Trump's Losing War on ESG Investing

♠ Posted by Emmanuel in CSR,Energy at 12/06/2020 03:32:00 PM

Funds like this one from BlackRock's iShares now list ESG no-nos. Trumpists couldn't care less.

The Trump administration is essentially a throwback to a time when white men ruled the world, burned fossil fuels with wild abandon, and were unapologetic about America's dodgy history concerning racism. So, it was perhaps inevitable that one of its last few efforts on the way out the door was to throw a middle finger to the very idea of environmental, social and governance [ESG] investing. You see, the US government manages any number of funds, including those of government employees for retirement. 

The Department of Labor manages one of these, and under the guise of maximizing returns and not entertaining misguided leftist ideas about being politically correct while investing, it has ruled out ESG criteria:

In a new Department of Labor (DOL) rule issued on October 30, the DOL essentially prohibits the use of widely used environmental, social and governance (ESG) factors in selecting investments for employee retirement plans...

For 30 years, however, the US Department of Labor has been considering whether recommending these kinds of investments in employee retirement accounts - that is, those factors which look at other than financial objectives - might be problematic. Their concern was that by focusing on the ESG needs, a manager using ESG products was not focusing attention on the client's financial goals - which is the basic fiduciary requirement under DOL rules.

Alike with many of these parting shots from the Trump administration, however, the mad rush to get them done make them vulnerable to rollbacks when Joe Biden becomes president.

Unlike many DOL rules, which typically take at least 18 months and often years to be passed, the ESG rule was pushed through at "warp speed," commented Bryan McGannon of US SIF, a sustainable business policy group. But it is considered likely that litigation under the Administrative Procedures Act may reverse the rule or that an incoming Biden administration may well act to reverse the rule. The Biden administration has been predicted to be far more sympathetic to ESG issues and is expected by some to begin reversing controversial Trump administration policies such as this.

In the end, the large and growing interest from investors in ESG investments as well as the likely hostility of the incoming administration to the new rule make it unlikely that the rule will stand. Moreover, the current research and performance history demonstrate that it probably shouldn't.

I think the economic rationale of ESG will ultimately prove irresistible anyway. Arms, energy and tobacco are your archetypal sunset industries, and stock valuations do bear this assertion out. The days of--shall we call it antisocial investing?--are numbered.

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Pope Francis, Do Speculators Go to Hell?

♠ Posted by Emmanuel in Casino Capitalism,CSR,Latin America,Religion at 5/18/2018 03:18:00 PM

You tell 'em, Pope Francis! Here are more of his thoughts on haute finance.

Okay, so the question posed above is not definitively answered in a new papal bull on modern finance. Let's just say that certain kinds of speculative activity most likely raise your chances of eternal damnation. As a pope coming from Argentina--ground zero for IMF borrowings past and immediate future--the way financial markets impact the well-being of persons has long been on his mind. Earlier this year, an apostolic exhortation encouraged people to think about the true meaning of "security" which does not equate to "wealth":

67. The Gospel invites us to peer into the depths of our heart, to see where we find our security in life. Usually the rich feel secure in their wealth, and think that, if that wealth is threatened, the whole meaning of their earthly life can collapse. Jesus himself tells us this in the parable of the rich fool: he speaks of a man who was sure of himself, yet foolish, for it did not dawn on him that he might die that very day (cf. Lk 12:16-21).

68. Wealth ensures nothing. Indeed, once we think we are rich, we can become so self-satisfied that we leave no room for God’s word, for the love of our brothers and sisters, or for the enjoyment of the most important things in life. In this way, we miss out on the greatest treasure of all. That is why Jesus calls blessed those who are poor in spirit, those who have a poor heart, for there the Lord can enter with his perennial newness. 

Just yesterday, Pope Francis continued with this theme of countering what the world values by identifying immiserizing forms of finance that *might* make you wealthy but leave others worse off (and endanger your soul's well-being in the process). Given a reasonable premise that financial crises leave many worse off in market-based societies, derivatives attract scrutiny insofar as they may hasten such crises as witnessed during 2007-08. From the just-released Economic and Pecuniary Questions:

[26.] However, in some types of derivatives (in the particular the so-called securitizations) it is noted that, starting with the original structures, and linked to identifiable financial investments, more and more complex structures were built (securitizations of securitizations) in which it is increasingly difficult, and after many of these transactions almost impossible, to stabilize in a reasonable and fair manner their fundamental value. This means that every passage in the trade of these shares, beyond the will of the parties, effects in fact a distortion of the actual value of the risk from that which the instrument must defend. All these have encouraged the rising of speculative bubbles, which have been the important contributive cause of the recent financial crisis.

It is obvious that the uncertainty surrounding these products, such as the steady decline of the transparency of that which is assured, still not appearing in the original operation, makes them continuously less acceptable from the perspective of ethics respectful of the truth and the common good, because it transforms them into a ticking time bomb ready sooner or later to explode, poisoning the health of the markets. It is noted that there is an ethical void which becomes more serious as these products are negotiated on the so-called markets with less regulation (over the counter) and are exposed more to the markets regulated by chance, if not by fraud, and thus take away vital life-lines and investments to the real economy.

In a similar vein, other targets of the pope's ire include credit default swaps when used for the purpose of "gambling" on the eventual insolvency of firms instead of "insurance" for corporate debt holdings as originally intended:

A similar ethical assessment can be also applied for those uses of credit default swap (CDS: they are particular insurance contracts for the risk of bankruptcy) that permit gambling at the risk of the bankruptcy of a third party, even to those who haven’t taken any such risk of credit earlier, and really to repeat such operations on the same event, which is absolutely not consented to by the normal pact or insurance[...]

In fact, the process of acquiring these instruments, by those who do not have any risk of credit already in existence [i.e., those who don't hold debt securities], creates a unique case in which persons start to nurture interests for the ruin of other economic entities, and can even resolve themselves to do so.

It is evident that such a possibility, if, on the one hand, shapes an event particularly deplorable from the moral perspective, because the one who acts does so in view of a kind of economic cannibalism, and, on the other hand, ends up undermining that necessary basic trust without which the economic system would end up blocking itself. In this case, also, we can notice how a negative event, from the ethical point of view, also harms the healthy functioning of the economic system.

Therefore, it must be noted, that when from such gambling can derive enormous damage for entire nations and millions of families, we are faced with extremely immoral actions, it seems necessary to extend deterrents, already present in some nations, for such types of operations, sanctioning the infractions with maximum severity.

You may of course question my impartiality on this matter, but I do think the pope lays out a straightforward response to a highly topical issue. Risks of financial distress tend to rise in developing countries like Argentina as interest rates increase Stateside, and the current rate-hike cycle is no exception. Detached from the "real" economy, financial activity without underlying economic purpose aside from speculation is ethically questionable insofar as the lives of other persons can be subject to grave harm--especially in the developing world:

17. What is morally unacceptable is not simply to profit, but rather to avail oneself of an inequality for one’s own advantage, in order to create enormous profits that are damaging to others; or to exploit one’s dominant position in order to profit by unjustly disadvantaging others, or to make oneself rich through harming and disrupting the collective common good.

