Issues for Debate in Corporate Social Responsibility: Selections from CQ Researcher

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    Annotated Contents

    Introduction to Corporate Social Responsibility
    Corporate Social Responsibility: Is Good Citizenship Good for the Bottom Line?

    Corporations across the country are embracing efforts to improve society. Unlike traditional efforts by businesses to appear socially responsible, the current movement emphasizes profit and long-term company success along with good works. Firms such as Whole Foods and Nike strive to make good citizenship a recognized part of their brand. General Electric, Coca-Cola and other more traditional corporations also support corporate social responsibility (CSR), motivated by advocacy group pressures, threatened government regulations and demands from employees, customers and investors. Some conservatives oppose CSR activities, arguing a company's only legitimate purpose is to enhance shareholder value. Some critics from the left label CSR a public relations ploy and say the government should expand corporations' legal responsibility to employees, the public and the environment.

    Organizational Issues
    Curbing CEO Pay: Is Executive Compensation Out of Control?

    This spring's shareholder proxy season promises to trigger fireworks among shareholders. Scores of public companies are under scrutiny from shareholders and politicians for rewarding their chief executive officers with huge pay and severance packages, sometimes despite spectacular management failures. Home Depot's Robert L. Nardelli, for example, received a $210 million severance package in January, while Capital One Financial's Richard D. Fairbank took home $280 million in compensation in 2005. Meanwhile, an investigation is proceeding into the possible manipulation of executive stock options at up to 200 companies. New federal rules requiring companies to disclose once-hidden details of their compensation took effect this year, setting the stage for bitter controversy over corporate pay. A coalition of shareholders is petitioning some 50 corporations for the right to advise their boards on the companies' executive compensation, and the new Democrat-controlled Congress has made moves aimed at curbing pay.

    Gender Pay Gap: Are Women Paid Fairly in the Workplace?

    More than four decades after Congress passed landmark anti-discrimination legislation —including the Equal Pay Act of 1963—a debate continues to rage over whether women are paid fairly in the workplace. Contending that gender bias contributes to a significant “pay gap,” reformists support proposed federal legislation aimed at bringing women's wages more closely in line with those of men. Others say new laws are not needed because the wage gap largely can be explained by such factors as women's choices of occupation and the amount of time they spend in the labor force. Meanwhile, a class-action suit charging Wal-Mart Stores with gender bias in pay and promotions—the biggest sex-discrimination lawsuit in U.S. history — may be heading for the Supreme Court. Some women's advocates argue that a controversial high-court ruling last year makes it more difficult to sue over wage discrimination.

    Labor Unions' Future: Can They Survive in the Age of Globalization?

    The American labor movement suffered a major blow at its 50th-anniversary convention in Chicago in July. The beleaguered AFL-CIO split nearly in half as seven unions formed the rival Change to Win coalition. The seceding unions argued that the AFL-CIO, led by John Sweeney, had been spending too much time and money trying to get Democrats elected to national office and not enough time recruiting new members. The defections reflect the concern over declining union membership in recent years, due in part to automation and job outsourcing. Some 3 million U.S. factory jobs alone were lost between 2000 and 2003. As he starts a new term, Sweeney confronts the possibility of more defections, businesses that are aggressively anti-union and unafraid to move operations abroad and a younger generation that knows little about unions. The split also raises questions for the Democrats, who historically derived funding and votes from the labor movement.

    Economic Issues
    Socially Responsible Investing: Can Investors Do Well by Doing Good?

    Socially responsible investing, which combines financial goals with the aim of improving society through stock screening, shareholder activism and other methods, has grown into a multi-trillion-dollar industry. Concerns about climate change, worker rights and other issues are prompting big institutional accounts as well as small investors to put more and more emphasis on social, environmental and corporate governance factors in weighing investment decisions. But critics say stock-screening methods used by mutual funds are subjective and that socially responsible investments tend not to perform as well as conventional ones. Some of the harshest criticism has been directed at public pension funds using social-investing approaches, such as the California State Teachers' Retirement System, which uses a “double bottom line” approach to investing.

