Looking Back to Look Ahead – The Promise of Biden-Harris Administration to Return to the Hopes of Action on Climate Change Issues

November 9, 2020

By Hank Boerner – Chair & Chief Strategist – G&A Institute

For almost four l-o-n-g, long years we have been watching – and decrying! – the antics of the Trump Administration in the attempt to roll back vital federal environmental protections that have been put in place (and protected) by elected representatives of both parties over five decades.

It was President Richard M. Nixon – a Republican and conservative leader – who signed the National Environmental Policy Act of 1969 (NEPA) into the law of the land. NEPA was established by the 91st Congress and became law on January 1, 1970.

This also established the President’s Council on Environmental Quality. What flowed thereafter was important…

…the Environmental Protection Agency (US EPA) was created;
The Clean Air Act was enacted into law;
The Clean Water Act soon followed; and then
Toxic Substances Control Act (TSCA);  and 
…”Superfund” for clean up of contamination (actually, CERCLA-Comprehensive Environmental Response, Compensation and Liability Act);  and
Emergency Planning and Community Right-to-Know Act;  and 
Endangered Species Act;  and
Federal Insectiside, Fungicide, and Rodenticide Act; and 
Energy Policy Act; and
Chemical Safety Information, Site Security and Fuels Regulatory Relief Act;
…and much more!

Beginning almost immediately as the Trump Administration took charge of the EPA and other cabinet agencies, these historic legislative achievements were being undermined and protections whittled away.

There will be new environmental overseers coming to town in 2021 and the great hopes pinned on the Biden-Harris Administration include rebuilding the important rules, oversight mechanisms and enforcement of the laws/rules by EPA, Interior, Energy and other agencies.

The New York Times today outlined the first steps that could be taken – issuance of presidential Executive Orders (EOs) and President Memoranda that would undo the same mechanisms employed by President Trump and EPA political leaders to undermine environmental protection measures.

We read in — “Biden Will Roll Back Parts of the Trump Agenda With Strokes of a Pen” – that on Day One, we can expect action on climate change, writes Michael D. Shear and Lisa Friedman.

That starts with notice to the United Nations that the U.S.A. will rejoin the Paris Agreement.

The move to revoke Trump era EOs and re-issue Obama-Biden Administration orders can be immediate; or, President Joe Biden in 2021 can issue new orders along the same lines of prior EOs addressing climate change issues.

Important: The new Executive Orders would create important policies for the heads and rank and file members of the departments – Defense, EPA, Labor, Commerce, Interior, SEC, and many others that in some way directly or indirectly are affected by climate change.

Attitudes do matter – and Presidential Executive Orders to heads of agencies really matter!

2021 is looking like climate change matters will move to front-and-center on the public policy agenda. The Financial Times today pointed out that candidate Joe Biden set a policy of having a target to reach zero carbon

While Donald Trump led the effort to isolate the United States from world affairs, China moved to pledge net zero by 2060 and Japan and South Korea set net zero targets.

With the USA back on board, real progress can be made toward meeting Paris Agreement goals. Exciting to consider: The United States of America as once again a leader in the drive to make the world a safer, healthier place for billions of us!

For a reminder of the Trump moves in 2017 to reverse a half-century and more of environmental protection, here’s my March 2017 look at what was underway just two months into the new administration, with a new leader (Administrator Scott Pruitt) at the helm of the EPA.

Let’s go back to March 2017 – Just two months into the Trump Administration – with bad news on climate change all around!

http://ga-institute.com/Sustainability-Update/climate-change-nah-the-deniers-destroyers-are-work-white-house-attempts-to-roll-back-obama-legacy/


Rising Heat & Humidity, Rising Sea Levels, Up & Down Shifts in Crop Yields, More Large Fires, Huge Human Migration Within the United States -– What We Are Learning Today

September 24 2020

by Hank Boerner – Chair & Chief Strategist – G&A Institute

There is so much going on in the global sustainability space that we could draw an apt analogy – it’s “like drinking water not out of a straw but a fire hose!”

Every week our team seeks out the news, feature and research items that will help you stay informed on developments in corporate sustainability and CSR, sustainable investing, the actions of governments and civil society leadership, activists, academics & researchers…and more.

For the past two or three years the pace of these developments has accelerated and so created a long list of many “possibilities” to share with you.  Sometimes, certain news jumps up and shouts at us from the print or digital page.

Example:  This week we see a powerful accounting of the impacts of climate change as assembled by ProPublica, an independent, nonprofit journalism organization focused on the major issues of the day.   The collaborating journalists – at ProPublica and The New York Times with support from the non-profit Pulitzer Center — focused on “the compounding calamities of climate risk” and the projected impact on the continental U.S.A. over the coming decades.

The issues “stack on top of one another”, they write.  Such as rising heat, excessive humidity, oceans rising, very large fires, crop failures, economic damages, and more…scary projections for the 2040-2060 timeframe.   (That is starting only 20 years, or 240 months, just 1,000+ weeks away!)

ProPublica worked with data from the Rhodium Group, which when presented in the context of the report, tell a story of warming temperatures, and changing rainfall that will drive agriculture and temperate climates from south to north, as the sea levels rise and vast amounts of coastlines “are consumed” and dangerous levels of humidity “swamp the Mississippi River Valley”.

All of this will profoundly interrupt the way that we in this, the world’s largest economy, will live and farm and work later in this century.  This could be an era to be marked by mass migration within the U.S.A., far outpacing the dramatic “Great Black Migration” with large populations moving from southern states to the north, profoundly reshaping this Land.

The data is presented in maps and county-by-county review; you can in the visuals presented see how the temperate zone marches north and more…for corn and soy production, harvests will decrease and increase, depending on location in the country.

Economic impact? (Serious projections to consider today while we experience dislocation now due to the Coronavirus pandemic include rising energy costs, lower labor productivity, poor crop yields, increase in crime and more.

Which counties will rise and which, fall?  The maps tell the story.

This reportage was so important and timely that the NY Times published a comprehensive wrap up this weekend in the Sunday magazine (reaching well beyond two million print and digital subscribers).   We present this important reportage for you in the Top Stories.

Timeliness:  This is also Climate Week, with important digital and some physical meetings around the world to focus on climate change challenges. We’re sharing some of the coverage of that as well.

 

Top Stories

As “Corporate Citizen” Working In Many Lands – This Can Be Challenging, As Corporate Experiences With China Show…

Another in the series The Corporate Citizen and Society – the Dynamics of the Relationship

Started in Autumn 2019 – drafting interrupted – further edited in June 2020 – and posted in September 2020. 

by Hank Boerner – Chair & Chief Strategist – G&A Institute

Running a multi-national business today is quite challenging, especially for firms with “footprints” of size in countries beyond the homeland.

Recently we have been watching some critical events…at times crisis situations…that senior executives are navigating. 

Of course, corporate leaders are responding to the Covid-19 pandemic – and civil protests in many cities and towns related to equality issues and objections to current methods of policing. – and the economic dislocations of the virus and more.  

For large multi-nationals with a presence in many different nations – sourcing there, or with local facilities in operation, or with products and services extensively used in the countries, with partnerships established with the public sector or NGOs – the challenge of being a “good corporate citizen” is ever-present. And sometimes can be daunting.

Challenges? Think about those related to continuing “freedom to operate” or “social license” or actual regulatory license to operate that may be placed in jeopardy in some way or another. 

Something done, something said (or published or communicated)…with the foreign governments objecting to that “something”.– and threatening to or taking action to limit the freedom to operate. 

When I began drafting this commentary last fall, tiny bits of news about the Coronavirus was just beginning to be reported out of China, with very sketchy details.  By year end, It was a kind of flu. Nothing to worry about. 

In the news headlines at that time (summer into fall 2019) there were more obvious challenges being presented to non-Chinese tech companies as the Hong Kong people protests continued to build momentum, and the Communist government in the mainland began to put pressure on the corporate sector (perhaps pressuring foreign companies’ media that had China news coverage).

An example of this kind of threat came to us in October 2019 involving Apple — concerning its vital relationship with the “two Chinas” – and with significant production and retail stores on the mainland — the People’s Republic of China being the #2 global market for Apple sales.

Other non-China-based companies have also being feeling the pressures as well.  

Just offshore from mainland China, trouble was quite evident to the world in the former British territory of Hong Kong, which is a kind of status aparte of the mainland. (That is similar to the status of Aruba in the Caribbean Basin to parent country The Netherlands.)  China has maintained a “one country-two systems” approach to Hong Kong. Until now. 

China gained re-sovereignty over the Hong Kong territory in 1997 with the execution of a treaty at the end of the United Kingdom’s 99-year lease. The treaty terms were meant to assure separate governance systems for the more advanced Hong Kong economy and territory’s political system of that era.

Early in October 2019, an Apple device software application – Hkmap.live – developed by an outside firm and sold through the Apple Store, was removed from the on-line store. 

The concerns:  Reuters News and Associated Press reported that the Communist Party’s main newspaper (the People’s Daily) had singled out Apple for criticism for having the third party app for sale (and used on smartphones)  that reportedly enabled Hong Kong protesters to track the local police activity.

The People’s Republic of China’s propaganda arm (the publication) said this was a no-no – that is, Apple making the app available — and Apple removed the app because it “violated the rules,” according to the Reuters/AP report at the time.  (Reason: the app could be used to ambush police and by criminals where police were absent – the Apple rules allow for removal when the app is found to facilitate illegal activity.)

Apple had first rejected HKmap.live — then agreed to make it available — and then as the protest mounted (and mainland China responded), the app came off the App Store.

Was it the People’s Daily targeting of Apple and the app…or what the company said (“…many concerned customers in Hong Kong contacted the company…”).

An MSNBC commentator (Kif Leswing) weighed in, pointing out that Apple also removed a news stream (Quartz) because the content is illegal in China. Quartz was covering the Hong Kong democracy protests.

This is/was not a new issue: Back in 2017 several U.S. Senators presciently charged that Apple was enabling the Chinese government’s draconian moves on censorship and citizen surveillance.  (Which moves, according to news reports of today, involves collecting everyone’s DNA and placing cameras everywhere to track everyone – plus developing a “social profile” for tracking the movements of citizens — and meting out punishment where officials think it is merited.)

We note here that Google also quietly removed Hong Kong protest content from the Android store — without creating Apple-type headlines.

But – for those who had downloaded the app, it continued posting locations of police patrols, so said The Los Angeles Times.

MSNBC noted that Apple more than other tech companies has a very close relationship with China (where 200 million-plus iPhones are made each year) and China is an important market as well with tens of billions in revenue in total from the “three Chinas”.  (For Apple, China is the #2 market for iPhones.)

The third China: the separate nation of the Republic of China, more generally known as Taiwan, and persistently claimed by the mainland as part of its territory. “China” is a complicated subject for many company managements. And then there is Hong Kong and nearby Macao, outposts of China mainland.)

Apple CEO Tim Cook sent a memo to Apple’s 130,000 employees to explain the move. And we can assume try to calm nerves internally.

US Senator Josh Hawley (Missouri) quickly posed the question:  Who is running Apple…Tim Cook or Beijing?

If We Don’t Agree — We Will Name & Share – Beware of the China Leadership

Brands targeted by China’s rulers have been subjected to campaigns (name and shame) to alert local customers of issues with a company or organization.

This could become more of a threat to non-Chinese companies as the government continues to develop the “social profile” of its citizens. And captures their imagines on street cameras. Which company’s products they buy could become a major issue in the western democracies!

Further complicating life for execs — we’ve seen the rise of internal protest inside U.S. tech companies, when employees don’t like the work being done for customers –particularly government agencies, police departments, intelligence agencies, military branches, etc. 

Business-society relationships are complicated. Sports is a big business in the USA. The National Basketball Association is a powerful sports enterprise now with global reach and the ownership universe (the key decision-makers) is made up of corporations and wealthy partnerships that own local sports teams. 

