The Smalrus Web Site

As I’ve not had luck extending my CSR networks at St. John’s, I decided to take some initiative to form my own networks. Using my thesis as leverage (and being truthful, since my paper is not yet published and I still have the ability to express their comments), I decided to write to various companies in the hopes that 1) I might learn some more info that is not necessarily expressed in the literature; and, 2) Generate corporate network contacts in hopes that, by May graduation, one of these companies might find me valuable enough to offer me a position in the field.

The result has been quite interesting. A couple of companies (Intel, Ford, Timberland) said they would be happy to speak to me. One company (Citi, Nike) didn’t have time to talk, but answered my e-mail questions–which was an option I gave. A few more companies (3M, Dell, and Gap) said they did not have the time and bandwidth to respond. Two companies (Gap and General Mills) responded to the effect that the information was either “confidential” or “proprietary.”

Perhaps I haven’t yet learned enough out of my internship, but based on what I do know, it doesn’t seem to me that large cap corporations would not have the time nor bandwidth to answer my questions (or at least speak with me). In the age of high power IT and Blackberrys that someone would have the availability to communicate, even if briefly. People don’t write long messages on their Blackberrys (and don’t like reading them either), but when they sit at their desks, they can take a couple more minutes to generate an e-mail. Read their response as: we’ve got no interest in participating.

But it is the responses by Gap and General Mills that have me most puzzled. Part of corporate social responsibility involves the transparency of corporations. To me, a company puts itself in the complete wrong CSR frame of reference when it’s being asked questions of CSR and chooses to excuse itself by effectively stating it’s not my business as a private individual. While I understand that corporations are private entities and do have the right to decline, it seems that responding that their answers are confidential is worse than not responding at all.

I still have several more of these companies to hear back from (or perhaps, not hear from at all). But it will be interesting to see which companies give excuses and what excuses they’re giving.  I wrote to them as a “multi-hatted” stakeholder (individual/career prospecter/csr advocate/academic).  It is curious to see, in practice, how stakeholders are engaging with someone who is writing on stakeholder engagement.  These companies may be large caps, but through my networking, I’m finding out just who the winners and the losers are in corporate transparency and accountability.

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Before I get into the main subject of this posting, I just wanted to recap the French debate. The New York Times put it best, it was the kind of “vivid confrontation that has disappeared from the American scene, where the candidates avoid each other as much as possible.” The post-debate polls ended up split, and even the political analysts couldn’t make heads or tales on who actually “won” the debate. Both actually played off their opponents’ strengths, so for that matter, they each had pros as to who might have won. From a neutral standpoint, I’m also of the mind that it was a draw, however it is obviously the votes that count. On a personal level, it was nice to see Ms. Royal finally shed some of her charm and fight with some intensity against the usually hard-headed Sarkozy. She might not have had all of her facts right (those who aren’t privy usually find it more difficult to be right), but at least she shows that she could possibly have the cojones to run the country.

On a different subject, there was an interesting column by Jonathan Guthrie in the Financial Times today about carbon footprints. After reading it, I came away with a sharp check on my thoughts about Pigovian taxes. For those who don’t know, Pigovian taxes is an economic term that describes taxes that are levied as a way of reducing economic externalities (the effect a person/company has on another person/company, either directly or indirectly). In some instances, these taxes are called sin (or more formally, sumptuary) taxes.

Here’s the thing with Pigovian taxes. Taxes are a financial charge that are raised by the state. In the case of Pigovian taxes, the money raised would be used to offset the negative externality (in this case, carbon emissions). But what happens if we take a cynical look at Pigovian taxes?

Let’s pretend that Company X was emitting 200 tons of carbon a year. Let’s say there was no tax. That means that the company is taking normal income at face cost. The government derives no tax benefits of Company X’s pollution and no finances to actually offset the problem and the Company has no incentive to stop polluting.

Now, let’s say that there was a tax of $2m per ton of carbon. The company takes in normal income at face cost. Thus, the government now derives $400m in tax benefits off Company X’s pollution and has some finances to offset the problem, while the Company has some incentive to stop polluting: If it cuts its emissions by 50 tons, it only pays $300m in taxes.

This method of cutting carbon emissions seems like a great way to save the environment. And in fact, its one of the most feasible (and common) options that government can step in to reduce externalities. However, there are two reasons to be cynical here. The first is that we must assume that the taxes levied on the externalities are actually being put to use for carbon emissions. Here in America, we can’t even actually be sure that taxes aren’t being pooled together to fund the Iraq War instead of subsidising businesses that are researching environmental issues.

