"

2006-10-26T23:28:00.000-04:00

Several years ago, I started out with the explicit goal of learning as much about the CSR field as I can, in order to figure out the greatest point of leverage - then jump in somewhere specific, where I can make a difference. This has been a great strategy, because I've learned a lot and I'm narrowing in on some things as having more potential than others, but at the same time it's been some years and what have I done?

Not a whole lot. I didn't actually bring anyone out of poverty. I didn't plant any trees. I didn't clean up any waste sites. I've started being more meticulous about my own recycling, buying fair trade products, and supporting local businesses - but those things are more along the lines of reducing my own negative impact rather than creating any real positive value. Everything is abstract, far-off in the future, intangible... and potentially an illusion.

So I've recently decided that while I do need to learn, to advocate, and to think of the big picture, I also need to devote at least a sufficient minimum of time do doing tangible things to make private enterprise more sustainable, in both the environmental and social sense of the word. I need some "quick wins."

Others need the same thing, I believe. A former colleague told me that in her new job, no longer a "CSR job," she isn't engaged in "thought leadership" like she used to be - but she found she just wasn't getting anywhere before. Recently, she succeeded in convincing her organization to budget for carbon offsets of staff travel - and that, she feels, may be the most valuable thing she's done in her career. What a statement.

Next month I'm going to organize a workshop via Boston Net Impact for people with whom this idea resonates, and who want to work on quick wins of their own - we'll brainstorm, share advice, create a plan and some personal accountability, and hopefully come up with a system to support each other over the weeks or months that follow. If you're in Boston and you'd like to join, please send me an email and I'll loop you into it.

Or just skip the talking, and do something. ;)

News: global water crisis, climate change, the UK companies bill, CSR malaise, and more

2006-10-22T17:08:00.000-04:00

So much interesting news going on... here's a quick round-up:

It is rare to find a good article that is both thoughtfully critical of the CSR movement and supportive of the overall cause; read "Business as Usual is Not the Answer to Society’s Problems" (10/20/06, Financial Times) or go to the authors' report ("CSR at a crossroads") at www.iied.org.

I'm always intrigued but what non-CSR folks seem to think of first when I tell them what field I work in, because it varies pretty widely. Most recently, someone immediately thought of the global water crisis - and indeed, it's a cause that's picking up steam, partly because it's becoming clear we're even worse off than we thought. This past week, there was a great New Yorker feature called "The Last Drop" and also an online follow-up interview called “Not a Drop to Drink.”

In the UK, the “companies bill” had a last-minute amendment requiring that listed firm sreport no only on their own CSR but also up the supply chain; predictably, anti-poverty and environmental groups applauded while businesses balked at the increased burden. In the larger scheme of things, it's interesting to see how much legislative activity there is in the UK.

Climate change came up frequently in the news, though not centered around any single news-making event. One indication of the groundswell of attention: in a press release, the Conference Board announcing its finding that about 75% of companies are actively measuring their “Carbon Footprint.”

Finally, lots of companies with CSR-relevant news this week: Google will install a huge solar array on the roof of its headquarters, to supply 30% of that facilities energy needs; Disney is pulling junk food from its parks and disassociating its characters with it; British Airlines is being sued after insisting that a worker conceal her crucifix necklace under her uniform, and a study of IBM’s employee mortality figures shows an increased risk of cancer.

Studying GE's Ecomagination

2006-10-18T21:52:00.000-04:00

It's been a long day at work, since Harvard Business School is running its second annual Executive Education program in Corporate Social Responsibility. We premiered a video interview of Jeffrey Immelt (CEO of General Electric) in which he talks about the Ecomagination campaign.

Basically, Ecomagination is both a marketing campaign and a growth strategy. Back in 2004 the company identified a half-dozen businesses that could support rapid growth, and noticed a theme among them - many were addressing environmental challenges such as scarce water, energy shortages, and climate change. So, to make a long story short, Immelt decided to tie them all together into the Ecomagination campaign.

Some might object (and some did) to a CEO who is embracing environmentalism on the basis of business opportunity. They could point out (and they did) that when and if the wind changes, GE would be unlikely to stand by its "green" commitment. So Immelt didn't win many points for personal dedication.

But I see Ecomagination as a great example of how CSR is supposed to work - pressure from employees, customers and regulators is exerting itself up into the company, incentivizing GE to adopt behaviors that are more socially- and environmentally- oriented.

And so, if the wind does change, and environmental solutions are no longer a profit opportunity for GE, then who's fault is that? Is it the company's fault for not wanting to lose money? Or is it our own faults, for being so fickle as to not continue to ask for better?

WorldChanging: the book

2006-10-17T22:44:00.000-04:00

From the amazing website of WorldChanging, please welcome what promises to be a fantastic new User's Guide to the 21st Century. Coincidentally, the book tour kicks off in Seattle, where I'll be visiting at the time - so I'll report more from there.

Selling out

2006-10-16T12:34:00.000-04:00

When I think of how Corporate Social Responsiblity got started, I start with the history my generation inherited from the 1960s - which is essentially a history of ineffectual activism. Sure, some protests accomplished their goals. Apartheid ended, civil rights for racial minorities improved, and women became much more equally represented in various esteemed professions. We also developed new problems - HIV/AIDS, increasing inequality and climate change, to name a few. Overall, the world doesn't seem to be significantly better off than it was, or to have benefitted very substantially from the hippie/free-love/activist mantras. "Don't trust anyone over 30" was a common expression then, but of course everyone who said it is either over 30 or dead now.

So when I was in college, in the late-1990s, my cohort was accused of being apathetic. I don't think we really *were* apathetic, but rather we didn't want to waste our time on ineffectual strategies. We were jaded, discouraged, and occasionally in denial - but we still cared. For many of us, myself included, the obvious step was to begin working within the "system" (business, government, etc.) to improve it, rather than fighting it blindly. This is the kernel at the center of CSR - the desire to co-opt businesses for the public good, rather than fighting them or wishing them gone. The latter strategy goes against forces that are bigger than all of us - forces like economics and human nature, and is therefore ineffectual.

But over the years, I've come to appreciate a strong activist challenge - because occasionally it does get noticed by the corporation or the government, and it becomes part of the calculus of what consumers, investors, and voters want. Then the system changes itself; cynically speaking, it changes to better exploit customers and voters based on a new understanding of what they want.

I've been thinking about these issues lately, because a theme is coming out in my various jobs. Each of them, in some way, has me wondering about the idea of "selling out."

At Harvard, I am writing about a company that doesn't want to approve the final product, and I'm certain this is because we haven't portrayed the company exactly as it wants to be portrayed. (All interview-based cases at Harvard Business School must be approved by the subject company, so this is always an issue to some extent - but in this case more than others.)

At BC's Center for Corporate Citizenship, I learned that my internal newsbrief serves a different function than the news summaries on the website; because the latter are public, and the Center is a membership-based organization, it would be inappropriate to put negative news and analysis there. I've also learned that another site with CSR news is not featured because it is seen as a competitor (whereas I'd naively assumed we were all tackling these problems together).

In my project for the World Bank, a group of people within a certain company has tried hard to promote a socially-beneficial product, but the overall corporate strategy has not been as supportive as it could have been; nevertheless, the group does not want to invite criticism or instigate outside pressure on its management.

In the end, each of these situations seems in its own way to be inevitable. So my questions to myself are: Am I paranoid, and all these things are actually OK? Or am I selling out by continuing to preserve anonymity on my blog, and not fighting for greater transparency? Finally, and perhaps most relevantly, do these stories tell me that I'm not tackling the issues through the right mechanisms, and that I'll need a career change in order to adopt the honesty and transparency needed for my own integrity and for the advancement of the CSR field?

The only conclusion I've come to so far: writing this blog may not be much, but it's the one place I can be satisfied that I'm sharing information and opinions without selling out.

At least for this year.
Next year I turn 30.

In last week's CSR news....

2006-10-15T22:44:00.000-04:00

For those who wondered whether the UN Global Compact had any “teeth,” last week it de-listed several hundred members for failing to file their COP (Communication on Progress) reports. SocialFunds.com featured two interviews with Georg Kell, executive director of Global Compact, about the de-listings and about new alliances to facilitate better COP reporting in the future.

BusinessWeek ran a cover story on The Organic Myth, claiming that “pastoral ideals are getting trampled as organic food goes mass market”; an article in The Independent likewise reports rapid growth in the organic food industry, as the Ethical Foods Boom Tops £2bn a Year in the UK.

And this year's Nobel Peace prize went to Muhammed Yunus and the microfinance bank he started, Grameen Bank, which led the surge in microfinance lending since the 1970s. He helped show that lending to the poor was not only a sustainable strategy for helping many would-be entrepreneurs out of poverty, but also that repayment rates were much higher than many had assumed - and so microfinance wasn't such a bad business after all.

Standards and the GRI

2006-10-12T10:53:00.000-04:00

Last week, the Global Reporting Initiative (GRI) met in Amsterdam and released its "G 3" guidelines. The Financial Times reported on October 6th that the major news was the simplification of reporting requirements. Previously, many people were concerned that GRI guidelines were too complex, and therefore were not being adopted by new companies quickly enough. They were especially difficult for small- and medium-sized businesses .

And of course, "standards" that are narrowly adopted are a contradiction in terms.

Now, companies can now choose to report on a limited array of issues instead of being required to report on every issue GRI has defined. To distinguish companies with comprehensive resporting from those who are only able or willing to engage in limited reporting, the GRI assigns five levels. The organizations expects that companies can start at Level 1 and move up to Level 5 within three-to-five years. Ernst Ligteringen, chief executive of GRI, said that the new guidelines were based on 4000 suggested improvements from firms, NGOs, and unions.