Such a practice is particularly deplorable from the moral point of view when the intention of profit by a few through the risk of speculation even in important funds of investment, provokes artificial reduction of the prices of public debt securities, without regard to the negative impact or to the worsening of the economic situation of entire nations. This practice endangers not only the public efforts for rebalancing, but also the very economic stability of millions of families,  and at the same time compels government authorities to intervene with substantial amounts of public money, even to the extent of artificially interfering in the proper functioning of political systems.

 The pope is able to relate finance's potential dangers in a manner we can easily understand.

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Hijab-Wearing Barbie and Social Responsiveness

♠ Posted by Emmanuel in CSR,Marketing,Religion at 1/02/2018 11:52:00 AM

Is so much ado about a Barbie doll warranted?

There's a hard-hitting op-ed in al Jazeera criticizing a move one of the United States' largest toymakers has made to produce a hijab-wearing Barbie. On the face of it, this action is a long-overdue one in recognition that the world's population is nearly a quarter Islamic. So yes, any move to make Barbie more "representative" of the countries Mattel sells this toy should include one who is appropriately dressed:

Earlier this month, it launched its first Barbie in hijab. Designed after Olympic fencer Ibtihaj Muhammad, this doll is part of its "Sheroes" series. Mattel portrays this doll as serving as an "inspiration for countless little girls who never saw themselves represented in sports and culture". Many Muslims and non-Muslims alike welcomed the doll as a sign of inclusion and diversity. In the words of Miley Cyrus, "Yay Barbie! One step closer to Equality! We HAVE to normalize diversity!"

Given the current context of large-scale demonisation of Muslims through institutional policies such as the "Muslim ban" and the dismantling of DACA, a Barbie in hijab (a headscarf worn by many Muslim women who feel it is part of their religion) appears to be a welcome respite. According to Pew Research Center, hate crimes against Muslims in the US have surpassed the 2001 level.

The author, Shenila-Khoja-Moolji, expresses several reservations about this move one would generally associate with an anti-capitalist perspective. First and foremost, it is an act of commercial exploitation of culture. Second, the design of this item has not been undertaken by groups of Muslim women presumably more aware of the intertwined nuances of gender and culture. (Rather, it was modeled after an idealized [read: more "active"] woman.) Third, Mattel does not really do anything about denigration of Islam in an age of xenophobia:

The assimilation of articles representing Muslim identity or religious life by for-profit corporations is, then, just a marketing/re-branding strategy, not a move informed by social justice concerns. It does little to disrupt racial hierarchies that undergird discrimination of Muslims in the first place. Significantly, it also stabilises a particular notion of Muslim womanhood. When influential organizations select the hijab as representative of Muslim women, those who do not don the hijab find themselves on the defensive about their authenticity as Muslims. They come out all guns blazing at the hijab, delegitimising women who actually choose to wear it for multiple reasons. Such moves then create fissures within Muslim women as well.

Rather than taking on the mantle of providing inspiration to Muslim girls, perhaps organisations such as Mattel should engage more Muslim women in their creative and production processes. Perhaps such engagements will enable them to not only understand the diversity of Muslim women globally, but also to provide much-needed opportunities to Muslim women to thrive economically and socially.

On the first point, I actually agree that it's a product borne of marketing spin. However, I do not see anything necessarily "wrong" with such a commercial move. If legitimization and mainstreaming are partly achieved by commercialization, then it actually helps the cause.  Unless you're a dyed-in-wool anti-capitalist, there is nothing essentially sinister here. On the second point, yes, Mattel could have improved its products' claims to authenticity if it had consulted more widely with Muslim women about the doll's presentation (and probably improved its commercial prospects).

On the third point, however, I disagree. Mattel is a for-profit enterprise, not a social enterprise. As such, "changing the world" is not its purpose by resolving the prejudices wrought by the current wave of Islamophobia. It suffices to recognize a well-intentioned move to counter such prejudicial sentiments, which Mattel is actually doing here. So, overall, it's a laudable action, though it could have been improved by more inclusiveness during the design process.

Given Islam's ethnic diversity as a globe-spanning religion, it should also be noted that blue-eyed, blonde-haired women are also followers of the faith.

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Crossfire Victim: L'Oreal, PRC & Hong Kong Democracy

♠ Posted by Emmanuel in China,CSR,Europe at 6/09/2016 10:17:00 AM

On the bright side for L'Oreal, they won't hire the Dalai Lama as a spokesperson since he has...no hair.

I hate to say it but, if Hongkongers were optimistic about the remit of "one country, two systems," then they have been proven wrong again. What we recently had was a big brouhaha when Lancome, one of the brands of French cosmetics giant L'Oreal, decided to sponsor a concert by canto pop (that's Hong Kong's particular brand of Cantonese-language pop which you'll hear on its streets day in and day out) star Denise Ho. It would be an unremarkable marketing promotion exercise were it not for Denise Ho being an outspoken proponent of democracy for Hong Kong [!] and a vocal supporter of Tibetan independence [!!] besides. Some people--Lancome's management in HK--are just asking for it.

The trouble began when the stridently jingoistic, quasi-official Global Times blasted Lancome for effectively going against the will of Beijing, calling for a mainland boycott of the brand. With China being the brand's second-largest market, you can guess what the result was: Lancome decided to cancel the planned Hong Kong concert, disowning Denise Ho in the process. The Global Times is even gloating that PRC "market power" is responsible for this change of heart:

Ho was one of the most prominent activists during the 2014 Hong Kong Occupy Central Movement. Mainland netizens then began to boycott her and her harsh response further enraged the mainland public. Last month, she posted her photos with the Dalai Lama on Facebook, writing "I could feel the blessing and energy rushing through my body just by holding his hands." The disagreement between her and mainland opinion is deepening.

Lancôme responded fast by releasing a statement saying Ho was not a spokesperson for the brand and canceled the planned concert, citing "safety reasons." But the real reason is self-explanatory.

Some Hongkongers slammed Lancôme for groveling to the mainland and vowed to resist the products of Lancôme and parent company L'Oreal. It seems that Ho has pushed Lancôme into a dilemma. Apparently Lancôme has given more consideration to the sentiment of the mainland public, because the mainland boasts a much larger market than Hong Kong. As a commercial company, it is bound to seek commercial gains, a wisdom it is supposed to have under complex situations. No big companies would like to step into politics as the high stakes have already been proved by previous cases.

Meanwhile, mayhem erupted in the normally placid and consumerist shopping malls of Hong Kong as protesters targeted Lancome and sometimes other L'Oreal brands' outlets in the city:

Cosmetics maker Lancome shut all its Hong Kong shops on Wednesday as protesters accused the cosmetics brand of kowtowing to Beijing when it scrapped a promotional event featuring an activist singer...

Several dozen protesters marched to an unstaffed Lancome counter in a downtown Hong Kong department store Tuesday. They taped up signs accusing the company of self-censorship and of kowtowing to Beijing and called for a boycott.

