Do Well and Do Good

Advertising Age: Doing Good Does Generate Returns for Business

Perhaps little else indicates the widespread adoption of an idea more than its transformation into a 'gut sense' that is easily accepted as truth. In that case, it seems that the benefits of cause-marketing are no longer up for debate and are now part of conventional wisdom, or at least so was my impression after reading this recent article in Advertising Age whose title "Yes, There is an ROI for Doing Good" promises a wealth of supporting data for its bold headline.

It turns out that most of the executives interviewed for the article hadn't really 'crunched the numbers' that would help quantify ROI for cause marketing initiatives, but they did indicate that there was little doubt in their mind that these programs can yield big returns when done right. So while the debate around the true motivations of cause-marketing lives on (whether or not companies are just in it for the money and if so does it really matter?), it look like the greening of our TV networks will continue.

Most interesting to me were the cause marketing examples called out in the article, especially the HelptheHoneyBees.com program by Haagen-Dazs that addresses the problem of the disappearing bee populations. What I liked about this effort was the seemingly sincere reason for choosing this cause (turns out most Haagen-Dazs ice cream flavors contain ingredients pollinated by bees) and the beautiful execution on the site and even in the advertising that really tries to not only inform you but even to get you to act. Amazingly, the print ad for the campaign (pictured here) actually ran on recycled linen paper embedded with sunflower seeds so that you could just tear out the add, plant it in your backyard and presto: you are planting flowers that help bees survive. Now that's what I call full circle.

Rockefellers vs. Exxon Mobil

The descendants of John D. Rockeffeler, the man who founded the company that would become Exxon Mobil, are taking on the company's current management for its refusal to focus on renewable sources of energy.

The family is sponsoring four proxy resolutions aimed at changing various aspects of the company. The first seeks to change the corporate governance structure by separating the roles of CEO and Chairman, both of which are currently held by Rex Tillerson, the man Forbes called "The Defiant One" in an article last year about Mr. Tillerson's refusal to 'get in line' with the shift in public sentiment toward renewables and away from oil and coal. 

Other resolutions aim to increase the company's emphasis on understanding and responding to climate change, such as one resolution which seeks to establish a task force to investigate and report "the likely consequences of global climate change between now and 2030... and to compare these outcomes with scenarios in which ExxonMobil takes leadership in developing sustainable energy technologies..."

I currently do not own a position in XOM as of the date of this writing – this may or may not change in the future. Under no circumstances should any of the comments stated above be viewed as a recommendation to buy, sell or hold any security.  A decision to invest or not invest in any particular security should be made in the context of the financial situation of the individual or entity involved and, as such, this communication should not be construed as a recommended action.Please see conditions of use for important legal disclosures and information relevant to this post

Earth Day Part 1: The Skeptic

It's hard not to get a little skeptical about the Earth Day celebrations. The bloggers over at Tree Hugger may have said it best when they questioned: "Is Earth Day the New Christmas?" Or a quote by Advertising Age in an op-ed, saying "It's nearly Earth Day: Time to consume more to save the planet." Indeed, with every major corporation now pushing 'green' products and every network on TV advertising 'green' shows, it's hard not to feel that the true spirit of the environmental movement has been co-opted for the service of something altogether different.

Still, I can't help but try and step back a bit and note the positives here. At the end of the day, consumers vote with their dollars. If there truly is a concerted effort to buy things that are actually made with fewer resources and are better for the environment, corporations will respond to the market demand and will adjust accordingly. And that's not a trivial shift. Yes, there is an irony here at play, since the most environment friendly thing one can do is not to consume so much in the first place. But since consumption isn’t going away soon we need to give companies and market participants a reason to pay attention. There's no better way to do that than to make them follow the green.

Bill Clinton and Arnold Schwarzenegger on the Unbanked

I came across an editorial published last month in the Wall Street Journal where Bill Clinton and Arnold Schwarzenegger team up to call on public, private and non-profit leaders to "join the effort" to help unbanked customers gain access to financial services and products.

It is unbelievable to me that half of households in California don't have basic savings accounts and more than 10% don't even have checking accounts. It's just as incredible to think that the people who can often least afford it will spend nearly $40,000 in his or her lifetime to turn their salary into cash. I've often written on this blog that what has made this country so prosperous for so many people in the past has been access to capital.  Without basic financial services at fair prices individual can't borrow money to invest in business and projects that help build their future, and they can't adequately save their financial resources (let alone grow them) in a way that creates stability for them in retirement or for their future generations. Nothing seems more contradictory to the promise of the American dream than this.

