Corporate Responsibility – Sustainability – Citizenship: Is It In Jeopardy in the Trump-ian Years? Don’t Think So!

by Hank Boerner – Chair & Chief Strategist – G&A Institute
April 17, 2017

The mid-1960s….the time of the wonderful beginnings of the modern era of Corporate Social Responsibility. Corporate Citizenship.  And then large corporations began backing off their prior commitments as new administrations came to power in Washington.

The relationship of large corporations to the general society (i.e., the rest of us) has long been of interest to me. My career has been an exciting journey through up and down cycles of clear demonstration of corporate social responsibility, corporate citizenship, environmental responsibility, by large corporations…and at times, and at times, a clear lack thereof.

The news has mostly been very positive for the past two decades about CSR and sustainability — and corporate citizenship. Will this continue in the months and years ahead?

This of course is a question on the minds of some as the Trump Administration and the Congress continue to at least verbally assault the New Era of Enlightenment of the corporate sector.

Corporate-Society relations — this is something I closely monitor and am involved with daily in our Governance & Accountability Institute work, of course. And the progress made, or at times lack of progress, is a subject area that I have often commented on in my writings over the years since the 1960s.

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Consider:  U.S.A. – Industrial Powerhouse of the Postwar Era

The publisher of Time magazine (Henry Luce) commented that the 20th was the “American Century,” in great measure thanks to the fantastic production of the United States corporate community.

The nature of the post-World War II economy was firmly set in place by the production prowess of the war years (1941-1945), when the United States of America was the “Arsenal of Democracy,” with fantastic output of weapons and war materiel by large companies. (Ford Motor stopped making cars and instead made B-24 bombers; General Motors turned out tanks, with innovative transmissions that became best-selling features on post-war autos, etc.)

The rapid military buildup helped to lift large U.S. manufacturers and their tens of thousands of workers out of the dark days of the Great Depression era and into renewed prosperity. A “military-industrial” complex thus arose that continued through the decades onward to today. The great American middle class was set firmly in place after the war and the world’s greatest consuming economy was created in catering to the needs and wants of the population.

Because American and British bombers had devastated the factories of Germany and in other European countries, and American bombers the manufacturing facilities of the Empire of Japan, the U.S.A. dominated postwar [world] trade, for many years accounting for fully half of global trade flows.

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Civil Rights in Focus

Despite the broad and inspiring progress made in uplifting American families to middle class status, not all “boats rose” on the rising tide of progress.  The benefits of Corporate America were not evenly enjoyed.

The relationship of the corporate sector, and of the public sector, and the nation’s African-American population, was over the years problematic. There was discrimination in hiring, in training, in promotion, in access to goods and services; the African-American community steadily lagged behind white peer groups.

The sweeping Civil Rights Act of 1964, followed by The Voting Rights Act of 1965, set in place public sector commitments to change things, to open up opportunities in employment, in access to college education, to affordable home mortgages, and more.

Of course, not all American citizens welcomed the changes; particularly in the American South, there was pushback and protests and defiance of Federal anti-discrimination laws. (Including the landmark 1954 Brown vs. Board of Ed, which seemed to assure equal education for all citizens.)

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The Rise of Civil Unrest in the 1960s

With rising civil unrest in the inner cities, filling with African-Americans in the Great Migration north, there were riots in 1963 and 1964 in Birmingham and Savannah; in Chicago and Philadelphia; with both whites and blacks involved, battling each other, and more often battling police.

In 1965, there were riots in Los Angeles (the “Watts” neighborhood), 4,000 people were arrested, 34 people were killed, hundreds were injured, and tens of millions of dollars of property damage resulted.

The year 1966 brought unrest to Chicago, Los Angeles, Cleveland (“Hough” neighborhood) — 43 disorders in the U.S. in all. More people died; the National Guard was mobilized; more protests were in store for the next year. And in Spring into Summer 1967, there were riots in Tampa, Cincinnati, Atlanta, Newark and Northern New Jersey, and Detroit.

The Report of The National Advisory Commission on Civil Disorders (issued March 8, 1968) noted: The summer of 1967 again brought racial disorders to American cities, and with them, shock, fear and bewilderment to the nation. The worst came during a 2-week period in July, first in Newark (N.J.) and then in Detroit.

