The Call for Corporate Action: NYU Stern Student Voices by NYU Stern School of Business

THE CALL for Corporate Action SPR I NG 2 01 1

NYU STERN STUDENT VOICES Edited by

PROFESSOR JEFFREY J. YOUNGER & KATE WOSKA Designed by DAVID OLMOS Cover photo by SARAH KUSZELEWICZ

Edited by

PROFESSOR JEFFREY J. YOUNGER & KATE WOSKA

SPR I NG 2 01 1

with additional photos by SARAH KUSZELEWICZ & ALEX JAGENDORF

CONTENTS

05 Letter from the Dean 06 Introduction to Business & Its Publics

Essays 08 From Conflict to Development: Diamonds,

Contents

DeBeers, and the DRC by Timothy Mok

14 Extending Compassion: P&Gâ&#x20AC;&#x2122;s Elimination of Animal Testing on Cosmetics by Alex Lazar

20 Distribution Is the Solution by Avinash Nagaraja

26 A Net-Fix for Netflix, the Environment, and the People

by Bryan Young

32 How Trek Can Change Africa, One Bike at a Time

by Samantha Altshul

38 Eradicating the Modern Day Food Desert by Stephanie Miao

44 Burned Out: A Case for Energy Parity by Albert Hong

50 Signaling Away the Dangers of Pesticides by Irina Burdeynik

56 Pharmaceutical Companies: Quagmire to Goldmine

by Rachna Jain

62 Third-World Labor and the Amputation Generation

by Jossie Carreras

68 Acknowledgements

CONTENTS

Exterior of NYU Stern’s Tisch Hall

THE CALL FOR CORPORATE ACTION

LETTER FROM THE DEAN

Letter from the Dean It gives me great pleasure and pride to introduce the ten essays in this inaugural online edition of “The Call for Corporate Action: NYU Stern Student Voices.” In their essays, our undergraduate business students grapple with some of the most pressing issues of our day—health care, energy, transportation and the environment. Under the guidance of Professor Jeffrey Younger and other members of Stern’s faculty, our students use their creativity, curiosity and analytical thinking to confront society’s problems and offer solutions with the potential to improve people’s lives. I applaud their efforts. At the very highest level, our mission at NYU Stern is to develop leaders with the intellect and character to excel in a future that will not resemble the past. The problems of the 21st century require leaders who understand the links between business and policy, the connections between the financial economy and the real economy, and how to balance the quest for profit with the public good. As these essays demonstrate, our students grasp the bigger picture. They analyze complex issues and propose solutions—whether they are local, regional, or global in nature. For example, in health care, Stephanie Miao proposes a public-private partnership to address the problem of obesity with education and choice. Jossie Carreras looks at the prosthetic needs of rural amputees and how supplying more appropriate devices will help them regain their productive places in society, while Rachna Jain focuses on how pharmaceutical companies can better serve developing countries. Continuing the focus on the developing world, Sami Altshul explores the link between transportation and economic development, while Timothy Mok turns his attention to a co-op model that offers a more equitable way to mine diamonds and alleviate poverty. At the intersection of agriculture and the environment, Irina Burdeynik outlines an innovative, high-frequency, aural alternative to pesticides; Avinash Nagaraja proposes a genetically modified corn that could boost ethanol production; and Albert Hong suggests a better way to provide energy to local communities. Challenging the use of animals by major industries, Alex Lazar investigates the benefits of removing animal testing for cosmetics. Finally, Brian Young looks to decrease wasteful paper use and preserve the environment by decreasing the size of the Netflix envelope. These students, and many more like them at NYU Stern, continue to develop mindsets that will create value for business and society. Projects such as this magazine promote new ideas with the potential for long run impact. Optimism is the evidence-driven belief that tomorrow will be better than today. I am optimistic that, by bringing their voices to the dialogue, these students, indeed all our students, strive to make the world a better place.

written by

PETER HENRY Dean, NYU Stern

INTRODUCTION TO BUSINESS & ITS PUBLICS

INTRODUCTION TO

Business & Its Publics introduction by

MATT STATLER Clinical Assistant Professor of Management and Organizations Richman Family Director of Business Ethics and Social Impact Programming

Business & Its Publics, a foundation course of our Social Impact Core, focuses on how businesses and markets interface with government, non-governmental organizations, and other social institutions. Within this context, students observe and reflect on timely issues, such as sustainability, social justice, and social entrepreneurship. The dynamic format of the course involves: a lecture series involving prominent business, government, and academic leaders; an inquiry session taught by senior Stern faculty; and a discourse session taught by Stern faculty communications experts. For the written assignments, students select and analyze topics, then compose a final essay advocating a concrete course of action. In this way, NYU Stern undergraduate students take initial steps toward achieving the learning objectives that unify the four-course Social Impact Core Curriculum; specifically, students: »» Become more aware of multiple stakeholder perspectives on important business issues; »» Develop a more nuanced understanding of the many relationships between corporations, governments, NGO’s, market economies, and civil society; »» Begin the process of developing professional ethics in harmony with their own personal values; and »» Learn to articulate, defend, and reflect critically on a point of view. The essays in this volume were selected by the BIP discourse faculty as exemplary of the kind of engaged reflection that will help the students become future leaders.

THE CALL FOR CORPORATE ACTION

FROM CONFLICT TO DEVELOPMENT: DIAMONDS, DEBEERS, AND THE DRC

from

CONFLICT to DEVELOPMENT: DIAMONDS, DEBEERS, AND THE DRC

THE CALL FOR CORPORATE ACTION

TIMOTHY MOK

essay by

TIMOTHY MOK Painstakingly researched, Timothy Mokâ&#x20AC;&#x2122;s analysis of diamond mining in the Democratic Republic of Congo offers hope. Through an idea that is audacious yet simple, Timothy suggests that the time may be right for a fair market diamond cooperative. Moving diamond finishing closer to the source of origin can raise GDP and fair market diamond cooperatives can thereby level the economic playing field. Timothy recommends that DeBeers, a leader in the industry take this challenge.

