Yesterday, and presumably via wire and not on bleached and un-recycled paper, publishing company Random House announced that it will, “increase the proportion of recycled paper it buys for its books to at least 30 percent by 2010, from 3 percent now” (Book Publisher Sets A Goal on Recycling, The New York Times).

While the news is uplifting, I am a bit surprised that their current usage is only 3%. I don’t know all of the in’s and out’s of the publishing industry, but I would have put the percentage much higher by this point in time. 3% sounds more appropriate for the late 80’s to me…

Is the cost of recycled paper really that high to have prevented it from being used more by such a large publishing company? Or perhaps it is a supplier issue, either in volume and reliability, or perhaps a weakness in getting the message out. Either way, in an age when consumers have been using, for some time now, recycled copy paper for their office needs, recycled napkins and paper towels for their messes, and even coffee-cup finger burn preventers for their $28 cup of Starbucks coffee, I would have thought the publishing industry would be further along than 3%.

Are all publishers around the same usage? Is the general shift toward greater concern for paper consumption and its impact on the environment? Is Random House breaking away from its peers, or lagging far behind them in increased recycled paper usage?

TAGS: CSR | Social Enterprise | Paper | Recycling | Books | Publishing | Random House | Printing | Magazines

Earlier this afternoon I attended a presentation at Cal Poly by the Chairman of Oracle, Jeffrey Henley. The presentation was excellent and offered a candid look at Mr. Henley’s career and Oracle’s corporate strategy.

During the Q&A portion of the presentation, one of my classmates asked Mr. Henly about Corporate Social Responsibility and its relevance in a corporation such as Oracle. I have a horrid memory, so I unfortunately do not remember the specific question, nor do I remember all of the details of Mr. Henley’s response. What I do remember is the general lack of enthusiasm he showed for CSR.

To be fair, it was apparent based on his response that Mr. Henley seemed to equate CSR only with charitable contributions, and not in a broader capacity of societal responsibility. This realization came up after the presentation in a discussion with a professor and classmates, however, I don’t think it necessarily justifies Mr. Henley’s response. A director of a corporation the size of Oracle, let alone the Chairman, should have a fairly strong idea of what constitutes CSR. If Mr. Henley thinks CSR is little more than charitable contributions by a corporation, then perhaps a bit of research into the topic is called for. And if Mr. Henley is aware of the broader aspects of CSR, then I am curious to hear what he has to say about them.

In reference to what he did speak about, he seemed to convey that his responsibility, and the responsibility of Oracle, was to generate wealth for the shareholders, and nothing more. He noted that Oracle contributes to charity but does so in a very small amount (again, noting that it is possible that Mr. Henley misheard the question). He went on to make the statement that the corporation should generate wealth for its shareholders whom can then do what they please with that wealth, including donating some of it to charity. In other words, charity, and by extension CSR, should be the responsibility of individual, not the corporation. …”ISR” then I suppose?

Mr. Henley also commented that the majority of CSR efforts are “for show” and to gain positive PR, a point I tend to agree with. I do think that there are a good number of companies that truly believe in the value of CSR and am optimistic that their numbers will grow in the coming years.

So what is Oracle’s corporate social responsibility commitment? A search of their corporate website led me to the “Community” page, but I was unable to view many of the sub-sections without a login and password. Hmmm — that doesn’t seem to be a shining example of transparency.

A search for “CSR” revealed a 2005 CSR publication [PDF] that has some very interesting information in it. CEO Larry Ellison is interviewed and offers a fairly interesting quote early in the publication:

“Q [Interviewer]: Is a company’s approach to corporate responsibility and corporate citizenship at odds with financial success?

“A [Ellison]: Absolutely not. Corporate responsibility and citizenship does not mean inappropriately spending shareholder money. It means finding genuine intersections between the needs of our society and the goals of our company, and making investments that benefit both.