The event itself was huge. According to GRI's website: "1150 participants came from 65 countries (including 37 developing countries and emerging markets) to hear from 161 leading speakers."

Taking a larger view, in an analysis preceding the GRI event, the Corporate Citizenship Briefing ("Whither Reporting?") predicted that next year's reporting issues will revolve around the twin challenges of stricter adherence to growing standardizaion, and the greater need for creativity in order to stand out from the crowd.

By the way, I'm a huge fan of voluntary standards. No one can research every company's ethical strengths and weaknesses, but a group like GRI makes it easier to see who is up-to-speed in a certain area, such as sustainability reporting. To me, it's similar to having a Fair Trade certification or an Energy Star label, but for a different issue - namely, transparency.

For-profit, non-profit, and everything between

2006-10-06T15:06:00.000-04:00

I've noticed a trend in the last few years: organizations can no longer be cleanly divided into "for-profit" and "non-profit" entities. Instead, this is becoming more of a spectrum, with many creative business models occupying the space between those classic formats.

For example, last year's winner of the HBS business-plan contest (social enterprise track) was Yashmere, a project that of Ventures in Development aims to bring better incomes to Western China by connecting yak farmers with exporting opportunities; the group defines itself as a social enterprise with a double bottom line, and aims to be "profit-making but not profit-maximizing." Technically, it's a non-profit.

In the news recently (9/17), a New York Times story described the new for-profit philanthropy set up by the founders of Google. No, that wasn't a typo. It's a for-profit charity. Without the restrictions placed on non-profits, this new organization will be able to finance start-ups, partner with venture capitalists, and even lobby Congress. It will have to pay taxes, but maybe that's part of social responsibility too. The founders are starting the charity off with $1 billion in seed money - not exactly stingy.

Last week, my chapter of Net Impact (the Boston Professional Chapter) held a panel discussion on "Leading a Values-Based Business" with several chapter members as participants. I found that entrepreneurs are defining their ventures in all kinds of ways. For example, Cornelia Hoskin's Well Well Well is basically a business for high-income consumers, but it's committed to healthy organic food for busy people who might otherwise eat junk, to hiring and training disadvantaged women, and even to creative fuel-saving mechanisms for the delivery truck.

At the same time, organizations that were set up as non-profits (and retain a social mission) are rethinking their approach to financial sustainability. I'm working on a case study about a microfinance organization that is currently transitioning many of its affiliates from non-profit to for-profit, while still keeping its mission of poverty reduction front-and-center.

There are so many more examples - but hopefully these four will show you that it's not all in my head. Mark my words, organizations that are a hybrid of profits and values will be the wave of the future.

Size Matters - But is Bigger Always Better?

2006-10-05T08:43:00.000-04:00

My apologies for the long pause - I was in Texas for a few days. Where everything is bigger. Sky, hair, portions, people, etc. Maybe that's one reason I've become preoccupied with size - though as usual, I'm also writing about a theme that's emerged from different parts of my work.

Last week I was in a meeting for my Harvard Business School job, and one of the professors was discussing possible themes for an upcoming conference. He doesn't seem the type to embrace liberal/hippie theories of the corporation (if you knew him, you'd find that funny) but he did say this: "How can we expect companies to grow at fifteen percent in markets that are growing at five?" It's practically a truism: on average, they can't. And yet they'll lose investors if they don't.

Also, over the weekend I was reading about Wal-Mart (see The Wall Street Journal, 9/25, "Boxed In"), and found out that the world's biggest company reported sales growth of only 9.5% - a disappointment considering that double-digit growth has become the norm over its 34-year history as a public company. But never fear - this year the big-box retailer does plan to expand its stores by about 8%, as ususal. And I thought: that's CRAZY. Can't a company stop when it becomes the biggest in the world? Or does it always have to balloon until it pops?

The article describes how Wal-Mart's "best" untapped markets, in particular Boston, don't seem to like it very much (there are some great quotes by Mayor Menino, who is pretty blunt about not wanting a Wal-Mart). So why not leave Boston and other "tough" markets alone, and continue excelling in the markets that do want and need Wal-Mart? Personally, as the company has come out with so many social and environmental changes recently, I've realized that I'm no longer boycotting Wal-Mart - but I still don't particularly like Wal-Mart. That has a lot to do with its size, and I doubt I'm the only Bostonian to think so.

Recently, I bought a book that I hoped would enlighten this train of thought. It's Bo Burmingham's Small Giants: Companies that Choose to be Great Instead of Big. Unfortunately, I don't find the book itself very compelling - just a collection of mediocre case studies. But the idea has so much potential. I've also had an article lying around called Small is Beautiful, that I keep meaning to read.

The idea that bigger isn't always better seems to have some currency, and to make sense to a wide variety of people, but is still not compatible with the way our capital markets currently work.

Social Networking for Social Concerns

2006-09-24T11:25:00.000-04:00

Last Thursday I went to the NYC launch of GOOD magazine and spent an hour or so feeling totally overwhelmed by the thousands of cool people it attracted - and somewhat intrigued but the awesome artwork at the Emergency Arts venue. It was fun, but it seemed too crowded to actually meet anyone.

But on my way out, someone suggested sharing a taxi - and that someone turned out to be Alex Saltzman, a slightly-older-than-average undergrad at Princeton University, which happens to be my alma mater. He and his friends were behind the Worm Poop post I made a few weeks ago, and are currently engaged in creating a social networking website for socially-, environmentally- and ethically- oriented members of "Generation Y" (defined as those currently aged 18-25).

The site is called Rethos, and it's still under development. The name is derived from "ethos" but is supposed to connote something of a re-emergence or a re-definition of social values, presumably by this new and more activist-oriented generation that grew up in the post-9/11 climate of terrorism and war.

I thought the idea was great, though I have to admit that I'm becoming frustrated by the separate bubbles of communities being created in this area. Harvard has it's own closely-networked group of leading lights that show up at the same conferences and executive education programs. Net Impact is a similar thing for the under-35s of the business world. Starting Bloc is like an undergrad version of Net Impact. And GOOD magazine is appealing to hip and activist-oriented twentysomethings - perhaps just slightly older than the Rethos / Starting Bloc crowd, but not business-y the way Net Impact is.

There's a real need for these group to not only network among themselves, but also across ages and disciplines. The Harvard crowd constantly laments the fact that the same people have been talking about the same things for several years now, with few (or no) rising leaders in sight. And the business-types of Net Impact recognize that they need to reach upper management and to also connect with other sectors - for example in bringing NGO issues to light. And yet, these different groups don't seem to have the time or the means to meet each other.

A social networking site that could somehow connect all these groups, and encourage concrete action among them, would be an amazing resource.

It's not always about business

2006-09-19T22:25:00.000-04:00

I was talking to Andy Savitz the other day, and I mention his name because he just came out with a book called The Triple Bottom Line that has debuted to great acclaim - and that's evidence he has some sensible things to say on the topic of CSR (or whatever we now call it).

He made the point - not a radical or new one - that there are some problems in the world that are not best left to business. In particular, sometimes the role of government is actually quite useful in solving social and environmental problems. Or at least is should be.

To that end, anyone who cares about these problems (pollution, poverty, and all that) should not only spend some time ranting at corporations and making sure they shop/invest/work in responsible ones, but should also put some energy into engaging in the political process.

I know. One more thing to do. But he's right - it's important. Which is why I dragged myself a whole 2 blocks today to vote in the Democratic primary for governor of Massachusetts - only to find out that I've failed to register in my not-so-new-anymore neighborhood. But now I know, and knowing is half the battle, and I have my mail-in registration card. When it's time for the real gubernatorial vote, I'll be ready.

And the one thing I want to encourage today is that everyone else who cares about these same issues should engage at least a minimal-to-average level in the political process (with more engagement being even better). And even the bare minimum should include voting.

If, like me, you found it really hard to get excited about sub-national candidates, check out this tool and see if you end up engaged sheerly for the entertainment value:
http://www.boston.com/news/special/bigarticles/campaign_finance/page2.htmlHappy voting!

Down with "CSR"

2006-09-17T08:46:00.000-04:00

I think it's finally happened. I'm ready to abandon the term "Corporate Social Responsibility."

In the mid-90s, the "CSR" term hadn't yet taken hold. Once it did, it felt like the field was more unified and more accepted. The bandwagon had a name, and so I was more able to join it.

Sure, the term has its weaknesses - I've heard criticisms of all three words:

Corporate (what about other institutions? and the role of government?)
Social (and the environment? what about internal stakeholders?)
Responsibility (shouldn't we talk about opportunity instead? and how about going above-and-beyond?)

But I've stuck by the CSR term, because I like that various groups had rallied around it. Over the past year, however, those at the top of the field seemed to be shying away from it. Now, perhaps the people using it are a different sort of people.

The clincher was this line from a New York Times article yesterday ("Capitalism With Heart"):

"It sounds like the 'corporate social responsibility' mantra used by executives trying to be hip -- and impress young trophy wives' friends -- by financing politically correct boondoggles with shareholders' money."

That wasn't really what I had in mind.

So, what's the next big term? The article I just mentioned uses the term "Compassionate Capitalism" - and if you read it in the New York Times, it must be real and it must be big, right? (I only wish I were entirely joking).