Hong Kong's 23 Lancome boutiques were closed for the day and it was uncertain whether they would reopen on Thursday, which is a public holiday, a customer service representative said by phone. Lancome and its parent company, French cosmetics giant L'Oreal, did not respond to emailed requests for comment. Shops under at least four other L'Oreal brands, including Kiehl's and The Body Shop, were also shut.

There is no edifying aspect to this spectacle. Instead, I will say that it was spectacularly dumb of Lancome to choose Denise Ho for a promotional concert when there are dozens of canto pop stars who are as outspoken. Pro-democracy Hong Kong campaigners will have another reason to be dismayed, but hey, there's a definite case for not putting yourself in such a compromised position to begin with.

UPDATE: Also see Advertising Age for more on the political angle of this topic.

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Climate Change, Lies & ExxonMobil

♠ Posted by Emmanuel in CSR,Energy,Environment at 11/08/2015 01:40:00 PM

So evil that prospective investors should be warned: "OWNING XOM SHARES IS HAZARDOUS TO YOUR SOUL"?

There is an interesting legal wrangle underway concerning the energy giant ExxonMobil--I can recommend Steve Coll's book Private Empire: ExxonMobil and American Power if you need further information on the company's globe-spanning reach. Unsurprisingly as one of the world's biggest energy companies, ExxonMobil has long been a bogeyman for environmentalists. The latest investigation involves these corporate evildoers failing to disclose fuel-burning's effects on climate change when it supposedly knew of them long ago:

Oil giant Exxon Mobil is being investigated for misleading the public about the impact of climate change. The New York attorney general has sent a request for emails and financial records to the company. Allegations surfaced last month that the company's own scientists raised concerns about global warming decades ago and that Exxon had worked to suppress that information.

From the environmentalists' standpoint, it is similar to the tobacco industry not disclosing that its products literally caused people to die (from lung cancer and other smoking-linked diseases). However, as Matt Levine points out at Bloomberg, this analogy has limitations.

Ah, but of course misleading people about climate change isn't just political. It's also, plausibly, a business decision. People might not have bought gas if they knew the full risks of climate change, but if Exxon covered up those risks, then people would have been fraudulently induced to buy more gas, and harmed by that fraud in the form of climate change. This is to a large extent the theory of previous investigations of tobacco companies, and "some experts see the potential for a legal assault on fossil fuel companies similar to the lawsuits against tobacco companies in recent decades, which cost those companies tens of billions of dollars in penalties."

The analogy strikes me as a bit strained, though. The harm of misleading smokers is just so direct, as is the commercial benefit of doing it. If you sell people cigarettes that kill them, those same people are obviously harmed. And if you lie about whether cigarettes will kill people, people will probably buy more cigarettes. But who is defrauded by an oil company that funds climate-change deniers? There is no particular reason to think that the people most harmed by climate change and the people who buy a lot of crude oil products are the same set of people, whereas to a first approximation the people most harmed by smoking are smokers. If you stop smoking, your risk of lung cancer goes way down. If you stop putting gas in your car, your risk of ending up underwater when the ice caps melt does not go down by any measurable amount. 

There is also the questionable assumption at work that shareholders are being harmed by the deception ExxonMobil allegedly wrought all those years ago. The claim of "securities fraud" doesn't seem to register IMHO:

But Americans don't just vote and drive. They also own stocks. And Schneiderman's probe isn't just about lying to the voting public, or the oil-consuming public. It's also about lying to the investing public:

Whether Exxon Mobil began disclosing the business risks of climate change as soon as it understood them is likely to be a major focus of the New York case. The people with knowledge of the case said the attorney general’s investigators were poring through the company’s disclosure filings made since the 1970s, but were focusing in particular on recent statements to investors. Exxon Mobil has been disclosing such risks in recent years, but whether those disclosures were sufficient has been a matter of public debate.

This is in certain ways the weirdest theory. For one thing, if you actually think that Exxon Mobil is engaged in a diabolical conspiracy to suppress climate science to wring extra profits out of an earth-destroying business, the last people you should be worried about are Exxon's shareholders. They're the ones profiting from all that destruction! For another thing, if you are concerned about those shareholders, the last thing you should do is fine Exxon a lot of money. They're the ones who will ultimately have to pay that money! "This is not good news for Exxon Mobil or Exxon Mobil shareholders," says an analyst.

It's a weird case all around, and one that would not get all that far outside a politically-charged climate.

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Meet the New S&P 500 Catholic Values Index

♠ Posted by Emmanuel in CSR,Religion at 8/23/2015 09:40:00 PM

Is Catholic capitalism an oxymoron? Let the fund managers and investors decide.

Ah, more of the economics of popery. Lovely stuff to contemplate, methinks. Despite being Catholic, I am not entirely sure what the religion's impact is on the wider world. For instance, Pope Francis' recent economically- and environmentally-focused encyclical has largely fallen upon deaf ears in the United States--even those who are Catholic:

Pope Francis released a 180-page indictment of capitalism and climate change that has fallen, for the most part, on deaf ears in the U.S. Just 31 percent of Americans know that the pope has made fights against global warming and poverty top issues, according to a national poll conducted by the Associated Press, the University of Chicago, and Yale University. Catholics reported familiarity with Pope Francis’s agenda in slightly larger numbers—40 percent—but a majority of the faithful remain unaware of the pontiff’s high-profile issues. His policy on climate change was released with great fanfare in June.

The new poll begins to answer some questions—posed by those paying attention, at least during the yearlong runup to the release of Laudato Si’, or “Praise Be to You,” the pope’s encyclical letter to bishops. Observers have puzzled over how effective, or even willing, the pope’s front-line personnel would be at propagating his message. Would dioceses actually put the document before parishioners? Turns out not many have, at least not yet. Just 37 percent of U.S. Catholics who went to church in late June and July heard the encyclical mentioned, compared with 12 percent of other Christians, according to the poll.

No matter; here's another entry in the mammon 'n' religion sweepstakes. You have undoubtedly heard of socially responsible investing, or putting your hard-earned money to work in companies that treat people, the environment and so on right by prioritizing corporate social responsibility. In the ever-widening market for ethical funds, here comes your latest entry: the S&P Catholic Values Index that evaluates companies by their adherence to the US Conference of Catholic Bishops socially responsible investment guidelines. What follows is the press blurb:

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S&P Dow Jones Indices (S&P DJI), one of the world's leading providers of financial market indices, announced the launch of the S&P 500^® Catholic Values Index which is designed to include the companies within the S&P 500 whose business practices adhere to the Socially Responsible Investment Guidelines as outlined by the United States Conference of Catholic Bishops (US CCB) and exclude those that do not. The Index has been licensed to Global X for product development. 