So – when the manager of the Houston Rockets briefly voiced support of the Hong Kong protests — the state TV in China stopped the broadcast of NBA games.  Pow!

Senator Majority Leader Mitch McConnell (R_Kentucky) quickly weighed in: “The people of Hong Kong have risked much more than money to defend their freedom of expression, human rights and autonomy.  I hope the NBA can learn from that courage and not abandon those values for the sake of their bottom line.” (The NBA apologized for the Twitter comment of the Houston team GM. It’s not comfortable being in the middle of intercontinental cat fight.)

Complicating matters: Majority Leader McConnell’s wife – Secretary of Transportation Elaine Chao – is a Chinese-American born in Taiwan. She was Secretary of Labor under President George W. Bush (and therefore an overseer of U.S. fiduciary investment policy-making at the DOL, affecting decisions of many large investors.) More complications in public and private sectors, we could say.

The Houston basketball team has been very popular in China and a star player (Yao Ming) played for the team.   The U.A. Senate majority leader is a constant critic of China policies. Complicated matters for companies doing business in and with China!

Senator Ted Cruz (R-Texas) also weighed in:  “We’re better than this. Human rights should not be for sale and the NBA should not be assigning Chinese communist censorship.”  Remember, his father fled Communist Cuba to come to the U.S.A.

The aggravated condition of U.S.-China trade relations under the Trump Administration is also complicating things. 

One, Two, Three Chinas – It’s Complicated

We should explain that the “ Two Chinas” policy of the United States government should now be considered as “three,” as the identification has traditionally meant the relationship of [mainland] Communist China and the offshore democracy of the Republic of China (Taiwan) to the USA.

The Nationalist ROC has governed the island nation since the end of civil war of 1949 when many mainland refugees fled to Taiwan as the Communists came to power.

With China moving aggressively toward Hong Kong independence-of-a-sort, the Trump Administration and members of Congress are talking about possible actions to attempt to ensure some independence of the little territory.  

Another dustup:  Hollywood’s Dreamworks and a China production company (Pearl Studio) collaborated to create an animated feature – “Abominable” (about a young girl meeting the Abominable Snowman or “Yeti”).  The film features Asian-American actor and was quickly a hit on release in America.

The film debuted in Vietnam as well – and was quickly pulled from viewing.  A map of China used in the animation showed the “nine dashes” – a no-no in China’s neighboring countries.

The Nine-Dashes – Complicating Matters in the South China Sea

What are the 9 dashes, you might ask?  (I’m sure that question rapidly went ’round in Dreamworks’ Hollywood offices — what the hell!.)  China attempts to impose its authority over the South China Sea with a series of dashes (not firm lines) to imply control or ownership. 

Which angers neighbors — Vietnam, Taiwan, the Philippines, Malaysia, and other nations with access to the vital sea lanes.  And those nations are trading partners of the U.S. — and American companies have significant presence in them.

How many people in corporate suites are tuned in to the vagaries or subtleties of China’s diplomacy!   

We recommend that you read Foreign Affairs and China-scholar Robert D. Kaplan’s excellent book on all of this — red warning flags flying! — “Asia’s Cauldron:  The South China Sea and the End of a Stable Pacific.”  Published in 2014 – available on Amazon. 

Simply stated –  “China” – it’s  a complicated subject for corporate citizens.

The China – United State of America Relationship

Former Secretary of State Henry Kissinger has said that the USA-China relationship with shape the international order for the 21st Century and the countries will have to deal with serious cultural differences (like freedom of expression and the right to protest and the freedom to trade etc.).

We saw that the investors in the USA shrugged off the Apple dustup with China over the Hong Kong protests. The share price was up $6.00 (3%) and moving toward an all-time high as the China-Hong Kong-APPL news stories appeared… this is a US$1 trillion-plus company! (Well, after the coronavirus crash of March 2020, we did have to check again and the price is back up in high $300s.)

Challenge: Being a Good Corporate Citizen When You Are a Guest

For large corporations, in general, worldwide, being a “good corporate citizen” in many lands is always a concern and a challenge as well as a competitive advantage (the brand and reputation and consumer favor as a 21st Century moat) — but things can be very complicated in the execution of citizenship on the ground. 

Complicated Challenge: Some companies operate in literally all but three or four nations of the world, excluding Iran, North Korea and perhaps a few others from their operations and marketing activities.

As we first prepared to finally publish this June 2020, dusting off the earlier Fall 2019 draft, we were in the midst of a global epidemic (COVID-19), and U.S. and global civil protests — with the news coverage all but eliminating the news out of Hong Kong on some days.

But China actions focused on western business organizations are very much in focus today. Recently several large news organizations (corporate-owned, of course, and at the top, corporate board and C-suite managed) saw their in-country journalists booted out of China because the Communist leaders objected to their news coverage.

Journalists employed by The New York Times (owned by The Times Company); The Wall Street Journal (owned by News Corp); and The Washington Post (now owned by Jeff Bezos, head of Amazon) were told to leave mainland China and the “regulated territories” of Hong Kong and Macoa.

In September 2020 we learned that Australian journalists had fled China to avoid detention. 

The leaders of the People’s Republic of China, it is said, are angered by coverage of the coronavirus (and the Communist government’s response); coverage of Hong Kong protests; and the reporting of “shadowy business dealings” of the country’s government leadership.

In addition, Time magazine (now owned by Marc Benioff, head of Salesforce) and the Voice of America – AND the expelled media organizations — were instructed to turn over information about their operations to the government minders.

U.S. Retaliation Complicates Corporate Life

This is not happening in a vacuum – in Washington, D.C., President Donald Trump designated the five China media organization operating in the USA as government functionaries of China, limiting the number of Chinese citizens who could work in the U.S. as journalists. The five are propaganda tools, the charge goes.  Their activities are being restricted. 

And so here in the USA the tit-for-tat is targeting China’s main news outlets –– Xinhua, CGTN, China Daily, People’s Daily, China Radio.

The Trump Administration is also moving to de-list publicly-traded Chinese corporations (traded on American stock exchanges). 

In all of the dustups, as U.S. business leaders are deftly navigating the tricky shoals where the seas of statesmanship meet the rocks of ideology and pose challenges to strategy and business models. 

Some of the challenges in the US-China relationships are about freedoms.  Such as our First Amendment freedoms. There are no China equivalents. 

President Franklin Delano Roosevelt set out four important freedoms for the peoples of all nations during the early days of World War II  — freedom of speech and religion, freedom from want and fear. These have long been central to many elements of U.S. and western capitalism — and foreign concepts to the rulers of present-day China. 

American companies have to carefully navigate the differences when they do business in China, with China, and other non-democratic nations. 

An example getting news coverage this week:  The Walt Disney Company, a U.S.-based global entertainment and communications company.  The company has been a  very able and savvy global marketer since the earliest days of Uncle Walt’s cartoon studio in sunny California.  Founder Uncle Walt always innovated and marketed that innovation far and wide. 

Consider that Disney has a $5 billion-plus investment in Shanghai Disneyland Resort (opened 2016) — co-owned by the Communist government — and an older Disney park in Hong Kong.   China is an important market for various activities of the company, including motion pictures.

And so the anxiety we logically could expect in the Disney offices as a new dustup occurred.  The company created “Hulan”, a movie about an important character (female) in China mythology, with a China-born female lead and a female director, and scenes filmed in China for accurate depiction of locations for the story. 

One snippet of the 1 hour/50 minute film — the usual (traditional) roll of credits at the end named a number of governments within China as assisting. Including Xinjiang, rolling by in a long list.  Where other American companies operated.  And where in 2018 as the film was underway, the local government was locking up tens of thousands of Muslims in concentration camps!  And so the September 2020 criticism of The Walt Disney Company — including by two dozen members of the U.S. Congress. 

There’s a thorough, fair and balanced recap of all of this in The New York Times, Sunday, September 13, 2020 (“How a 1 Minute of Scenery in ‘Mulan’ Put Disney in a Bind Over China”).    It’s an important read for you, I think, in the context of U.S.-China relations and for non-China-based companies operating in the country. 

Thinking about “open” communication not being permitted today in China we are reminded of President Thomas Jefferson’s perspective: “The only security of all is in a free press. The force of public opinion cannot be resisted when permitted freely to be expressed. The agitation it produces must be submitted to. It is necessary, to keep the waters pure.” – Thomas Jefferson letter to the Marquis de Lafayette.

So true some two centuries later in our great democracy!

 

Important Crisis Talk About PPE – Personal Protective Equipment – Excellence in Corporate Citizenship #3

by Hank Boerner – Chair & Chief Strategist – G&A Institute and the G&A team   — continuing a new conversation about the corporate and investor response the coronavirus crisis…continuing the second week of the conversation…   Post #3 – March 23 – first of two 

Introduction
These are the times when actions and reactions to crisis helps to define the character of the corporation and shape the public profiles of  each of the corporate citizens. For companies, these are not easy times.

Many important decisions are to be made, many priorities set in an environment of unknown unknowns — and there are many stakeholders to be taken care of.

The good news:  Corporations are not waiting to be part of the solution – decisions are being made quickly and action is being taken to protect the enterprise.  This is no easy task while protecting the corporate brand, the reputation for being a good corporate citizen, watching out for the investor base and the employee base — and all stakeholders.

What are companies doing? How will the decisions made at the top in turn affect the company’s employees, customers, hometowns, suppliers, other stakeholders? Stay tuned to our continuing commentary.

* * * * * * * *

Important Crisis Talk About PPE – Personal Protective Equipment

About those face masks…”PPE’s” for this conversation include protective clothing, gowns, face shields, goggles, face masks, gloves, and other equipment designed to protect the wearer.

These could be those PPEs especially designed for medical use (such as for use in surgery or dentistry) that are fluid-resistant, loose-fitting and disposable, for example. Many of the devices are regulated such as by FDA, or reviewed and registered with the agency.

Or the N95 that many refer to could be the ubiquitous industrial mask, tye disposable type, used in many industries.  It’s important to note that the medical version (“S”) is desperately needed in the medical crisis, of course.

And the corporate sector is stepping up to fill the gaps.

Many PPE items are in short supply. Right now, FDA is collaborating with manufacturers of surgical masks and gowns to “better understand” the supply chain issues related to the outbreak, and to deal with widespread shortages of products.

The U.S. government has strategic stockpiles of surgical (medical) N95s filtering facepiece respirators that exceed the manufacturers’ recommended “shelf life” — and so the Agency is considering whether or not to release the equipment during the crisis.

The good news is that many of the devices tested should provide the expected level of protection to the user. This varies by manufacturer and shelf life.

Manufacturers identified by CDC in its communications include 3M, Gerson, Medline/Alpha Portech, Kimberly-Clark, and Moldex. Other makers include Cardinal Health, Ansell, DACH, CM, Hakugen, Shanghai Dasheng, Yuanqin, and Winner. The CDC is providing guidance at: https://www.cdc.gov/coronavirus/2019-ncov/release-stockpiled-N95.html 

(Note: Kimberly-Clark also produces toilet paper, towels and diapers – items flying off consumer shelves these days.)

The N95 industrial mask is a different situation than the “s” model designed for medical use, since the N95 model is made for industrial and construction use (as examples) and not for medical care.

In a crisis such as this one, “something” would be better than nothing, or having medical workers fashion masks out of materials to try to be safe.

The “perfect” solution here would be the enemy of the good, as the saying goes. And so millions of N95 are pressed into action and industry is responding with donations.  And companies are in high gear to produce masks.

Background: With the masks generally in short supply, the Centers for Disease Control (CDC) is saying that the usual N95 respirators are not recommended for use by the general public to try protect themselves from respiratory diseases, including COVID-19. Also, people who are well should not be using surgical (face) masks to protect themselves from the virus.