President Bush actually recently met with Angela Merkel and Jose Manuel Barroso and shrugged off the suggestion that the US get involved with the Kyoto treaty as to entice China and India to reduce their carbon emissions. His stance was to invest in new technologies and pass them off. This is a great suggestion, but it only works when the government’s budget and financing actually plows the Pigovian tax proceeds back into research.

The second problem I’m finding with Pigovian taxes is, as Mr Guthrie writes, the means by which they become nothing more than the indulgences the Catholic Church used to sell in the Middle Ages. Sure, this is why Pigovian taxes are often called ’sin taxes,’ but now that the wealth in the world is massively disproportionate and the reach of the problems are truly global, the actual viability of these indulgences is actually unrealistic to me. And I’ll tell you why.

I have a friend who is very much the type of person who subscribes to this “pay to make it go away” mentality.  If Mayor Mike Bloomberg’s Congestion Tax ever makes its way to New York, I could see her being the type to pay $8 to bring her car into lower Manhattan.  There are companies that have the same approach: if they can afford to pay the $400m and it means they don’t have to spend any money on researching how to reduce carbon emissions, why not pay the $400m and call it a day?  Throwing money at problems solves them, doesn’t it?

Well that comes back to the previous premise.  In economics, there is an assumption that firms are profit-maximizers and that they will act rationally in order to achieve this goal.  The fact of the matter is, this is farther from the case.  Firms are actually more inclined to behave as people, with the same behavioural patterns (and one might even suggest, psychoses) that individual persons have.  Governments are the same way.  So while the Pigovian tax proposed by Mr Bloomberg might fund the planting of 1 million trees in New York City, Mr Bush may never put the money to R&D of these technologies (this coming from the man whose 2003 State of the Union suggested that hydrogen cars we’re not that far off but lost all ground to the Japanese in carmaking).

Throwing money at problems doesn’t solve anything unless you use money for problems.  Just as paying to rid oneself of sin is a ridiculous idea, so is paying to use tons of carbon just because the money is available.   So it is with low gas mileage SUVs where people say “If I can afford to pay for the gas, why shouldn’t I get one,” it is with carbon emissions.  “Affording it” doesn’t solve problems, reducing it does.

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A friend of mine had this “i’m” symbol located next to her screenname in Windows Live Messenger. I’m not going to get into this too much right now, but it was an interesting way for internet companies to integrate themselves into the corporate social philanthropy market, by donating an unlimited amount of money to various causes. Microsoft integrates its causes through the utilization of a simple code in the user’s screenname and allows the user to align him/herself with the cause to which s/he feels most sympathetic. Nine different causes ranging from stopglobalwarming.org, Susan G. Komen for the Cure, UNICEF, or the National Multiple Sclerosis Society, donates an unspecified portion of advertisement revenue each time one sends an IM.

I’m not sure how much will be donated, or how effective the campaign will be, however it seems to fit within the advertising means by which Project (RED) functions, where the corporations are able to appeal to users through normal consumption methods (in this case instant messaging) and send donations on their behalf. It will be interesting to see what the outcome of this campaign will be and how long the campaign will even run.

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I’ve been lacking things of real interest to write about here on this blog, though I must say that I’ve downloaded the new Wilco CD and it is excellent.  It sounds a little bit like Randy Newman and modern Bob Dylan, only confirming my belief that 2007 is the year of the matured artist.  In addition to the Wilco CD, I’ve obtained a copy of the new Kings of Leon album and it seems that bands are creating bigger and better albums that expand and evolve the sounds of the artist, rather than just making a sophomore or third album that falls into the rut of similar song writing styles with different melodies.  The alternate agenda of bands is to completely change their styles and heading into a different direction that alienates core fans.  A group puts a lot of its credibility on the line by taking this approach and risks either massive successes or failures.  One could look at Radiohead as a band that either alienated a lot of its pre-Kid A fanbase or only served to entice them further into the rabbit hole.

I’m not sure yet whether I will ultimately post a formal review of the Wilco and/or Kings of Leon album, but they are high on my list of 2007 albums.  The remainder of the year continues to pull some amazing follow-up talents from bands like the Arctic Monkeys (23 Apr), Travis (7 May), Radiohead (18 Aug), Coldplay (31 Oct), The Polyphonic Spree, Feist, and of course, the supposedly excellent but may never come out Guns ‘n’ Roses album.