The S&P 500 Catholic Values Index is the first Catholic index based on such a prominent benchmark as the S&P 500. Constituents are screened to exclude companies who are involved in the following activities that are perceived to be inconsistent with Catholic values as set out by the US CCB, such as:

• Biological weapons, chemical weapons, cluster bombs, landmines
• Nuclear weapons – any exposure to whole systems and strategic par
• Conventional Military sales – companies that have their primary business activity as military products
• Child labor employment in the company's operation or in supply chain

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I am sure that tobacco and (fossil fuel-based) energy also take their lumps. The real questions are, however, [a] whether funds pop up that match their placements to this index and [b] if there are investors out there who would be interested in placing their money in such funds.

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Incarceration Nation: Invest in US Private Prisons?

♠ Posted by Emmanuel in CSR,Security at 6/15/2015 12:24:00 PM

Their "customers" are all outfitted in Guantanamo orange. Care to invest?

With interest rates set to rise in the United States, it is difficult for folks to figure out where to invest. Bonds tend to go down in price as interest rates rise. While stocks may be less averse to interest rate rises, making the cost of money dearer results in greater difficulty funding their purchase, and stocks also face headwinds as a result. Consider, then, a somewhat different investment that falls somewhere between bonds and stocks in real estate investment trusts (REITs). REITs provide their holders with income from real estate-related activities, especially renting out properties. Among the different REITs, the most adventurous of them all are prison REITs. That is, those which derive their income from running private prisons in the United States. With an astronomically high, world-leading incarceration rate, the United States certainly doesn't lack for, er, a huge captive market.

There are of course different arguments about the virtues and vices of corporations running prisons. From the right, some would say that for-profit businesses are more efficient in running jails Stateside. On the other hand, those from the left caution that private prisons encourage unnecessarily tough sentencing since these businesses profit from more people being thrown in jail for longer regardless of whether sentences meted out are just. Because of the political controversy surrounding prison REITs, they provide higher dividends than other kinds of REITs. But, there are caveats for would-be investors like Democrats running for the 2016 presidential elections seeking to reduce tough sentencing and hence the number of prisoner-customers for these REITs:

The small and controversial sector of for-profit prison companies, which operate as real estate investment trusts (REITs), have been under pressure this year, underperforming the broader REIT sector, which has itself lagged behind the general market. The two main prison operators have been dogged by the prospect of new government regulations, with presidential candidates Hillary Clinton and Senator Rand Paul among those calling for criminal justice reform, an issue seen as a threat to the group. While supporters argue that private prisons save taxpayer money, critics charge that the companies' for-profit model has led to excessive sentencing and poor conditions for inmates.

Take, for instance, some major prison REITs:

Corrections Corporation of America, which has a market capitalization of about $4.1 billion, is down 5.3 percent in 2015 while Geo Group is down 9.4 percent. The Vanguard REIT ETF, a popular way for investors to play the broader space, is down 4.9 percent. Analysts say the year-to-date declines in prison stocks mean potential headwinds have been priced in, positioning them for gains even as the appeal of the overall REIT sector wanes. In an indication the selloff has been overdone, Corrections trades almost 16 percent under StarMine's measurement of intrinsic value, which looks at anticipated growth over the next decade.

"There is a lot of uncertainty surrounding reforms, causing prison REITs to trade at a discount to the REITs that aren't tied to government spending, but you've already seen them pull back, meaning that from here there's more upside than downside potential," said Eric Marshall, portfolio manager at the Hodges Funds in Dallas.

Marshall, who has a stake in Geo, also praised the high dividend yields of prison REITs, which surpass those for the sector at large. Corrections' yield is 6.25 percent while Geo's is 6.74 percent. Three of the biggest REITs by market cap - Simon Property Group, Public Storage and Equity Residential - have yields below 4 percent. The S&P's yield is 2.38 percent.

Are you tough enough to invest in CXW and GEO? Like in life's other pursuits, it may be a case of fortune favoring the bold--especially if the ethical aspects do not elicit unease.

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American Imperialism & Blatter's Last Stand

♠ Posted by Emmanuel in CSR,Governance,Sports at 5/29/2015 01:30:00 AM

A match made in hell: Gazprom & FIFA.

One good post on battle over futbol mundial deserves another: I am constantly surprised by the amount of global attention the governance of FIFA has received these past few days. On the surface, the politics of an international sporting organization headquartered in Europe should be of limited interest to the rest of the world. For the most part, we watch the World Cup every four years and that's that. Dig below the surface, however, and there is much, much more at stake: the West versus the rest, the corrupting influence of big money, and the governance of global institutions. Let us examine each of these in turn.

(1) To no one's surprise, Russian President Vladimir Putin sees the United States' move to prosecute FIFA officials on corruption charges as an effort to scotch the 2018 World Cup in Sochi. As with most Putin narratives, there's a whiff of conspiracy theory, but read for yourselves:

Russian President Vladimir Putin accused the United States of meddling in FIFA's affairs and hinted that it was part of an attempt to take the 2018 World Cup away from his country. Putin said in televised comments Thursday that he found it "odd" that the probe was launched at the request of U.S. officials for crimes which do not involve its citizens and did not happen in the United States...

Putin said even if "someone has done something wrong," Russia "has nothing to do with it." He then tried to portray the probe as a U.S. attempt to go after dissenters, likening the case to the persecution of whistleblowers Julian Assange and Edward Snowden. "Our American counterparts, unfortunately, are using the same methods to reach their goals and illegally persecute people. I don't rule out that this is the case in relation to FIFA," Putin said. "I have no doubt that this is yet another evident attempt to derail Mr. Blatter's re-election as FIFA president. We are aware of the pressure that he was subjected to in relation to Russia holding the 2018 World Cup."

Just as I predicted in the earlier post, the losers will portray this action as American imperialism in cowing Swiss authorities to follow suit. The long arm of America is not yet gone, evidently. 

(2) Actually, Blatter seems to have perceived American resentment at him before the arrests. Earlier this month, he wanted to hold the next few games outside of Europe (UEFA), making the US obviously the front-runner for another American event:

FIFA President Sepp Blatter wants to implement a rule that would prevent Europe from bidding for the 2026 World Cup, improving the chances of the United States to host the tournament. The FIFA executive committee could agree this month to block continental confederations from bidding for the following two World Cups after hosting. ''It should be this way,'' Blatter said Friday, adding that the proposal is ''more than an option.''

(3) On the CSR end, perhaps the United States will ultimately undermine Blatter's leadership most by hitting FIFA where hurts most--the millions in sponsorship money it rakes in each year from corporate sponsors. Some of these sponsors are real stinkers who couldn't care less like Putin's toadies at Gazprom. Obviously, American companies will be more sensitive to their home government's actions. What's most interesting are the neither here nor there firms in Europe like Adidas. At any rate, sponsors apper to be reassessing their options:

Visa Inc., a leading FIFA partner since 2007, said that the twin U.S. and Swiss investigations into alleged corruption that resulted in the arrest of seven soccer officials here Wednesday could prompt the company to end its agreement. Visa’s current deal runs until 2022.

Urging the organization to make sweeping change, Visa said overnight that FIFA needed to rebuild “a culture with strong ethical practices to restore the reputation of the games for fans everywhere.” “Should FIFA fail to do so, we have informed them that we will reassess our sponsorship,” it added.