Worn properly, the surgical mask (the “s”) can help to block large-particle droplets, splashes, sprays or splatter containing viruses or bacteria – but not small particles in the air transmitted by coughs, sneezes or medical procedures because of the loose fit (face mask, on the face). And the masks are suggested to be used just once and then discarded.

N95 Respirators generally are protective devices designed to achieve a fit tight and serve to filtrate airborne particles, exceeding the protection of the face mask. The design forms a seal around nose and mouth – as explained, there are both industrial and surgical version.

The industrial version is used in construction, food preparation, manufacturing, etc. The surgical version is the N95s, tested for various medical applications. Manufacture of these devices is regulated.

The N95s is in great demand for healthcare workers and the CDC is urging “conservation” of surgical masks and gowns (such as use of reusable gowns vs. single use) while supplies are being made available to medical professionals.

* * * * * * * *

3M – 24/7 Production Lines In Action

The company is the largest producer of the N95 respirator face mask – the global output was just upped to the target of 1.1 billion or 100 million monthly. Inside the U.S. the company makes 400 million-plus N95’s in a year. Investment is now being directed to produce 30% more over the next 12 months.

The company is advising consumers not to show up in stores for the masks  – production should be directed to the front lines, those caring for coronavirus-infected patients.

In response to the crisis, 3M is striving to produce 100 million masks per month going forward (the global output). Current production is 35 million per month. Healthcare workers will receive 90% of the production, and the rest will go to other sectors of the economy (like food, energy, pharm companies).

This week 500,000 respirators are going to sent to New York State/City and Seattle. The company also produces hand sanitizers, disinfectants and filtration solutions, and is working with government officials, customers and distributors worldwide to address the supply issue.

* * * * * * * *

Honeywell is expanding production of masks at its Smithfield, Rhode Island eye protection products plan to make N95 masks – and hiring 500 workers immediately to support the effort. The products will go to the U.S. Department of Health and Human Services for the national stockpile. (VP Michael Pence talked about this in the weekend briefing – orders for “hundreds of millions of masks” were placed through the Federal Emergency Management Agency.)

* * * * * * * *

Dr. Anthony Fauci (head of NIH Allergy and Infectious Disease) said fresh supplies of masks will be reaching medical professionals in days, not weeks.

Note that the U.S. Congress expanded the U.S. PREP Act to ensure both types of N95 respirators will be available to hospitals and healthcare workers.

* * * * * * * *

Challenge: Mike Bowen, principal of Prestige Ameritech (a mask maker in Texas), told The New York Times that 95% of face masks are made outside of the U.S. including by U.S.-headquartered companies that moves production offshore. He’s getting 100 calls a day now for his products.

Challenge: Even for those companies making masks in the United States, we cite the example of Strong Manufacturing in Charlotte, North Carolina, making of 9 million masks each month. The raw materials come from Wuhan, China – ground zero of the coronavirus outbreak. The materials are not arriving (yet) – the boxes are on the dock in China.

Challenge: Just one facility here in New York City (the Columbia-Presbyterian system typically would use 4,000 N95 makes per day — and is now using 40,000 per day and expecting to double that in the crisis.

 * * * * * * * * 

And so — the Corporate Sector Responds

Apple:  CEO Tim Cook is going to donate millions of masks to healthcare workers in the U.S. and Europe (according to his weekend Tweet) – Vice President Michael Pence said that on the weekend White House Task Force briefing and the company CEO then confirmed this:

“Our teams at Apple have been working to help source supplies for healthcare providers fighting COVID-19. We’re donating millions of masks for health professionals in the US and Europe. To every one of the heroes on the front lines, we thank you” (CEO Tim Cook).

Tesla – CEO Elon Musk donated a truckload of PPEs (masks, gowns etc) to a UCLA Health center in California. We know this from Twitter tweeting. Musk told California Governor Gavin Newsom that 250,000 masks will be donated to California hospitals.

Hanes Brands – President Donald Trump at the weekend briefing talked about Hanes, the clothing maker, that is retrofitting factories to make face masks. The goal is to make 1.5 million masks a week, and working with Parkdale Mills America (they make the yarn for Hanes) and a consortium of companies, will ramp up to 5-to-6 million makes every week.

The company’s experts in supply chain and product development worked with the U.S. Department of Health and Human Services to develop the products and FDA has given its approval to masks that are not the traditional N95 but a prototype that can be used in N95s are not available.

The Hayner Hoyt Corp, a local company doing construction work at St. Joseph Health, in Syracuse (upstate New York) donated 1,200 face masks to the hospital. “I encourage other construction businesses and construction supply companies to see if they have any PPE that they can give to our healthcare providers during this critical time,” says the firm president, Jeremy Thurston. The hospital itself has reached out to doctors, dentists and vet offices to ask for donations of masks, gowns, eyewear, thermometers and other PPEs – something we will be seeing all over the nation to help to meet local shortages.

* * * * * * * *

G&A Institute team note: We continue to bring you news of private (corporate and business), public and social sector developments as organizations in the three societal sectors adjust to the emergency.

The new items will be posted at the top of the blog post and the items today will move down the queue.

We created the tag “Corporate Purpose – Virus Crisis” for this continuing series – and the hashtag #WeRise2FightCOVID-19 for our Twitter posts.  Do join the conversation and contribute your views and news.

Send us news about your organization – info@ga-institute.com so we can share.   Stay safe – be well — keep in touch!

 

Excellence in Corporate Citizenship on Display in the Coronavirus Crisis – #2

by Hank Boerner – Chair & Chief Strategist – G&A Institute and the G&A team   — continuing a new conversation about the corporate and investor response the coronavirus crisis…this is the beginning….

Introduction
These are the times when actions and reactions to crisis helps to define the character of the corporation and shape the public profiles of each of the corporate citizens. For companies, these are not easy times.

Many important decisions are to be made, many priorities set in an environment of unknown unknowns — and there are many stakeholders to be taken care of.

Employees – Customers – Suppliers – Regulators – Partners – Investors – Lenders – Communities – Civic Leadership.

As the the arms of the Federal government rush to aid the American society, CEO Chuck Robbins of Cisco put things in perspective in the story: “It’s critical that D.C. do something fast for companies – if you get 80 percent right today, it’s better than waiting a week and getting it 90% right.”

The good news:  Corporations are not waiting – decisions are being made quickly and action is being taken to protect the enterprise – no easy task while protecting the corporate brand, the reputation for being a good corporate citizen, watching out for the investor base and the employee base — and all stakeholders.

This continuing commentary in the first week of the crisis breaking through the barriers of doubt and with reality setting in. What are companies doing? How will the decisions made at the top in turn affect the company’s employees, customers, hometowns, suppliers, other stakeholders? Stay tuned.

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Friday, March 20, 2020 – Day Four of the National Shutdown in the Coronavirus Crisis…  The Second Roundup of the Day –  Evening Today

Walmart Responds – Setting the Pace for Mass Retailing

Walmart is the largest retailer in the United States of America, with branded stores, Sam’s Club stores, warehouses and other facilities in literally thousands of communities across the continent.

During hurricanes, floods, superstorms and the like, the Walmart men and women have stepped forward to aid their communities in various ways.

The company has a web site up for employees, customers and stakeholders to detail “Walmart’s Response to COVID-19″ (link below).

Among the steps announced so far:

The message from the CEO-President John Furner (Walmart U.S.) to his team members:  “We are so grateful for your hard work.  It’s been incredible to see Walmart associates step up to the challenge of serving America this month.  During a very uncertain and stressful time, you have done your jobs with calm, compassion and excellence.”

Full message here: https://corporate.walmart.com/newsroom/2020/03/19/walmart-u-s-ceo-john-furner-to-associates-we-are-so-grateful-for-your-hard-work

Walmart’s Walking-the-talk reward for associates:

  • Every full timer in stores, supply chain and HQs will receive $300 and part-timers $150 in the bonus (on April 2nd). The bonus payments for Q1 will be accelerated to be paid later in the month of April – the amount will be just as if the first quarter goals were reached.  No associate will receive less than the first Q bonus payment. Cost to WMT: US$180 million.
  • Overall, $550 million will be going to WMT associates during this critical period.  2019 Q4 payments were made this week – so Walmart team members will be seeing money coming in March 19 – April 2 – April 30 – May 28.

We’re hiring!  More associates are needed – the doors are open for up to 150,000 temporary workers for stores, clubs, distribution centers and fulfillment centers – some may convert to permanent jobs after the crisis.  The 2-week application process is now 24 hours.  Information is at careers.walmart.com

The company beefed up its COVID-19 emergency leave policy to encourage sick employees to stay home, or those “uncomfortable”, those who are quarantined, and associates with the virus.

Today (March 20) from 6 a.m. to 7 a.m. employees had an “associates-only” shopping hour with the usual 10% discount expanded to include vital grocery items.

Consider the lift:  This company has 2.2 million associates worldwide.

Walmart has a huge footprint across North America and stretched into parts of the world.  Each week (in normal times) 265 million shoppers (customers and “members”) visit 11,500 stores under 56 banners in 27 countries and eCommerce websites.

Says CEO-U.S. John Furner:  “Thank you again for what you’re doing – America needs Walmart right now, and we have been at our absolute best.

Bravo, Walmart associates, for keeping us supplied as best you can in this emergency.

You can keep up with Walmart news at: https://corporate.walmart.com/coronavirus

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Give Us a Few Hours and You Will Have Your Hand Cleaner

LVMH, the luxury brand marketer, met France’s call for more hand sanitizer in just 72 hours. On a typical day the Orleans, France factory produces perfume (Christian Dior etc).  This Monday, reports The Financial Times, the first lines of hand sanitizer in plastic bottles rolled forth, headed for doctors and nurses in Paris hospitals.

The government of France called on industry to help – that was last Friday – and Monday the bottles began to head for boxes for delivery to the besieged hospitals.  (LVMH – Louis Vuitton, Moet Hennessey is the largest company in France.)

The company intends to produce 12 tonnes (!) of the gel to 39 hospitals in Paris (the APHP”) over the coming days and two other production lines (Givenchy, L’Oise and Guerlain Brand, Chartres) are coming on line.

Secret to the ramp up: FT writer Leila Abboud explains that sanitizing needs three main ingredients – purified water, ethanol and glycerine – and the company had these at the ready as the equipment was set up (cosmetics and pharma products being close cousins). The company makes liquid soap, moisturizing creams for the usual products – Dior, Givenchy, Guerlain.

Said the company:  “LVMH will continue to honour this commitment as long as necessary.”

* * * * * * * *

In related news The Financial Times tells us that other French companies have joined the battle.

  • BNP Paribas donated 500,000 masks to Paris hospitals.
  • Renault loaned 300 autos for medical purposes.
  • L’Oreal is retooling factories to make millions of hand sanitizers destined for nursing homes and hospitals.

Keeping in mind:  Makers of luxury goods will be hard hit in the current crisis, especially as the lucrative China markets shut down – both for sales and for production.  (LVMH is not reliant on China for production, but sales, definitely.)

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Closer to Home – Bacardi in Puerto Rico Steps Up

Bacardi Limited, makes of popular rums, will help to supply the ethanol required for making hand sanitizers.  The distillery in Catano, P.R. where 80% of the rums are made, is partnering with Olein Refinery to product raw materials that will contribute to the production of the products.

Target: at least 500,000 of the 10-ounce units of hand sanitizers – and these will be donated to local communities.  Said Jose Class – VP-Supply Chain & Manufacturing:  “This is a family-owned business sand we know what it means to take care of a community in need.  In the 158 years of [the family-owned] Bacardi, we’ve endured our share of challenging times and have learned that resilience, optimism and community are what will help us come out stronger.”