That may, in fact, be the best term on offer. There are the advantages of looking not just at what companies do, but at how our entire market system works to either further or hinder the greater good. And compassion has a wide connotation - social, environmental, ethical, etc. Finally, if liberals can get past the connotation of "compassionate conservativism" (a big if) then this term might help bring the red states to the cause-formerly-known-as-CSR.

So, do we have a winner?

Other candidates: corporate citizenship, conscious capitalism, sustainability, corporate social opportunity.
Subsets: business ethics, philanthropy, socially responsible investing, corporate governance, environmentalism, bottom of the pyramid.

Executive Excesses

2006-09-12T20:24:00.000-04:00

In an article available at SocialFunds.com, outsized CEO salaries are put into perpective in an article called "The Ratio of Greed: Numbging Numbers of Executive Excess."

Among the key metrics cited:

CEO-to-worker pay: 411-to-1
Since 1990 (adjusted for inflation): CEO pay rose almost 300 percent, profits increased a little over 100 percent; average worker pay rose 4 percent; the minimum wage decreased almost 10 percent
If average workers had experienced the same raises as CEO's, they would be making $108,000 intead of $28,000 and minimum wage would be $22.61 instead of $5.15.

Hottest Eco-Model

2006-09-10T11:34:00.000-04:00

In Grist Magazine's first-ever superlatives, Summer Rayne Oakes was annointed the Hottest Eco-Model; according to Grist, "the choice was easy; she pretty much owns the category."

Oakes started out as an activist and a scientist, and (since she was born gorgeous) decided that modeling might be the best way to communicate her messages to a mainstream audience. She only models organic or recycled clothing, but opts for whatever is sexy rather than stereotypical ponchos and clogs.

Reading about Oakes reminded me of yesterday's post, in which the SSIR lamented a lack of revealed preferences (i.e. though buying behavior) by consumers who are ostensibly interested in environmental and social issues. That article mentioned lackluster results so far of the [Red] brand, created and marketed by U2's lead singer Bono.

Let's hope that Oakes can make ethical consumerism sexy where Bono seems to be struggling. Check her out (pun intended) at:
http://www.summerrayneoakes.com/home.htm

Two weeks ago in CSR

2006-09-10T09:39:00.000-04:00

I was away on business last week, but here is the (belated) summary of last week's news:

Global Happenings

Malaria Adversely Affects Over 70 Percent of African Business
07/27 Voice of America
A new study says over 70 percent of African business are adversely affected by malaria, with nearly 40 percent reporting serious consequences. The report – Business and Malaria: A Neglected Threat – was released Thursday by the Global Health Initiative of the World Economic Forum.

Hong Kong Smog Hurts Business
08/28 Wall Street Journal
The smog hanging over Hong Kong is threatening more than the views of its famous setting: Air pollution is making the city less attractive to foreign investors and is driving some executives out.

Behind the Loom
Sep/Oct Utne Magazine
Rugmark is a six-country international nonprofit whose smiling rug label has been assuring customers since 1995 that their purchases didn't cost any kids their childhoods. Each label carries a number that can be traced back to its origin loom in India, Pakistan, or Nepal.

Green News

TerraPass launches partnership with Expedia
08/28 TerraBlog
Expedia and TerraPass have partnered in a program to offer carbon-offsetting Flight TerraPasses to travelers when they buy plane tickets.

Dual-Fuel Vehicles Open Mileage Loophole for Carmakers
08/31 New York Times
As car companies promote E-85 as an alternative to gasoline, they are benefiting at the same time from a loophole that allows them to receive credits toward environmental standards when they sell flexible-fuel vehicles.

Fill Up On Corn If You Can
08/31 New York Times
To assess just how efforts to help E-85 catch on were going, a New York Times reporter drove through the region where its popularity is greatest. He found that despite all the good will, success is far from assured.

How green is your Apple? E-waste
08/26 The Economist
Not very, according to Greenpeace. Disposing of computers, monitors, printers and mobile phones is a large and growing environmental problem.

Employment, Investing, Consuming

Green Century Equity Fund Seeks Shareowner Okay to Continue Tracking Domini Social Index
08/30 SocialFunds.com
The fund also announced its intention to lower the expense ratio for the fund with aim of enlarging the fund’s investor base.

How Insurers Are (and Are Not) Tackling Climate Risk
08/30 SocialFunds.com
A new report from Ceres identifies almost 200 activities recently introduced by insurers to address climate change, but calls for further industry action.

The Future of Labor Unions: People of Color and Women
09/01 Diversity Inc
Can labor unions survive? Not if their leaders don't represent them.

Fulla Flap
Sep/Oct Utne Magazine
A Muslim Barbie has her own trendy accessories and cultural baggage.

'Small-Marts' take on Wal-Mart
08/30 Fortune Magazine
Small, local groups nationwide are fighting back against big business and helter-skelter globalization.

CSR Strategy and Education

New publication guides small businesses on a better business journey
08/29 Business in the Community
The UK Small Business Consortium launched a guide to help small and medium sized businesses find their way on a better business journey.

Communicating business responsibility - Learning a new language
08/31 Ethical Corporation
Company chiefs need to do more than just give the speeches prepared by their corporate responsibility departments. They need to properly engage with their stakeholders and not just pay lip service.

Business and short-termism - Why investor taxation is the solution
08/11 Ethical Corporation
The Business Roundtable (together with the CFA Centre for Market Integrity) just released a report that finally takes seriously the problem of short-termism that plagues American business and finance. The Conference Board published a similar report in April. It’s about time.

Regulation

California Plan To Cut Gases Splits Industry
09/01 New York Times
California is once again at the forefront of the nation's environmental policy, with a far-reaching pledge to curb carbon emissions by 2020. But the deal struck between Democratic legislators and the Republican governor, Arnold Schwarzenegger, has divided businesses and industries in California.

California businesses face cap on greenhouse gas output.
09/01 Financial Times
Businesses in California began to grapple with the need to reduce their greenhouse gases yesterday following a deal on legislation that would mean mandatory caps on emissions for energy-intensive industries in the state.

Congressman aims to eliminate SUV tax breaks
08/30 MarketWatch
Tax breaks benefiting buyers of sports-utility vehicles fly in the face of a good energy policy and are costing American taxpayers billions of dollars a year, according to a report from Rep. Edward Markey.

Fowl Play
08/04 Forbes
If you can't nail a polluter for stinking up the countryside, go after him over a disclosure technicality. Is this fair?

Corporations in the News

India: Behind The Scare Over Pesticides In Pepsi And Coke
09/04 BusinessWeek
Fearless researchers nail two big, bad American multinationals selling toxic soda to India's masses? Get Bollywood on the line! But are these companies being unfairly targeted because they're outsiders?

Comment: BP is deserving of censure, but not a vendetta
09/01 Financial Times The fiasco in Alaska could spell serious trouble for BP, as the US Congress begins hearings. It is easy to cheer them on and urge them to take drastic actions against this corporate wrong doer. We should move beyond this knee-jerk reaction.

How Many Lightbulbs Does it Take to Change the World? One. And You're Looking At It.
Sept. Fast Company
For years, compact fluorescent bulbs have promised dramatic energy savings--yet they remain a mere curiosity. That's about to change.

Reports out this week

SAS Group: http://www.sasgroup.net/SASGROUP_IR/CMSForeignContent/2005eng.pdf

The Ministry of Defence (UK) has published its second Sustainable Development Annual Report, which can be found at: www.mod.uk/DefenceInternet/AboutDefence/WhatWeDo/HealthandSafety/DSC/DsandcEnvironmentSustainableDevelopmentDocumentLibrary.htm

Ford Motor Company releases 2005/6 Sustainability Report: http://www.ford.com/go/sustainability

"The Other CSR"

2006-09-09T21:27:00.000-04:00

There's an amazing article in the Fall 2006 Stanford Social Innovation Review - it's called "The Other CSR" because in this case CSR stands for Consumer Social Responsibility.

The article deals with the fact that we as consumers spend a lot of time bitching about what companies do wrong, and we answer surveys saying we'd choose and even pay a premium for ethically-produced goods and services - but the good intentions stop there. In making purchases, people go for the cheaper product and forget about all those complicated and expensive social issues.

This is something I've been harping about endlessly for the past few years, but SSIR does a much better job of it. If you read one CSR article this week, make it this one: http://www.ssireview.org/articles/entry/the_other_csr/

New Master's program

2006-09-01T18:02:00.000-04:00

I've often bemoaned the continuing lack of graduate degrees in CSR, but here's a one (online) program with degrees in both Social Enterprise and in Corporate Social Responsibility:
http://www.mes-d.net/Html/index.html

Please note that you can toggle to the English-language version using the link on the upper right-hand side.

CSR Education

2006-08-28T21:50:00.000-04:00

Net Impact, a national organization for (mainly) MBA students interested in corporate social responsibility, today released detailed profiles and rankings of the "best" programs for those interested in the CSR field, based on over a thousand member surveys.

This is the first such publication, and it's still a little rough around the edges - but very transparent about its weaknesses. Overall though, it's very exciting to see this come out. I've struggled myself to figure out which programs are strong in this area.

See the profiles and rankings in .pdf format here.

"This week in CSR" (08/19/06 - 08/25/06)

2006-08-25T14:40:00.000-04:00

Soon I'll be re-starting my part time work for the Center for Corporate Citizenship at Boston College (after a wonderful summer off!), and this means I'll be combing through even more CSR news every week. One post a day won't cover it; and several paragraphs per post would be too much for my schedule.