Other top sponsors such as Adidas AG, Coca-Cola Co. and McDonald’s Corp. all said they were monitoring the situation, while Hyundai Motor Co. Ltd. said it was “deeply concerned” about the allegations. FIFA earns $177 million a year from its marketing partners, according to its 2014 financial results.

See here for other sponsors' thoughts on FIFA/Blatter. Being a firm believer in the notion that money talks, I ultimately believe that Blatter's fate lies in the hands of FIFA's sponsors. I am convinced that the US making a big stink about arresting FIFA officials in an international extradition was partly designed to draw attention to governance issues among the sponsors.

It's very interesting stuff, and let's see in a few moments whether Blatter's previously assumed rubber-stamping as president will actually happen.

5/30 UPDATE:  Blatter wins a fifth term, to no one's real surprise. Having spread FIFA largesse to small member nations, it was inevitable since votes are weighted according to, say, revenues.

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Woman Beater Mayweather, Hublot's Celeb Endorser

♠ Posted by Emmanuel in CSR,Gender Equality,Sports at 5/06/2015 01:30:00 AM

Hublot's adverts featuring Mayweather should feature this background music.

We haven't had a corporate social responsibility (CSR) post for quite some time, so here's one. I am afraid that the only "knockout" I observed during the much-ballyhooed but ultimately dull Pacquiao-Mayweather "Fight of the Century" was me falling asleep sometime during the third round. Believe me, I was out cold. So the fight itself was utterly forgettable, but one thing I did note before being KO'ed were the Hublot-sponsored trunks Mayweather was wearing.

For those of you who don't know Hublot, it's a maker of flashy, bling-bling watches of the sort a chap like Mayweather would like, festooned as they are with gold and jewels. Chintzy trinkets for tawdry people. Watch-collecting cognoscenti in the know tend to disdain the brand for this very reason--it's flash over substance. True, Hublot has tried to remedy this image by making movements in-house for its latest timepieces instead of buying (relatively inexpensive) ones from someone else not on par with the prices they're charging, but the image persists. For an analogy, think of Hublot as the Dre Beats of watchmaking instead of headphones--all marketing hype but little substance that more discerning buyers can observe.

I am afraid that Hublot did itself no favors by selecting perhaps the most hated man in sports as their celebrity endorser. For an undefeated American champion, Mayweather getting lustily booed in his hometown speaks volumes. What kind of feel-good factor do you get from hiring Mayweather as your endorser? Anyway, to the press blurb for the Hublot endorsement:

Today, luxury Swiss watch brand Hublot had the honor of hosting a press gathering with 10-Time World Champion Floyd "Money" Mayweather to announce their sponsorship of the future Hall of Famer for his highly anticipated match-up against Manny Pacquiao on Saturday night in Las Vegas.

To mark the occasion, Hublot CEO Ricardo Guadalupe presented a King Power WBC Full Pave with Emeralds to the undefeated champion, who will also wear the Hublot brand name on his boxing trunks on Saturday night.  In line with Hublot's "First, Different, Unique" brand ethos, Mayweather has previously never had a brand adorn his boxing shorts. The Presentation took place minutes before the boxer took the stage for the highly touted Weigh In.

"Everyone knows I am a big fan of luxury watches and Hublot is one of them," said Mayweather. "I am extremely grateful for their support and I look forward to adding the King Power WBC Full Pave with Emeralds to my collection."

Once upon a time, Tiger Woods had a clean-cut image that advertisers desired. (He also used to win major tournaments on a regular basis, but alas, time has moved on.) After details of his salacious personal life began to emerge, though, most left until few remained. It is thus puzzling why anyone would choose a convicted woman beater only released from jail in the past few years as a product endorser. Is he not toxic enough? This controversy was resurrected recently when female reporters who had investigated the domestic abuse were denied press credentials for the yawner of a fight. 

Meanwhile, the boxer remains unapologetic:

Questioned by CNN reporter Rachel Nichols last year about his abusive behavior, Mayweather showed little remorse. He noted that there were "no pictures ... just hearsay and allegations." He has previously said he should not be compared to O.J. Simpson or Chris Brown because there are no pictures of the women he has allegedly abused -- as if the lack of video or photographic evidence is equal to exoneration. In fact, Mayweather spent several months in jail in 2012 after pleading guilty to misdemeanor assault charges.

What is astonishing here, however, is that the public is willing to overlook Mayweather's misogynistic, violent behavior outside the ring. Consider how well all the hype over the Mayweather-Pacquiao fight is paying off. The Los Angeles Times reports that gambling on the fight is expected to be heavy, with one MGM Resorts official estimating the total amount of wagers at $80 million. The 16,800-capacity MGM Grand Garden Arena has sold out, generating a record $74 million.

Mayweather, whom Forbes has named the highest-paid sportsman in the world, is set to take home $180 million for the fight.

 

Such collective indifference by the public of Mayweather's domestic abuse is curious considering other incidents involving football players. After video surfaced of Ray Rice punching his then-fiancée (now wife) in an Atlantic City, New Jersey, elevator, he was temporarily suspended by the NFL and later dropped by the Baltimore Ravens.

Perhaps Mayweather's apparent elusiveness in the ring is also evident outside of it as his well-documented history of beating women up--something which severely tars other athletes--has not really affected him that much commercially-speaking. In any event, Hublot has chosen to open itself up to potentially massive criticism in heaping praise and money on a social pariah. Somehow, being "The Woman Beater's Watch" doesn't strike me as a particularly effective marketing ploy.

What self-respecting woman would wear a Hublot watch knowing all this?

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Manchester United: From AIG to Chevrolet Killer Cars

♠ Posted by Emmanuel in CSR,Sports at 10/18/2014 01:30:00 AM

Chevrolet is "Like a Rock"? Man U makes itself into a global punch line (again).

 When I contemplate the largest follies of sports sponsorship, one name immediately comes to mind, "Manchester United." It takes the cake by some margin even if the competition has become more intense. I have written at some length about the dastardly activities of the Ameriscum Glazer clan which saddled this once-solvent sports team with boatloads of debt after they bought it via leveraged buy out (LBO). They say that misery loves company, and one of the "benefits" the Glazers have brought to Manchester United are American shirt sponsors of the equally dodgy sort.

In a world infested by hellishly daft shirt sponsors, Manchester United took the cake by having fellow American--let me repeat that for emphasis--American Insurance Group (AIG) as shirt sponsor when it imploded spectacularly because of its nefarious activities involving the sale of credit default swaps (CDS) as the US subprime crisis went into full swing. As defaults on subprime real estate-linked assets AIG's London subsidiary sold protection on collapsed, it took down the US mothership. So, the football team was made into a laughingstock as they could not remove AIG from its kit since the deal to sponsor AIG was still in place despite the firm collapsing.

He was smart enough to leave Man U to save the embarrassment of wearing this shirt.