FROM CONFLICT TO DEVELOPMENT: DIAMONDS, DEBEERS, AND THE DRC

Mother Nature smiles tenderly upon the Democratic Republic of Congo (DRC). She has bestowed almost each of its provinces with diamond resources. High-quality diamonds are scattered across the plains of Tembo, while industrial grade stones fill the mines of the Mbuji Mayi district. The challenge facing the people of the DRC is the transformation of these abundant natural assets into shared national wealth. On the one hand, the DRC is currently the third largest exporter, by volume, of rough diamonds.1 At the same time, she languishes in second to last place (out of 180 countries) on the IMFâ&#x20AC;&#x2122;s GDP per capita rankings.2

THE CALL FOR CORPORATE ACTION

TIMOTHY MOK

Diamonds have been inseparably bound to the history of the DRC. During the Congolese Civil Wars, revenues from diamond exports financed the arms and ammunitions purchases of rebel groups.3 Pervasive and lucrative, the smuggling of these “conflict diamonds” prolonged the war that eventually claimed the lives of 3.8 million people.4 Fortunately, with the signing of the Pretoria Accord in 2003, the people of the DRC have begun the slow, arduous journey of rebuilding a blighted nation. Once the fuel for war, diamonds are presently the hope for a brighter future. The blueprint for success is for the diamond sector to create employment opportunities and generate export tax revenues. Prudent government spending, coupled with direct foreign investment, will spur development and usher in an era of economic growth. But this ideal of “development diamonds” will not happen naturally; it calls for an honest acknowledgement of the precipitating realities of the diamond sector and fundamental, necessary changes at both the micro and macro level. Marginalized and Excluded Far from charting the ascendancy of a resilient primary sector, the diamond sector has dissolved into a “casino economy.”5 Driven partly by greed and largely by desperation, an estimated one million diggers flock to the rich, alluvial diamond plains of the DRC each year to take the gamble. They work for next to nothing—a minimal daily wage of US$0.39 and two cups of rice—in the hope of getting a share of diamonds they mine.6 They toil onerously for ten hours a day with only a shovel or a sieve. Every day the diggers disregard the basic truism of the casino industry: the house always wins. Despite the US$870 million generated from rough diamond exports in the DRC, the average diamond digger earns less than a dollar a day.7 This marginalization of diamond diggers points to two undercurrents. First, the lack of formal government regulation forebodes the exploitation

of diggers. Written contracts laying out the conditions of work are often ornamental, while health and safety legislations are, unfailingly, non-existent. Unskilled and without alternative employment, diggers have little choice but to begrudgingly accept whatever conditions the holder of the mining license, who organizes and manages the means of production, imposes on them. A pyramid hierarchy has entrenched itself in the diamond industry. Typically, a good quality, one-carat rough diamond fetches US$1,100; out of this total, the digger pockets US$130, the holder of the mining license receives US$240, the supporter profits US$630, and the exporter takes in US$100.8 The diamond supporter is the classic middleman. He finances the license holder and assists with the application of permits. In return, the license holder is obliged to sell the diamonds he produces to his supporter. This leverage allows him to pay hugely undervalued prices for the gems while managing to sell them to the exporter at their true valuation.9 Moreover, he has the added advantage of being the first in the supply-chain to have any expertise in the valuation of diamonds. Unsurprisingly, the lion’s share of the profits is concentrated in the hands of the dozen exporters and 1,000 supporters who dominate the diamond sector in the DRC.10 The majority of the one million diggers live in absolute poverty, far removed from the glitz and glamour associated with diamonds. Competitive Advantage through Cooperation For the concept of “development diamonds” to truly grip and invigorate the entire DRC nation, benefits must trickle down to those most in need. Stakeholders have to come together to address the issues of poverty and wage inequality. Recently, the idea of cooperatives has, justifiably, been the solution in vogue. Cooperatives in Bangladesh have increased the income of 40,000 dairy farmers tenfold.11 The rationale behind cooperatives is simple, yet effective. In the

words of Aristotle, the whole is more than the sum of its parts12; gathering disparate diamond diggers together gives them a unified voice and a degree of economic clout. By negotiating directly with international buyers, they can condense the supply-chain and reap the intermediary profits. Over time, as these profits are reinvested, the cooperative will become self-financing and the diggers will be able to free themselves from the grasp of the supporter. This sounds promising; however, certain pitfalls remain. Diggers often have little to no capital of their own to contribute; the cooperative must, therefore, depend on the goodwill of external stakeholders for an extended period. As past experience has shown, half-hearted, short-term investments invariably fail to deliver results. Aiming to be self-sufficient after just one mining season, the Integrated Diamond Management Program, a pilot cooperative project in Sierra Leone, has, instead, led to disillusionment among diggers and investors alike. The cooperative received, on average, US$73 (significantly below the national average of US$200) per carat for the diamonds mined, while the private investors recovered only US$4,400 out of an initial investment of US$75,000.13 Any attempt to change the underlying structure of the diamond industry thus mandates a long-term capital outlay and a sustained commitment from stakeholders. Such a task is, admittedly, beyond the competence or financial capabilities of most private philanthropists. Given the disorganized state of the DRC government, it is best if a large multinational corporation, such as DeBeers, steps in and takes responsibility. DeBeers is the linchpin of the entire diamond industry; and, over the last decade, it has developed a reputation of being a good corporate citizen. In 2008, the company spent a total of US$13.6 million on social initiatives ranging from HIV research to grassroots sports leagues in Africa.14 Taken individually, each of these initiatives is unquestionably worthy; but from

FROM CONFLICT TO DEVELOPMENT: DIAMONDS, DEBEERS, AND THE DRC

a macro-perspective, they appear uncoordinated, a jumble of activities unaligned with DeBeers’ operational strategy. To create maximal social impact, corporations must focus on creating shared value. Effective corporate social responsibility (CSR), as Prof. Michael Porter argues, seeks out the interdependencies between business and society, not the tensions.15 To be sure, DeBeers has not always been the model corporate citizen. During its expansion in the early 20th century, DeBeers, often insensitive to political or economic tensions, was solely obsessed with brokering deals with diamond-producing nations. This single-mindedness led it to control 80% of the world’s rough diamond production. Through tightly managing supply, DeBeers successfully created an illusion of scarcity that allowed it to maintain high, stable prices.16 However, since the turn of the millennium, its influence has waned. Discoveries of new mines in Russia, Canada, and Australia have slipped from its grasp. Friends have turned into foes. In 2000, the Angolan government terminated its agreement with DeBeers, choosing instead to sell its diamonds to Leviev.17 DeBeers has seen its market share drop to 45%.18 It must once again consolidate—responsibly this time—its hold over production. What better way to start than with the world’s third largest exporter of rough diamonds?19 On the alluvial plains of the DRC, corporate operational strategy fuses with corporate social responsibility. By financing these cooperatives, DeBeers gains access to a bountiful supply of diamonds while bettering the living conditions of a million diamond diggers. Depending on the circumstances, CSR can take the form of an outright grant or a low-interest loan to the cooperatives; but for CSR to be more than a cosmetic public relations campaign, the following provisions are essential. DeBeers should guarantee the diggers a fair wage (at least US$0.60 with three meals) and an equitable share of the diamonds mined (30%).20 It should also provide first-aid and