We’ll hoist a glass to that!  Make it BACARDI® – GREY GOOSE® – DEWARS® – BOMBAY SAPPHIRE® – MARTINI® – and other brands of this corporate citizen in a U.S. territory still struggling to recover from a devastating superstorm.

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Reuters / Ethical Corp:  Moving to the Online to Share Important Perspectives & Guidance

Ethical Corp / Reuters Events create “Reuters Events Ethical Corporation” events.  While in-person meetings will be a zero right now and probably at minimum for a while, that does not mean that the sharing has to stop.

The partners are organizing a new webinar series of 60 minutes each to “deliver solution to key sustainability challenges”.  Senior event speakers from Europe and the USA will present at the upcoming sessions:

  • Investors Engagement: Measuring Your Social Impact
  • Traceability & Visibility: Successfully Map and Monitor Across the Tiers
  • Best Practice Sustainability Supplier Engagement
  • Climate Disclosures – Accurately Reporting Climate Impacts, Risks and Future Opportunities

G&A Institute regularly partners with Reuters / Ethical Corp and G&A’s VP Amy Gallagher is the point person who alerts our connections about upcoming Reuters / Ethical Corp conferences.  She’ll keep us posted on the webinar series – watch for our communications through the usual channels.

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Global Reporting Initiative – Staying Safe and Continuing on Course

Tim Mohin, Chief Executive of the GRI, updated the global community plugged into the standards organization with news from Amsterdam (HQs of the GRI):

  • Most employees have transitioned to remote work arrangements to continue the operations.
  • Virtual solutions are enabling stakeholder engagements through online platforms.
  • All air travel is restricted for the GRI workforce.
  • Employees are being updated and informed through messaging apps, video, collaboration tools.

The GRI organization’s three priorities: (1) the wellbeing of all employees worldwide; (2) continuing the work with partners; (3) meeting new challenges with resilience, dedication and hard work.

You should know: Timothy J. Mohin was senior director of CR for Advanced Micro Devices (AMD) and former chair of the Electronic Industry Citizenship Coalition (EICC) before joining GRI as chief executive.  He’s the author of the best-seller, “Changing Business from the Inside Out: A Treehugger’s Guide to Working in Corporations”.

Earlier in his career Tim was founder/leader of Apple’s Supplier Responsibility program, and also led Intel’s sustainability functions.

G&A Institute is Data Partner for the GRI in the United States of America, the United Kingdom and the Republic of Ireland (an EU state).   We value our long relationship with the GRI team and with Tim Mohin and our decade-long collaboration with GRI.

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The National Geographic Shoulders On – Facts and Science in the Forefront

The National Geographic Society has assembled the magazine’s COVID-19 “scientifically-accurate” information for subscribers (online). This includes text, graphics, photos, videos, “fake news” exposes, data sets, and much more.  Also, resources for families (“for facts geared toward kids and ideas on how to occupy their minds while they are out of school – at “Nat Geo Kids”).

All of this is in addition to the usual broad fare of science, geography and other content that the National Geographic offers.  The society’s national office in Washington D.C. is closed until at least March 31st

Says NatGeo:  “The work continues in these uncertain times.  It must.  Earth’s last wild places and millions of species are on the brink of being lost forever. If anything, this pandemic shows what happens when science and the experts are ignored.  We need solutions to the biggest challenges threatening our planet now more than ever. We can’t afford to pause our work, and we’ll do the best that we can to build a better future together while maintaining the health of all.”

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G&A Institute Team Note:
We will continue to bring you news of private (corporate and business), public and social sector developments as organizations in the three societal sectors adjust to the emergency.

The new items will be posted at the top of the blog post and the items today in this first blog post will move down the queue.

We are creating the tag “Corporate Purpose – Virus Crisis” for this continuing series – and the hashtag #WeRise2FightCOVID-19 for our Twitter posts.  Do join the conversation and contribute your views and news.

Send us news about your organization – info@ga-institute.com so we can share.   Stay safe – be well — keep in touch!

Excellence in Corporate Citizenship on Display in the Coronavirus Crisis

by Hank Boerner – Chair & Chief Strategist – G&A Institute and the G&A team   — starting a new conversation about the corporate and investor response the coronavirus crisis…this is the beginning….

These are the times when actions and reactions to crisis helps to define the character of the corporation and shape the public profiles of each of the corporate citizens. For companies, these are not easy times.

Many important decisions are to be made, many priorities set in an environment of unknown unknowns — and there are many stakeholders to be taken care of.  

Employees – Customers – Suppliers – Regulators – Partners – Investors – Lenders – Communities – Civic Leadership.

We are in the age of the stakeholder – beyond the long-time focus on investors only (the Milton Friedman school of shareholder primacy).

Setting the challenge before corporate leaders for us, The New York Times in a story by Jim Tankersley and Ben Casselman, we read:

“Economists fear that by the time the coronavirus pandemic subsides and economic activity resumes, entire industries could be wiped out, proprietors across the country could lose their businesses and millions of workers could find themselves jobless.”

As the Federal government rushes to aid the American society, CEO Chuck Robbins of Cisco put things in perspective in the story: “It’s critical that D.C. do something fast for companies – if you get 80 percent right today, it’s better than waiting a week and getting it 90% right.”

The good news:  Corporations are not waiting – decisions are being made quickly and action is being taken to protect the enterprise – no easy task while protecting the corporate brand, the reputation for being a good corporate citizen, watching out for the investor base and the employee base — and all stakeholders.

We’re starting this commentary in the first week of the crisis breaking through the barriers of doubt and with reality setting in. What are companies doing? How will the decisions made at the top in turn affect the company’s employees, customers, hometowns, suppliers, other stakeholders? Stay tuned.

* * * * * * * *

March 20, 2020 – Day Four of the National Shutdown in the Coronavirus Crisis…

Outdoor Heroes and Timberland

(The firm is well known for its shoes and boots and out-of-doors gear)

Message to Consumers
At Timberland, we’ve always cared deeply about nature and people.
With this great passion, comes the responsibility to protect the health and well-being of our community. For this reason, to help slow the spread of the COVID-19 coronavirus and minimize impact, we’ve decided to temporarily close our stores. All retail employees at these locations will continue to receive full pay and benefits during the closure period.

In the meantime, we can stay in touch through our social channels and your can shop from home at our online store with free shipping.
As an outdoor brand, it’s hard for us to suggest that you stay home, but for now it’s advised. Perhaps use this time to plan your next outdoor adventure. Nature will wait for us. #NATURENEEDSHEROES (end)

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Amazon – Hiring Underway in the Dark Valley of Layoff Land

The giant internet retailer Amazon is set on hiring 100,000 workers for warehouse and delivery services to help the company meet the delivery demand during the crisis period. This could be a relief for workers laid off in key industries – restaurants, hospitality, airlines, amusement parks, and other service industry categories.

The company will create both full and part-time positions, paying a minimum of $15 per hour to $17 per hour in the USA, with similar raises in Canada, the UK and EU states.

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Delivering All Those Packages – FedEx on the Line

FedEx says it will not require recipient to physically sign for deliveries during the crisis in the USA. The company has set up COVID-19 safety page for information: https://www.fedex.com/en-us/coronavirus.html

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Paying for Those Deliveries — Chase Bank for Business – Adjusting Branch Hours

Chase Bank notified customers today that branch hours may be adjusted (for in-person or ATM visits). The bank encourages customers to use the Chase Mobil App (bank from anywhere). The bank explains that the branch teams are using EPA-approved disinfectants for cleaning ATM screens and key pads for customer safety.

“Chase for Business” has a “Business recovery page” for the latest information. Chase is encouraging customers to tune in to the advice at: https://recovery.chase.com/customers  — to keep their contact information current and up to date.

* * * * * * * *

Valley Bank – Relief for Customers — From the Regional Bankcorp Serving New York, New Jersey, Florida and Alabama.

Announcing Relief Measures:

  • The bank will be increasing debit and credit card limits.
  • Increasing the funds held in ATMs for easy access to cash.

For eligible customers (consumer and business) – the invitation is out to connect with the Valley representative to discuss interest and principal deferrals; waiver of overdraft charges; waiver of penalties for early CD withdrawals for emergencies; increased loan limits.

Valley is an SBA lender and will implement the federal government’s emergency plans. Bancorp has total of US$37.5 assets.

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Grubhub – We’ll Save Restaurants $100 Million in the Crisis

CEO / Founder Matt Maloney told CNN that the firm is temporally suspending collection of up to US$100 million in commission fees for delivery etc that the firm collects from vendors.

Grubhub services more than 350,000 restaurants of all types, including McDonald’s, Wendy’s and Subway. But of the total, some 80% are locally-owned businesses.

The announcement was made in Chicago with Mayor Lori Lightfoot and local restaurant owners present and participating.

* * * * * * * *

Information That Board Members Need in the Crisis

The National Association of Corporate Directors (NACD) is the premier board member professional organizations; both individual and full board membership is offered, as well as membership for board advisors. This is an educational- and informational-focused peer organization for the board room.

For the crisis, NACD is offering limited access to “NACD Directors Daily”® -that is usually for members only; this also has links for board members to access key COVID-19 resources.
For information: Matt Barone, Director, Board Development – www.NACDonline.org

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What is Happening in the Distant Work Site? Verité is the Checker

Verité, the supply chain audit company, communicates that its team members are now working from home and that all offices are closed. The program and project work continues with remote connecting.

The work that usually involves group visits to factories, farms or other worksites is now suspended. Verité is collaborating with funders, partners, clients, other stakeholders to determine the way forward such as adjusting the programs to protect its team members.

The organization notes: This, as vulnerabilities of workers worldwide are increasing. The firm will be back in full swing as soon as “trusted authorities” say that it is OK.

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Burlington Retail Stores – Open But Watching Carefully

Burlington Stores, Inc. (NYSE:BURL) is a well-known retailer of off-price high-quality, branded apparel (and toys, gifts, home goods) with 700-plus stores across the United States (in 47 states and Puerto Rico).

The corporate offices are closed in New Jersey so employees could work at home, and stores’ hours are reduced with evaluation going on about the retail, local store operations.

Today, 100 stores have been closed. The Fortune 500® company “is carefully managing expenses, inventory receipts, capex and balance sheet.

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Update For Greater New York City – Business and Government Partnerships in the five boroughs (counties) of the city.

City Council Member Brad Lander (D-Brookyn) shared this news today:

Essential Businesses: Governor Andrew Cuomo has expanded on business closures. Restaurants, bars and cafes may only serve food take-out and delivery. Gyms, theaters and many other establishments have been ordered to close.

Gatherings of over 50 people are prohibited. (Later reduced further.)

Yesterday, Governor Cuomo ordered that all non-essential businesses reduce their workforce by 50%. He said that essential businesses would include health-care providers, grocery and food production, pharmacies, shipping, media, warehousing, utilities, banks and related financial institutions, and other industries critical to the supply chain.

Everyone is encouraged to work from home wherever possible.

Schools: NYC Schools (with one millions students, largest system in the USA) are closed this week as teachers prepare for distance learning. Grab-and-go meals are available for students between 7:30 and 1:30 am at any public school.

Next week, some schools will open as enrichment centers to provide childcare, food and support for children of essential workers and those who cannot stay home.

Some online learning resources are already available here. NYC is buying and giving out laptops for students who do not have access to technology at home (people can fill out the form to request tech).

Spectrum  is making internet access free for those who do not already have it for the next two months.

Spectrum is service of the franchise holder – Charter Communications, Inc. – the NYC service was formerly owned by Time Warner Cable. The company is offering free access to Spectrum Broadband and Wi-Fi for 60 days for new K-12 and college student households beginning March 16. Click here for more info. 