“For example, Oracle’s Academic Initiative has provided technical training in 72 countries around the world—a US$1.3 billion investment in the futures of more than 300,000 students. This program not only lays the groundwork for so many successful careers, but it helps us expand the pool of talent available to support our customers’ Oracle solutions. It’s a great example of how good social investment makes good business sense.

“We’ve made similar changes in our environmental policy. We’ve invested in new equipment and changed our business practices to encourage the efficient, environmentally sound use of energy and resources. As a result, we’ve reduced our energy usage at Oracle headquarters each of the past three years. We’re also powering our main data center on approximately 25 percent renewable energy. We earned back our investment in equipment upgrades in eight months and are now able to reduce our real-time energy use by up to 18 percent in case of power emergencies.

“Our success is magnified by a good relationship with our neighbors: the customers, partners, and residents of the cities where we operate. We should not shy away from supporting the issues that are important to their communities. Investments in the environment and education ensure that our business leaves a positive footprint and improves the lot of the people we work among.”

Interesting. I’m fairly certain that Mr. Ellison and his Chairman have chatted about Oracle’s CSR initiatives at least once or twice, say in a board meeting perhaps? Is it possible that Mr. Henley is simply unaware of all of the neat things Oracle is doing to promote corporate social responsibility, or is it more likely that he was being brutally honest when he made the claim that most CSR efforts are for show? Given his candor earlier today, he did quip questionably, ‘there aren’t any press present, right?’, I think it is difficult not to draw the conclusion that Oracle’s CSR efforts fall into the PR and “puffery” bin.

Is it a shame that Mr. Henley conveyed what he did about CSR, or should we applaud his honesty? Is he part of the problem, pushing for greater and greater shareholder wealth (check out his compensation below), or is he simply adhering to the true purpose of Capitalism and corporations. Should Mr. Henley be subject to criticism for not taking CSR more seriously, or should the system be criticized for creating the problem?

Truthfully, I went to the presentation with fairly high hopes but left feeling a bit cheated. I expect more from executives and powerful corporations. Am I being incredibly naive and idealistic, or is there more that Oracle, Mr. Ellison, Mr. Henley, and the cadre of other $1 million+ compensated executives at the company should be doing to promote CSR?

Here are a few additional resources to check out:

• Information on Jeffery Henley’s compensation and Oracle stock ownership. (Yes, that would be $3 mil in annual compensation in addition to the 12 million exercisable options.)
• The same information for CEO Larry Ellison
• Financial information about Oracle

[Update 1, 5/17/06]: A brief article about the event appeared in the local paper today: Oracle Exec Offers An Upside To Global Economy.

[Update 2, 5/17/06]: Here’s another interesting article about Mr. Henley: Insiders: Oracle Chairman Cashes In. When I was doing a bit of research for the original post, I noticed that he had been selling large chunks of shares in the past few months and thought it was quite interesting. This additional article comments a bit on why he would be selling shares in such quantities and frequency, and I thought it put everything into perspective quite nicely.

TAGS: CSR | Ethics | Oracle | Jeffrey Henley | Larry Ellison | Executive Compensation

Seventh Generation, one of my favorite companies, has just started a blog. CEO Jeffrey Hollender and perhaps a few other authors will be making posts touching on a wide range of subjects from Corporate Social Responsibility to wellness. Here’s Hollender’s “Inaugural Post.”

TAGS: Blog | CSR | Seventh Generation | Jeffrey Hollender

CSR is alive and well in Central and Eastern Europe! Today, the Partners for Financial Stability released their sixth-annual survey on corporate social responsibility among the largest companies in the region.