    Regulating Credit Cards: Are Tougher Regulations Needed to Protect Consumers?

    As home refinancing dries up as a source of cash for many Americans, credit card debt is rising faster than ever. Seeking to protect consumers from serious debt trouble, Congress is discussing the first significant legal restraints on credit card issuers imposed in many years — and possibly the toughest ever. The banking industry argues that most people don't get into severe financial distress from credit card spending and that a crackdown on fees and other bank practices could dry up the consumer credit that drives the economy. But some consumer advocates say that the approximately 35 million households behind in payments or over their credit limits demonstrate that tough action is needed—including caps on interest rates. Meanwhile, some economists warn that increasing the earning power of working-class families is the only long-term solution to consumer credit woes.

    Fair Trade Labeling: Is It Helping Small Farmers in Developing Countries?

    The number of products sold with fair trade labels is growing rapidly in Europe and the United States. Big chains like Wal-Mart, Dunkin' Donuts, Starbucks and McDonald's have begun offering coffee and other items. Fair trade brands hope to raise their profile by targeting consumers who care about the environment, health and fair-labor standards. Fair trade supporters say small farmers in the developing world benefit by receiving a guaranteed fair price, while the environment gets a break from intensive industrial farming. But critics say consumers pay too much and that fair trade's guarantee of a good return — no matter what the market price — sends the wrong economic signal to farmers. When the price of a global commodity like coffee tumbles in response to oversupply, overcompensated fair trade farmers will remain in an uneconomic sector long after they should have switched to some other crop or livelihood, free-market economists argue.

    Buying Green: Does It Really Help the Environment?

    Americans will spend an estimated $500 billion this year on products and services that claim to be good for the environment because they contain non-toxic ingredients or produce little pollution and waste. While some shoppers buy green to help save the planet, others are concerned about personal health and safety. Whatever their motives, eco-consumers are reshaping U.S. markets. To attract socially conscious buyers, manufacturers are designing new, green products and packaging, altering production processes and using sustainable materials. But some of these products may be wastes of money. Federal regulators are reviewing green labeling claims to see whether they mislead consumers, while some critics say that government mandates promoting environmentally preferable products distort markets and raise prices. Even if green marketing delivers on its pledges, many environmentalists say that sustainability is not a matter of buying green but of buying less.

    Consumer Safety: Do Government Regulators Need More Power?

    Americans have been alarmed by recent product recalls, including toothpaste containing an ingredient found in antifreeze, tainted pet food and millions of Mattel toys containing toxic lead paint. The recalls — all involving Chinese-made products — prompted government hearings that spotlighted problems at the underfunded and, critics say, overwhelmed Consumer Product Safety Commission. Meanwhile, inspectors found contamination in imported seafood as well as millions of pounds of U.S.-produced ground beef, triggering concerns that the two agencies responsible for food safety —the Food and Drug Administration and the Department of Agriculture — were also understaffed and underpowered. While food and product safety scares are not new, the skyrocketing growth of Asian imports has forced even industry groups to call for stepped-up consumer protection. Consumer advocates salute the trend but warn that some industries may be seeking to regulate themselves in an effort to preempt Congress from passing tougher laws.

    Limiting Lawsuits: Is Business Pushing Too Hard to Restrict Litigation?

    Business groups are continuing their decades-long war with trial lawyers and consumer groups over the U.S. litigation system. Business lobbies led by the U.S. Chamber of Commerce contend that companies are beset by lawsuits that are often unjustified, jury verdicts that may contradict federal regulations and punitive damage awards that may reach into the tens of millions of dollars. Trial lawyers and consumer groups claim that business interests exaggerate the number of suits and the frequency and size of jury awards. In addition, they contend that companies are simply seeking legal protection for wrongdoing that results in injuries to workers and consumers. The Bush administration has backed business in urging federal preemption of some state court suits in areas regulated by federal agencies, such as drug safety. The administration has been largely unsuccessful in pushing legal reforms through Congress, but President Bush's two Supreme Court appointees have strengthened the court's pro-business tilt on litigation issues.

    Societal Issues
    The New Environmentalism: Can New Business Policies Save the Environment?