THE CALL FOR CORPORATE ACTION

housing facilities for mine workers and their families. Furthermore, DeBeers can use these cooperatives as a nucleus to coalesce its myriad of social initiatives and translate them into bottom-line figures. HIV research can be tied to a healthier workforce with reduced absenteeism. Grassroots sports leagues can build cohesion among employees, while training programs can lead to tangible improvements in productivity. The potential for shared value looms large on the horizon. Don’t Neglect the Big Picture Paradoxically, an increase in the standard of living of diamond diggers will spark a competitive scramble into the industry, leading to a re-depression in wages. Overall, there may be little improvement. Along with micro-level changes, governments will have to ensure that viable economic alternatives exist at the macro-level. A widely discussed solution is diamond beneficiation. Currently, the bulk of the downstream activities—cutting and polishing—that add value to rough diamonds take place in the major diamond exchanges, such as London and Antwerp. Bringing such activities to Africa would increase employment opportunities and boost the value of the gems mined for diamond producing nations. Governments are, increasingly, grasping the importance of beneficiation. The DRC recently enacted the “Obligatory De-oxidization of Raw Diamonds Before Export” law that will raise the value of her diamond exports by 20–25%.21 Botswana and Namibia routinely attach beneficiation as a precondition when granting mining licenses to extraction companies.22 Corporations are doing their part as well. DeBeers has doubled the value of the diamonds it beneficiates in Africa over the past two years, while Tiffany’s and Sotheby’s have opened similar facilities in Namibia.23 With a literacy rate significantly higher than her immediate neighbors, the DRC is primed for the transition from a primary extraction economy to a secondary manufacturing econ-

omy.24 Beneficiation would certainly smooth this transition. A Blessed Union Incentives are compelling at both ends. DeBeers wants access to the DRC’s plentiful supply of diamonds. Similarly, the DRC hopes to tap into DeBeers’ deep pockets and profit from the company’s excellent expertise. Economically, this is a union made in heaven; yet, while competitive advantage is perhaps the strongest justification of CSR, it is easy for corporations to lose sight of the underlying benign intentions. Operational strategy may vindicate DeBeers initial financing of the cooperatives; but, moving forward, the company should be guided by the potential for shared value and driven by the desire to promote social justice. A million lives cry out to be freed from the clutches of poverty, to participate in the economic miracle of “development diamonds.” The confluence of business and society on the savanna grasslands of the DRC puts DeBeers in a unique position to answer this cry.

TIMOTHY MOK

http://www.diamineexplorations.com/web/index.php?id=147 International Monetary Fund. “World Economic Outlook (WEO): Financial Stress, Downturns, and Recoveries.” International Monetary Fund. 2008. Print. 3 Oomes, Nienke and Matthias Vocke. “Diamond Smuggling and Taxation in Sub-Saharan Africa.” IMF Working Paper 03/167. 2003. Print. 4 United Nations. “Second special report of the Secretary-General on the United Nations Organization Mission in the Democratic Republic of the Congo.” United Nations Security Council. May 2003. Print. 5 NGOs such as Global Witness and Partnership Africa have often likened the diamond industry to a “casino economy.” Apart from the gamble the diggers take, parallels extend to the harassment of diggers by license holders and the shady deals between exporters. However, this paper focuses mainly on the problems of below subsistence wages and wage inequality that are rife throughout the industry. 6 There are various wage schemes for diamond diggers. The figures above are estimates for the “casino system” scheme where there is a large variable component based on the quantity of diamonds mined. An in-depth analysis of the different schemes and detailed quantitative treatment of the figures can be found in the following report. Global Witness. “Rich Man, Poor Man: Development Diamonds and Poverty Diamonds.” Report. 2004. Print. 7 Global Witness. “Reforming the DRC Diamond Sector.” Annual Report. Jun 2006. Print. 8 It should be noted that the price of rough diamonds increase exponentially with price. Many rough gems are much smaller than one carat and, as a result, diggers receive considerably less per carat than the figures stated above. Levin, Estelle and Lansana Gberie. “The Dynamics of Diamond Pricing and Marketing in Sierra Leone.” Partnership Africa Canada. March 2006. Print. 9 Global Witness. 10 Although the exporter gets a small percentage of the value of the diamond, he makes up for this by sheer volume alone. Additionally, it is often hard to determine the distribution of profits among supporters and exporters as, in many instances, the same person fills both roles. 11 Birchall, Johnston. “Rediscovering the cooperative advantage: Poverty reduction through self-help.” International Labour Organization. 2003. Print. 12 Although not quite in his exact words, the above quote, or at least the idea behind it, is often attributed to Aristotle. Aristotle. “Aristotle’s Metaphysics.” Trans. Joe Sachs. 2nd ed. Santa Fe, N.M.: Green Lion. 2002. Print. 13 A distinction should be noted between this higher national average figure and the US$130 per carat stated earlier. This figure refers to the proceeds received by the entire cooperative and not merely the diggers alone. Levin, Estelle Agnes and Ansumana Babar Turay. “Artisanal Diamond Cooperatives in Sierra Leone: Success or Failure?” Diamond Development Initiative, Jun 2008. Print. 14 DeBeers Family of Companies. “Report to Society, 2008.” Annual Report. 2009. Print. 15 At present, there are four broad justifications for CSR: moral 1

obligation, sustainability, license to operate and reputation. These appeal more to intuition and emotion and inadequately capture the specific nuances between a particular company and its impacts on society. To achieve competitive advantage, Porter argues that CSR must be inseparably aligned with operational strategy. Porter, Michael E. and Mark R. Kramer. “Strategy & Society: The Link between Competitive Advantage and Corporate Social Responsibility.” Harvard Business Review. Oct 2006. Print. 16 The traditional argument is that De Beers is a monopoly and should be broken-up or regulated. However, it should be noted that throughout its history, De Beers was more concerned with a stable than a high diamond price. In fact, it took efforts to reduce prices when speculation by Israeli merchants threatened to skyrocket the price of diamonds. Unlike other commodities, diamonds depend on stable prices; short-term shifts in prices lead to detrimental long-term shifts in consumer perception. Having a cartel control prices, from a utilitarian perspective, is thus not naturally a cause for concern. For a more detailed analysis, refer to the following. Spar, Debora L. “Continuity and Change in the International Diamond Market.” Journal of Economic Perspectives-Volume 20, Number 3. 2006. 195–208. Print. 17 Melman, Yossi and Julio Godoy. “The Influence Peddlers.” Center for Public Integrity. Nov 13. 2002. Print. 18 Mining Review Africa. “Diamond Industry Review.” Report. 2004. Print. 19 It is worth pointing out that DeBeers already has a long-standing partnership with the world’s second largest exporter—Botswana. In fact, the government of Botswana owns 10% of DeBeers. The world’s largest exporter is Russia, whose government is adamant about distributing its diamonds in ways it sees fit. Thus, in a way, a partnership with the DRC is arguably the best option for DeBeers. 20 The following recommendations are adapted from the Global Witness report and relate to a wage scheme under the “casino system.” Assuming they receive their fair portion of the diamonds mined, the average digger is estimated to make between US$1.5–2 a day. This almost doubles their current wages. 21 The following law was slated to take effect beginning Jun 2010. More details can be found in the following article. Reuters. “DRC to require “clean” diamond exports by mid-June.” 24 Apr 2010. Web. 22 Goldstein, Fran. “An Introduction to Beneficiation.” Israeli Diamond Industry. Feb 2008. Web. 23 DeBeers Family of Companies. “Report to Society, 2008.” Report. 2009. Print. 24 From a cursory point of view, there appears to be a correlation between diamond beneficiation and the literacy rate of a country. The DRC has a literacy rate that is much higher than other diamond-producing nations; namely Ivory Coast and Serra Leone. These nations have yet to benefit from diamond beneficiation. However, in Botswana and South Africa—where diamond beneficiation is taking place—the literacy rate is higher than in the DRC. Central Intelligence Agency. “The World Factbook.” Report. 2009. Web.