Hospital capacity: The City and State are taking action to find and create more hospital beds and supplies, as we look ahead to overwhelmed hospitals. They are considering turning spaces like the Javits Conference Center and private hotels into emergency hospitals. The shortage of beds and supplies means that we all need to do our part in preventing hospitals from being overwhelmed.

Paid Sick Leave: The New York State legislature passed legislation yesterday to provide emergency paid sick leave up to two weeks for employees who test positive for the virus or are told to quarantine.

While that is a good step, says Council Member Lander, the legislation leaves out hundreds of thousands of workers in NY who are independent contractors, including many mis-classified workers like food delivery workers and for hire drivers. “I am continuing to push for an expansion of paid sick leave to reach many more people, both now and in the long term”, he declared.

* * * * * * * *

G&A Institute Team Note 
We will continue to bring you news of private (corporate and business), public and social sector developments as organizations in the three societal sectors adjust to the emergency.

The new items will be posted at the top of the blog post and the items today in this first blog post will move down the queue.

We are creating the tag “Corporate Purpose – Virus Crisis” for this continuing series – and the hashtag #WeRise2FightCOVID-19 for our Twitter posts.  Do join the conversation and contribute your views and news. 

Send us news about your organization – info@ga-institute.com so we can share.   Stay safe – be well — keep in touch!

Have You Tuned in to The Green New Deal? The “GND”? — You’d Better!

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

Here we are at the start of year 2019 and the nation’s 116th U.S. Congress. Radical and exciting ideas with something for everyone from Wall Street to Main Street to the Corporate Suite and Board Room are now on the table for discussion as this new Congress gets settled in.  We are tuning in to this emerging movement…

Question for you: Have you tuned in to the “Green New Deal”? The “GND” is a concept advanced first by The Green Party in the 2016 election cycle; the concepts gained traction bit-by-bit over time and have been embraced by a fiery new member of the 116th Congress as a platform for re-doing our economic system, our political system, public policies of many kinds.  As well re-structuring our nation’s monetary policy (with creative new stimuli suggested for financing important infrastructure in place to meet climate change challenges) …and more. Much more.

The new champion advancing the GND today is Representative Alexandria Ocasio-Cortez, a first-term democratic socialist from New York City.

The proposals are dramatic, bold, sweeping — with something that some people can love and champion and other condemn and do battle against.

We should recall here for perspective that the original New Deal was ushered in by newly-elected President Franklin Delano Roosevelt upon taking office in March 1933…in the midst of the Great Depression.

Sweeping, radical ideas were then needed to literally save the U.S. economy and avoid slipping into some form of communism, fascism, or worse. The stakes were high.

At the time, the country’s economy – and people! – were being crushed by the negative forces of the Great Depression, which followed the disastrous crash of the stock market in October 1929.

Manufacturers’ lots were filled with unsold merchandise, or in many cases factories were being shuttered and workers laid off. There was a global trade war looming (with passage of the Smoot Hawley protective trade legislation). Fascism was on the rise in Europe. European countries were in an expensive arms race. Many countries were not able to pay their debts. U.S. banks were closing by the scores and then in the thousands in this country. There were few safety nets.

Said President FDR: “I pledge you, I pledge myself, to a new deal for the American people. The country needs, and, unless I mistake its temper, the country demands bold, persistent experimentation. It is common sense to take a method and try it. If it fails, admit it frankly and try another. But above all, try something.”

Scientists and experts tell us today that climate change challenges represent the kind of threat that the Great Depression did for our nation, and that time is running short for bold action. 

“Try Something” – and so today in part inspired by the historic (and sweeping, long-lasting) New Deal accomplishments, key elements of our population – Millennials, civic leaders, business leaders, elected members of the House and Senate, NGOs – have been advancing some bold ideas for our consideration. Meet the concept of the “Green New Deal”.

Origins: As explained, elements of the Green New Deal originally were developed by The Green Party of the United States as its 2016 election platform — there were four pillars with pages-upon-pages of detail to explain each:

  • The Economic Bill of Rights
  • A Green Transition
  • Real Financial Reform
  • A Functioning Democracy

You can read the details of the Party’s GND here: https://gpus.org/organizing-tools/the-green-new-deal/

Will There Be Action in the 116th Congress?

Newly-installed member of the House of Representative Alexandria Ocasio-Cortez has introduced an 11-page draft text resolution to form a new select committee in the House to rapidly develop a plan of action to finance and implement the GND.

Her draft bill calls for creation of a Green New Deal (“GND”) Select Committee to be composed of 15 House members appointed by the Speaker of the House with authority to develop a detailed national, industrial, economic mobilization plan, for the transition of the economy to GHG-neutral (drawing down GHGs from the atmosphere and oceans), and to promote economic and environmental justice and equality.

The committee would draw on the expertise of leaders in business, labor, state and local governments, tribal nations, academia, and broadly-represented civil society groups and communities.

The actions taken would be driven by the Federal government in collaboration and co-creation and partnerships with these and other stakeholders:  business, labor, state and local governments, tribal nations, research institutions, and civil society groups and communities, the plan to be executed (for the U.S. to become GHG-neutral) in not longer than 10 years from the start.

  • The final Plan would be ready by January 1, 2020. Draft legislation to enact the Plan would be completed by March 1, 2020.

The Plan for a Green New Deal would have the objective(s) of reaching these “bold” and we can say, “radical” outcomes:

  • Dramatic expansion of existing renewable energy power sources and new production capacity to meet 100 percent of national power demand through renewable sources.
  • Build a national, energy-efficient, smart grid.
  • Upgrade every residential and industrial building for state-of-the-art energy efficiency, comfort and safety.
  • Eliminate GHGs from manufacturing, agriculture and other industries (including investment in local-scale ag in communities across the U.S.).
  • Eliminate GHG emissions from transportation and other infrastructure; upgrade water infrastructure to ensure universal access to clean water (UN Sustainable Development Goal #6).
  • Fund massive investments in the drawdown of Greenhouse Gasses.
  • Make “green” technology, industry, expertise, products, services, a major export of the United States, to become the undisputed international leader in helping other countries transition to completely GHG-neutral economies, to bring about a global Green New Deal.

The draft envisions the Plan to be an historic opportunity to virtually eliminate poverty in the U.S., to make prosperity, wealth and economic security available to everyone participating in the transformation. This could be done through job guarantees to assure living wages to every person.

Among the benefits seen:

  • Diversify local and regional economies.
  • Require strong enforcement of labor, workplace safety and wage standards, including the right to organize.
  • Ensure a “just transition” for all workers.
  • End harm faced by “front line” communities posed by climate change, pollution and environmental harm.
  • Protect and enforce sovereign rights and land rights of tribal nations (there are more than 300 in the U.S.A.).
  • Mitigate deeply-entrenched racial, regional and gender-biased inequities income and wealth.
  • Assure basic income programs and universal healthcare.
  • Involve labor unions in leadership roles for job training / re-training and worker deployment.

How to finance all of this? The draft text calls for financing by the Federal government, using a combination of the resources and abilities of the  Federal Reserve System, a [possible] new public bank, or a system of regional and specialized public banks, public venture funds, and other vehicles or structures.

Interest and returns would then return to the U.S. Treasury to reduce the burden on taxpayers and allow for more investments.

Paying For the GND

In the bill’s draft, a Q&A section notes: Many will say, how can we pay for this?

To which the Representative and supporters say:  Let’s look at some of the ways that we paid for the 2008 bank bailout, aid to the auto industry, extended quantitative easing programs, the same ways we paid for World War II and many other wars. New public banks can be created to ensure credit and combination of various taxation tools, including taxes on carbon and other emissions, and progressive wealth taxes) can be employed.  (The immediate news media frenzy was not over the many elements of the proposed actions but on taxing the rich.)

You can read the entire draft text at: https://docs.google.com/document/d/1jxUzp9SZ6-VB-4wSm8sselVMsqWZrSrYpYC9slHKLzo/edit#

More than 40 members of the new Congress endorsed the move, including Senator Bernie Sanders, Senator Corey Booker, Senator Elizabeth Warren — and a few dozen fellow House members with more sure to join the movement.

Emergent: A Movement?

This is now being described by supporters as a movement that aims to enact no less than dramatic, sweeping economic and climate change policies in the 116th Congress — and to in the process “change politics in America.”

The Controversial Conversation about GND

On the CBS “60 Minutes” program segment that will air this coming Sunday (January 6th), the congresswoman argues that the Green New Deal agenda can be financed by imposing a 70 percent income tax on the wealthiest Americans. That would be “a fair share” in taxes to fund an extensive clean energy infrastructure.

Representative Oscasio-Cortez has described herself as a democrat socialist – in the models set by President Abraham Lincoln (citing the Emancipation Proclamation in the midst of a great civil war) and President Franklin Roosevelt (whose New Deal programs re-shaped the American economy and political system).

She has focused on economic, social and racial justice as key issues to be addressed by the Federal government in her campaigning (she upset a long-standing Democrat House member (4th ranking Dem and Caucus Chair Joseph Crowley) in New York State in the November 2018 election. The Green New Deal would help in those efforts, while stimulating economic growth.

Ocasio-Cortez’s campaign platform included tuition-free education, universal health care and the Green New Deal developed by the Green Party as its platform.

During the 2018 campaign, she spent less than $200,000, compared to her opponent’s purse of more than $3 million.

Media Reactions

The right wing publication Washington Examiner warned that the Green New Deal would add trillions of dollars in debt and would represent “the most radical policy shift in modern U.S. history”. (We would ask: what about success of the New Deal of the 1930s  – was it worth the money invested by government?)

Fox News tells viewers that the GND legislation “would eliminate much of the U.S. fossil fuel consumption, dramatically increase America’s already skyrocketing debt, and transform the U.S. into a European-style socialist nation.”

Unfortunately, mainstream media such as CNN and daily newspapers (like the New York News full page headline) have been focusing on the drama of the proposed “tax on the rich” aspects of the concept and not the meat of the sweeping proposals, which American voters and business leaders might see as immediate and long-term opportunities for creating new wealth and a greatly-enhanced economy with many beneficiaries.

Important addition to the above:  On January 9, 2019, influential author and New York Times columnist Thomas Friedman weighed in.  He called to readers’ attention “A Green New Deal Revisited!” – his column today about the ideas he floated back in 2007 (that prescient commentary was about a Green New Deal), and expanded on in his best-seller, “Hot, Flat and Crowded”.

In that book (published in 2008 by Farrar, Straus and Giroux) has numerous comments on GHGs, energy, energy efficiency, environmental technology, environmentalism, green collar jobs, green hawks, the green revolution, and the Civil Rights movement and WW II analogies to the emerging green revolution.

Friedman today likes the urgency and energy [the representative] and groups like the Sunrise Movement are bringing to this task. He says:  So for now I say:  Let a hundred Green New Deal ideas bloom!  Let’s see what sticks and what falls by the wayside. 

He wrote today in the column:  Who believes that America can remain a great country and not lead the next great global industry?  Not me.  A New Green New Deal, in other words, is a strategy for American national security, national resilience, national security and economic leadership in the 21st Century.  Surely some conservatives can support that. 

Money, Money, Money!

The projected additions to national debt are of course especially in focus for those in opposition to the plan.

In the discussions we should keep in mind that the “tax reform” package passed by the 115th Congress added almost $2 trillion in national debt, with benefits for a narrower band of constituents; the non-partisan Congressional Budget Office (CBO) projected additional debt (from 2018 to 2028) with not too much criticism occurred short-term. (The commentary about the country’s staggering debt has been increasing lately.) The Republicans in Congress have talked about a second round of tax cuts (“tax reform 2.0”), which would add another $3 trillion to the Federal deficit (to be financed by still more debt).

The Social Media Universe Lights Up

In a Twitter post in December, as the social media universe lit up with mentions of the GND, Congresswoman Alexandria Ocasio-Cortez had tweeted: “…and we have #GreenNewDeal lift-off! Never underestimate the power of public imagination.”

