Global Problems: Local Solutions

Problems are Structural If economic problems are structural, than solutions should also be structural. Corporations externalize costs of pollution deforestation, overfishing, overconsumption, energy use, economic stratification, etc.

Problems with Relying on Liberalizing the Market: Pressures on Short-termism 1) Short-termism--- pressure on businesses to increase the value of their company each quarter. Such pressure makes it likely that businesses will: Search for low labor costs, cheapest materials and innovate in a way that benefits the rich over everyone else. Such actions harm: environment and workers

Costly Innovations? Derivatives – Very confusing; two parties agree to bet on something that may happen in the future Short Selling – “borrowing” assets from a broker, selling those assets and hoping those assets decrease in value. Credit Default Swaps – buying something like “insurance” on a company so that if the company goes belly up, you get paid. However, you do not own any part of the company

Who’s Responsible? 1) Historical conceptions of CSR Adam Smith and Morality 2) NGOs and Activists have forced companies to care about “Image” because Adam Smith’s idea of informal control not longer works.

Solutions Government Regulations: In Europe, where centralization of state is more accepted, this is more realistic. U.S. is more de-centralized and much resistance. United Nations – It has no enforcement power. NGOs – Influence public perception

Corporate Social Responsibility: What is it? CSR: Including social and environmental costs of doing business in your bottom line. Laissez Faire concepts of CSR: Milton Friedman: I have called it a "fundamentally subversive doctrine" in a free society, and have said that in such a society, "there is one and only one social responsibility of business–to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud."

Transparency and Accountability: An Easy Solution? In the U.S., Corporations do not have to report: Employment numbers outside US Pollution numbers Money spent on lobbying to continue harmful global problems Wage distributions Percent of workforce contracted What is done with government tax breaks, subsidies, grants or bailout monies. Actual accounting realities to stock holders Environmental degradation If we made laws that forced corporations, not to change policy, but to document various behaviors, consumers would have more knowledge.

Socially Responsible Consumerism: Taking into account companies social and environmental record when purchasing goods Consumers’ Choice: Is More Really Better? The Irony of finding the “best deal.” Is cheaper always better? Short and long term problems for consumer? Environmental degradation Lack of benefits in the marketplace Health problems Unemployment

NGOs: What are Activists Doing? 1) Corporate Campaigns 2) Shareholder Activism 3) Corporate Dialogue 4) Codes of Conducts Global Reporting Initiative UN Global Compact CERES (Coalition for Environmentally Responsible Economies) CERES

How Companies Respond? There are no laws, but companies can voluntarily: 1) Join business associations like Businesses for Social Responsibility 2) Hire directors of Corporate Responsibility 3) Agree to Codes of Conduct 4) Agree to Triple Line Accounting

GreenWashing? 1) Some activists fear that corporations GreenWash instead of adopt true change. Six Sins of Greenwashing 2) Many corporations do not change their accountability or transparency – same companies that agree to Codes and Triple Line lobby government for “Free Trade.” 3) The case of Apple and Foxconn: Fair Labor Association?

Shopping Responsibly? Equal Exchange Coop America Local Harvest: CSAs and other food locally Environment: reduce, recycle, reuse. Carbon Footprints ( Turn off your engines, avoid toxic chemicals that harm water supply, encourage weeds, Decrease Carbon footprints.

Shopping Responsibly Get into Groups of 5: What structural and cultural pressures make being responsible difficult? Now discuss solutions you could see yourself adopting.