EXTENDING COMPASSION: P&Eâ&#x20AC;&#x2122;S ELIMINATION OF ANIMAL TESTING ON COSMETICS

essay by

ALEX LAZAR Written in 2008, this essay investigates animal testing within the cosmetics industry. Author, Alexandra Lazar, quickly gets to the heart of animal cruelty and offers a perspective that is both powerful and persuasive. As a civilized society, we must revisit the pain and suffering inflicted on animals. For Alexandra, this goal can be achieved through innovative technology and unique partnerships.

THE CALL FOR CORPORATE ACTION

ALEX LAZAR

P&G’S ELIMINATION OF ANIMAL TESTING ON COSMETICS

Extending Compassion

EXTENDING COMPASSION: P&E’S ELIMINATION OF ANIMAL TESTING ON COSMETICS

The animal rights movement has gained momentum in recent years with the emergence of organizations such as People for the Ethical Treatment of Animals (PETA), the International Society for Animal Rights, and the Humane Society of the United States. The basis of this reform movement stems from the conviction that animals are inhumanely exploited in society and deserve protection. According to the philosophy of animal rights groups, basic moral structures dictate that it is unethical to treat animals as though they exist solely for the benefit of human beings. Supporters of this movement assert that, if it is morally wrong to treat intellectually disabled humans as “renewable resources” or “commodities,” then it is irrational and inhumane to use animals’ alleged lower intelligence as an excuse to take advantage of them.1 Clearly, the behavior of animal rights advocates is heavily influenced by the social values of compassion and respect for life.

THE CALL FOR CORPORATE ACTION

ALEX LAZAR

Nevertheless, not every individual extends these values to encompass all living things. Critics of the animal rights movement hold the opinion that, because animals lack cognizance and sense perception, they are not entitled to moral rights. Unfortunately for these opponents, the basis of their arguments is losing credibility as scientific evidence increasingly indicates that animals possess higher mental abilities than previously believed. It is important to recognize that these scientific results automatically present new questions to society regarding its responsibility to animals. “It is one thing to treat animals as mere resources, presumed to be little more than living robots, but it is entirely different if they are recognized as fellow sentient beings.”2 Accepting the idea that animals can feel and think requires society to acknowledge the ways in which it inflicts pain and suffering on living creatures. In his 1789 publication, An Introduction to the Principles of Morals and Legislation, Jeremy Bentham effectively illuminates the rationale that should incite people to promote animal rights. He states, “The question is not, Can they reason? Nor, Can tshey talk? But, Can they suffer?”3 Although the prevention of suffering is the social principle advocated by animal rights groups, the desire for change is not enough to succeed. These organizations must also understand the best ways in which social change can be implemented, a task that requires identifying the societal institutions that have the greatest potential of bringing the social issue to the forefront. This leads to an important question to be considered. Who has often been the target of criticism by animal rights organizations? Whether it has been animal rights groups’ denunciation of Yum Brands, Johnson & Johnson, Merck & Co., or L’Oreal, it is difficult to deny that corporations are the ones that most often receive disapproval from the animal rights movement. Although the censure faced by these corporations is not unwarranted, the exorbitant amount of attention placed on them

reflects business’s role as a predominant social institution. Considering the significant influence that corporations exert on society, it should come as no surprise that managers today are obligated to “take stands on social issues that their predecessors would have ignored.”4 Whether or not corporations are willing to admit it, they are now held accountable for the effects they have on society and are expected to engage in corporate social responsibility (CSR). In fact, one might suspect that the concept of CSR has made it easier for animal rights groups to voice their concerns to major corporations, and has obliged these corporations to listen. A primary concern of animal rights organizations regards the cruel circumstances that animals are subjected to in research laboratories. With the emergence of alternative methods to animal testing, there has been increasing suspicion over the necessity of experimenting on animals to test the safety of cosmetics. Although government regulations demand animal testing to prove the safety of pharmaceutical drugs and vaccines, the Food and Drug Administration (FDA) does not impose these requirements on companies that manufacture cosmetics.5 It appears that companies that produce cosmetics enjoy flexibility in evaluating the safety of their products; therefore, these companies should exert the effort to employ existing non-animal methods. One such company is Procter & Gamble Co., the American manufacturing corporation that owns CoverGirl Cosmetics and Max Factor & Company. Despite maintaining that it has “eliminated animal testing for about 80% of [its] products around the world,” P&G’s cosmetic companies remain the targets of criticism for relying on animal testing.6 Although 80% appears to be a high number, there is no reason why P&G cannot eradicate animal testing by 100%. This is not necessarily an inconceivable task, considering that Revlon and Avon are two cosmetic companies that have succeeded in abolishing animal experiments completely. Tak-

ing into consideration future expectations, specifically the increasing recognition of animal rights and the upcoming European ban on animal testing of cosmetics, it appears that eliminating all animal testing is in the best interest of P&G. P&G would have a significant chance at completing this arduous, yet feasible task by adopting a corporate social action proposal. This specific proposal calls on P&G to (1) develop a partnership with MatTek Corporation, (2) seek guidance from the Center for Alternatives to Animal Testing, and (3) lobby the FDA to reduce its emphasis on animal testing. One way in which P&G might facilitate its transition to only non-animal methods is through a partnership with MatTek Corporation, a company involved with tissue engineering. In order to understand the profound implications of such a partnership, one must understand certain future expectations regarding the cosmetics industry. Many cosmetic companies have been developing alternative testing procedures in anticipation of a European Union ban, “which covered seven specific tests as of March 2009.”7 In 2013, the addition of eight more test signals a deadline for all animal testing on cosmetics.8 If P&G’s cosmetic lines, such as CoverGirl and Max Factor, aspire to make a profit internationally, then they will have to abide by the “rules that apply to any company wishing to sell in the 27-nation European Union.”9 Nevertheless, adhering to current rules is not enough. Companies are now involved in a race to prove themselves as leaders in discovering alternative testing methods. For instance, P&G’s major competitor, L’Oreal, has fortified its position as a key player “in the fast evolving reconstructed skin testing arena,” by purchasing the company SkinEthic, “a worldwide player in the production and commercialization of human epidermal tissues.”10 With the ability to use human tissue instead of live animals, L’Oreal enjoys access to testing methods that comply with the European ban. In addition, SkinEthic