Therefore, I'm going to try a new format for Friday postings: "This week in CSR." It will be a few bullets on the stories you shouldn't have missed if you have a serious interest in this field, plus some interesting but less-essential tidbits.

This first edition won't be comprehensive, but I might as well start with something…

AOL has several controversies - one is an Internet sensation of a recorded telephone call that reveals what many of us already knew: that it is next to impossible to cancel your account; the other is the un-vetted release of anonymous but individually-coded search data to an academic portal, which was widely copied and saved before AOL removed it; the data show interesting patterns such as who was searching for personal information online and who was looking up "how to kill my wife."
Wal-mart has allowed its China stores to have unions (or rather, to have employees join China's one and only state-recognized "union"), and more recently has allowed employees to form Community Party committees at its stores.
Pepsi has been banned (along with Coke) in several Indian states for allegedly allowing pesticide residues in its drinks; ironically, it has also named an Indian woman to its top post - a move that might have seemed too coincidental if not for longstanding predictions that she would eventually take over the helm. In another Pepsi/Coke saga, three senior Coke executives tried to sell secrets to Pepsi, but the company took the high road (or perhaps the good-publicity road?) by making the incident known to Coke and to the public.

Got any news that I should include? For inclusion in future Friday briefs, send me an email (mtritter at gmail dot com) to notify me of some story you think the CSR world should know about. Thanks!

Tradable pollution permits

2006-08-25T13:51:00.000-04:00

As a follow-on to yesterday's post, which ended with the idea that harnessing market economics can be useful for social and environmental aims, I wanted to briefly note that I have a long-standing interest in "tradable pollution permits" - in fact, I wrote my undergraduate economics thesis on the topic.

While the idea of "buying and selling pollution" strikes many people as inherently unethical, there are many advantages to this kind of regulation. For one, it sets a cap on total pollution - which is often the overarching goal - rather than trying to reach a goal indirectly by limiting individual contributors to the problem. Second, it allows the abatement to happen wherever it is cheapest (and therefore more efficient), because those who can reduce pollution easily will reduce more than they have to and sell their permits to others (while those who find it very difficult will have to pay for extra permits from others). Third, this effectively punishes every instance of pollution, because each one incurs a very tangible cost. Fourth, it can often make a set of regulations viable in a situation where stricter "command-and-control" tactics would create a powerful backlash of lobbying and resistance.

But permit systems work well only under certain conditions. One is that the pollution must be "global" in the sense that one person's reduction is interchangable with another's. For example, SO2 contributing to acid rain is global, while littering is site-specific - so if I pay someone else to reduce littering in another town, and continue to litter in my own, then my fellow townspeople won't find this an acceptable arrangement. Also, it helps immensely to have a limited number of easily-identifiable and easily-regulated source points. For example, US acid rain mainly comes from S02, which mainly comes from 200-300 power plants - all of which are accustomed to regulatory oversight. Curbing global warming, on the other hand, is made more complex by distributed source points (automobiles) and a lack of cohesive regulation (many sovereign nations).

*********************************************************************************

After writing and posting this entry, I came across a great article from the New York Times that addresses exactly this issue ("Capital Pollution Solution," by Jeff Goodell, NYT 7/30/06).

Embryos, cadavers, and market economics

2006-08-24T08:26:00.000-04:00

In the controversial world of biotech, a new method of harvesting stem cells may make all the difference. As published in the recent issue of Nature, scientists have developed a way to remove individual stem cells from human embryos without, apparently, harming the embryos themselves. Many are speculating that by satisfying ethical concerns, this new method may allow government funding of stem-cell research.

This issue reminds me of several research projects going on at Harvard Business School (where I work when I'm not blogging) on the "market" for such things as embryos and organs. Examples would be the Body Worlds exhibition, organ donation programs, and infertility treatments involving donated oocytes. Of course, these are not really "markets" in many senses of the word - selling is prohibited and the use of economic vocabulary seems crass.

But, in a general sense, there really is both a supply and a demand for these things - and a pricing point. By refusing to allow them to be priced, we end up with more demand than supply, meaning that many people are left without the kidney they need or the ability to become pregnant. Another side-effect of our refusal to recognize these as "markets" is their tendency to go underground - note the accusations that some of the Body World cadavers seem to have come from Chinese prisons.

I'm not advocating that we should explicitly marketize the supply of organs, cadavers and babies - far from it! If tried this, we'd need to create new regulations and think through them very carefully - and we might well fail and make a mess of things. What I'm doing here is simply commenting on a general phenomenon that I find very interesting: how economic forces will creep around many of our regulations, revealing our stubborn denial of economics.

At times, perhaps, it may be more socially useful to recognize that market forces exist, and then find ways to harness economics (rather than defy it) to reach socially-desirable solutions.

Shell: Nigeria :: Coke: Columbia

2006-08-23T10:30:00.000-04:00

Shell has been having problems in the Nigerian delta for some time now. Though it brings economic activity to a poor country, the vast majority of the wealth created goes to a corrupt goverment - rather than helping the disadvantaged local communities who are the ones primarily affected by the environmental damage that petroleum production inevitably brings. According to the Financial Times (8/22/06), the delta states currently control only 13% of their resources, with the national government controling the rest.

A militant activist group called MEND (Movement for the Emancipation of the Nigerian Delta) has been fighting for the rights of these local groups to capture more of the wealth created by resources being taken from their land. MEND uses illegal and often violent means to reach their arguably noble cause: they are stealing oil, sabotaging piplines, and kidnapping foreign workers.

Recently the Nigerian government has been cracking down harder on these militant activists, promising not only arrests but also "force for force." Last Sunday, as the militants were preparing to release a hostage, government forces attacked and 10 militants were killed in the gun battle. The hostage is now missing.

It's easy to see why Nigerian government wants to defeat MEND - the group is getting in the way of the country's most lucrative resource, and the national government is the primary beneficiary of that resource. Shell's production has been severely limited in recent months and this hurts government revenues in both the short- and long- term.

The government's interests are clear, and it's not surprising that such a corrupt and authoritarian regime is resorting to violence to protect those interests. The CSR question here: does Shell bear responsibility for these deaths? The company might think it doesn't, and see the situation merely as government forces controlling a violent militia. On the other hand, those goverment forces are there to protect Shell's business.

This sounds awfully familiar. Coca Cola is facing a similar situation in Columbia, which U.S. activists have dubbed the "Killer Coke" issue. In this case, Columbian government forces have perpetuated violence and murder against union activists, and Coke doesn't seem to have accepted its implicit guilt. A quickly-growing string of boycotts across college campuses, however, might change its attitude.

Corporate political donations

2006-08-22T12:30:00.000-04:00

Interesting article in today's Financial Times ("Lifting the Veil of Secrecy on Corporate Political Donations"). Corporations have been accused of many misuses of their growing power, and not least among these is their political influence. In recent years, public mistrust of corporate political donations has increased in the wake of various political scandals (DeLay, Abramoff) and corporate scandals (Enron, WorldCom).

But there is increasing pressure for change: more shareholder resolutions are calling for transparency in political donations. With 21% of investors voting in favor of these, the movement still doesn't have anywhere near a majority - but this is double the percentage that voted similarly last year. A few companies have already responded by publicly reporting their political donatoins; these include Morgan Stanley, Johnson & Johnson, and McDonald's.

Some shareholder pressure is aimed at ensuring that executives make donations for the good of the company and not for their own personal aims - but it's not clear to me how companies could justify making donations in either case. It's wrong for managers to squander shareholder money, and yet it's also very wrong for shareholders to hurt the rest of the citizenry by leveraging their disproportionate political power to enrich themselves.

Another interesting feature of this article was that, according to a survey by the Committe for Economic Development, two out of three executives say they've faced pressure to make a major political contribution. Though that may be one semi-reasonable motivation, and transparency might help them decline such requests in the future.

Obsessions with growth

2006-08-21T09:52:00.000-04:00

I've been doing some research on General Electric lately, and I believe I can safely say, with no damage to confidentiality, that the company would like to grow. No big surprise, huh?

In fact, a July 31 Financial Times article ("GE Plays it Straight to a Tough Audience") explained "how a conglomerate with more than Dollars 150bn in sales can meet its yearly target of adding 10 per cent to profits and growing turnover twice as fast as the world economy." There was also a recent feature in the Harvard Business Review detailing CEO Jeffrey Immelt's recent focus on "growth as a process" - a way of leveraging the company's productivity skills to make growth itself more efficient. In fact, the much-lauded Ecomagination campaign is really just one part of the overall "growth as a process" initiative.

All this is unsurprising, in a way - that small companies want to become large, and that large companies want to become larger. But what we don't perhaps ask often enough is: why? Why would a company want to grow faster than the world economy? Not everyone can do this, by the law of averages, but the vast majority of individual companies want to try. Even if profits are good - return on assets, return on investment, profits as a percentage of sales - it's not enough to run a constant-sized business really really well. Instead, everyone strives to convert success into growth.

Does our economy operate better with large companies dominating the landscape? There are economies of scale to be gained up to a certain point that would vary from industry to industry, but it seems we pursue growth more than efficient scaling would require - especially in the case of a conglomerate like GE. And there's the issue that many people don't like big companies - don't particularly enjoy working for them, living near them, or being forced to shop at them for lack of other options. Many anti-corporate activist are really anti- "big business." So who actually wants this unending pursuit of growth?