Fast-forward a couple of years later and Manchester United's owners decided to take on another Yanqui laughingstock. In the years between they took AON, a respectable political risk insurer. Not having learned their lesson from the AIG, however, they subsequently took on the General Motors brand Chevrolet. When it comes to corporate social responsibility (CSR), what's worse? AIG underwent the largest government bailout in US government history, wasting colossal amounts of taxpayer money. Meanwhile, the newswires are now plastered with stories about various lawsuits against GM amounting to billions for customer injuries and fatalities. So, Manchester United's penchant for bad press has indeed moved on--from corporate collapse over dodgy dealings to, well, killing the customer:

At least 27 people have died and 25 people have been seriously injured in crashes involving General Motors cars with defective ignition switches. Attorney Kenneth Feinberg, who was hired by GM to compensate victims, updated the totals Monday. Feinberg says he has received 178 death claims since August. Of those, 27 have been deemed eligible for compensation payments. 

Twenty-five of the 1,193 injury claimants have also received compensation offers.
GM knew about faulty ignition switches in Chevrolet Cobalts and other small cars for more than a decade but didn't recall them until February of this year. The switches can slip out of the "on" position, which causes the cars to stall, knocks out power steering and turns off the air bags. Feinberg will accept claims until Dec. 31.

Tragic as it may be, you can't make this stuff up. If you need some ugly Americans, I've got some of the ugliest for you right here as they all flock to a British football team for some strange reason. 

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Brent Spar 2: Greenpeace, Lego & Shell's Betrayal

♠ Posted by Emmanuel in CSR,Environment,Marketing at 10/15/2014 01:30:00 AM

This WSJ feature is sponsored by, er, Shell.

Environmentalist activists are not infallible despite being ostensibly well-intentioned. Common failings include impractical courses of action as well as those which actually make the situation worse. With regard to the latter, Greenpeace has some history with energy titan Shell. In 1995, Greenpeace singled out Shell for the planned sinking of an exhausted oil platform, Brent Spar. Greenpeace argued that it was better to bring the platform on land and dispose it from there at considerable additional expense. After making a huge racket, Shell eventually bowed to the environmentalists. However, this action was foolish and misguided. In a study published in the prestigious journal Nature, it was explained how sinking the platform into the sea as originally planned was actually the ecologically-friendly alternative:

However, the true scandal may have never made it to the public: In June 1995, a study was published in the scientific journal “Nature”. This study stated that the impact on the environment by sinking the Brent Spar would have been minimal and the authors even said it would have been a gift to the eco-system. In September 1995, Greenpeace had to publish publicly that the 5,500 tons of leftovers of oil they assumed to be in the Brent Spar, was too much. In October 1995, the assessment of the Brent Spar by a Norwegian independent institution found that it was only 75 to 100 tons of oil. This is 1.36% – 1.82% of the amount assumed by Greenpeace. In retrospective, it seems to be true that sinking the Brent Spar would have been the best option, also ecologically.

Good job, Greenpeace. Nowadays, we have "Brent Spar Round 2" as Greenpeace has singled out Shell again for its role in Arctic drilling and targeted Lego for creating toy sets which feature Shell gas stations and the like via a viral YouTube video. Always loving irony, the WSJ feature on this incident was preceded by--you guessed it--a Shell video playing up its alternative energy portfolio (see picture above). Anyway, on to the matter...

A 1-minute, 45-second video has ended a long-term relationship between Lego and Royal Dutch Shell. The Danish toymaker said today that it will not renew a co-promotion deal with Shell, after a Greenpeace video linking Lego with the oil company’s Arctic drilling program went viral.

The video, which shows an Arctic landscape built of Lego blocks being swallowed up in a pool of black oil, “may have created misunderstandings among our stakeholders about the way we operate,” Lego Chief Executive Jørgen Vig Knudstorp said in a statement. Greenpeace has been pressing Lego to end a partnership signed in 2011, in which co-branded Lego toy cars are sold at Shell stations in some countries.

Greenpeace, in a statement on its website, called the decision “fantastic news.” In a statement issued by its London press service, Shell said it did not comment on contractual matters. “Our latest co-promotion with Lego has been a great success and will continue to be as we roll it out in more countries across the world,” the statement said.

I myself have some distaste for Arctic drilling, but I certainly don't think that targeting Lego is ideal. After all, remember that Lego pieces are made of acrylonitrile butadiene styrene (ABS). ABS is a petroleum-based product, i.e. a "petrochemical" derived from fossil fuels.

Lego disowning petroleum-based products is like McDonalds disowning meat production. Ironic, and worst of all, dumb. First off, Greenpeace should not have targeted Lego, a marketer of petroleum-based products. Second, Lego was doubly stupid to give in since it undermines the whole business model of selling petrochemical-based toy elements. Makes you sad, doesn't it?

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When McDonalds China Can't Serve Burgers...

♠ Posted by Emmanuel in China,CSR,Health at 7/23/2014 01:30:00 AM

...it's like Amazon without books to sell. A colleague in China posted the picture above to his social media account in the wake of Chinese food supplier Shanghai Husi being found to have relabeled the expiration date of its meat products. Upping the visibility and impact of its food safety violations, it sold these products to several major Western food chains. We usually believe that tampering with food products is common among PRC firms and not Western ones who would think more carefully about tarnishing their reputations for a bit more profit, but this instance depicts the opposite: Shanghai Husi is a subsidiary of the OSI Group of America, a private meat processing concern headquartered in Aurora, Illinois of Wayne's World fame. You can't get more American than that.

With an already lengthy history of food scares, there was no other option for the Chinese authorities other than to disrupt the food supply chain to these chains:

Authorities suspended operations at Shanghai Husi, a unit of Aurora, Illinois-based OSI Group, after the local Dragon TV channel reported on July 20 its workers repackaged and sold chicken and beef past the sell-by date. The probe may affect chains such as McDonald’s, Yum’s KFC and Pizza Hut, Papa John’s International Inc. (PZZA) and Burger King Worldwide Inc. (BKW), which said they had bought and have since removed items from the supplier.

Unfortunately, the Chinese government doesn't go scot-free here. As it turns out, they had already been looking into the firm's practices prior to the investigative show on Dragon TV running its feature on Shanghai Husi. How do we know this? Part of the show contained the interrogation of a Shangai Husi employee stating that these practices have been going on for years now:

An unnamed quality manager at Shanghai Husi’s factory said company executives approved the use of expired ingredients, a practice he said had been going on for a few years, according to Dragon TV’s taping of his interrogation by authorities. Two calls to OSI China’s main office in Shanghai weren’t answered. The Shanghai city government’s media office didn’t immediately respond to a request for comment.

Shanghai Husi’s case would be handed to police if crimes were suspected, according to the regulator. It also ordered probes into all other China food-production operations invested by the OSI Group, including in Shandong, Guangdong and Yunnan. 

Instead of taking action only after the show was aired, the authorities ought to have cracked down as soon as they confirmed these irregularities not only to bolster their reputations but also to ensure public safety. When I travel abroad, I usually think of McDonald's as a haven for clean and safe (if not necessarily healthy) food. After all these years, I guess I should rethink that.Apologies won't work now, unfortunately.