I was unaware of the survey until today’s press release and think the methodology is quite interesting:

“PFS Program surveys analyze the annual reports and websites of the ten largest listed companies in the above-mentioned 11 CEE countries in order to document the current disclosure practices of this ‘blue-chip’ peer group and identify best practice among the peer group. Whereas the universe of companies surveyed may change over time due to changes in a company’s market capitalization, the semi-annual surveys of reporting on CSR represent a snapshot of this peer group’s CSR disclosure practices on a given day twice a year. Furthermore, by analyzing disclosures in both annual reports and websites, the surveys track the timing of the publication of the annual report and the related yet separate issue of periodic disclosure, namely, how blue-chip companies keep their websites data-rich and up-to-date.”

The complete findings of the survey as well as the raw data are available for download (the third link is for data compiled for companies in Spain and Portugal):

• Survey of Reporting on Corporate Social Responsibility in CEE - April 2006.pdf - [PDF file, 429 KB]
• Database - Survey of Reporting on Corporate Social Responsibility in CEE - April 2006.xls - [Excel file, 599 KB]
• Database - Survey of Reporting on Corporate Social Responsibility in ES and PT - April 2006.xls - [Excel file, 149 KB]
TAGS: CSR | Corporate Social Responsibility | CEE | PFS

[Source: alcoa.com]

From CSRwire:

“Alcoa (NYSE:AA) today announced that it has released its 2005 China Sustainability Report, which provides detailed insight into the environmental, social and economic achievements and challenges of Alcoa in this Asian region.”

The report is available online in PDF format: China Sustainability Report 2005[PDF, 39.6 MB]

The report is in English and Mandarin (I assume it is Mandarin — someone please correct me if that is incorrect) and touches on the environment, social factors, and economic factors. Here is an interesting clip from the report:

“Our goal is to achieve financial success, environmental excellence, and social responsibility in order to ensure long-term benefits to our shareowners, employees, customers, suppliers, and the communities where we operate.”

This is an interesting “shareholder wealth” statement as it implies that in addition to financial success, both environmental excellence and social responsibility are key to ensuring long-term benefits. In terms of corporate governance, I don’t think most companies would make that claim – either Alcoa is using buzzwords generously, or it truly believes that the combination of the three is necessary to maximize “long-term” shareholder wealth.

TAGS: China | Alcoa | Sustainability | MBA

Via CSRwire.com this afternoon: United Nations Secretary-General Launches ‘Principles for Responsible Investment’ Backed by World’s Largest Investors

Here’s a clip from the press release:

“In a historic development for global financial markets, United Nations Secretary-General Kofi Annan was today joined by a group of the world’s largest institutional investors at the international launch of the Principles for Responsible Investment.

“The heads of leading institutions from 16 countries, representing more than $2 trillion in assets owned, officially signed the Principles at a special launch event at the New York Stock Exchange. The Principles were developed during a nearly year-long process convened by the UN Secretary-General and coordinated by the UN Environment Programme Finance Initiative (UNEP FI) and the UN Global Compact. “

…and here’s a clip from the PRI site:

“As institutional investors, we have a duty to act in the best long-term interests of our beneficiaries. In this fiduciary role, we believe that environmental, social, and corporate governance (ESG) issues can affect the performance of investment portfolios (to varying degrees across companies, sectors, regions, asset classes and through time). We also recognise that applying these Principles may better align investors with broader objectives of society.”

Following are the six Principles (ESG — ‘Environmental, Social, and Corporate Governance’):

1. We will incorporate ESG issues into investment analysis and decision-making processes.
2. We will be active owners and incorporate ESG issues into our ownership policies and practices.
3. We will seek appropriate disclosure on ESG issues by the entities in which we invest.
4. We will promote acceptance and implementation of the Principles within the investment industry.
5. We will work together to enhance our effectiveness in implementing the Principles.
6. We will each report on our activities and progress towards implementing the Principles.

If you are interested in reading the full Principles overview, download the PDF on this page.