While the first action taken by the new member of Congress called for establishing a committee, she writes on Twitter: “Our ultimate end goal is not a Select Committee. Our goal is to treat Climate Change like the serious, existential threat it is by drafting an ambitious solution on the sale necessary – a/k/a Green New Deal – to get it done.”

Note that the Congresswoman has about 2 million Twitter followers.

There’s a very well done commentary on the Green New Deal concepts for you on Vox: https://www.vox.com/energy-and-environment/2018/12/21/18144138/green-new-deal-alexandria-ocasio-cortez

And the Sunrise Movement has information focused on the political side as the public policy debate continues in the new House: https://www.sunrisemovement.org/gnd/

Putting Things in Perspective

We do live in the age of greater prosperity, compared as to the time when President Franklin D. Roosevelt took the reins of the nation at a very dark moment in our history.

Climate change challenges pose threats to the future of this nation, many experts posit, including many elements of the United States government itself.

Then, in the 1930s, one-in-four-households was unemployed. States and many cities were running out of relief money. Farmers were being foreclosed because of crop failures, lack of foreign markets, the failure of the bigger banks they borrowed from, and poor land management (recall the “dust bowl” crisis in the west). In America, fear was rampant – with men and women wondering where was the next meal or dollar coming from.

The New Deal title was inspired in part by a book of the same name by prominent liberal author / economist Stuart Chase, published in August 1932 (the presidential election was that November). At the conclusion of his screed he observed (about the radical recommendations he put on the table for discussion): “We do not have to suppose; we know that these speculations will be met with a superior smile of incredulity. The funny thing about it is that the groups are actually beginning to form. As yet they are scattered and amorphous; here a body of engineers, there a body of economic planners. Watch them. They will bear watching. If an occasion arises, join them. They are part of what [author] H.G. Wells has called the Open Conspiracy.”

The groups he referred to some eight decades ago were the American voters, small business owners, Big Business leaders, investment bankers, trade associations, chambers of commerce, government leaders, labor unions, farmers, and academics.

These are the stakeholders clearly identified and explained in the 2019 House draft text that may or may not gain traction in the House of Representatives and for sure not in the U.S. Senate, even among rank & file Democrats who should be in favor of many of the elements of the proposal as stated so far.

Some of the 1930s ideas of Stuart Chase (far left wing and radical they were at the time!) very quickly ended up as necessary public policy adopted to bring the nation out of the scary depths of the Great Depression by a new head of state (FDR) and his assembled Brains Trust.

The Green New Deal is a blossoming idea – yes, radical, of course! – that will be both loved and hated, criticized and championed by various segments of society.

Something For Everyone!

But there is something for everyone in the package and the Plan that could emerge if the Select Committee is formed and elements of the plan get implemented, as promised with the key elements of the American Society  participating.  The actions of the public and private sectors could be as breathtaking in the sweep of what is to be accomplished as were the achievements of the 1930s New Deal.

Those actions helped to create the most powerful economy and democratic political structure the world has ever experienced.  The laws, regulations, rules, policies and actions shaped the modern U.S. and global economies that have delivered benefits to many of us.

The Intergovernmental Panel on Climate Change (IPCC) cautioned us just a few weeks back that we had about 10 years to reverse course and accelerate measures to address the challenges of climate change. The supporters of the GND movement cite this clear warning as part of the rationale for radical and dramatic thinking, commitment and action over the next decade.

The Fourth National Climate Assessment was released by the Federal government shortly after that, and echoed the rising threats to our economy, businesses, the public sector, and the American nation’s well-being due to the dramatically rising threats inherent in climate change.

For more details on this, see our comments in our November 30 To the Point management brief at: https://ga-institute.com/to-the-point/tune-in-to-this-important-report-the-fourth-official-climate-science-special-report-issued-by-the-u-s-governments-global-change-research-program/

Possible GND Impact on Politics

Some presidential hopefuls have recently been saying that climate change will be among the top — if not the top — issues in 2020 races.

Billionaire Congressman Tom Steyer (California) said that climate change could help Democrats sweep into office in 2020. He told USA Today in December: “When we talk about what’s at stake here, we’re talking about unimaginable suffering by the American people unless we solve the problem over the next 12 years. And I think we are very far from doing that. And it is unclear to me that we can summon that will without having substantial political victories across the board.”

Re-elected House Speaker Nancy Pelosi has said that climate change will become a front-and-center issue if the Democrats take back the house. She told The New York Times in October days before the elections that she would resurrect the defunct Select Committee on Climate Change if the party wins back the House. (The Republican leaders killed the committee in 2011 when they took mid-term power.)

Representative Alexandria Ocasio-Cortez has taken Speaker Pelosi at her word and put the meat on the table with her draft bill.  (During the orientation of the new members, Ocasio-Cortez led a protest outside the Speaker’s office to draw attention to climate change.)

Ocasio-Cortez in the youngest member of the House, from New York’s 14th District in New York City, upsetting a leading Democratic member in the primary. She is a member of the Democratic Socialists of America and was an educator and community organizer in the [NYC] boro/county of The Bronx before running for office.

Background:  She was a winner of an Intel International Science and Engineering Fair in high school; was graduated from Boston University (cum laude); served as an intern in the office of Senator Edward Kennedy; was an organizer in Senator Bernie Sanders’ presidential campaign; was endorsed by Move On, Black Lives Matter, Democracy for America, and others. Including NY Governor Andrew Cuomo, Senators Chuck Schumer and Kirsten Gillibrand, and NYC Mayor Bill deBlasio.

And so against this background — we’ll see where the GND movement goes from here!

Do tune in and learn more about the critical elements of the plan being championed now in the Halls of Congress as the tempo of the conversation increases.  The “60 Minutes” program on the CBS network tomorrow night is sure to create a national buzz, pro and con, and ensure Representative Alexandria Oscasio-Cortez greater notoriety (and both support and condemnation) in the days ahead.

Created January 5, 2019 – updated January 9, 2019

We Are “Out” of the Paris Accord — Really? What a Year! Signs of Great Progress in the Trump Denial Era

June 1, 2018

By Hank Boerner – Chair and Chief Strategist, G&A Institute

It was just one year ago – ah,, but it seems much longer…

WASHINGTON — The New York Times – June 1, 2017: “President Trump announced on Thursday that the United States would withdraw from the Paris climate accord, weakening efforts to combat global warming and embracing isolationist voices in his White House who argued that the agreement was a pernicious threat to the economy and American sovereignty.

In a speech from the Rose Garden, Mr. Trump said the landmark 2015 pact imposed wildly unfair environmental standards on American businesses and workers. He vowed to stand with the people of the United States against what he called a “draconian” international deal.

“I was elected to represent the citizens of Pittsburgh, not Paris,” the president said, drawing support from members of his Republican Party but widespread condemnation from political leaders, business executives and environmentalists around the globe.”

What was to follow?

A Year of Significant Progress!

Today — interesting perspectives are shared in The Washington Post on where we are one year after President Donald Trump “withdrew” from the Paris Climate Accord. The United States of America is the first – and perhaps will be the only – nation to join and then withdraw the Agreement. Sort of.

Participation in the agreement for the USA runs to year 2020 so we are “still in” (officially).  The withdrawal process will take the next three years.

By that time, there might be a new occupant in the White House. 

This nation is still in by examination of various other factors that are explained by writer Chris Mooney in the WaPo. (He covers climate change, energy and the environment, reported from the Paris negotiations in 2015, and has published four books on the the subjects he covers.)

The key points we took away from Mooney’s excellent wrap up today:

  • The Trump Administration still has no consistent message about climate change,  and no clear policy, except for the antics of EPA Administrator Scott Pruitt, with his slash & burn attacks on environmental and climate-related regulations.
  • There is a positive development: NASA Administrator Jim Bridenstine embraced climate science.  (See notes at end.)
  • There has been unrelenting attack on President Barack Obama’s skilled moves to protect the country – and the planet! – such as the Clean Power Plan.
  • But, while the White House is the cheerleader for the coal industry, market forces reward renewable energy and natural gas as powerful drivers for change.
  • Other countries are sticking with the Paris Accord, but some of those countries may find it challenging to stay the course without U.S. leadership (says John Sterman of MIT).

BackgroundThe Obama Administration agreed in Paris with many other nations to the goals of a 26%-to-28% reduction of emissions below the 2005 levels — and today the U.S. and the whole world is off that metric, writes Chris Mooney.

Even if the commitments were realized, there would be a temperature rise of 3.3 degrees Celsius (almost 6% F) over time (according to MIT’s Sterman). So the USA would have to do even more than agreed-to in Paris. (The USA is the world’s second largest GhG emitter.)

Where are we? According to the Climate Action Tracker produced by NewClimate Institute and Ecofys, the USA is on track for an 11% to 13% decrease by year 2025, which is about halfway to the Obama Administration pledge.

What may interfere: the move to rollback auto fuel efficiency standards; an analysis by Rhodium Group projects adding 100 million tons (annually) by year 2035 for auto emissions alone if the rollbacks move forward.

The good news – from the “We Are Still In” front: the states of Virginia and New Jersey are making moves to cut emissions and the states of Colorado and California are developing new electric vehicle policies.

Vicky Arroyo (director of the Georgetown Climate Center is quoted:   At least we are not losing the momentum that was feared (one year ago today).

Kate Larsen, who directs climate change research at the Rhodium Group, thinks that the country is on track to meet or even exceed the Obama-era Clean Power Plan goals — thanks to the use of lower-cost renewable fuel sources and natural gas.

Greenhouse Gas Emissions in the United States are “hardly set to explode” and the country is moving toward lower GhG emissions over time, writes Mooney.

But. What the Trump announcement did last year on June 1 was to create fog about US national policy regarding climate change. The thing we all have to face: the slow progress exhibited and achieving climate change goals (those coming out of Paris) are not compatible.

The WaPo commentary is at: https://www.washingtonpost.com/news/energy-environment/wp/2018/06/01/trump-withdrew-from-the-paris-climate-plan-a-year-ago-heres-what-has-changed/?utm_term=.782d3cb38b3f&wpisrc=nl_most&wpmm=1

Counterpoint!

The EDF – a/k/a Environmental Defense Fund – today trumpeted the Year of Climate Progress (since June 1 2018).