UPDATE: For what it's worth, TIME speculates that finding against this firm may be part of Chinese efforts to undermine foreign companies operating in the PRC:

We can speculate why that might be happening. The government could be trying to reel in a few “big fish” to try to scare smaller fry into better behavior. Officials might be attempting to win points with the public by appearing to address issues of great public concern like food safety without roiling any Chinese interests. And in the process, the Chinese government might believe it can aid Chinese companies in their competition with foreign firms by undercutting the reputation of international brands...

The Chinese government has a long history of attempting to tilt the local playing field in favor of its own firms. Foreign carmakers, though very successful in China, are still forced to manufacture in the country only through joint ventures with Chinese firms — a restriction most other emerging economies don’t impose. Reports from chambers of commerce accuse Chinese bureaucrats of routinely hampering the expansion of foreign business by taking a “go-slow” approach when issuing mandatory permits and licenses. 

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Adios Sochi Grand Prix 2014, Russia World Cup 2018?

♠ Posted by Emmanuel in CSR,Europe,Russia,Sports at 7/22/2014 01:30:00 AM

Geography is against Russia retaining these events without scrutiny.

This is not exactly a pleasant post to write given the circumstances, but it's something that will be the subject of discussion anyway in the coming months and perhaps years. First, as I wrote a few weeks ago, the first Russian Grand Prix is scheduled on the Formula One calendar for October 12. Even as its business elites are preparing for the worst as the full weight of Western sanctions passed (and yet to pass_ disrupt their abilities to conduct business abroad, Russian race organizers are adamant that show must go on:

Organizers insist Russia's first Formula One Grand Prix will go ahead as planned despite an airliner being shot down in the conflict zone in eastern Ukraine.

Malaysian Airlines Flight 17 from Amsterdam to Kuala Lumpur crashed Thursday in eastern Ukraine. All 298 people on board are believed to have been killed. Ukraine accused pro-Russian separatists of shooting the plane down, something the rebels deny.

The promoters of the Oct. 12 Russian Grand Prix in Sochi told The Associated Press in a statement Friday that "all the preparations are on track and run according to the schedule," and that "organisers are confident that the inaugural Russian Grand Prix will be comfortable for all."

All I can say is that the organizers of the Bahrain Grand Prix were making similar noises prior to the 2011 race being canceled against the backdrop of anti-monarchy protests during the Arab Spring. Self-evidently, the disorder in Sochi's case emanates not from internal turmoil--Chechnya is far away--but from the weight of disapproval from foreign powers-that-be. In motorsports, they reside in Great Britain.. As the graphic above indicates, 7 out of 11 Formula One constructors are headquartered in the UK (never mind that the car brands themselves are "foreign"; their F1 facilities are mainly in the Blighty. 

I am obviously not clairvoyant as to what the culpability of Russia is in the downing of Malaysia Airlines MH17. Nor do I know what Russia's response will be if and when an international body finds the weight of evidence implicates Russia. However, I do know this: if Russia is designated a "state sponsor of terrorism" or something similar that results in severed trade ties as UK Defence Minister Michael Fallon suggests, there is no chance whatsoever that the race will proceed as planned. It will be curtains for the race and much else that is Russian-invested in Europe. Aside from most of the teams being UK-headquartered, commercial sponsors scare easily.

* * * 

Tis sad talking about real generals instead of the Oranje Generaal, but we are where we are.

Next, consider the 2018 World Cup. Unlike the IOC with its Olympic events behind the Iron Curtain--the most memorable being the 1980 Summer Games in Moscow, USSR and the 1984 Winter in Sarajevo, Yugoslavia--there were never any FIFA World Cup events held behind the Iron Curtain. (See this interesting story behind IOC politics during the Cold War.) Obviously, large-scale disapproval of Russian involvement will also torpedo Russia hosting the next World Cup even if it's only 4 years away. Being designated a state sponsor of terror or being taken to the International Criminal Court and the like will scare any sensible commercial sponsor away. 

Russia has also rubbed one of football's powers the wrong way--the Netherlands. With a majority of the passengers aboard MH17 coming from the Netherlands [193/298], it has been deeply affected by current events. That said, the Netherlands also has significant commercial ties with Russia alike many other Western European countries. What to do, then? If Russian involvement is found, then trade ties will probably not be enough to quell Dutch frustrations. For obvious reasons, Dutch input will be crucial in forming the international response to Russia.

And while the disaster has touched so many here, the government is also mindful that Russia is the country’s third-largest trade partner and that business is growing, especially natural gas.

“We are a small country, dependent on our exports, and unlike the United States, we cannot always react from our moral high grounds,” [opposition leader Alexander] Pechtold said. “Still, if it is proven that the Russians have their fingerprints on this horrible event, we cannot look in the other direction.”

Also consider that the Dutch national team is one of football's most famous draws. In Yank-speak, the World Cup without the Netherlands participating is like the Lone Ranger without Tonto. (Sorry Dutch readers; if your team had won at least one World Cup final in three tries, I'd say the World Cup without the Netherlands is like the Simpsons without Bart.) As the worst-affected country, the Netherlands is not a pushover being a NATO member and fielding one of football's most recognizable squads in sporting terms. End result? You can safely conclude that the Dutch will play a significant role in determining the fate of the 2018 Russia World Cup.

UPDATE: The highly reliable Christian Science Monitor explains why EU sanctions will likely be shaped by the Dutch. Also notice how the Russia-aligned rebels are now providing passenger remains to the Dutch.

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US Firing Squads From Mars, EU Pharma From Venus

♠ Posted by Emmanuel in Americana,CSR,Europe at 5/20/2014 02:00:00 AM

Having (ab)used the hackneyed Americans from Mars, Europeans from Venus trope already, I suppose giving it another go isn't bad. As I usually start my day, I perused the Yahoo! news items presented to me on the homepage, including an AP article about how the state of Utah may be bringing back the firing squad to execute death row inmates. The proximate cause of this seeming return to barbarity is especially interesting: For many, many years now, European countries have been trying to persuade the United States to stop the cruel and inhumane practice of handing down death sentences. As it turns out, though, many of the chemicals used to lethally inject death row inmates were sourced from EU pharmaceutical firms. Upon figuring this out, the aforementioned EU pharma concerns were aghast at how their products were being used--or at least the EU finding them complicit in American "human rights" violations punishable under European law. Faced with dwindling supplies from abroad, what are AmeriKillers supposed to do?

The ethical exploration of society’s ultimate sanction has been going on for decades. But it’s been complicated more recently with European pharmaceutical companies refusing to sell key lethal injection drugs to US death penalty states, on ethical concerns about capital punishment. Most other countries that still have the death penalty either hang or shoot their condemned, with only six countries, including the US, relying on lethal injections. (Three countries still behead.) One hundred forty countries ban the death penalty. But to some elected state officials, drug shortages and legal challenges have sparked a renewed focus on what is a humane execution.