There are really two groups who benefit from unlimited corporate growth. The first is investors - who, if they get in on the ground floor of a growing company, turn out to have bought x% of something huge rather than x% of something tiny, and that can create vast amounts of wealth. The second group is managers, who would prefer to manage more peoople and more money rather than less - both for the pure prestige and salary and because this is seen as a mark of their success in helping the company meet its growth targets. In fact, some economic studies have shown that managers tend to pursue revenue growth more than really makes sense (as opposed to profit growth) because of the personal advantages that can have.

A few months ago, I bought Bo Burlingham's book Small Giants because I was intrigued by his premise that companies can be great without trying to be big. Unfortunately, I haven't found the book itself to be very compelling - and that's a shame, because I think this ideas deserves more attention. Think of all the attributes of big business that are annoying - long calls to automated phone lines, retail workers who don't care enough to help you, resumes that disappear into a black hole, big-box stores that dominate the landscape.

I predict that in a few years, we'll suddenly discover that bigger not only isn't better, but it's also not necessarily more efficient. People will increasingly realize that they are willing to pay a premium to shop at small businesses, and willing to work at small companies for less. At the same time, we'll discover that a behemoth isn't the most efficient producer because (for example) its processes become bureacratic, managment loses touch with other layers, strategies aren't implemented consistently, employees are less committed and less productive, and employee turnover is high. Someday in the next decade, I think we'll find that "growth as a process" is outdated, and that sustainable sizing is becoming more widely and openly accepted.

Climate Crisis

2006-08-20T23:03:00.001-04:00

Awareness of global warming is growing quickly in the U.S., as Al Gore's book and movie, An Inconvenient Truth, proves very popular among young people. I saw it with our local chapter of Net Impact, which also had a book-group discussion on the same topic. I've also visited the companion website and tried out the carbon calculator there. The most common reaction I've heard to the movie is a new appreciation for the seriousness the "climate crisis" combined with a feeling of frustration that we can't do more. Of course, we can each reduce our own carbon footprint - but one of the messages of the movie is that incremental change isn't going to be enough. So naturally, people want to know how large-scale change can happen, and the official U.S. stance on the Kyoto Treaty isn't very heartening.

Most recently, however, I saw in the August 16 Financial Times that Jagdish Bhagwati (well-known economics professor and author of In Defense of Globalisation) is suggesting an alternative international regulatory structure. He sees the deadlock as stemming from India and China's insistence that they did not cause the CO2 problem in the first place and others' insistence that they are causing it now; in Bhagwati's economics jargon, they are responsible not for the "stock" but for the "flow" of CO2 emissions. He believes that implementing a fee for CO2 production could create a fund for solving the problem, and could also tax those who produce from now on. Past behavior could be dealt with separately, perhaps through a mechanism similar to the Superfund.

It's an interesting suggestion, and has some common sense to it. I'm not completely certain it would work, as there are a dizzying number of factors in these multinational negotiations - but I'm glad to see a big-picture solution suggested by someone in a position to do so.

Terracycle: ecology, profits, and worm poop

2006-08-01T18:10:00.001-04:00

Last weekend, a friend was telling me enthusiastically about a Princeton University drop-out who is using worms to turn food waste into plant fertilizer. The company, Terracycle, also recycles spray-bottles to package its product. Oddly enough, today I got an email from a totally unconnected friend, also raving about this same company. Looks like this small firm has somehow passed the media "tipping point" and is getting quite a bit of attention.

Wal-Mart is Going Green

2006-07-31T19:47:00.000-04:00

There is an excellent feature in Fortune Magazine ("The Green Machine," 7/27/06) about Wal-Mart and the changes that the company has been through with regard to it's CSR attitude and actions. This company fascinates me. It's such an incongruous mixture of good and bad influences on our society and on our planet - but it's hard to say whether they balance out, since every impact is so huge.

As many people have pointed out, if Wal-Mart makes a move to stock organic foods, it will reshape the organics industry - possibly making organic food available to the masses at reasonable prices, and making organic growing proceedures a much more common standard around the world. If it asks suppliers to reduce waste, those changes will trickle down through the rest of the economy.

On the other hand, Wal-Mart operates on an unprecedented scale. The company is huge, its stores are huge, and its impact on our lives is huge. Many of the objections to Wal-Mart are intrinisic to its success, whether it attains that success ecologically and humanely or not. New stores still displace "inefficient" but beloved Mom-and-Pop stores, they still lead to the homogenization of our consumerist society, and they still encourage us to buy more and more stuff that we probably don't need.

I want to reward Wal-Mart for the progress it's making, but at the same time I'm not sure if I want to see it succeed under any circumstances. I decided almost a year ago that I would no longer "refuse" to shop at Wal-Mart on ethical grounds, but I'm not sure if I'll ever be a huge fan.

For me, the decision of whether I should shop at Wal-Mart is almost purely theoretical - I live in Boston, and the nearest Wal-Mart is about 20 miles away. Most of the country lives much closer to one. I'm curious, has Boston resisted the company, or are we a poor market for it due to our staunchly independent/individualistic values?

Fairtrade Cotton

2006-07-22T18:40:00.000-04:00

Today's Financial Times has a wonderful feature on Fairtrade (see "Follow the Thread" on p. W1), with a special focus on the relatively new market for Fairtrade cotton.

Cotton's legacies make it a particulary compelling product for social action - two hundred years ago, in the U.S. South, it was a slavery product; in this century British, Mahatma Ghandi resisted the the colonial system in which India grew cotton and sold it cheaply to Britain, where it was spun and made into clothing, which was sold at disproportionately high prices back to Indians. So to establish a system through which cotton-growers can earn a good living would be a major advance from the industry's history.

The article does point out some of the pitfalls of fairtrade, particularly those based on simple economic principles. One of these is that paying above-market prices "encourages farmers to stay in unprofitable sectors, inducing oversupply and pushing down prices for everyone else." A second critique is not one of theory but of practice, namely that "supermarket chains and international commodity brokers (are) reaping more bnefit than Guatamalan farmers."

These are real and serious concerns, but remember that similar arguments have been made about the minimum wage in the U.S. - that requiring a wage above the "market" wage would imbalance the labor market, leading to unemployment. Most empirical studies of the minimum wage have failed to show such a negative effect.

In the end, forcing apparel companies to devote a reasonable amount of money to cotton sourcing seems to be a wise pre-requisite for helping cotton farmers earn a decent living. Currently, it is the lack of global regulation that allows companies to seek ever-lower prices, erroding any profits that might have accrued to farmers were we still in a pre-globalized world. Since no one nation can impose a minimum price, for fear of being out-competed by another nation, it makes sense that regulation should come on the side of industry, with de-facto rules forcing companies to pay some reasonable minimum. It isn't easy for one company to do this, since it must compete with others in the industry, so it makes sense to do this on an industry-wide basis.

Creating a social norm that says fairtrade labelling is necessary would be one way - perhaps the best way- to balance all the above. We can't ignore the potential pitfalls (so it's important to see how much farmers are gaining and how equally farmers are gaining) but they shouldn't lead us to give up on the idea of fairtrade sourcing.

The ultimate constraint: Time

2006-07-21T18:11:00.000-04:00

Apparently, a recent U.K. study (as described in Net Impact's weekly newsletter) has found that multi-stakeholder dialogues don't seem to "satisfy" stakeholders, because they usually bring up more demands than they resolve. These groups tend to find that attitudes have changed through engagement, and relationships have strengthened - but that there are more issues on the table at the end than at the beginning.

At a recent Kennedy School conference, "partnerships" were the mot-du-jour for CSR practitioners. This survey indicates that partnerships are doing some good, but also may not be accomplishing what they were set up to do - i.e., resolving disputes between stakeholder groups. (Partnerships don't usually say this is their goal, but broadly speaking, I belive it is.)

Sometimes I wonder, with all the great CSR things we want to do, by how much can we really increase the energy we put into these activities? How much can we expect ordinary consumers and shareholders to increase the time they put in? I'm afraid that time and energy are serious constraints on raising awareness and motivating action.

This, among other reasons, is why I support solutions that make it easier for us to move in the right direction - like ethical labels that tell us in a glance that a certain product meets a certain widely-accepted standard. I've started compiling a list of these on my website. Please feel free to sugest more!

Making Fairtrade more fair

2006-07-12T09:36:00.000-04:00

An article in Tuesday's Financial Times (7/11/06) discusses the annual meeting of AgroFair, a company that supplies Fairtrade fruit to European consumers. This year's gathering was held in the Rotterdam Zoo; as always, it was attended by representatives from both the developed world and the developing world - leading to some useful and entertaining insights on both sides.

Though AgroFair provides "Fairtrade" products, it is not affiliated with TransFair, the most-recognized organization involved in Fairtrade-certified agricultural products. I find this encouraging. TransFair has had a tendency to blur the line between the concept of fair-trade pricing and its own proprietary certification label. While its mission is an admirable one, and its public recognition is impressive, like all organizations it is imperfect - but unlike many it lacks transparency.

A few of the inperfections of TransFair's "FairTrade" brand:

It pressures companies to use its label, even if their own relationships with farmers are as good or better.
When a company switches to FairTrade, it must use pre-certified farmers, which means that many farmers currently supplying the company no longer qualify.
It does not incorporate environmental aspects of ethical sourcing.
A student-recruitment brochure of 20+ pages fails to mention the per-pound fee that TransFair collects.
In order to expand, the organization faces downward pressure on the prices it guarantees to farmers - exactly the situation it is trying to remedy!

I believe in the concept of fair-trade pricing, and the mechanism of using recognizable certification labels. These are some of the most useful things we can be doing to promote global corporate social responsibility. But at this point in time, we need more competition among fair-trade labels.