    Concern about the environment is intensifying, but new efforts to reduce pollution and save energy differ from past environmental movements. Unable to get much satisfaction from the Republican-dominated federal government, environmental activists have set their sights on businesses — trying to influence corporate behavior and even forming partnerships with companies to confront environmental challenges. A growing number of businesses — including Wal-Mart, the world's biggest retailer — are concluding that saving the environment is good for the bottom line. But some conservative critics charge that such actions actually dilute companies' primary purpose — to increase shareholder value. Meanwhile, in the absence of federal action, state and local governments are instituting policies aimed at weaning industry from fossil fuels. And some environmentalists are even rethinking nuclear power.

    Confronting Warming: Can States and Localities Prevent Climate Change?

    Growing concern about climate change has led states and cities to adopt new policies to try to conserve energy and reduce emissions of carbon dioxide and other greenhouse gases. California recently adopted new rules that aim to reduce such gases by 30 percent by 2020, while a cap on carbon emissions in the Northeast took effect Jan. 1. But critics say the efforts are more symbolic than substantive, pushing real sacrifices far off into the future. Many business groups, meanwhile, complain that the new rules will increase the cost of energy and hurt the economy —despite current promises that a “Green New Deal” can create jobs. The Obama administration promises to be far more aggressive in addressing global warming than the skeptical Bush White House. Even though the issue is coming to the fore in Washington, states and cities that have filled the policy vacuum in recent years pledge to stay vigilant in addressing the issue.

    Carbon Trading: Will It Reduce Global Warming?

    Carbon emissions trading — the buying and selling of permits to emit greenhouse gases caused by burning fossil fuels — is becoming a top strategy for reducing pollution that causes global climate change. Some $60 billion in permits were traded worldwide in 2007, a number expected to grow much larger if the next U.S. administration follows through on pledges to reduce America's carbon emissions. Advocates say carbon trading is the best way to generate big investments in low-carbon energy alternatives and control the cost of cutting emissions. But carbon trading schemes in Europe and developing countries have a mixed record. Some industries are resisting carbon regulations, and programs intended to help developing countries onto a clean energy path have bypassed many poor nations, which are the most vulnerable to the impacts of climate change. Some experts argue that there are simpler, more direct ways to put a price on carbon emissions, such as taxes. Others say curbing climate change will require both taxes and trading, plus massive government investments in low-carbon energy technologies.

    Ecotourism: Does It Help or Hurt Fragile Lands and Cultures?

    In the booming global travel business, ecotourism is among the fastest-growing segments. Costa Rica and Belize have built national identities around their celebrated environmental allure, while parts of the world once all but inaccessible — from Antarctica to the Galapagos Islands to Mount Everest — are now featured in travel guides, just like Manhattan, Rome and other less exotic destinations. Advocates see ecotourism as a powerful yet environmentally benign tool for sustainable economic development in even the poorest nations. But as the trend expands, critics see threats to the very flora and fauna tourists flock to visit. Moreover, traditional subsistence cultures may be obliterated by the ecotourism onslaught, replaced by service jobs that pay native peoples poverty wages. Meanwhile, tour promoters are using the increasingly popular “green” label to lure visitors to places unable to withstand large numbers of tourists.

    Philanthropy in America: Are Americans Generous Givers?

    Billionaire investor Warren Buffett has a message for wealthy Americans: Give away your money. Last June Buffett announced he was donating 85 percent of his $44 billion fortune, most of it earmarked for a charitable foundation established by Microsoft co-founder Bill Gates and his wife, Melinda. Although Americans donated more than $7 billion for hurricane, tsunami and earthquake relief in 2005, the super-rich, in general, have not stepped up their donations to match the economy's growth. Some in the philanthropy community argue, in fact, that Americans' self-image as uniquely generous is overblown. Meanwhile, the foundations that are a mainstay of U.S. philanthropy need more public oversight, critics say. And some scholars question whether charitable organizations are funding medical and other services that the government should provide.