EXTENDING COMPASSION: P&E’S ELIMINATION OF ANIMAL TESTING ON COSMETICS

also has the opportunity “to directly tap into an area where the technology it is developing could serve as a vital part of future skin care products and treatments.”11 As such, the relationship between L’Oreal and SkinEthic enables both companies to prosper in their respective industries. For similar reasons, P&G might find it beneficial to pursue a relationship with MatTek Corporation, a company similar to SkinEthic. Unlike L’Oreal, P&G might not find it practicable to completely purchase MatTek; but, a research and development partnership would enable both companies to work together in an attempt to discover new technologies. One might assume that this endeavor would be costly for P&G; however, MatTek claims that one of its main goals is to provide less expensive alternatives to animal testing. MatTek asserts that it is dedicated to “reducing the costs of such models by 50–80%,” while “increasing industry and regulator confidence in the performance of commercially available in vitro tissue models.”12 If MatTek achieves its goals, then P&G would not only reduce its costs but would be able to employ these methods in order to make profits in the European Union. At the same time, MatTek would enjoy the same benefits as SkinEthic, specifically exposure to the cosmetics industry which is undoubtedly becoming dependent on non-animal testing methods. In order to embark further on its quest to abolish animal testing, P&G might also find that seeking guidance from the Center for Alternatives to Animal Testing (CAAT) would be conducive to its goals. Located at Johns Hopkins University, CAAT aspires “to effect change by working with scientists in industry, government, and academia to find new ways to replace animal [testing methods] with non-animal [testing] methods.”13 Through its attempts to appeal to a broad coalition of interests, CAAT appears to be a well-balanced organization that is truly dedicated to implementing change in current research methods. In addition, “CAAT

THE CALL FOR CORPORATE ACTION

proposed and served as host for the first World Congress on Alternatives and Animal Use in the Life Sciences,” an accomplishment that is indicative of this organization’s validity. By seeking assistance from CAAT, P&G could use CAAT as a mentor, and, subsequently, enjoy direct access to information on the newest research studies and innovative ideas. One might expect that P&G would receive public approval for its attempts to develop a relationship with an academic center that is devoted to non-animal research. Clearly, a relationship with CAAT would provide P&G with the opportunity to fortify its position as a key leader in promoting non-animal methods. P&G’s full integration of non-animal testing cannot be complete without lobbying the FDA to reduce its emphasis on animal testing. According to a report of the International Society of Regulatory Toxicology and Pharmacology (ISRTP), it is difficult for companies to promote alternative methods because “the rigidity is provided by current laws and guidelines, and furthered by the fact that regulators and the regulated community are uncomfortable in changing the structured framework.”14 This statement is reflective of the fact that, even though the FDA claims that it does not “require” animal testing for cosmetics, it still shows preference for products that have been tested using animals. One might consider the FDA’s preference for animal-tested products to be related to the apprehension associated with changing old patterns. For this reason, companies should not be held fully accountable for their decision to use animal testing, since the approval of their products remains under the strict jurisdiction of the FDA. The only way to overcome this obstacle is to convince the FDA that alternative methods are just as accurate, specifically through the “dissemination of information and education of all stakeholders about alternative methods.”15 By involving all stakeholders in the pursuit of promoting alternative methods, R. Edward Freeman’s stakeholder theory is clearly

evident. If P&G’s top management wants to “look after the health of the corporation,” then they must engage in “balancing the multiple claims of conflicting stakeholders,” such as the FDA, scientists, and activist groups.”16 In fact, the relationship between P&G and CAAT would facilitate P&G’s attempts to present its concerns to the FDA. CAAT “has been invited to participate in every U.S. government-related activity dealing with alternatives.”17 Clearly, CAAT’s close affiliation with government agencies seems substantial enough to provide P&G with a platform to voice its concerns. Through its encounters with the FDA, the corporation should suggest that the FDA make it mandatory that products contain labels signifying whether or not animal tests have been used. If the FDA succeeded at “[establishing] official definitions for the use of certain terms” on labels, then consumers would be more cognizant of the products that they buy and the conditions that produced those products.18 During a presentation on CSR and the environment, Alice Tepper Marlin emphasized the influential role that consumers play in determining the way corporations act. She emphasized that, if consumers disapprove of a specific corporation, their refusal to buy that company’s products could eventually be an incentive for that company to change.19 Similarly, if labels regarding animal testing were required on products, then consumers could use their purchasing power to influence companies to adopt non-animal methods. Evidently, if P&G were to eliminate animal testing, labels indicating that P&G does not use animal testing would increase public approval of the corporation and cement its position as a socially responsible company. Through its partnership with the company MatTek, its association with the Center for Alternatives to Animal Testing, and its attempts to decrease the FDA’s criticism of alternative methods, P&G has the potential to make the transition to non-animal methods a reality. Nevertheless, P&G’s pursuit should not be strictly

ALEX LAZAR

based on the goal of maintaining its profits. P&G should undertake this proposal as a testament to its belief that corporations are now the most effective at implementing long-lasting social change. In terms of the animal rights movement, one should hope that P&G’s elimination of animal testing is only the beginning. Hopefully, as more and more companies see the benefits of reducing animal cruelty, then society as a whole will seek change as well. The animal rights movement is not only confined to the living creatures who suffer from the actions of corporations in the cosmetic and pharmaceutical industry. It also involves acknowledging the suffering of animals in the meat industry and understanding that more humane conditions should be employed. If P&G succeeds at exposing the necessity for non-animal methods, then perhaps more people would be curious to know about the procedures affecting animals in other industries. One might expect that if consumers knew about the appalling conditions in meat factories, then eventually corporations in the meat industry would be compelled to change. Clearly, the social value of transparency is emerging in a world where business and society share an intricate, dynamic relationship that undeniably has effects on both. However, one must not just look to business and society, but the role of the individual. Change starts with the individual and ends with society. Although it’s important to look to the future, it is also beneficial to look to the past. Abraham Lincoln illuminates an important concept that should guide individual action, corporate action, and societal action. He states, “I am in favor of animal rights as well as human rights. That is the way of a whole human being.”20