EDF members and environmentalists immediately began the counter-attack in June 2017 and in EDF’s words, that led to a year of extraordinary climate progress. The organization presents a timeline on line.  Highlights:

  • June 5, 2018 – EDF helps launch a coalition of organizations, businesses and state and local civic and political leaders to pledge “We Are Still In!” – today there are 2,700 leaders participating.
  • On to July 2017 – California Governor Jerry Brown signs into law an extension of the state’s cap-and-trade program out to 2030.  The state is the sixth largest economy in all of the world!
  • September – North of the border, Ontario Province links its cap-and-trade program to the California-Quebec carbon market, creating a huge market covering 580 million tons of emissions. Sister province British Columbia intends to increase its carbon tax for April 2018 through 2021.
  • Nine Northeastern US States in the Regional Greenhouse Gas Initiative complete their second program review and agree to reduce emissions by 30% from 2020 to 2030.
  • Halfway around the world in December 2017 China announced its national carbon market (to be largest in the world); this will start with electric power and expand to seven other industrial sectors. (So much for the Trumpian claim China is doing nothing to meet Paris Accord conditions.)
  • We move further into 2018 and the Federal Energy Regulatory Commission (FERC) rejects the DOE coal and nuclear proposal.
  • Despite shouts and threats and Trumpian boasting, the U.S. Congress adopts the 2018 budget in March 2018 that leaves the EPA budget mostly intact (EPA Administrator Scott Pruitt wanted to cut the agency’s budget by 30%. Other environmental / energy agencies see budget increases.)
  • April – the UN’s International Maritime Organization adopts a climate plan to lower emissions from container ships, bulk and oil carriers, by at least 50% below 2008 levels by 2050.
  • Also in April — In the key industrial State of Ohio, the Public Utilities Commission approves AEP’s Electric Security Plan – this, EDF points out, will enhance and diversify the state economy, unlock millions in funding, provide customers with clean energy options and overall, will reduce pollution.
  • Next door, in April, the Illinois Commerce Commission approves the state’s Long-Term Renewable Resources Procurement Plan to have a pathway for electric utilities to produce 25% of power from renewable sources by 2025 and put incentives in play for development of wind and power.
  • April — EDF President Fred Krupp gives a TED Talk, outlining the plan to launch methane-detecting satellites in orbit above Earth to map and measure oil and gas methane emissions. The data and information gathered will help countries and companies spot problems, identify savings opportunities and measure progress.
  • April sure was a busy month – Canada issued policies to cut oil and gas emissions by 40% to 45% at new and existing facilities. This was part of a pledge made in 2016 (when President Obama was in office) for the USA, Canada and Mexico to decreased such emissions in North America by that amount by 2025.
  • On to May – and recently-elected New Jersey Governor Phil Murphy – a former Goldman Sachs exec – signed into law the plan to cut GhG emissions by almost half by 2030 (hey, that’s twice what the Clean Power Plan would have required!). The Garden State will require 50% of NJ electric needs to be met from renewable sources.
  • And on to May – ExxonMobil announced plans to reduce oil and gas methane emissions by 15% and flared gas volume by 25% — worldwide – by 2020.

Yes – a remarkable year, kicked off on June 1st 2017 by a vindictive head of state set on reversing the significant progress made under his predecessors.

But many individuals, companies, investors, civic organizations, NGOs proclaimed: We are still in.  The movement represents city halls, board room, college campuses, investors, and more…interests representing US$6.2 trillion (one-sixth of the entire American economy) have signed on to the We Are Still In declaration — https://www.wearestillin.com/we-are-still-declaration

Have you?

Notes:

The New York Times story by Michael Shear, June 1 2017 is at: https://www.nytimes.com/2017/06/01/climate/trump-paris-climate-agreement.html

The American Institute of Physics info on NASA, embrace of climate change consensus: https://www.aip.org/fyi/2018/bridenstine-embraces-nasa-science-climate-change-consensus

We Are Still In information at: https://www.wearestillin.com/

Conversation with Professor Baruch Lev at NYU: Is Accounting Outmoded?

The book: The End of Accounting.

July 17, 2017

by Hank Boerner – Chairman and Chief Strategist – G&A Institute

Questions:  Is Accounting as we know it now outmoded … beyond Its usefulness to investors? We share with you today the views of a global thought leader on Accounting and Corporate Reporting — Dr. Baruch Lev of Stern School of Business at New York University.

Professor Lev’s shares his views of the vital importance of intangibles to investors, with his call for far greater corporate transparency being needed … including his views on the importance of CSR and sustainability.

His latest work:  The End of Accounting – and the Path Forward for Investors and Managers — authored by Dr. Baruch Lev and Dr. Feng Gu of the University of Buffalo/ SUNY.  The professors’  important new work is the result of three years of research and collaboration, In the book they that suggests new approaches are needed to reform “old” accounting practices to provide more information of value to investors, who are mostly ignoring corporate accounting.

And as read the book, we were thinking:  what about ESG – CSR – Sustainability – and other new approaches that do focus on many intangible aspects of corporate operations?  We had a conversation with Dr. Lev and share his views on this and more with you today.

After reading the book, readers may ask:  Is this about the “The End of Accounting?” Or, “The Beginning of Really Useful Financial Information for Investors?”  My view:  It’s both!

And we discuss needed reforms in corporate reporting, for you to think about:  Are U.S. public companies prepared to publish the authors’ recommendations for a Resources and Consequences Report for investors’ benefit?  Read on to learn more…

And for sustainability / CSR professionals: This is an important new work for your consideration that focuses on the importance of intangible information for investors to help guide their decision-making.

First, some background:

Accounting as we know it has been around for 500+ years. Fra Luca Bartolomeo de Pacioli, the Italian mathematician (c 1447-1517) set out the principles of the double-entry bookkeeping system for the merchants of Old Venice in his 1494 work, Summa de Arithmetica, Geometria, Proportioni et Proportionalita, a very important textbook of the day.

This “Father of Accounting” put forth the important concepts of ledgers, journals, credits and debits (and the balancing of same); A/R, A/P, Cost Accounting and much more. His is a rich legacy in the accounting and business worlds. **

But now, Professor Baruch Lev posits in his work with colleague Professor Feng Gu, we really need to reform this five-century-old approach to how we account for the financials and think and act way beyond the traditional.

Their Recommendations:

Let’s begin with the corporate “intangibles” – some investment professionals still speak of a company’s ESG / Sustainability / Responsibility strategies, programs and actions, achievements, and the burgeoning reportage of same (data & narrative) as addressing the intangibles (and not “the tangibles,” represented by the financial data).

But many analysts and asset managers look far beyond the financials to help determine the valuation of a public issuer. For example, veteran financial analyst Stephen McClellan, CFA, formerly VP and head of research for Merrill Lynch and author of the best seller, “Full of Bull,” has told conference audiences that as much as 80% of a corporate valuation may be based on the intangibles.

Writing for investors, Professors Lev and Gu put forth their suggestions for dramatic accounting and corporate reporting reform. They “establish empirically” in their work that traditional corporate accounting is failing investors and reforms are needed.

Their recommendation: have companies publish a “Resources and Consequences Report” with five main elements:

  • Development of [Corporate] Resources;
  • Resource Stocks;
  • Preservation of Resources;
  • Deployment of Resources;
  • Value Created.

Some of the information could be financial, as in today’s disclosures. But other information could quantify data, and there could be qualitative information as well. (Sounds like we are looking at some of the sustainability reports of corporate sustainability leaders?)

The elements of the report the good professors recommend:

Development of Resources: Detailed descriptions for investors of the company’s important internal research efforts, the R&D advances, the further development of present technologies to leverage to create value, etc. After “proof of concept,” how does the R&D contribute to the value of the company?

Resource Stocks: The company’s intellectual properties, the assets that are the foundation of investor value. (Patents, trademarks, processes, etc. — all “intangibles” that are in fact very tangible to investors.)

Preservation of Resources: The safety/security of such things as a company’s digital assets, IT, IP, and so on; are there cyber attacks? Was there damage – to what extent? What does the company do about these attacks? How does the company manage and secure its acquired knowledge?

Deployment of Resources: As the company creates “value,” how are the strategic resources deployed? How does the company use its intellectual assets?

Value Created: Here the professors would like to see reported the dollar results of all of the above. Companies would describe the changes in Resource value(s), and describe the nature of value (for a company with a subscription model, what is the value of the individual subscription; what is the value of a brand, etc.)

Notes Dr. Lev: “We suggest and demonstrate a new measure: adjusted cash flows.”

Highlights of our conversation:

G&A Institute: Your new book offers very powerful arguments for fundamentally changing present-day corporate accounting and the way that investors do or do not pay attention to that accounting in their analysis and portfolio decision-making. There are a lot of vested interests in the present system; can the accounting and corporate disclosure and reporting systems be changed to reflect your recommendations?

Dr. Lev: Things change very slowly in accounting policies and practices. The systems is changing, in that public company managements are disclosing a considerable amount of information that is beyond that required for SEC filings, in the areas that we touch on in examples in our book. So there is progress. But not fast enough, I believe, to really serve investors.

G&A Institute: The SEC months ago published a Concept Release requesting public input on the present methods of corporate disclosure. We were encouraged to see more than a dozen pages in the document devoted the question of ESG metrics, sustainability information, and the like. Your thoughts on this?

Dr. Lev: We have not seen any further communication on this and there are no rules proposed. Will the new administration take any of this seriously?

Observes Dr. Lev: There are now many corporate financial statements that virtually no one understands. There is great complexity in today’s accounting. When we look at the US Environmental Protection Agency and environmental rules, we see that once rules are in place, they are constantly debated in the public arena. Unlike the EPA situation, there is presently no public interest in debating our accounting rules.

G&A Institute: Well, let me introduce here the subject of the SASB approach — the Sustainable Accounting Standards Board (SASB). Of course, the adoption of the SASB approach by a public company for adopting to their mandated reporting is voluntary at this time. What are your thoughts on this approach to this type of intangibles disclosure?

Dr. Lev: Well, the SASB recommendations are built on top of the present approach to accounting and reporting. In effect they leave the financial reporting system “as is,” with their rules built on top of a weak foundation as we outline in the book. I’ve said this at the SASB annual conference and my comments were very well received.

I did point out that the SASB approach is quite useful for investors. But the demand for voluntary disclosure by companies could create an invitation for lawsuits all over the world, if certain disclosures were made regarding a company’s environmental impacts.

G&A Institute: Well, aren’t investors seeking information such as environmental performance, as well as related risk, opportunity, more of the “E” of ESG strategies, performance, and metrics?

Dr. Lev: It depends on the setting. Our book was in process over a three-year period. My co-author and I devoted an entire year to analyzing hundreds of quarterly analyst (earnings) calls. Keep in mind that an analyst may have just one opportunity to ask the question. There were no — no — questions ever raised about ESG performance, corporate sustainability, and related topics. We reviewed, as I said, hundreds of earnings calls, with about 25-to-30 questions on each call.

G&A Institute: What kinds of questions may be directed to corporate managers on the calls about intangible items?

Dr. Lev: There were questions about the R&D efforts, the pipeline for example for pharma companies. Customer franchise was an important topic. Changes in U.S. patent law resulted in much more information being disclosed by the U.SPatent Office related to the filings. The entire argument made for patent filing, for example, and this is a subject the analysts are interested in.

G&A Institute: Are there any discussions, analyst and corporate, about ESG/sustainability?

Dr. Lev: Yes, these questions are mostly in the one-to-one conversations. A challenge is that in my opinion, the ESG metrics available are not yet at investment-grade. There is a good bit of investor interest and discussion with companies about sustainability. The factors are quite relevant to investors. But the “how-wonderful-we-are” communications by large public companies are not really relevant to investors.

G&A Institute: What kinds of information about the CSR or environmental sustainability intangibles, in your opinion, is of importance to investors?

Dr. Lev: Think about the special capabilities of the public corporation. The organization typically has special capacity to do good. Not just to donate money, which is something the shareholders could do without the company. But to share with the stakeholder, like a community organization, the special know how and other resources to make good things happen. The world really expects this now of companies. Call it Corporate Social Responsibility if you like.

The Cisco Example

Explains Dr. Lev:  Cisco is a fine example of this. The Company has a Networking Academy, and they invite people to enroll and take free educational courses to learn more about networking. There have been millions of people graduating from this academy and receiving certificates. Cisco management leverages its special capacity in doing this. And it is a good idea if you think about the impact of this far-sighted approach to generate more interest in and business with Cisco.

The Home Depot Example

Another example he offers is Home Depot. The company teams with an NGO – Kaboom — to build playgrounds for children. In terms of special capacity, HD does provide materials, but also provides company legal talent to help situate the playgrounds in the neighborhood. That is far more than throwing money at a community need.

Dr. Lev Observes:  I think one of the issues is that the terminology is not clear. CSR — what is it? Good or bad for investors? Having good ideas and special capabilities is key, I think.

We asked about Dr. Milton Friedman’s Views on CSR

G&A Institute: This brings us to one of your former colleagues, Dr. Milton Friedman of the University of Chicago, who famously wrote in a New York Times magazine article that CSR is, in effect, hokum, and not the business of the company. Shareholders well being should be the main focus, and through dividends and other means, if a shareholder wants to give the money away, they can do that…not the company.