    Preface

    Can investors do well by doing good? Is executive compensation out of control? Is fair trade helping small farmers in developing countries? These questions—and many more— are at the heart of corporate social responsibility. How can instructors best engage students with these crucial issues? We feel that students need objective, yet provocative examinations of these issues to understand how they affect citizens and organizations today and will for years to come. This collection aims to promote in-depth discussion, facilitate further research and help readers formulate their own positions on crucial issues. Get your students talking both inside and outside the classroom about Issues for Debate in Corporate Social Responsibility.

    This first edition includes fifteen up-to-date reports by CQ Researcher, an award-winning weekly policy brief that brings complicated issues down to earth. Each report chronicles and analyzes executive, legislative and judicial activities at all levels of government. This collection is divided into three distinct areas—organizational issues, economic issues, and societal issues—to cover a range of issues found in most corporate social responsibility and strategic management or leadership-related courses.

    CQ Researcher

    CQ Researcher was founded in 1923 as Editorial Research Reports and was sold primarily to newspapers as a research tool. The magazine was renamed and redesigned in 1991 as CQ Researcher. Today, students are its primary audience. While still used by hundreds of journalists and newspapers, many of which reprint portions of the reports, the Researcher's main subscribers are now high school, college and public libraries. In 2002, Researcher won the American Bar Association's coveted Silver Gavel award for magazine excellence for a series of nine reports on civil liberties and other legal issues.

    Researcher staff writers—all highly experienced journalists—sometimes compare the experience of writing a Researcher report to drafting a college term paper. Indeed, there are many similarities. Each report is as long as many term papers—about 11,000 words—and is written by one person without any significant outside help. One of the key differences is that writers interview leading experts, scholars and government officials for each issue.

    Like students, staff writers begin the creative process by choosing a topic. Working with the Researcher's editors, the writer identifies a controversial subject that has important public policy implications. After a topic is selected, the writer embarks on one to two weeks of intense research. Newspaper and magazine articles are clipped or downloaded, books are ordered and information is gathered from a wide variety of sources, including interest groups, universities and the government. Once the writers are well informed, they develop a detailed outline, and begin the interview process. Each report requires a minimum of ten to fifteen interviews with academics, officials, lobbyists and people working in the field. Only after all interviews are completed does the writing begin.

    Chapter Format

    Each issue of CQ Researcher, and therefore each selection in this book, is structured in the same way. Each begins with an overview, which briefly summarizes the areas that will be explored in greater detail in the rest of the chapter. The next section chronicles important and current debates on the topic under discussion and is structured around a number of key questions, such as “Does corporate social responsibility really improve society?” or “Does corporate social responsibility restrain U.S. productivity?” These questions are usually the subject of much debate among practitioners and scholars in the field. Hence, the answers presented are never conclusive but detail the range of opinion on the topic.

    Next, the “Background” section provides a history of the issue being examined. This retrospective covers important legislative measures, executive actions and court decisions that illustrate how current policy has evolved. Then the “Current Situation” section examines contemporary policy issues, legislation under consideration and legal action being taken. Each selection concludes with an “Outlook” section, which addresses possible regulation, court rulings and initiatives from Capitol Hill and the White House over the next five to ten years.

    Each report contains features that augment the main text: two to three sidebars that examine issues related to the topic at hand, a pro versus con debate between two experts, a chronology of key dates and events and an annotated bibliography detailing major sources used by the writer.

    Acknowledgments

    We wish to thank many people for helping to make this collection a reality. Tom Colin, managing editor of CQ Researcher, gave us his enthusiastic support and cooperation as we developed this edition. He and his talented staff of editors and writers have amassed a first-class library of Researcher reports, and we are fortunate to have access to that rich cache. We also wish to thank our colleagues at CQ Press, a division of SAGE and a leading publisher of books, directories, research publications and Web products on U.S. government, world affairs and communications. They have forged the way in making these readers a useful resource for instruction across a range of undergraduate and graduate courses.

    Some readers may be learning about CQ Researcher for the first time. We expect that many readers will want regular access to this excellent weekly research tool. For subscription information or a no-obligation free trial of CQ Researcher, please contact CQ Press at http://www.cqpress.com or toll-free at 1-866-4CQ-PRESS (1-866-427-7737).