Regan, Tom. “The Philosophy of Animal Rights.” Culture and Animals. 2008. Culture and Animals Foundation. 6 May 2008 <http://www.cultureandanimals.org/animalrights.htm>. 2 Linden, Eugene. “Can Animals Think?” TIME. 22 Mar 1993. 6 May 2008 <http://www.time. com/time/magazine/article/0,9171,978023-9,00.html>. 3 Even If You Like Meat...You Can Help End This Cruelty. Tucson: Vegan Outreach, 2007. 4 Kinard, Jerry, Michael E. Smith, and Brian R. Kinard. “Business Executives’ Attitudes toward Social Responsibility: Past and Present.” Business and Its Publics. Boston: Pearson Custom, 2008. 99–107. 5 “Animal Testing.” U.S. Food and Drug Administration. 6 Apr 2006. FDA. 15 Apr 2008 <http:// www.cfsan.fda.gov/~dms/cos-205.html>. 6 “Animal Alternatives.” P&G. 2008. Procter and Gamble. 21 Apr 2008 <http://www.pg.com/ science/aa_commitment.jhtml>. 7 Feder, Barnaby J. “Saving the Animals: New Ways to Test Products.” The New York Times 12 Sep 2007: 1–4. LexisNexis. 15 Apr 2008. 8 Montague-Jones, Guy. “EU ban on animal testing comes into force today.” Cosmetics design-europe.com. 11 Mar 2009. Wed 25 Feb 2011. 9 Carvajal, Doreen. “A New Science, at First Blush.” The New York Times 20 Nov 2007: 1–5. LexisNexis. 15 Apr 2008. 10 Pitman, Simon. “L’Oreal Builds on Skin Testing Capabilities.” Cosmetics Design. 1 Mar 2006. 22 Apr 2008 <http://www.cosmeticsdesign.com/news/ng.asp?id=66150-l-orealskinethic-skin-testing>. 11 Pitman. 12 “Company Profile.” MatTek Corporation. MatTek Corporation. 22 Apr 2008 <http://www. mattek.com/pages/profile>. 13 “CAAT Achievements.” 2007. Center for Alternatives to Animal Testing. 22 Mar 2008 <http://caat.jhsph.edu/about/achievements.htm>. 14 Becker, Richard A. “Report of an ISRTP Workshop: Progress and Barriers to Incorporating Alternative Toxicological Methods in the U.S.” Regulatory Toxicology and Pharmacology 46 (2006): 18–22. ScienceDirect. 22 Apr 2008. 15 Becker. 16 Freeman, R. Edward. “A Stakeholder Theory of the Modern Corporation.” Business and Its Publics. Boston: Pearson Custom, 2008. 99–107. 17 “CAAT Achievements.” 2007. Center for Alternatives to Animal Testing. 22 Mar 2008 <http://caat.jhsph.edu/about/achievements.htm>. 18 Lewis, Carol. “Clearing Up Cosmetic Confusion.” FDA Consumer Magazine May–Jun 1998: 1–6. U.S. Food and Drug Administration. 22 Apr 2008. 19 Tepper Marlin, Alice. Lecture. New York University Schimmel Auditorium, New York. 10 Mar 2008. 20 Regan, Tom. “The Philosophy of Animal Rights.” Culture and Animals. 2008. Culture and Animals Foundation. 6 May 2008 <http://www.cultureandanimals.org/animalrights.htm>. 1

DISTRIBUTION IS THE SOLUTION

DISTRIBUTION IS THE

Spread photo by Trent McBride ( flickr.com/mctrent)

SOLUTION 20

THE CALL FOR CORPORATE ACTION

AVINASH NAGARAJA

essay by

AVINASH NAGARAJA Food and energy become inextricably intertwined when considering the emergence of biofuel technology. Avinash Nagaraja outlines a controversial plan that would divide ethanol corn production from food corn, and would provide the clear definition needed to separate the markets and guarantee future growth. The vertical integration he proposes joins BP, GE, and regional farmers in a distinctively challenging way.

DISTRIBUTION IS THE SOLUTION

Food is no longer just food. Agricultural commodities can now be converted into energy. The convergence of food and fuel raises unprecedented issues concerning the food supply and energy. Since oil is a non-renewable resource, oil companies such as British Petroleum (BP) are preparing for the future by developing biofuels; Similarly, agribusiness companies such as Syngenta (which was formed in 2000 with the merging of the agribusiness divisions of Novartis and AstraZeneca) have focused on genetically engineering corn to create efficient ethanol. However, if corn is used for ethanol, there will be less corn for food consumption and food prices will increase. Price increases would consequently have negative repercussions for the worldâ&#x20AC;&#x2122;s poor populations. Additionally, if genetically engineered (GE) ethanol corn is grown alongside natural corn, it could contaminate the food supply with new proteins. The solution to separating corn between food and energy requires food corn to be separated from ethanol corn in the cornfields and in the market place. Ethanol producers, such as BP, should purchase ethanol corn seeds from Syngenta and contract farmers to use Syngentaâ&#x20AC;&#x2122;s seeds to only grow GE ethanol corn. Consequently, BP would only use the ethanol corn it grows for ethanol production.

THE CALL FOR CORPORATE ACTION

AVINASH NAGARAJA

Ethanol’s Effect on the Food Supply Corn is a renewable resource, but only a certain amount can be grown each year. If the amount of corn used for food is reduced because of an increase in ethanol production, then the price of corn will presumably increase. When ethanol production expanded from April 2007 to April 2008, it “accounted for 10 to 15 percent of the rise in food prices.”1 According to the Earth Policy Institute, for each “1 percent rise in food prices; caloric intake among the poor drops 0.5 percent.”2 Since ethanol demand contributes to increased prices, it is responsible for decreased food intake among the poor. Ethanol producers and society must answer the question: is producing ethanol at the expense of the world’s poor population ethical? To combat higher food prices, the US government plans on increasing food expenditure and nutrition programs to $900 million.3 This plan may combat domestic problems, but doesn’t appear to be a viable longterm solution. On April 17th, 2009, Grassroots International, a non-profit organization, protested increased prices for commodities.4 They claim commodity prices increased because of ethanol speculation at the Chicago Mercantile Exchange; furthermore, they declared that if commodity markets were regulated prices would be less volatile and as a result farmers would pursue more sustainable and stable production methods. Frank Orzechowski, a retired commodity trader, stated that the rise in food prices “is not just going to affect U.S. food aid, but food aid from every source.”5 Orzechowski’s statement foreshadows how higher corn prices, provoked by both consumption of and demand for ethanol, will have global implications. What is at stake here isn’t just US food prices, but global food prices and our commitment to helping the world’s poor population combat starvation. Biofuels and Genetic Engineering Although the food supply is an impor-

tant issue, society needs to prepare for a future without oil. BP understands the importance of alternative energy and plans on investing “$1 billion in building [their] biofuels business operations.”6 They have invested $500 million in the Energy Bioscience Institute, a research consortium of universities and biotechnology firms.7 Through such investments, BP is positioning itself to capitalize on technological breakthroughs in biofuels. However, in order for biofuels to be a viable energy source, crops must be improved to provide more energy.”8 Since 80% of US corn has GE components, biotechnology firms believe genetic engineering can also be applied towards ethanol.9 In 2007, Syngenta developed corn amylase, a GE ethanol corn that uses enzymes to make ethanol production more efficient.10 Essentially, genetic engineering could reduce costs in the long run and increase corn’s capacity for energy output. Through such innovations, ethanol could be produced without government subsidies. Despite the potential success of Syngenta’s corn amylase, the Union of Concerned Scientists (UCS) discerns corn amylase’s possible detrimental nature. UCS believes that corn amylase “will contaminate the food supply” with new proteins through both cross pollination with natural crops and human error when corn is sorted in distribution channels.11, 12 Humans have never been exposed to these proteins and, according to the UCS, exposure to these proteins could have consequences as serious as death.13 The US food supply is therefore at stake if GE ethanol corn is produced. It has passed the FDA consultation process for domestic use; and on February 11, 2008 the USDA deregulated Syngenta corn with amylase.14 Corn amylase had previously been approved for human consumption in Australia, New Zealand, and the Philippines.15 UCS has suggested data that Syngenta should retest. Although Syngenta only needs USDA approval to mass-produce corn amylase, if they follow UCS’s advice the com-