Dr. Lev: I was a student of Dr. Friedman and later a colleague at the University of Chicago after I got a Ph.D. He was a brilliant man. In my opinion, he was the greatest economist of the 20th Century and I put him on a pedestal. He liked to introduce a subject and then generate great debate on his suggestions, which he felt people could accept or reject. That, I think, is the case with his famous commentary on CSR. See, we are still debating his views today. He was proved right so many times during his time.

G&A Institute: Let’s conclude this talk with a question: Do you see a value for investors in accepting, or better understanding, such terminology as CSR and sustainability and sustainable investing?

Dr. Lev: Yes, these are important approaches for companies and investors. Four years ago I devoted a chapter to CSR in my book, “Winning Investors Over.” My views are fully set forth in the recent article, “Evaluating Sustainable Competitive Advantage,” published in the Spring 2017 issue of Journal of Applied Corporate Finance.

Notes Dr. Lev:  About “CSR” — there are other terms used, of course. Varying titles are very confusing. It is not always clear what CSR or sustainability may mean. For example, the Toyota Prius is a good approach to auto use. Is manufacturing that car “good CSR,” or just good business? A measure of sustainability? CSR is hard to define, sometimes. Good corporate citizenship is good for business and good for society, I believe.

G&A Institute: Thank, you Dr. Lev, for sharing your thoughts on accounting and the reforms needed, in your book and in this conversation.

# # #

Footnotes:

The book:: The End of Accounting – and the Path Forward for Investors and Managers … by Dr,Baruch Lev (Philip Bardes Professor of Accounting and Finance at the NYU Stern School of Business and Dr. Feng Gu (Associate Professor and Chair of the Department of Accounting and Law at the University of Buffalo).

Published by Wiley & Sons, NY NY. You can find it on Amazon in print and Kindle formats.

# # #

Dr. Baruch Lev is the Philip Bardes Professor of Accounting and Finance at New York University Leonard Stern School of Business; he teaches courses in accounting, financial analysis and investor relations. He’s been with NYU for almost 20 years.

Dr. Lev is author of six books; his research areas of interest are corporate governance, earnings management; financial accounting; financial statement analysis; intangible assets and intellectual capital; capital markets; and, mergers & acquisitions.

He has taught at University of Chicago; the Hebrew University of Jerusalem; Tel Aviv University (dean of the business school); University of California-Berkeley (business and law schools). He received his Bachelor of Accounting at Hebrew University; his MBA and doctorate (Accounting/Finance) are from the University of Chicago, where he was also a professor and (student of) and then academic colleague of Nobel Laureate (Economic Sciences-1976) Dr. Milton Friedman (1912-2006).

# # #

Dr. Milton Friedman’s article — “The Social Responsibility of Business is to Increase its Profits”; published in The New York Times Magazine, issue of September 13, 1970. The commentary for your reading is here: http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html

# # #

** Thanks to the “International Accounting Day” account of Luca Pacioli’s life, his work and his legacy. There is information available at: http://accountants-day.info/index.php/international-accounting-day-previous/77-luca-pacioli

U.S. / Global Cities Showing the Way on Climate Change Solutions

Sustainability — Forward Momentum!

By Hank Boerner – Chairman & Chief Strategist – G&A Institute

U.S. / Global Cities Are Showing the Way on Climate Change Solutions — consider:  more than half of the world’s population (now at 7 billion) now live in cities. Many cities are vulnerable to the effects of climate change — rising seas; drought; severe storms; heat waves; winter blizzards…vicious storms of all types…and more.

City Fathers and Mothers are awake to the threats — and doing something about climate change!

While at the Federal level the public sector of the United States of America has abandoned the field to other nations to now lead on addressing climate change challenges, at the city/municipality level, there is a lot going on that is positive and encouraging.

Here’s a brief collection of recent events that spell out o-p-p-o-r-t-u-n-i-t-y at the domestic and global urban level.

The U.S. Conference of Mayors
At the recent U.S. Conference of Mayors meeting in Miami Beach (the 85th annual for the association), climate change issues were high on the agenda. Of course — many U.S. cities are at water level, on oceans-rivers-bays. New York; Miami; Baltimore; Philadelphia: Boston; San Francisco; Chicago; Cleveland; New Orleans; St Louis — need we go on?

At the annual conference there were plenaries, workshops, committee meetings, task force meetings, and more. The headlines coming out of the Conference of Mayors:

A survey of the members found many U.S. mayors are taking action on climate protection and planning even more steps in the future.

City governments are focusing on:

  • Purchase of renewable energy electricity (69% of respondents already generate or purchase and 22% are considering doing so);
  • utilization of low-carbon transport (63% buy green vehicles for municipal fleets; 30% are considering; this includes hybrids, electric, natural gas, biodiesel);
  • striving for greater energy efficiency, especially for new municipal buildings 71%; 65% for existing buildings — this includes new policies put in place;
  • the association has teamed with the Center for Climate and Energy Solutions (C2ES)**, to promote renew these programmatic approaches; this creates a framework for mayor and business leaders to collaborate to develop approaches to reduce carbon emissions, speed deployment of new technology, implement sustainable development strategies, and respond to the growing impacts of climate change.

Survey respondents were from 66 cities with populations ranging from 8.5 million to 21,000 across 30 of the U.S. states. These cities invest more than US$1.2 billion annually in electricity — a significant buying power to help create the changes needed in the municipal electricity market.

Collaboration — the survey demonstrated that cities are working with each other (90%) and with the private sector (87%) to accelerate action on climate change issues. This is important when considering the recent White House abandonment of the Paris Agreement.

Opportunity Spelled Out:

  • Half of responding cities are incentivizing energy efficiency in both new and existing commercial and residential buildings. There is significant room for growth here. And lots of opportunity for public-private sector collaboration.
  • Less than half of the cities have policies / programs to help businesses and their citizens choose renewable energy — more room for growth and opportunities for partnering.
  • 66% of the cities responding have put in place public charging stations; 36% are in the process of doing so with private sector partners (for electric vehicle charging).

Says Conference of Mayors CEO Tom Cochran: “The nation’s mayors are poised to take an even greater leadership role in fighting climate change and protecting cities from its negative impacts. Working together with the business community, we can achieve deeper results more quickly and broadly.”

While much progress is being made, the mayors collectively are striving to do more.

Notes Santa Fe Mayor Javier Gonzales, Alliance Co-Chair : “We need to create a baseline so we can measure our ongoing progress. Sustainability is a smart strategy for the future, and cities and companies need to learn from one another.”

One of the positive actions taken at the conference was adoption of a resolution — “Supporting a Cities-Driven Plan to Reverse Climate Change” — which notes that cities comprise 91% of the U.S. GDP, placing mayors at the center of marrying environmental protection with economic growth; and, it calls on the Trump Administration and the U.S. Congress to support the fight against climate change by fully committing to the Paris Climate Accord; the Obama Clean Power Plan; the Clean Energy Incentive Program; and other efforts to provide U.S. cities with the tools needed to combat climate change. (You can read the full text at: http://legacy.usmayors.org/resolutions/85th_Conference/proposedcommittee.asp?committee=Environment

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There’s much more encouraging news from the municipal government level.

The Compact of Mayors (“C40”) is the world’s largest cooperative effort among mayors and city leadership working together to reduce GhG emissions and address climate risk in the world’s cities. The effort was launched by the United Nations General Secretary in June 2016. And in the year since:

652 cities have joined the effort;
— representing almost 500 million people residing in the urban centers;
— which is about 7% of the global population today.

Former New York City Mayor Michael Bloomberg (now returned to chair the eponymous Bloomberg LP organization after 12 years in office) is serving as the United Nations Secretary-General’s Special Envoy for Cities and Climate Change, and spearheads the Compact of Mayors initiative.

Ambitious plans: commitments to the Compact of Mayors are set to deliver half of the global urban potential GhG emissions reductions by 2020. But, there is still much more to do, the Compact notes, on the part of the nations in which the cities are located. (Like the USA!).

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And…CDP’s Cities Initiative reports that more than 500 cities are now disclosing their initiatives related to climate change. More than US$26 billion in climate-related projects are underway or targeted.

CDP is providing a global platform for cities to measure, manage and disclose their environmental data on an annual basis. This is intended to help local governments manage emissions, build greater resilience and protect against the growing impacts of climate change. So far, cities are disclosing almost 5,000 climate actions.

And be sure to note this: there has been a 70% increase in cities’ sustainability-related disclosure since the Paris Agreement was adopted; 1,000-plus economic opportunities have been identified by almost 400 cities; and, 56% of cities identified opportunities to develop new businesses or industries linked to climate change.

More information for you at: https://www.cdp.net/en/cities

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Then there is “America’s Pledge” — an effort involving 227 cities and counties, 9 states and 1,650 businesses and investors that have pledged to uphold the U.S.A. commitment to the Paris Agreement! (Reducing our country’s GhG emissions by 26% to 38% by 2025, compared to 2005 levels.) The group is led by California Governor Jerry Brown and Michael Bloomberg.

As The New York Times reported on July 11, 2017 (“US Cities, States and Business Pledge to Measure Emissions”):

Former Mayor/Bloomberg LP Chair Michael Bloomberg:
“The American government may have pulled out of the Paris Agreement, but American Society remains committed. We will redouble our efforts to achieve its goals.

California Governor Jerry Brown:
“Were sending a clear message to the world that America’s states, cities and businesses are moving forward with our country’s commitments under the Paris Agreement, with or without Washington DC.”

The new group will measure the effect (by 2025) of new climate actions by cities, states, business, universities, that sign on for the effort. The analysis will be performed by the World Resources Institute (WRI) and Rocky Mountain Institute.

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Bloomberg Philanthropies
All of these efforts of course takes money!  Michael Bloomberg’s philanthropic arm – Bloomberg Philanthropies – has a cities-focused initiative: What Works Cities Initiative.

This is one of the largest efforts to help cities use data for making local decisions, and get technical assistance from experts through the  Bloomberg organization.

Four more cities just joined up: Arlington, Texas; Charleston, South Carolina; Fort Collins, Colorado; Sioux Falls, South Dakota. That makes 85 U.S. cities in 37 states are now participating.

Cities commit to a “WWC” Standard, using data to improve performance and results that make their residents’ lives better. More info at: https://whatworkscities.bloomberg.org/cities/

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Why Is City-Level Action on Climate Change So Critical?

The total population of urban areas (486 areas) in the United States of America was 80.7% of the country’s total population in 2010, according to  an analysis by Reuters News.

More Americans are moving to urban areas, according to the 2010 census. (As reported by Reuters in March 2012.) The nation’s total population growth was 9.7% from 2000 to 2010; urban growth was 12.1%. In some places the growth was 50% — like Charlotte, North Carolina (64.%).

The most urbanized state in America is California — where 95% of the total population live in urban areas (35.4 million people).

Los Angeles/Long Beach/Anaheim is the nation’s second largest city (at 12,1 million residents); New York/Newark NJ is #1 (18.4 million); Chicago is #3, noted Reuters in the story.

So — we are keeping close watch on the significant efforts at the city/municipal level efforts in the United States of America with regard to developing climate change solutions.  Cities and states are showing the way for this nation, as the Federal government at least for now has abandoned climate change leadership.

Summing up:  With literally thousands of  local government units developing partnerships with the private sector, and with NGOs and other stakeholders, and looking to the U.S. capital markets to help fund infrastructure and other initiatives — a climate change economic boom is underway!  Are you part of it?  We see great o-p-p-o-r-t-u-n-i-t-y spelled out at the American municipal level.

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Notes:

**Center for Climate and Energy Solutions (C2ES) is an independent, non-partisan, nonprofit organization working to forge practical solutions to climate change. Link: www.c2es.org.