Some say that existing payday lenders already meet the needs of unbanked customers, or that Credit Unions can offer alternatives to some of the lenders that take exorbitant fees from their customers. While this may be true in a limited respect, it's clear that this isn't enough. Competition among current lenders hasn't brought down prices to reasonable levels and many people simply don't have access to or aren't part of Credit Unions.  What's more, current lenders seem to only view the unbanked market as a target for loan products.  What about saving products, capital accumulation products? If the only financial products that are offered through the channels that unbanked customers use are loan products, they will hardly move beyond them. At the end of the day, then, providing the products people need is just one piece of the puzzle. Education and financial literacy need to come along with it.

Citi, JP Morgan and Morgan Stanley Create "Carbon Principles" for Energy Companies

Three major Wall Street firms announced last week the creation of Carbon Principles, " climate change guidelines for advisors and lenders to power companies in the United States," according the the release. Citibank (C) JP Morgan (JPM) and Morgan Stanley (MS) came together and consulted with both power companies and environmental organization over a nine month period before announcing the principles. Great post from the Cleantech Blog on this here.

It seems that the majors have recognized that the sands are shifting underneath their feet when it comes to how consumers want energy produced and, more importantly, when it comes to how the government is likely to regulate the industry and its emissions in the future.  As carbon taxes or a cap-and-trade system become more likely the big banks are afraid of financing energy projects and plants today that become economically problematic tomorrow if such new policies or regulations take hold. While Wall Street is clearly doing this in order to protect their economic interests and not for the benefit of the world's air quality, it is still an amazing example of the private sector leading the way and being just ahead of where the government and regulators are going (even if it's only because the regulators themselves have been slow to react).

What Micro-Credit and the Subprime Meltdown Have in Common

One can have too much of a good thing. Take buying a home, for example. After WWII, the dream of home ownership went mainstream in part because it was supposed to bring a sense of economic and emotional stability into the average American’s life. No matter what, you could always go home.

Somehow, however, more than fifty years later we lost touch with these humble beginnings. Suddenly, rather than using home ownership to secure our economic stability, we were putting it in real jeopardy. Fueled by rising prices, cheap money, lenders with questionable intentions, banks that didn’t ask about the creditworthiness of the mortgages that they were buying, and ratings agencies willing to look the other way, things blew up. We all know the rest of that story.

Motley Fool: The Happy Meal in Front of the Bulldozer

It's not that I don't like McDonald's (NYSE: MCD). I enjoy its food and coffee, and despite the recent months of market unease, the stock has risen from $45 to $60 a share since this past April. But just when the company seemed to be going gangbusters, a new initiative in Florida could return some tarnish to the Golden Arches.

Read the rest of this article on the Fool.

I currently own a position in MCD as of the date of this writing – this may or may not change in the future. Under no circumstances should any of the comments stated above be viewed as a recommendation to buy, sell or hold any security.  A decision to invest or not invest in any particular security should be made in the context of the financial situation of the individual or entity involved and, as such, this communication should not be construed as a recommended action.Please see conditions of use for important legal disclosures and information relevant to this post

Motley Fool: CSR Done Right

My latest Motley Fool article on how Corporate and Social Responsibility is becoming a more essential to companies can be found here.

Barron’s: World’s Most Respected Companies

As corporate and social responsibility (CSR) has taken center stage, numerous commentators have denigrated those companies that have chosen to enact responsibility measures. I’ve long-held that such opponents often build an anti-CSR case by misstating the facts and others share this opinion. It is my view that when enacted sensibly, CSR (I am not talking cause marketing alone) can add considerable long-term value to enterprises.

A cover story for this week’s Barron’s seems to support this view – in “They’ve got class”, Michael Santoli reports on the results of a corporate respectability survey given to money managers. The top companies on the list are: 

CNBC: Warren Buffett and Tax Disparities

Many of Warren Buffett's interviews are off-the-cuff affairs where he gives a journalist a few seconds of his time in between a conference or meeting. Nevertheless, they always seem to be infused with really poignant and insightful commentary about business and social conditions.

In his latest television interview with CNBC's Becky Quick, Buffett drops some pearls of wisdom on the current market condition and also why, in his opinion, the taxes the ordinary American is paying are unfair. An excerpt of the interview is after the jump and the full text and video are available here.