pany could avoid consumer backlash against corn amylase. Furthermore, in response to food supply and contamination issues, Syngenta initiated research to develop “second generation biofuels [that] will use organic waste matter and not the food part of the plant.”16 Syngenta’s corporate action has targeted both issues, but requires both time and innovation. Proposed Corporate Action BP’s investments “contribute to the security of energy supplies,” but also position BP to secure future profits.17 Similarly, Syngenta’s research and products benefit society, but also produce revenue for the company. Each company is currently isolated and is only concerned with their future profitability. Yet BP, Syngenta, and farmers can address the food supply and contamination issue now. Syngenta could sell corn amylase to BP, who would contract farmers to grow the GE ethanol corn and deliver it to ethanol factories. Furthermore, BP would grow the corn in a region where only GE ethanol corn is produced, as to prevent contamination of the food supply. Since 30% of corn crops are used for ethanol, Syngenta would only sell enough seeds to produce 30% of US corn.18 Syngenta therefore wouldn’t encroach on the food supply. However, the government must regulate the industry to ensure that corn purchased in the market isn’t used for ethanol. Analysis of Proposed Corporate Action This corporate action separates ethanol corn from food corn physically and in the commodities market. If ethanol producers only use the corn they grow, then ethanol demand could be withdrawn from the market and corn prices could be lower. Professor Sally Blount former dean of New York University claims that markets “are not intrinsically just [nor] intelligent,” and companies therefore need to take action to establish the difference between food corn and ethanol corn.19 Furthermore, since

DISTRIBUTION IS THE SOLUTION

ethanol corn would only be produced in one region of the US, a geographic buffer would prevent contamination. This solution is socially responsible and allows firms to remain competitive. According to professor Robert Frank, a socially responsible firm can be prosperous if they solve commitment issues with firms and employees.20 Through contractual agreements between BP and Syngenta, BP has a source of ethanol corn seed and Syngenta has a guaranteed buyer for its seeds, even if they aren’t approved for unregulated mass production. Furthermore, BP would provide farmers with a guaranteed buyer and therefore a guaranteed income. The main incentives for BP to undertake such action would be to bolster its reputation as a green energy company and reap the possible economic benefits. If BP builds an ethanol plant in the same region where the farmers grow the GE ethanol corn, then BP could forgo transportation costs and would have efficient corn for ethanol production. In the long run, such corporate action would economically benefit farm communities, energy companies, and biotechnology companies because the

THE CALL FOR CORPORATE ACTION

contracts interconnect stakeholders and their success. However, this proposal has its pitfalls. All ethanol producers must agree to produce corn in the same region of the US, and they must agree to only use the corn they grow. This would become an issue if corn on the open market was cheaper than the GE ethanol corn contracts between ethanol producers and farmers. Ethanol producers would also have to devise a pricing mechanism to determine how much to pay farmers. In addition, this corporate action is only viable if the government continues to provide companies with incentives to produce ethanol. If these incentives are withdrawn, ethanol producers wouldn’t benefit from producing corn. Furthermore, researchers need to ensure that a geographic buffer would prevent airborne contamination between GE ethanol corn and natural corn. Although there are pitfalls, it is important to consider what Paul Hawken stated in his article “Natural Capitalism:” that “when [limiting factors emerge] massive restructuring occurs.”21 With the convergence of food and energy, companies are restrained by different stakeholder

perspectives and by physical resources. Robert Kennedy Jr. stated that the energy distribution system needs to be redesigned for the future. Consequently, the proposed corporate action could reorganize the corn distribution system because it provides farmers, ethanol producers, and biotechnology firms with social, environmental, and economic benefits to work together. This partnership would maximize energy potential and maintain an affordable food supply. Food and energy are essential for a sustainable future. Before companies utilize crops for energy they must acknowledge food costs and the possible social costs that genetic engineering may have. Partnerships between oil companies, biotechnology companies, and farmers can reorganize the corn distribution system to extract the demand of ethanol from the price of corn and prevent the contamination of natural crops. The suggested corporate action provides a framework that is sustainable and can be regulated by the government. By separating food from energy, both physically and in the market, companies can produce crops and energy for our future.

AVINASH NAGARAJA

“Ethanol drives up price of aid.” Orlando Sentinel 10 Apr 2009. Web. 23 Apr 2009 <http:// proquest.umi.com/pqdweb?did=1676779281&sid=3&Fmt=3&clientId=83650&RQT=309& VName=PQD>. 2 Brown, Lester. “Why Ethanol Production Will Drive World Food Prices Even Higher in 2008.” Earth Policy Institute 23 Jan 2008. Web. 23 Apr 2009 <http://earth-policy.org/ Updates/2008/Update69.htm>. 3 “Ethanol.” 4 Schachet, Carol. “U.S. Family Farmers Mark April 17th With A Protest Against Commodity Speculation.” Grassroots International 16 Apr 2009. Web. 23 Apr 2009 <http://www. grassrootsonline.org/news/blog/us-family-farmers-mark-april-17th-protest-againstcommodity-speculation>. 5 Pollack, Andrew. “Redesigning Crops to Harvest Fuel.” The New York Times 8 Sep 2006. Web. 23 Apr 2009 <http://www.nytimes.com/2006/09/08/business/08crop. html?pagewanted=1&ref=science>. 6 “Biofuels.” Web. 23 Apr 2009 <http://www.bp.com/sectiongenericarticle.do?categoryId=902 7827&contentId=7050732>. 7 “Biofuels.” 8 Pollack. 9 “Data Set.” United States Department of Agriculture Economic Research Service. 2 Jul 2008. USDA. 24 Apr 2009 <http://www.ers.usda.gov/Data/BiotechCrops/ ExtentofAdoptionTable1.htm>. 10 “The Science and Safety of Corn Amylase.” Syngenta. Web. 23 Apr 2009 <http://www. syngenta.com/en/corporate_responsibility/pdf/Fact%20Sheet%20The%20Safety%20 of%20Corn%20Amylase.pdf>. 11 Risler, Jane. “Union of Concerned Scientists.” 19 Jan 2009. Web. 23 Apr 2009 <http:// www.ucsusa.org/assets/documents/food_and_agriculture/Syngenta-ethanol-corn-UCScomments.pdf>. 12 “Renewable Energy and Agriculture: A Natural Fit.” Union of Concerned Scientists. Web. 23 Apr 2009 <http://www.ucsusa.org/clean_energy/technology_and_impacts/impacts/ renewable-energy-and.html>. 13 Risler. 14 “USDA approves Corn Amylase Trait for Enogen.” Syngenta. Web. 11 Feb 2011 <http://ww2. syngenta.com/en/media/mediareleases/en_110211.html>. 15 Risler. 16 “Position Statements.” Syngenta. Web. 23 Apr 2009 <http://www.syngenta.com/en/media/ positionstatements_full.html>. 17 “Biofuels.” Web. 23 Apr 2009 <http://www.bp.com/sectiongenericarticle.do?categoryId=902 7827&contentId=7050732>. 18 Doggett, Tom. “Ethanol to take 30 pct of U.S. corn crop in 2012: GAO.” Reuters 11 Jun 2007, Web, 23 Apr 2009 <http://www.reuters.com/article/scienceNews/ idUSN1149215820070611>. 19 Blount-Lyon, Sally. “Grand Illusion.” Business and Its Publics: Inquiry and Discourse (2008): 113–117. Print. 20 Frank, Robert. “Can Socially Responsible Firms Survive In Competitive Environments?” Business and Its Publics: Inquiry and Discourse (2008): 57–92. Print. 21 Hawken, Paul. “Natural Capitalism.” Business and Its Publics: Inquiry and Discourse (2008): 139–149. Print. 1