TAGS: CSR | SRI | Principles | PRI | Responsible Investment

Thanks to a heads up from a site visitor in the comments on one of my earlier posts, I learned about a new documentary film that sounds quite interesting called Black Gold. I did a bit of searching and found a good article that gives an overview of the film: Movie Makes Viewers Think Twice About Coffee. Here’s an interesting clip from the article:

“‘Black Gold’ follows coffee’s complex journey from poor farmers in Ethiopia to elitist baristas in the European Union and the United States, ultimately reminding us of the great chasm between our mouths and the sources of our food.

“As we watch commodity traders in New York and London setting coffee prices amidst harsh images of hungry Ethiopian children at therapeutic feeding centers, we see how coffee touches us all.”

If you have seen Black Gold, I’d be interested to hear what you think. I’ll be sure to record my thoughts as soon as I have a chance to see it myself!

TAGS: Coffee | Fair Trade | Ethiopia | Starbucks

CFO Magazine has an interesting article about China in the most recent issue: View From China: Stakeholder Capitalism. In short, the author touches on cultural differences, such as the absence of “the concept of a company’s responsibility to society, beyond what is owed investors,” as well as the difficulties many large “semi-independent” corporations face in reining in any environmental damage they cause.

“While lip service is paid to corporate social responsibility on environmental issues, the reality is that pollution in China is at a crisis level yet companies seem unconcerned.

“…Most Chinese companies are still struggling to enforce more internal controls to protect shareholder value. It is high time for them to address the needs of other stakeholders, such as communities that suffer via environmental mishaps or unchecked pollution. Soon enough, a disaster could emerge that will cause even the most growth-hungry China investors to vote with their feet.”

TAGS: CSR | China | Stakeholder Capitalism | Ethics

There are a few questions I have been mulling over that I am interesting in hearing what others may have to say in response:

1. Did you know that Costco is now selling Fair Trade Certified coffee? (This may only be in select areas — they have it in San Luis Obispo, CA.)
2. Did you know that the coffee, branded under the Kirkland name (Costco’s brand), is roasted by Starbucks (House Blend, Caffeinated and Decaffeinated)?
3. If Starbucks is supplying that much Fair Trade Certified coffee to Costco, are the storefronts the next move?
4. Despite Costco’s healthy employee focus as well as a dedication to offer organic products (vegetables and milk so far, though regionally there might be more/fewer offerings) as well as Fair Trade coffee, is it okay to shop there, or is Costco simply a less-bad Wal*Mart?

Costco
My wife and I have been Costco members for as long as I can remember, and although we primarily purchase business-related items there, we also do some personal shopping there as well (some trips more than others). In an attempt to come full circle in our effort to support local businesses and organic farmers (the local small ones as often as possible), we are seriously questioning whether or not we should continue to support Costco. Like most consumers who care about such issues but still compromise and make a few purchases there periodically, most of our decision to continue to shop there boils down to convenience and pure cost savings.

The compromise has been eating at me more and more over the past year, but I continually struggle with the point I make in the fourth question above. Costco is widely known (or reported) as a very employee-focused company. A quick search of “Costco and Walmart” turns up a number of articles and resources comparing the two companies. Here are a few that I found interesting:

• The Costco Challenge: An Alternative to Wal-Martization?
• Costco’s Dilemma: Is Treating Employees Well Unacceptable for a Publicly-Traded Corporation?
• Analysts on Costco and Wal-Mart

One of the issues that keeps nagging me, and also helps me justify our patronage to Costco, is whether or not there is value in supporting a company like Costco that is making positive steps (big ones in my opinion) as a matter of pushing issues into the public eye more rapidly and effectively. The best scenario for my wife and I would be to give our money and time to only small local businesses that support issues that are important to us, such as Fair Trade, organic farming (includes produce and poultry/meat), fair-labor apparel companies, and other like organizations. However, is there value in showing Costco that if they offer Fair Trade coffee, organic produce and other similar items, that there is a strong market for such products?