Said the authors. this is our basic conclusion: Our nation is moving toward two societies, one black, one white — separate and unequal.

Reaction to the disorders has quickened the movement and deepened the division. Discrimination and segregation have long permeated much of American life; they now threaten the future of every American. (end quotes).

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An important irritant: the increased involvement in the war between North and South Viet Nam — a conflict in which young men of privilege (attending Ivy League schools, for example) could skip military service while a high proportion of African-Americans would be drafted and shipped to the war zone.

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Corporate Sector Response

After passage of civil rights legislation, companies doing business with the Federal government were required to meet certain requirements; state and local governments had to come in line with affirmative action (such as set-asides in hiring for members of minority communities).

As the rules-of-the-road of the Federal civil rights statutes were set in place, both government agencies and America’s largest employers began to change their strategies, practices and policies to match the law of the land. This was not always easy — and certainly was not met with universal acceptance in many quarters of our population.

As the corporate community adjusted, G.A. Lloyd, a respected director public affairs/ community affairs manager at Humble Oil and Refining Company became an active public speaker on the changes taking place.

He wrote a small booklet: The Human Side of History (published 1967 – 16 pages) to help to educate his corporate community colleagues in the business sector on the changes taking place. He delivered a delivered powerful speech at University of Houston and around the Southwest, in late-December 1967, a time when I had been appointed as the “citizenship officer” of my employer, American Airlines (so I was paying close attention).

The Great Progress Made in the Private Sector

Mr. Lloyd advised us that “…leadership socially-conscious companies business organizations” such as those encouraged in the day’s electric utility industry association) were striving to make a difference. (Was this the beginning of modern-day “corporate social responsibility”? Perhaps.)

The corporate functions involved included public relations, community affairs/ community relations and philanthropy.

His employer — Humble Oil Company – in November 1967 was reacting very positively to key government action: passage of the Federal Civil Rights Act and the Voting Rights Act

The chairman of the board of his company, M.A. Wright, in October 1967 said: “The business community’s involvement with social problems must take a new look. In the search for solutions, they must bring into play their leadership and analytical capabilities. They must devise new and better approaches to existing public programs. Businessmen have no practical choice but to insist social problems be given the same analytical treatment that business uses in solving its own problems. ”

There were three outstanding business attributes and resources to bring to bear, the common wisdom told us: the three E’s of education, employment, environment.

G.A. Lloyd was busily telling business and academic audiences, “poor youths” were being put to work in the NASA Manned Space Center in Houston, Texas; 187 youths were recruited, paid a wage and provided training (“learning skills” was important).

Note the accepted language of the day: They were “economically-deprived boys and girls” from families of “the hard core unemployed,” and the objective was to keep them from falling into poverty as they grew up. They learned to type, run duplicating machines, operate machinery, and learn about electronic equipment.

The community-based programs that they were recruited from included: Job Fair; Junior Student Trainee Program; Job Opportunities for Youth (“JOY”); Vocational Education Program; and Back to School Youth Opportunity Campaign. Buses picked the students up, brought them to work and back home.

By the year 1967, Lloyd informed us, some 348 U.S. insurance companies had agreed to invest $1 billion to upgrade U.S. “slums” (concentrated primarily in major U.S. cities).

And more good news:

U.S. Gypsum (building materials) bought or optioned tenement buildings in Harlem and a handful in Cleveland to rehabilitate.

Smith, Kline & French (the Philadelphia pharma) rehabbed buildings in its neighborhood and sold them to the local housing authority.

Hallmark Cards in its home city of Kansas City planned over the next 16 years (that would be to 1983) to invest more than $100 million in rehabbing a “run-down” 85-acre area.

Polaroid (then based Cambridge, Massachusetts) established a “job clearing house” and invited colleagues in from more than 700 Boston-region firms to hire “underprivileged Negros” sans high school diplomas to earn that diploma on company time and expense. Companies responding supplied interviewers at the clearinghouse.

Met Life in New York City was recruiting new employees through The Urban League and social service organizations and put them through a 13-week training course. This process includes a “culture fair test” (no details provided).

Pacific Bell & Telephone dispatched African-American and Spanish-speaking recruiters out to barber shops, pool halls, beauty parlors and “where ever people meet” to identify potential new employees. Those selected were given training to develop skills; 18 of the first 20 men and 21 of the first 22 women became full-time employees.