Until we have a commonly-accepted certification process that is transparent, objective, and inclusive, consumers should support a variety of fair-trade organizations - AgroFair among them.

GOOD Magazine

2006-07-11T14:06:00.000-04:00

The other day a friend from my old Net Impact chapter sent around a link to GOOD Magazine, which will be debuting in September 2006.

Though its website does not specifically mention the term CSR, this is basically a magazine that is making CSR happen from a grassroots level - by helping people educate themselves about social and environmental issues, and how different companies are handling them. It gives the tools for ethical consumerism, investment and activism.

I like the way GOOD Magazine describes its purpose: "GOOD, a new voice in media, embraces this generation's merger of capitalism and idealism. We provide an entertaining, thought-provoking, cultural platform for those who want to do well by doing good. We engage and challenge the people, ideas and institutions driving change in the world. Our mission is to stimulate the culture of good by creating dialogue around things that matter."

Couldn't have said it better myself.

And if that weren't enough good news, the magazine has pledged to donate 100% of its subscription sales (at $20 each) to a pre-specified list of charities from which subscribers can choose - with a fundraising goal of $1 million in the first year. The editors hope this will create a buzz about the magazine, saving them the money of launching a junk-mail blitz. They candidly explain this strategy here.

I'm eagerly awaiting the first issue, and will cover GOOD articles here if they turn out to be as, well, good, as I expect. To find out more, or to subscribe, go to www.goodmagazine.com.

Cape Wind makes the international news

2006-07-10T11:30:00.000-04:00

Friday's Financial Times has an article about Cape Wind, the controversial offshore wind-power project that has my home community up in arms. Advocates of the project say that locals have a selfish not-in-my-backyard mentality, and are therefore objecting to a clean energy source because they like the view as it is. Opposition claims are that the windmills will not only be unsightly, but will pose environmental and navigational hazards.

In my opinion, neither side is portraying the issue clearly. For one thing, aesthetics are not just a passing fancy on Cape Cod; they are the basis of the economy. And most year-round residents are nowhere near rich; they depend on beautiful beaches to supply their businesses with vacationers and wealthy part-time residents.

Also, a little-cited issue is the fact that Horshoe Shoal, the proposed site of the wind farm, is a small triangle of federal waters, entirely surrounded by state-controlled waters. This creates a regulatory loophole, so that Cape Wind need not seek state approval for its project. These boundaries must have been established before 420-foot structures were a likely possibility, and so it seems reasonable that the project really should be required to seek state approval.

Overall, Cape Wind has done a poor job of stakeholder management. I think the project may have merit, but it was essential for the proponents to convince locals that their property values and tourist industry would not be harmed.

A new era of American philanthropy

2006-07-07T08:16:00.000-04:00

Earlier this week, Warren Buffett announced that he will be giving the majority of his fortune to the Bill & Melinda Gates Foundation, which has already been putting billions toward causes such as third-world health and U.S. schools. I've always admired the Gates Foundation for its relentless focus on leveraging the most social good for its dollar - for example by fighting malaria, one of the deadliest yet most-treatable diseases for a large population in the world. Apparently Buffet also admired the way it was run, and the fact that is was already scaled-up to handle large sums and large problems.

The numbers are staggering: Gates has put $31 billion into his own foundation, and still has $50 billion "burning a hole in his pocket"; Buffett will be donating stock worth $37 billion, of which $6 billion will go to family-run foundations and the remainder will go to the Gates Foundation. By comparison, John D. Rockefeller and Andrew Carnegie gave far less: in 2006 dollars they donated $7.6 billion and $4.1 billion, respectively.

What is perhaps most interesting to me is that all these tycoons - Rockefeller, Carnegie, Gates and Buffett - are following a model of corporate social responsibility that has largely been branded as insufficient: to make as much money as possible in one's lifetime, and then donate it back to society. In a way, it's a Robin Hood philosophy, and perhaps it deserves greater credibility among today's CSR proponents. On the other hand, it wouldn't seem right to earn billions through fraudulent or immoral business practices, then use the ill-gotten gains to "fix" the problems that one has helped create. In the end, I think there is a spectrum of choice, and Buffett may not be entirely on one end of that spectrum; his management style has been famous for directness, honesty, and long-term outlook.

Buffett's reasoning, as usual, is direct and common-sense. Believing that the rich should leave their children "enough money to do anything, but not enough to do nothing," he had planned to leave most of his estate to a foundation, to be run by his wife. Statistically speaking, his wife was likely to survive him, given that she was two years younger and women tend to live longer - but she died two years ago. Meanwhile, the Gates Foundation has been doing admirable work, and the Gates are still relatively young - Melinda is 41 and Bill is 50. Buffett therefore decided to "invest" his charitable dollars with a trusted and capable friend who is likely to be able to oversee their disbursement over a long time period. It was the same reasoning that had led him to invest in other people's companies through Berkshire-Hathaway, and to make so much money doing it. At the same time, it shows a remarkable humility, to put his money under someone else's name rather than his own. Ironically, Buffet is the second-richest man in the world, and he is, in a sense, giving his money to the richest man in the world.

There are several insightful articles on this big news story, including ones in Fortune Magazine and The Economist. The former seems to have broken the story, and has the original interview here: http://money.cnn.com/2006/06/25/magazines/fortune/charity2.fortune/index.htm

A plug for a great new book

2006-07-06T11:35:00.000-04:00

A colleague of mine, Andy Savitz, will see his book The Triple Bottom Line published next month. I've seen an early copy of it myself, and can vouch that it is well-written and insightful. One of my favorite CSR journalists, Alison Maitland of the Financial Times, seems to agree. Here is her review in its entirety:

Book Review: The Triple Bottom Line

Every company has a sustainability sweet spot. This lively and cogent guide can help managers find ways to make shareholders' and society's interests overlap.

By Alison Maitland

Financial Times

Published: July 5 2006 03:00 | Last updated: July 5 2006 03:00

Andrew Savitz recalls a conversation he had with a purchasing manager at a large telecommunications company. The man was adamant that social responsibility had nothing to do with his job, which was to buy products at the lowest price.

"Would you buy from a foreign supplier that you knew was employing 10-year-old girls and paying them 60 cents a day for their labour?" Savitz asked. "Of course I wouldn't do that," came the reply. Not even if the supplier offered the lowest price, if child labour was legal in that country and if no one could possibly find out? No, the manager replied. It would not be right.

"Do you think your company would support your decision to sacrifice profit in this case?" Savitz persisted. "Absolutely, I'm certain of it," the manager said.

Do not be deterred by the unfortunate title of this forthcoming book. In just 250 pages, rich in anecdotes, Savitz makes a lively and cogent case that no company or manager can afford any longer to ignore the world around them.

Many of the reasons companies face "the age of accountability" are familiar, but it is useful to see them pulled together: our shared sense of vulnerability, fostered by climate change and natural disasters, coupled with the awesome power that global corporations have accumulated; the goldfish bowl in which companies operate; their increased exposure through networks of business partners and global supply chains; the campaigns mounted by lawyers, non-governmental organisations and shareholder activists.

But this book is not a tract admonishing business to take its responsibilities seriously. Its central argument is an upbeat one that is gaining currency: it makes financial sense for companies to anticipate and respond to society's emerging demands. In the long run, says Savitz, the sustainable company is likely to be highly profitable. There is a flipside: companies that fail to respond, or thumb their noses at society, are likely to pay the price.

What is a sustainable company? Savitz and Karl Weber, his co-author, spend time on their definitions - a sensible move given the confusion and spin that often surround this debate.

Sustainability is not about philanthropy, which has nothing to do with the company's main purpose. Nor is it merely about ethics. The authors even prefer "sustainability" to "responsibility", arguing that the latter emphasises benefits to society rather than benefits to the company.

For Savitz, who created the environmental practice at PwC and has worked with some of America's biggest companies, it is about conducting business in a way that benefits employees, customers, business partners, communities and shareholders at the same time. It is "the art of doing business in an interdependent world".

The best-run companies find "sustainability sweet spots" - areas where shareholders' long-term interests overlap with those of society. Implausible? Look at General Electric, with its revenue-boosting Ecomagination green technology, says Savitz. Or Toyota's fuel-efficient Prius. Or Unilever's Project Shakti in India, training 13,000 women to distribute its products to rural customers and thereby greatly increasing families' income while expanding its market penetration.

Every company can find a sweet spot, he suggests, even if it is the minimal one of cutting costs by reducing energy use, employee accidents or the chances of a lawsuit - though some of this could just as well be called smart risk management.

In the second half of the book, he explains how to translate all this into "business as usual": how to decide what it means for the company; how to work with stakeholders, not against them; how to set enforceable goals in difficult areas such as child labour. Throughout, the arguments are driven by pragmatism, not dewy-eyed altruism. The narrative occasionally suffers from its American slant. The English Quakers, after all, pioneered decent working and community practices long before Henry Ford.