Now onto things a little less (or more) technical:

Whilst I’m reading Michel Albert’s book Capitalisme Contre Capitalisme, I’m also starting my research into various journal articles, with my current cache of articles at 77.  Personally, I wish there was a way that I could move the pdf journal files onto my Palm Zire, but with 2MB of memory, I can barely upload one file at a time onto it.  It’s a pain to have to drag my laptop everywhere, but I’ve also put the files onto USB key, so now I can bring them with me wherever I go.  The first article I’m reading is entitled “A Comparative Analysis of New Product Programmes: European versus North American Companies.” 

As far as I’ve read, Prof. EJ Kleinschmidt encourages a cross-national approach in assessing the successes of new product programs.  Though I’m not sure where this might fit into CSR, I believe his premise is correct.  And perhaps in assessing the various CSR approaches and formulating, it is helpful to know how new product programmes function.   By doing so, I can extrapolate prescriptions as to now future product entries may be marketed with a focus on CSR.

In addition, I have started culling quotes from various television shows and other sources of pop culture.  This past Sunday, I was watching Gordon Ramsay’s F Word and there was some discussion between Chef Ramsay and British television personality Janice Street-Porter on sustainable cod farming vs. opea sea cod fishing.  I’ve been looking to some random TV quotes that depict public perceptions of corporations and responsible business in order to gain some non-academic perspective. In addition to the F Word, I have also found quotes from The Cosby Show and from NUMB3RS that are applicable to the subject.  I may use them in the chapter headers throughout the thesis to draw CSR into pop culture, particularly since a lot of marketing deals with pop culture and the ability to harness brand images and identity in the public psyche.

If anyone has any good ideas/quotes/interesting informational sources, feel free to leave comments here on the web site.  So far, my biggest (and only) participant has been Dany, who has not only added his own thoughts to the discussion, but has given me more fodder to develop my own thoughts on the subject.

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FT WEEKEND MAGAZINE - FEATURE: Spend, spend, spend. Save, save, save
By Alan Beattie, Financial Times
Published: Jan 27, 2007

Buy a red T-shirt to fight AIDS. But does it really help
By Ben Arnoldy, The Christian Science Monitor
Published: Mar 12, 2007

Both of these articles are interesting analyses of the Project (red) campaign, founded by Bono. I however, take a little more issue with the article from the Christian Science Monitor and am thus choosing to focus on that here. The in-store advertising at Gap outlets repeatedly demonstrates that “half the profits” on the Gap (red) line will go to fund Project (red) contributions. And while Mr Arnoldy makes a good point in saying that there’s a lack of transparency by failing to disclose what “half the profits” are, he seems to forget that some contributions are better than nothing, regardless of what their numbers might be.

My personal stance is to agree with Ms. Smith. As stated in the Financial Times article, the idea behind Project (red) goes past mere cause-related marketing. As I’ve been reading in various books, any company can simply cut a cheque to have its corporate logo attached to a charity of its choosing. The idea behind (red) however, is cause-related consumption. This cause-related consumption takes note of the statistic that shows that, ceteris paribus, people more likely to change their consumption patterns to a brand that is socially responsible. This is where someone like me fits in. They see the idea of what (red) does and that consumption of the (red) design looks trendy, thus they will opt to spend the $28 in order to help fight AIDS in Africa, having made a difference on their purchasing behaviours.

For the sake of Mr. Cortez’s argument though, let’s assume that when you subtract the materials, labour, and design of the basic Gap (red) t-shirt, they receive $14 profit. Even that 50% profitability figure seems like a low number to me.

Half the profit ($7) is 25% of what the shirt costs to purchase. It would be hard to argue that 25% of purchase cost is a shabby number, particularly given that American Express (red) is only donating 1% from purchases made by people who have the (red) card and that the AMEX card is only available in the UK. Apple iPod is giving only $10 of $200 iPod (5% of product sale). Converse is donating 15% of net sales (which is pre-profit, meaning less). The only (red) brand that otherwise shows such high donation percent of retail cost is the $17 of a $60 RAZR phone (28%) only at Sprint in the US.

This means that for all of Mr. Cortez’s concerns about how much of his $28 is going to fight AIDS in Africa are less than justified, when compared to (red)’s other partners. The fact of the matter is, it’s more likely he wouldn’t have written the Global Fund a cheque on his own accord, nor would he spend $28 on any other shirt at Gap. By purchasing his shirt, he has at least become an active participant in the idea of corporate philanthropy through consumption.

Either way, the result is that the (red) campaign has raised the $25 million for AIDS prevention and treatment. And it’s hard to argue those results, regardless of what numbers Gap is actually providing for half its per shirt profits (and those ($28) shirts are on the cheaper end of the gap (red) line). If the 25% was applied to the higher priced products, then Gap is still writing the global fund a large cheque.

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