Jobs Now (operating in Chicago) helped street gang members and those with minor criminal offenses to get local employers to look at candidates that had been on the straight-and-narrow for at least six months. High school diplomas were waived.

For his company, Humble Oil, applicants with low math and “chemical comprehension” (knowledge) were provided with lower entrance qualification testing and given training. (“They were educationally-deprived,” he noted. (In those days before self-service at gas stations the company was training minority men for jobs as service station driveway salesmen at the pump in Newark, New Jersey; Baltimore; and Los Angeles, working with local job development agencies.)

What did all of this mean for the people and communities involved?

  • They got a job – and a salary. And were trained.
    Dignity and self-respect was restored.
    They were able to buy an affordable home. With an affordable mortgage.
    There were less people on the welfare rolls.
    More minority youth were able to attend college. And become professionals.
    There was less potential for civil unrest – the riots of recent past years.
    Neighborhoods could be rehabilitated.
    It was good for business — especial for the private sector.  Major companies and small businesses would prosper.
    Entrepreneurial businesses gained a good foothold.
    These were optimum results at minimum cost, as some experts observed.

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Hedley Donovan, Editor-in-Chief of Time magazine and one of the most influential of American journalists, observed that it was good business to apply the same creative radicalism used to create good, and sometimes great, products, into create “good” and “great cities.”

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Importantly, a manager of public relations at giant DuPont (one of the dominant industrial firms of the era), advised that a major objective of American business should be “public service,” not just pursuit of profit. That is, public service through new or better products for the benefit of humankind…the objective is “just making money” was not sufficient, in his view.

Even in those faraway days there were many men (mostly men) who had stopped looking for work and too much unemployment concentrated in minority communities.  American corporations tried to do their part to change this situation.

This was all good news, of course, but there were changes in the wind.

* * * * * * *

As a long-time student of the Corporate-Society Dynamic, I have concerns that with the election results of November 2016, there might be backsliding in the efforts of Corporate America to be “better citizens,” and to continue to “do well by doing good” in terms of benefiting the American and global societies.

We shall see. The early signs are very encouraging. So far, this is not a revival of the actions of Richard Nixon presidency. Even though then-President Nixon encouraged adoption of the Federal Environmental Act and created the US EPA, his dog whistles to the business community helped to bring about an end to much of the above described good works of many major companies.

With the rise of right-leaning political leadership, the era of “Neutron Jack” Welch at General Electric would become the model for other CEOs. Slash and burn, chop away at R&D budgets, get rid of people, concentrate on profits and not people.  And please Wall Street. Not the many Main Streets of America.

Good news:  We have not yet seen a repeat of the rhetoric of Professor Milton Friedman as he so eloquently stated in The New York Times Magazine of September 13, 1970: The Social Responsibility of Business is to Increase its Profits. (You can read that essay here: http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html)

In case you have not read the piece, the summation of the essay was: “…the doctrine of ‘social responsibility‘ taken seriously would extend the scope of the political mechanism to every human activity. It does not differ in philosophy from the most explicitly collectivist doctrine. It differs only by professing to believe that collectivist ends can be attained without collectivist means. That is why, in my book Capitalism and Freedom, 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.’ ”

We have come a long, long way from those positions as stated by a respected academician of his time. This is so very long ago in today’s corporate rhetoric on corporate citizenship.

What will the future hold? We’re closely watching the Trump Administration and the Congress to hear the dog whistles and see the signals perhaps being quietly sent to the business and investing communities.

With all the progress being made by “universal owners” (the all-important independent fiduciaries of our time), and wide-awake NGOs and other key stakeholders, I don’t think we’ll have a Nixon-ian and Ronald Reagan type of backsliding. Not just yet. That’s the good news.

Your thoughts?

Good News: Solar & Wind Emerge in Global Search for Renewable Energy Sources

Guest Commentary  – Alison Crady      Marketing Specialist, CDF Distributors and Fast Partitions, United Kingdom

On Planet Earth there are numerous resources we have learned to utilize to enhance our work and private lives. Through the work of brilliant inventors and engineers, our cities come alive day and night powered by reliable electricity.

From the cars we drive to the light bulbs that illuminate our desktop, we steadily use the planets’ natural resources without giving much thought to the power source.
But in recent years, in addition to our increasing usage of these resources and supplied power, there comes our greater awareness of their limitations.