I think it is possible to argue that there is quite a bit of value there. For all of those consumers that are not exposed, for whatever reason, to information about such movements, perhaps seeing a $10 bag of Fair Trade coffee at Costco will prompt them to buy it (it’s ~3 lbs. after all). And in buying the coffee, not only are they supporting the Fair Trade movement, both directly and also by showing Costco that if they stock such items, consumers will snatch them up, but they also stand a much higher chance of learning about the implications of their purchase. At some point, the price conscious consumer that snagged the bag simply because it was $10 will notice the “Fair Trade Certified” label and will do some digging. Perhaps that is the spark that will start the fire for that individual.

Starbucks & Costco
But is something more sinister happening? Costco also sells bags of Starbucks French Roast (again, it is stocked in the San Luis Obispo, CA store and may not be available everywhere), but for a much higher price per pound (don’t quote me on this, but I think it is somewhere in the range of $14-$17 for a ~2 lb. bag). Is part of this whole scenario an attempt to hike the price of Starbucks’ other roasts? I think it is a bit of a stretch (why wouldn’t the Fair Trade beans be sold at a premium?) but I figured I’d throw it out there.

Regardless, if Starbucks can produce the volume of Fair Trade beans to supply Costco (at least regionally), why haven’t they taken the next step to supply the storefronts with only Fair Trade beans? Are the FTC bags at Costco a result of pressure by the warehouse on Starbucks, or is this simply a precursor to a much larger commitment to Fair Trade by Starbucks? Quite frankly, I hope it is both!

I’ll do some more digging and see if I can come up with answers to some of the questions I have posed here. If anyone has any information or resources to point me to, I’d love to hear about them.

TAGS: Starbucks | Costco | Coffee | Fair Trade

The title of this post shouldn’t surprise anyone — it is a commonly held belief that major corporations are dragging their feet on reducing their contribution to global warming. It is also  the title of a very interesting article that appeared in the New York Times a few days ago (U.S. Companies Lag on Global Warming).

Citing a study performed by Ceres, Corporate Governance and Climate Change: Making the Connection, the article points out a few interesting findings that may seem counter to what would have been expected:

“The study gave General Electric, American Electric Power and Cinergy among the highest scores in their industries. But over all, it concluded, American companies ‘are playing catch-up’ with international competitors like BP, Toyota, Alcan, Unilever and Rio Tinto.

“‘Dozens of U.S. businesses are ignoring the issue with “business as usual” responses that are putting their companies, and their shareholders, at risk,’ said Mindy S. Lubber, president of Ceres and director of the Investor Network on Climate Risk, a group whose members control a total of $3 trillion in investment capital. ‘When Cinergy and American Electric Power are tackling this issue, and Sempra and Dominion Resources are not, that should be a red flag to investors.’”

There were some positives to report as well:

“The report does show progress since 2003, when a much smaller Ceres study concluded that most American companies were ignoring the threat of climate change. Since then, Ceres notes, Chevron Texaco has invested $100 million in developing cleaner fuels, Ford Motor introduced the first American hybrid car, American Electric Power has committed itself to ‘clean coal’ technologies and G.E. has introduced its Ecomagination program stressing “green” products. And many companies including Dow Chemical, Anadarko Petroleum and Cinergy have board committees that oversee the curbing of greenhouse gases.”

The Ceres report covered in the article is very interesting — I recommend checking out the “Summary Report.” The following statement appears in the Foreword of the Summary Report and summarizes quite well the importance of dealing with environmental issues for both businesses and investors.

“These trends present enormous risks and opportunities for companies and investors. With the launch of the Kyoto Protocol and expanding greenhouse gas limits, power companies and other energy-intensive businesses face growing risks from the energy they use and how efficiently they use it. Companies also face risks from direct physical impacts, including stronger and more frequent storms, droughts, floods and sea level rise. In turn, forward-thinking companies that fine-tune their operations and develop new climate-friendly products can prosper from climate change.”

TAGS: Environment | Global Warming | Greenhouse | CSR