The recent brouhaha over lethal injection was spurred when a new toxic cocktail did not work as intended as Clayton Lockett cursed and thrashed for a long while in Oklahoma before falling silent in a botched execution. The incident prompted much discussion, and I was pointed in the direction of an earlier Listverse feature detailing horrifically botched executions. These things tend to further exasperate Europeans from all ends of the political spectrum convinced of the barbarity of American practices. Talk about the road to hell being paved with good intentions, however, as the Yanks are going back to firing squads over the unavailability of EU-sourced chems:

For decades, Europe has done all it could to bring its anti-death penalty stance to the United States. We've seen international covenants and conventions, refusals to expedite in capital cases, good old-fashioned diplomacy, even EU briefs to the US supreme court. Nothing has worked. Until now. Over the last several years, Europe has found a way to export its rejection of capital punishment ... by refusing to export lethal injection drugs to the United States.

In the private sector, European pharmaceutical companies caught wind of the increasing reality that their products were being diverted to execution chambers, so they either imposed end-user agreements on buyers or stopped producing the drugs altogether. In the public sector, Britain responded by imposing export controls on drugs used for lethal injection and joined a chorus of countries calling for the European Commission to do the same, which it did.

When it comes to the death penalty, the United States today is what South Africa was in the 1980s. It is the subject of a targeted boycott of goods based on behavior that the rest of the world views as immoral. That's a mighty strange place to be for the self-declared leader of the free world.

As a God-fearing Catholic, I generally discourage the use of the death penalty. However, you may be surprised that this occasional America-basher will not automatically condemn this Stateside practice as an abomination (or compare it to apartheid-era South Africa). From a rational choice standpoint, keeping folks in jail isn't cheap, even more so those on death row. Searching the Internet, you will get an astonishing range of figures on how much it costs to jail "regular" inmates and their death row peers. What they share is being humongous to astronomical.

However, portraying shooting people as a the "cost-effective" solution is of course besides the point: Why do so many people end up in jail in the first place--especially those unfortunate enough to be born with the wrong skin color? As with many other seemingly barbaric practices, never forget that there are some who stand to profit from the entire enterprise. Sticking with EU pharma firms, I am content with the belief that most are genuinely appalled by the use of their drugs for this application and are thus willing to stick with EU guidelines proscribing their distribution for such use.

I'm not saying their practices are always ethical, but that's a story for another blog post...

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Mickey in GulagWorld: Enter Disney Shanghai

♠ Posted by Emmanuel in China,CSR,Neoliberalism at 5/15/2014 02:00:00 AM

Wishing upon a CSR Death Star, you are.

I was originally going to entitle this post "Totalitarianism and Theme Parks" but I thought the better of it. Some of you will of course still complain that (a) there already a Disney park in China in Disneyland Hong Kong and that (b) jillions of Disney-licensed merchandise is already made in the PRC. So, it is too late to complain that China's authoritarianism fits poorly with Disney's family-friendly image. But I digress.

With holier-than-thou Hollywood types complaining about Brunei's human rights violations, the upcoming opening of a Disney park in mainland China should not go unnoticed. The interesting angle for me has always been the collision of Disney's commercialized and sanitized fairy-tale happy endings with real life's opposing penchant for messy, tabloid-nasty sad endings. The essential difference between Disney and China is that Disney is more concerned with the appearance of being one big, happy family whereas China is more concerned with acquiescence to a patriarchal leadership in the Communist Party. Are these two--illusion and patrimony--mutually exclusive? That is the question Disney Shanghai will face.

Actually, there already is a planned community which Disney has created that certainly does not always play host happy endings. Celebration, Florida (pop. 7,427) has been around for about a decade, and it's been an interesting social experiment:

Celebration isn’t perfect in the Stepford Wives, Truman Show way that it invokes with its Disney connection and emphasis on uniformity—there have actually been a few documented murders in Celebration and Potochney recalls clandestine drug use by teens like in any other town—but the residents have a palpable pride. It stems from a sense of connectivity and community that careful planning often provides, and that hopefully we can learn from and try to implement in less logically structured neighborhoods in the country.

So residents of Celebration kill each other and shoot up drugs like in any other American town. However, that it is still an all-American town means that few compare it to the Disney ideal. Do not expect the same treatment for Disney Shanghai. So many years on after it joined the WTO in 2011, we have hardly noticed Bill Clinton's liberal ideal that economic freedom will eventually cause Chinese residents to clamor for political freedom. Just think of the possibilities for protesters--I'm sure Disney itself is already building up its rhetorical defense for when the time comes:

1. When You Wish Upon a Star - Jiminy Cricket tells us that it makes no difference who you are; anything your heart desires will come to you. However, what if you are the Uighurs or Tibetans wising for self-determination, or at least more political autonomy? Xinjiang province where the Uighurs live has been subject to Commmunist Party repopulation campaigns to make them a minority there. Same banana with the Tibetans who've been subject to their own repopulation efforts. Can you say "Chinese West Bank"?
2. It's a Small World After All - this standard ride in all Disney theme park extols the virtue of respecting differences in a Kantian sense since "there's so much that we share." Aside from hardly being applicable to China's separatist movements, Chinese work camps or laogai do not seem to square with China being a small world after all. Why would you need to re-educate your people while hosting a theme park that lauds unity in diversity? 
3. Circle of Life - this Elton John classic from The Lion King is a really memorable, upbeat tune. It too does not seem to jibe with a country that still implements a one-child policy whose violation by the poor and marginalized is likely to result in forced abortions.

I hardly think China will change the practices mentioned above to ensure Disney doesn't get a a bum rap helping enrich the folks who violate all sorts of trite, do-gooder sentiments expressed in song. Sometime ago I discussed money-grubbing American Yale University whitewashing concerns about freedom of speech to set up shop in Singapore, while the more circumspect British Warwick University decided against doing so. Americans, especially the commercial behemoth that is Disney, probably couldn't care less that the CSR concerns in China are far, far greater than those of Singapore for as long as they're not brought up. Again, the problem for Disney is that it is the world's leading purveyor of lachrymose sentiments about the goodness of this world while working closely with a regime that tries to keep 1.3 billion persons in line by almost any means necessary.

Indeed, why are there so many songs about rainbows when we kind of know what's on the "other side"? To paraphrase Elton John, I'm afraid I do not necessarily feel the love tonight--but I do see the commercial po$$ibilities. As the capitalists have pumped in another $800 million into this project, it should be quite a show. Mark your calendars for December 2015, and try not to feel so bad about radical levels of inequality in this self-styled "worker's paradise" of a country as you take photos with Gonzo, Princess Leia, Winnie the Pooh and heaven knows how many more characters Disney have already bought.

You may even want to try out to be a "cast member" who is contractually obliged to be perpetually cheery in that shallow and vacuous American way: just forget about the poor sods unable to afford a ticket into the Happiest Place on Earth. Really, it's a whole new world (after you get in the gates)--don't you dare close your eyes.

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