Today, with the societal emphasis on greater sustainability in all areas of our lives, environmentalists and technicians eagerly search for renewable energy sources.

Options like hydropower, solar power, wind energy and geothermal plants are being tested around the world… the good news is, with increasing success, worth noticing.

Here are some good news stories to share about renewable energy successes around the world:

In Costa Rica
Perhaps one of the “brightest” examples, the nation of Costa Rica in Central America has managed to use 100 percent renewable energy for 76 days straight. This was the second test-run of the length of sustainable power this year, which adds up to over 150 renewable energy days. Being a smaller country, Costa Rica is the perfect testing grounds for replacement energy sources. The length of the country’s use of renewable power is astounding.

Throughout the project, the Costa Rican government depended on these primary replacements:
• Hydro/geothermal/wind/solar energy— 80. 27%
• Geothermal plants— 12.62%
• Wind turbines— 7.1%

In the Nation of Portugal
The Portuguese quest for clean energy has achieved some important milestones. Recently, this small European country on the Atlantic shoreline managed to provide power for four days straight using only renewable energy sources. For the entire 107 hours, the nation of Portugal was sustained only by wind and solar power. This 4-day streak was the recent peak of their increasingly-promising clean power journey. Last year renewable sources provided 48% of Portugal’s total energy needs. Zero harmful emissions release is the goal.

In the United Kingdom
In the UK, governmental leaders and renewable energy industry leaders are hard at work to identify sustainable clean energy solutions. Researchers have seen some dramatic changes in solar power and wind energy usage. Unfortunately, the UK government has decided to halt the spread of onshore windfarms, primarily because of how expensive these installations were becoming.

Experts predict at least a one gigawatt — enough to light up 660,000 homes — loss in renewable energy generation within the next five years. After the ground-breaking investment in wind energy last year, several proposed construction projects will come to a halt.

That is the disappointing news. Investment in solar power, on the other hand, has slowly but steadily been increasing. Perhaps with the coming drop in government wind energy subsidies, the renewable energy finances will be redirected to encourage greater solar energy funding.

In Spain
If you visit the colorful lands of Spain, Portugal’s neighbor on the Iberian Peninsula, you’ll soon learn that electrical power is expensive. The country’s lack of natural resource blessings — such as deposits of oil, natural gas or coal — has spurred policymakers and industry leaders forward in the development of renewable energy. With this motivation to find less expensive, reliable energy sources, Spain is becoming known as a “Cradle of Renewable Energy.”

During the night time, wind energy fulfills 70% of Spain’s electricity needs, with a daytime record achievement of 54%. Over 29 million homes in Spain are currently powered by wind energy. However, wind energy is unpredictable, which makes forecasting key to sustainable clean energy. The Spanish firm Acciona consistently monitors the operations of 9,500 wind turbines at the Pamplona control center.

In Germany
The German nation’s quest for renewable energy has recently gained momentum. According to the Agora Energiewende think tank, Germany was able to supply nearly 100% of its energy needs with renewable sources for an entire day. Conventional power plants were able to supply 7.7 gigawatts at their energy output peak. As the country moves forward to phase out nuclear and fossil fuels, Germany’s cleaner power drive / quest narrows in on solar and wind power.

In China
Never a country to miss out on significant global trends, China has taken stock in its renewable energy resources. Aware of the need to combat climate change, China sets up new wind turbines at the astonishing rate of two every hour. According to the International Energy Agency (IEA), onshore wind and solar panels have increasingly been reduced in costs.

The IEA reported this decline as impressive, and they expect the trend to continue. With cheaper renewable energy options, the clean power usage trend will continue to take off, most industry expert agree.

The Rewards of Renewable Energy
The damaging effects of current levels of carbon dioxide emissions and the awareness of ever-limited natural resources are being felt around the world. The need for a better way to generate energy is clear. Given the recent trends of success, in a growing number of countries, solar and wind energy power sources are not going away any time soon. These renewable resources are the forecasted “superheroes” for continued (and significant) reduction in dangerous carbon emissions and energy source and supply security on a global scale.

That’s the good news to share today.

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Allison Crady provides these links to the companies she serves as marketing specialist:
• http://www.cdfdistributors.com/
• https://www.fastpartitions.com/

Alison Crady

Guest Commentator Alison Crady