Even if you do not agree with it all, this is a thoughtful guide for managers who still harbour doubts about the point of sustainability, who are taking tentative steps towards it or who are seeking a clearer path through the maze. With luck, it should also help the anoraks in the sustainability industry to distinguish the wood from the trees.

a miscellaneous array of recent news

2006-06-27T16:17:00.000-04:00

McDonald's is changing its drinks menu to include more bottled drinks, which will allow more variety and more portability. The upside of this for health advocates is that new format can offer more healthy drinks such as juice, and customers may take unfinished amounts with them rather than chugging down a liter of sugary soda. Apparently this new drinks strategy would be a large departure from the restuarant chain's 51-year partnership with Coke. (Financial Times, 6/19/06, p. 18)

One large headline proclaims that a "European poll highlights French gloom on politics" (FT 6/19) - but a different table is more eye-catching: apparently citizens of the U.K., France and Spain consider the U.S. to be a greater "threat to global safety" than Iran, China, North Korea, Russia or Iraq. It would be nice if George Bush read the newspapers; then he might come across polls like this and act differently - or at the very least talk more diplomatically. But I digress. After all, this is a CSR column. This is a good opportunity to mention, however, an interesting business coalition called "Business for Public Diplomacy" which is trying to engage the private sector in changing our American image, not least becaue anti-Americanism hurts sales of American products. This is a remarkably big-picture area for CSR, and I hope they can make it work well. Certainly there are potential pitfalls but that could be the subject of another post.

Last Sunday's New York Times had a great article on green consumption, in particular detailing the many ways that individuals can "offset" the carbon emissions that their lifestyles create. Essentially, you can buy a certification attesting that you've contributed enough money to carbon-offsetting activities (planting trees, cleaner energy technologies, etc) to cancel out your negative impacts. We've come a long way, it seems, in accepting this sort of economics as moral. In my undergrad days, I wrote my senior thesis about tradeable SO2 permits and the U.S. Acid Rain program; back then many environmentalists saw "pollution permits" as morally wrong. I actually think they are a great idea, but am unsure how many people understand that if they are really "worth" a certain amount of carbon offset, they will become more and more expensive as they become more commonly purchased. The first ton of carbon is so cheaper to offset than the last.

Wal-Mart is closing some stores in Germany. It's not a big news story, but maybe it's an early signal that the world is no longer embracing the Wal-Mart way of life? (FT 6/19)

The Financial Times section on "Financial Training" (6/19/06) contains a cover story about the irresponsible amount of debt that young people are accumulating. Now I've seen articles on student loan burdens, and I've seen articles on irresponsible debt, but so far I haven't seen anyone connect the dots and say, "Hey, wait a minute. You can no longer get a good job without a college education. But tuition prices are skyrocketing. It seems our society is essentially requiring young people to take on an unsustainable debt. Maybe we should do this differently?" I'm sure society will solve this right after I've sacrificed just long enough to actually pay off my own debts, maybe 20 years from now. This reminds me of a long-standing wish that there were CSR grants and fellowships. The field seems to be too new, but perhaps better research could be done if those of us with "irresponsible" levels of debt could still engage in CSR research both in the U.S. and overseas?

I also saw a full-page tri-color ad for the FTSE4Good Index, which is encouraging. (FT 6/19)

Finally, Net Impact came out with "rankings" of the top responsible firms, presumably so that its predominately-MBA membership can favor these companies when choosing their career paths. It's a great idea, and I generally applaud efforts to bring complex CSR information to a simple, quick, usable form. Not everyone can be a CSR expert, but for the idea to work we need almost everyone to act according to CSR principles - in their consumption, investment, careers, etc. The list is not as useful as I had hoped though; it's just a compilation of five other lists, organized alphabetically and including scores from each of the 5 lists next to each company. Someone asked me a couple of days ago how companies get selected for these lists, and I jokingly said they do it by getting on other lists. I guess maybe I was only half-joking.

Whew! So much news, so little time. This blog is still evolving, as a product and also as a part of my routine - perhaps next time I can be more focused and more current. But for today, I'm just happy not to be packing the same torn-out newspaper articles back into my backpack again.

Scandal of the week: backdating options

2006-06-14T10:06:00.000-04:00

When I mention "corporate social responsibility" to someone unfamiliar with the field, the most common response (besides "Is that an oxymoron?") is to mention Enron and related corporate-governance scandals. It seems that governance gone bad has captured public attention more than any other issue. And just when I think they must have run out of news, recent issues of the Financial Times have reported the all-too-common practice of "backdating" options.

Stock options grant the right to own a certain number of shares of of stock, at a certain fixed price. They are worthless if the current market price is below the stock-option price (then you might as well buy your shares in the regular market), but if they can be extremely valuable if, for example, they allow one to buy $200 shares for only $100 each. Presumably, granting stock options to a CEO is an incentive for him/her to create shareholder value - because the CEO's own fortunes become highly dependent on the stock price. Some have argued this still doesn't make the CEO feel the pain of stock-price drops (and can therfore lead to excessive risk-taking), but overall the idea makes some amount of sense.

What doesn't make sense is to retroactively grant options. It's against the whole idea of incentives, because one already knows the price today and the price before. It's really just a way to mask CEO pay. Strictly speaking, it's not illegal - but it's deceptive.

Until 2002, it was possible for companies to backdate options so that, following a rise in the stock price, options were granted for an earlier date (and at a lower price). These options were therefore immediately valuable. After 2002, thanks to the Sarbanes-Oaxley legislation, options must be reported within two days, making backdating virtually impossible.

To date, according to the Financial Times (see, for example, "Options Backdating Scandal Snowballs, 6/14/06, p. 12) about 40 companies are under formal investigation or holding internal inquiries. The results of these investigations are expected to reveal abuses across the Fortune 500.

Soaring CEO pay has already become an area of concern in the past few years, and the options backdating scandals will likely fuel more criticism. Then again, perhaps CEO pay has been rising to offset the decline in backdated options since 2002... a case of two wrongs making a right?

Can't stop thinking about food today...

2006-06-08T09:44:00.000-04:00

The food industry has been a CSR hotspot over the past year, as obesity in developed countries triggered such critiques as Fast Food Nation and Super Size Me. These brought food issues into the mainstream press, and now there are regular news pieces criticising the food industry - and also covering the industry's responses and rebuttals.

The June 5th Financial Times has an interview with Roger Deromedi, CEO of Kraft ("Watching the World's Waistlines"). In the article, Deromedi brags about the many changes Kraft has made to its products, and the fact that his own meal adjustments (which still contain a large proportion of Kraft products) have allowed him to lose 15-20 pounds. With Kraft being best known for unhealty products like macaroni-and-cheese, Oreo cookies and Kool-Aid, the change in strategy/messaging is huge.

Yesterday I was also reading an early manuscript of a colleague's book, and he mentions Hershey Foods as an outlier in the sense that it doesn't even publish a social report. This sort of CSR activity was, until quite recently, considered above and beyond the call of duty - but now perhaps is expected.

Other articles have criticized the food industry for making only small incremental changes to their products, too small to make much difference.

In the US and the UK, schools are starting to ban "junk food" from the cafeterias. Actually, my own high school had a similar rule. The problem was that the lunch food wasn't really any healthier than the "junk food"- we had greasy tater-tots, "grade N" canned beef, chocolate pudding, etc. I would sometimes eat only bread rolls for lunch, as they seemed the healthiest edible option (the vegetables being too old or overcooked to seem edible).

Any real fix to the school-lunch problems would have to involve adding foods that are healthy, not just taking away the worst of the current foods. Super Size Me showcased one provider of school lunches that uses local/organic produce and allegedly cost no more than other providers. It seems hard to believe, but if it's true it would be a great breakthrough.

Someone I met at a conference recently is spearheading a campaign to change the food sourcing at Princeton University; she had information on other colleges who are experimenting with healthier dining-hall options, with great success. But everyone in this business has an agenda - the companies who say everything's fine and the activists who say their way is better.

But even if the solutions aren't easy, I'm glad to see that this dialogue has started.

A greater share for the shareholders (and less for workers)

2006-06-07T22:30:00.000-04:00

Today I attacked the growing pile of Financial Times in my livingroom, and found several interesting articles. One front-page piece ("US Business Increases Its Share of Economy"; 6/5/06) shed some light on the pressures people are feeling for more corporate social responsibility.

The article essentially said that shareholders are receiving a larger and larger share of the economic "pie" - while employees are receiving a smaller share than ever, possibly because they lack bargaining power as their jobs shift overseas. Bondholders didn't fare too well either.

To share the exact figures with you: Profits were 7% of GDP in 2001, and are 12.2% of GDP today. This rate of profit growth is the highest since records began in 1947. The share going to workers has fallen over the same period from 58.6% to 56.2%. Interest payments also fell, from 5.6% to 4.1% of GDP.

While this article wasn't explicitly about CSR, it did show that corporations are being run more and more for the benefit of one stakeholder: the equity investor. There is, of course, a major school of though that believes a (public) firm's primary reponsibility is to these "owners" - but it is important to realize there are alternatives. Under different circumstances, more of the wealth generated by the private sector can go to employees. Maybe to consumers. Maybe even to communities or to taxes.

In other words, there are alternative slants to the capitalist model, and CSR to a large degree should be about finding the right balance.

Ferreting out activist shareholders

2005-12-12T23:33:00.000-05:00

Activist shareholders have been more active than every this past year, and the big question on my mind is: How will this change the way companies make decisions? The Financial Times seems to be of two minds about it:

It's popular "Lex Column" (of 12/9/05) seems to assume that activist shareholders will have increasing sway over corporate policies, and balances the "pro" of forcing management to defend its ideas with the "con" of potentially pitting shareholders with competing objectives against each other.
The following day's front page, however, has an article ("Boards check shareholder lists for trouble") describing a very different corporate response: to sleuth out who the activist shareholders are, presumably to cut them off at the pass. The article is not very specific about how corporations intend to use information about internal agitators, but here's the general idea: "Companies want to know who owns their stock, what their investors' intentions are and what their voting history is.... They want to know if there are activists there, and they want to get a better idea of the modus operandi of any activists, as well as what other shareholders might tie into their plans."