    We hope that you will be pleased by this edition of Issues for Debate in Corporate Social Responsibility. We welcome your feedback and suggestions for future editions. Please direct comments to Lisa Cuevas Shaw, Executive Editor, SAGE Publications, 2455 Teller Road, Thousand Oaks, CA 91320, or lisa.shaw@sagepub.com.

    —The Editors of SAGE

    Contributors

    Thomas J. Billitteri is a freelance journalist in Fairfield, Pennsylvania, who has more than 30 years' experience covering business, nonprofit institutions and related topics for newspapers and other publications. He has written previously for CQ Researcher on teacher education, parental rights and mental-health policy. He holds a BA in English and an MA in journalism from Indiana University.

    Marcia Clemmitt is a veteran social-policy reporter who joined CQ Researcher after serving as editor in chief of Medicine and Health, a Washington-based industry newsletter, and staff writer for The Scientist. She has also been a high school math and physics teacher. She holds a bachelor's degree in arts and sciences from St. Johns College, Annapolis, and a master's degree in English from Georgetown University.

    Rachel S. Cox is a freelance writer in Washington, D.C. She has written for Historic Preservation magazine and other publications. She graduated in English from Harvard College.

    Sarah Glazer specializes in health, education and social-policy issues. Her articles have appeared in The Washington Post, Glamour, The Public Interest and Gender and Work, a book of essays. Glazer covered energy legislation for the Environmental and Energy Study Conference and reported for United Press International. She holds a BA in American history from the University of Chicago.

    Alan Greenblatt is a staff writer for Congressional Quarterly's Governing magazine. He previously covered elections and military and agricultural policy for CQ Weekly. He was awarded the National Press Club's Sandy Hume Memorial Award for political reporting. He holds a bachelor's degree from San Francisco State University and a master's degree in English literature from the University of Virginia.

    Kenneth Jost, associate editor of CQ Researcher, graduated from Harvard College and Georgetown University Law Center, where he is an adjunct professor. He is the author of The Supreme Court Yearbook and editor of The Supreme Court from A to Z, both published by CQ Press. He was a member of CQ Researcher team that won the 2002 American Bar Association Silver Gavel Award.

    Peter Katel is a veteran journalist who previously served as Latin America bureau chief for Time magazine, in Mexico City, and as a Miami-based correspondent for Newsweek and the Miami Herald's Spanish language edition El Nuevo Herald. He also worked as a reporter in New Mexico for 11 years and wrote for several nongovernmental organizations, including International Social Service and the World Bank. He has won several awards, including the Interamerican Press Association's Bartolome Mitre Award. He is a graduate of the University of New Mexico in University Studies.

    Pamela M. Prah, a former CQ Researcher staff writer, is now political editor for http://Stateline.org. She has also written for Kiplinger's Washington Letter and the Bureau of National Affairs. She holds a master's degree in government from Johns Hopkins University and a bachelor's degree in magazine journalism from Ohio University.

    Tom Price is a Washington-based freelance journalist and a contributing writer for CQ Researcher. Previously he was a correspondent in the Cox Newspapers Washington Bureau, and chief politics writer for the Dayton Daily News and The Journal Herald. He is author, with Tony Hall, of Changing the Face of Hunger: One Man's Story of How Liberals, Conservatives, Democrats, Republicans and People of Faith are Joining Forces to Help the Hungry, the Poor, and the Oppressed. He also writes two Washington guidebooks, Washington, D.C., for Dummies, and the Irreverent Guide to Washington, D.C. His work has appeared in The New York Times, Time, Rolling Stone and other periodicals. He earned a bachelor of science in journalism at Ohio University.

    Jennifer Weeks is a CQ Researcher contributing writer in Watertown, Massachusetts, who specializes in energy and environmental issues. She has written for The Washington Post, The Boston Globe Magazine and other publications, and has 15 years' experience as a public-policy analyst, lobbyist and congressional staffer. She has an AB degree from Williams College and master's degrees from the University of North Carolina and Harvard.

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