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Anne Lieber

January 4th, 2022

Investigating Impact: Are companies doing enough?

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Estimated reading time: 10 minutes

Anne Lieber

January 4th, 2022

Investigating Impact: Are companies doing enough?

0 comments

Estimated reading time: 10 minutes

If you’ve spent much time on Twitter or on the websites of American media outlets in the last few weeks, you may have come across something about Kellogg’s strike. 1400 workers striked over a “two-tiered wage system, [in which] established workers keep the pay or retirement benefits they’re used to, while newer employees get less money and/or benefits,” the aim of said system is to save money. (Something that seems a bit ridiculous when you take into account the 1.25 billion dollars in profit the company reported in 2020) . Kellogg’s aim was to permanently replace the workers, but they ran into a, to be frank, probably should have been an expected obstacle: Generation Z. The internet is banding together to “spam Kellogg’s job portal.”

 

Why are we telling you this story? Issues like these are at the crux of impact, the theme of this year’s Public Sphere Journal. The Centre for Social Impact defines social impact as “the net effect of an activity on a community and the well-being of individuals and families.”  Impact, in short, is everything and nothing. It is individual, societal, and institutional. It is Environmental, Social, and Governance (ESG) investing and Corporate Social Responsibility (CSR). And at the heart of it, it acknowledges that we, everyone, from business to policymakers to the third sector, need to internalize our externalities.

 

We are not. Companies have good intentions, and their CSR efforts are certainly making an impact. However, that does not mean they should be let off the hook for what they aren’t doing. According to the U.S. Government Accountability Office (GAO), “about 70% of the 21 million [U.S.] federal aid beneficiaries worked full time.” Some of the top culprits where employees needed benefits? McDonald’s, Walmart, and Amazon.  The irony of this? Companies love to tout CSR, which Investopedia defines as “a self-regulating business model that helps a company be socially accountable,” being “conscious of the kind of impact they are having on all aspects of society, including economic, social, and environmental.”

 

We are in an era where, “among the 500 largest companies listed on one of the US stock exchanges, the average gap between CEO and median worker pay was 264:1,” “CEO pay in the US climbed more than 900% between 1978 and 2014 – compared to just 11% for average worker pay,”  “100 companies have been the source of more than 70% of the world’s greenhouse gas emissions since 1988,”  and “a fifth of global industrial greenhouse gas emissions are backed by public investment” it is clear there are discrepancies between the CSR companies are touting and their day to day actions.

 

Going back to Kellogg’s, which touts its founder W.K Kellogg, who “donated nearly all his personal wealth to create the W.K. Kellogg Foundation”, and goes on to state to list among its values: “act with integrity and show respect,” and “we are all accountable.” Kind of ironic given the 1.5 billion stock buyback the company recently approved, and the claims that “[Kellogg’s doesn’t] treat [factory workers] as they do their machinery.”  Amazon touts sustainability, even co-founding The Climate Pledge, but in 2018 had CO2 emissions “roughly equal to the annual emissions of Norway,” and its founder (in)famously got into an informal contest to be the first billionaire to be on a rocket. They are not walking the walk, so it was. While intentions, and outcomes, maybe good we need more structural pressure and support for companies to do better. Where can this come from? Policymakers. Why should they care? Business decisions don’t happen in a vacuum. As we’ve seen with food stamps, their decisions can often result in messes someone else (the government, non-profits, society, etc) has to clean up. Institutional accountability and pressure are needed. And if the private sector won’t do it, maybe the public sector can.

 

Policymakers have attempted to create the framework to pressure/incentivize companies to do better. San Francisco, CA, and Portland, OR for example, both have both imposed taxes on high pay ratios, though effectiveness has been debated and past efforts to deal with pay gaps have gone awry. We need to take that momentum and push for an institutionalized framework for governments at all levels to incentivize aid, and abet companies to be more responsible. Whether that’s through more laws to penalize companies, incentives of some kind, withdrawing public investments from certain companies, or even getting the discussions in the media, or something else, it is clear something needs to change. It won’t be easy. There is no way to properly quantify this, and there are plenty of instances where (some) companies picked up the slack where governments won’t (see, paid parental leave in the U.S.). There are frameworks. Governments can work with ESG funds and companies that have been leaders in the space. Like you, reader, are a policymaker, CSR or ESG worker, activist (or soon to be), keep this in mind when you are going about your work. We are all in this together, solving pressing problems isn’t the domain of just one sector, and we need to act like it.

 

About the author

Anne Lieber

Anne is a graduate student at the LSE School of Public Policy.

Posted In: Entrepreneurship | Public Policy

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