What will they do with this information? Will something akin to the "poison pill" be incorporated into company bylaws to prevent activist-driven change? Will they work more collaboratively with activists in advance of a stand-off? Will managers simply be better informed and have their rebuttals ready when the confrontation occurs? This is a very new area, and I'm not quite sure what to expect - probably a bit of each scenario.

The important thing is to keep an eye on this development, and it would be nice if the SEC was ready to move quickly on implementing any new rules, as the need for them becomes more clear - either to stop managers from banishing dissent or to prevent some shareholders from undermining the interests of others.

"If CSR is the answer, what is the question?"

2005-12-12T22:50:00.000-05:00

Tonight was the holiday party for the Center for Corporate Citizenship at Boston College, where I work part time, remotely putting together a weekly news brief. I've only been to the office once, for my orientation, and so it was a rare chance to actually meet my virtual co-workers. I had several great conversations, and thought I'd just post some tidbits here.

One woman told me about the upcoming conference that the Center is hosting this March. It has a fantastic theme: "If CSR is the answer, what is the question?" Beyond getting a chuckle from sci-fi fans, it gets at the idea that CSR means many things to many people; in fact, as a popular buzzword it ends up being co-opted by a variety of groups. In particular, advocates of various causes or points of view argue that CSR means that companies have to support their agendas. But this can result in a frenzy of activity, without necessarily appeasing everyone - groups are for or against abortion, for or against gay lifestyles, for or against saying "Merry Christmas" (see http://www.savemerrychristmas.org/), and a variety of other incompatible causes. Sometimes I wonder if my mom thinks this is the sort of thing I aspire to do for a living, actually - stump for one cause or another, and needle corporations into bending to my will.

But for me, the real question is very broad, and it's this: How do corporations fit into society? I'm intrigued by how they fit into different societies (post-communist, for example), and by how they fit with the other puzzle pieces of government, NGO's, consumers, investors, media, etc. I want to know how societies determine their values, and how they can build systems and incentives that will allow and encourage businesses to act in accordance with those values - whatever they may be. Intellectually, I'm more concerned with whether we can build that sort of system than with what precisely the system encourages.

There was also a great conversation about the future of CSR education. I described my experience at the Fletcher School, where a lack of faculty expertise restricts the school's ability to offer more formal and deeper training - even though there is a great deal of interest among the student body.

This tied into other conversations about funding. The Center receives most of its funding though memberships, and some through conferences, classes, and special projects. My boyfriend, who is an engineer, asked me why a Center affiliated with a university isn't simply funded by that university. Good question. Is it simply because we study business, and business has more money than the subjects of other intellectual discourse, that we are expected to be financially independent? Isn't this a valid and worthwhile field on its own, or at least wouldn't it become one if we had more resources with which to study it?

It does seem a shame that the field is restricted by a lack of faculty, and yet I don't know if I could ever afford a Ph.D. (or an MBA) without more funding and support - jobs in this field don't often pay enough for that. And yet it's such an important field to study, as corporations become more powerful and less easily controlled. Can't the government, or the universities, or foundations - can't one of them help with funding? Perhaps they will someday, and I'm just too early on the bandwagon.

Making responsible consuming easy

2005-12-11T22:11:00.001-05:00

Tonight I'm putting together an internal newsbrief that I write each week as my second job; it summarizes the CSR news for the staff of the Boston College Center for Corporate Citizenship. I've been reading a New York Times article about how and why the public increasingly distrusts business ("New Surveys Show That Big Business Has a P.R. Problem"; New York Times; 12/9/05; by Claudia H. Deutsch).

In this article, there is a good back-and-forth with the opinion poll statistics and with company responses to them. The point made by many company officials: maybe consumers don't like us, but they are part of the problem. For example:
-- "They say that people who blame McDonald's for their obesity still order the large fries, and that those who complain about low wages still insist on low prices."
-- "'I don't see investors refusing to buy because they think the chief executive is overpaid, and I don't see union members boycotting nonunion stores that sell attractively priced foreign goods."
-- "Wal-Mart's own surveys, done at the behest of board members worried about the company's image, indicated that only 8 percent of consumers refused to shop at Wal-Mart because they were opposed to its practices."
These are good points. Consumers seem to care that businesses sometimes causes social ills, but they don't often research these issues thoroughly and use that information to influence their buying decisions. And how could they? How could each and every one of us spend hours researching every product we buy and finding alternatives that meet our values? In most people's opinions, I'm sure, it wouldn't be an efficient use of time.

So the question of the day is: How can we put society's values into action, without demanding that individuals spend inordinate amouts of time on their buying decisions. I think that the answer - or at least a large part of it - is in standard-setting and voluntary certification.

Already there are independent international labeling groups such as Fair Trade, Energy Star, the Forest Stewardship Council, and others. As individual organizations, they are not perfect. But they are working toward a system-wide solution. If each product category can have one or two trustworthy NGO's concentrating their resources on figuring out who the good companies are and which products are made in socially- and environmentally- reponsible ways, then indivual consumers can make choices within their values and within their schedules.

If there are any social entrepreneurs reading this who are looking for a way to make a big impact right now, I think that amazing contributions could be made by establishing more of these organizations, making them more credible, and advertising them to both consumers and suppliers.

The "Bottom of the Pyramid"

2005-12-02T16:17:00.000-05:00

There's a conference here at Harvard Business School right now, on Global Poverty. To a large degree, it's also a conference on the "Bottom of the Pyramid" buzz that's been gripping the CSR Nation for the past couple of years. This concept was first proposed by C.K. Prahalad and Allen Hammond in an article (then a book), which essentially says that the way to alleviate poverty is to treat the poor as customers rather than as aid recipients, thereby bringing them the benefits of free markets. It's a good idea at the broadest level, based on the arguments that:
1) the poor currently lack access to many products (and a basic princple of economics is that voluntary transactions create economic value for both parties);
2) the poor tend to pay higher prices because distribution to their communities is scarce, and many of the poor lack the transportation to shop further from home); and
3) products are usually designed for the rich, and then sold with minor adaptations to the poor as a secondary market - rarely are products designed with the specific needs of the poor in mind.

The Bottom of the Pyramid ("BoP") theory also argues that businesses can and should make a profit by selling to the poor - that good opportunities have been left on the table due to a lack of dedication and imagination on the part of business leaders, and that uncovering these profits will have the important secondary benefit of helping lift the poor out of poverty. This concept has spread like wildfire among business leaders, and (perhaps because of the receptive audience) among CSR practitioners. It seems to me that business leaders are delighted to have both a new growth opportunity and a reason to say (and believe) that pursuing profits is a noble goal.

I agree with the general assertions that market creation is crucial to poverty alleviation, and that companies could have a role in this by concentrating on lower-income sectors. However, I cannot believe that targeting poor customers will always be to their benefit. For example, one story in the original article is of a company that makes penny candy for children in India; I fail to see why having children spend their parents' money on non-nutritional snacks (that will cause more dental problems than they can afford to fix) is somehow going to lift people out of poverty. In other cases (e.g., affordable artificial limbs and water purification systems), it seems reasonable to assume that companies have created social value. But there is no real focus on how to determine which ventures are good for the poor, and which are not - just an assumption that all are good. Everything is anecdotal, except for a few poorly-designed charts.

All these misgivings are thoughts from before the conference, and I hope to actually post something about the learning that's going on now. The participants are in fact moving well beyond what I just described, although with so many people in the room (over a hundred), it's difficult to discuss any one idea thoroughly. I'll say something more about it soon.

A law of relative responsiblity?

2005-11-29T16:58:00.000-05:00

Someone asked me the other day whether the companies that are "bad" in one sense tend to make up for it in other ways. I'm not sure, but it's interesting to think about. There may well be companies that fail on multiple counts but somehow stay below the radar of public criticism, and one hopes that at least a few companies can become all-around contributors... but there may be something to this... I read an article that same day about all the donation that Altria (a tobacco company) gives - it's one of the top givers in the US. The biggest giver is Wal-Mart, which has significant labor and community issues. Oil companies tend to give heavily to charity as well. So maybe some negative can be balanced with other positives, and it's not so uncommon to see this balancing act? Naturally, the next question is whether this is OK. Do we as a society allow companies to sell their soul and buy it back? Is the market for good a sort of tradable-permits market, where you can tally up your virtues from different sources, as long as they add up to your vices? Or do we expect a minimum level of performance from companies on all fronts, or at least on the most important ones? Have you noticed that I tend to ask too many questions and provide too few answers? OK, I'll work on that.

Starting Out

2005-11-28T13:34:00.000-05:00

Welcome to my "CSR Thoughts" blog, which I should have started years ago!

It may be a bit scatter-brained at first, but there are just so many things I can't wait to say about CSR (Corporate Social Responsiblity) - what draws me to the field, why it's important, what's wrong with the field today, some new directions I'm hoping for, and more. Over time, my goal is to make these scattered thoughts into something more coherent - a book perhaps, or at least a personal philosophy. I hope members of the blogosphere will help by writing to ask questions or to challenge my ideas.

I've heard that, among the many "styles of learning", there are some people who learn best by listening, by reading, by talking or by writing. This blog is not an attempt to broadcast answers that I believe I've already found; instead it's my way of learning by writing. Maybe you'll learn something by reading it, and maybe you'll teach me something. It's a new field, with more action than expertise, so the faster we learn the better!

-- Melissa