A NET-FIX FOR NETFLIX, THE ENVIRONMENT, AND THE PEOPLE

essay by

BRYAN YOUNG Bryan Young analyzes the Netflix mailing process within this fluid essay. While perhaps simplistic at first glance, there are genuine insights here that demand attention. If Netflix were to take Bryanâ&#x20AC;&#x2122;s advice, they would make a positive environmental change and would help their bottom line at the same time.

THE CALL FOR CORPORATE ACTION

BRYAN YOUNG

a Net-Fix for

NETFLIX,

the Environment, and the People

A NET-FIX FOR NETFLIX, THE ENVIRONMENT, AND THE PEOPLE

The “Go Green” Initiative has been active for about a decade now; but, long before the 21st century, environmentalism was a passion of a few. “Tree hugger” was the common term for people trying to save trees and forests across America. However, as society began to witness the damage caused by past mistakes, people’s mindsets changed, and the nationwide environmentalist effort took root. For years, people have been trying various methods to save paper and trees. Some recycle, some print on both sides of the page, and others even change to a smaller font size; however, the popular DVD and Blu-ray disc rental-by-mail company, Netflix, has not followed suit.

THE CALL FOR CORPORATE ACTION

BRYAN YOUNG

The culprit of Netflix’s tremendous paper misuse is its envelope. Although it has an extremely creative design, able to be used for both initial and return delivery, the envelope is unnecessarily large. A 6-inch by 8.25-inch envelope is not necessary for a 5-inch by 5-inch DVD. Netflix even acknowledges the uselessness of the extra three inches as it actually permanently seals off this part of the envelope. It is common for a Netflix subscriber to open his or her mailbox and find this end folded under, as it makes the envelope fit easier in the mailbox. Many people choose to overlook this extra paper because all they really care about is the DVD inside. If one were to stop and think, one might realize that Netflix could help the environment and itself if it reduced the size of its envelopes. Netflix has been delivering DVDs since 1999, and has become extremely popular since then. In recent years, the number of Netflix subscribers has skyrocketed. Netflix started with only about 100,000 customers in 1999. By 2009, the company had increased its number of subscribers to about ten million; and, by the end of March 2010, Netflix was providing its services to fourteen million customers nationwide. Given its rapid growth, Netflix will most likely continue to ship thousands more DVDs every day. The company currently ships about two million DVDs a day, and the average Netflix user rents about six DVDs per month. With those numbers alone, one can imagine how much paper Netflix consumes daily to provide its service. If Netflix were to reduce the size of its envelope to 6-inches by 6-inches instead of the current 8.25-inches by 6-inches, it would be the equivalent to Netflix reducing its deliveries by more than 500,000 DVDs every day. That’s over 500,000 envelopes saved every day, and about 182.5 million envelopes saved every year. It’s clear that, by reducing the size of the special envelopes it uses, Netflix can save thousands of trees every year. This only leaves one to wonder why Netflix continues to produce such large envelopes.

The answer is simple—cost. Today, Netflix spends about seventy-eight cents on postage for each envelope, and the company predicts that it will have spent roughly $600 million on postage by the end of 2010.1 The ideal environmental stance would be for Netflix to completely remove the wasteful three inches from its envelope and, instead, use a square envelope. However, this would cause some problems. For a square, rigid envelope, the United States Postal Service (USPS) charges a twenty-cent nonmachinable surcharge. Netflix ships about two million discs daily and also pays for the return postage for each of its customers; therefore, an extra twenty cents per envelope would cost Netflix $800,000 per day, or $392 million per year. This outrageous postage cost is the reason the Netflix envelope is designed the way it is. Even if it were to account for the money saved from using less paper, Netflix would still see a considerable dent in its profits if it took this environmental stance. There is, however, another option. According to the USPS, an envelope is machinable (capable of being safely sorted by mail machinery) if its length divided by its height is between 1.3 and 2.5.2 The Netflix envelope’s dimensions currently fall within this range; but it could afford to “push the envelope” a little more. If it were to reduce the size of its envelope to 7.25 inches by 5.5 inches, Netflix would be reducing its envelope’s size by about a fifth, the equivalent of saving 400,000 envelopes a day. This would save the company a considerable amount of paper, while still falling within the USPS’s machinable guidelines. This may not appear to be a big change; but with 2 million envelopes being mailed six days a week, the amount of paper saved adds up quickly. The company has redesigned its envelope dozens of times since it started mailing DVDs in 1999 with its environmental impact in mind. Netflix switched from its original cardboard mailers to a thick, paper envelope in 2000, thereby making the

envelopes more recyclable. In 2001, it made a change to plastic to cut costs, but soon changed back to paper again for a more recyclable material. Based on Netflix’s past mailer redesigns, it doesn’t seem odd to think that the company could redesign its current envelope to help the environment, while simultaneously cutting costs. Netflix recycles all of its envelopes, so imagine what it could save if it had 400,000 less envelopes to recycle every day. That’s all money saved without having to pay the USPS a penny extra for postage. It’s even possible that Netflix could end up saving the USPS money by redesigning its envelopes.3 The USPS is an important stakeholder in Netflix’s realm of influence; and, over the past few years, Netflix has been costing the post office a lot of money. Like Netflix, the USPS has a problem when its operations begin to cost too much. Netflix’s current design causes many mechanical sorting problems, mainly due to the extra paper that creates a “floppy leading edge.” In 2007, Scott Mayerowitz from ABC’s News Business Unit reported that Netflix’s envelopes were costing the USPS “roughly $21 million in extra labor costs each year.”4 This is because, as Eric Savitz reported in a 2007 Barron’s article, “70% of DVD mailers processed need to be handled manually because they ‘sustain damage, jam equipment and cause missorts during automated processing.’”5 Back then, Netflix was only shipping DVDs to about 7.5 million customers. By now, that number has almost doubled, and the problem has only been exacerbated. At the time, the US Postmaster General wanted to either disallow Netflix mailers completely or charge the company a 17 cent handling fee per envelope. It is possible that the nonmachinable criteria will be changed in the future to discourage Netflix’s “floppy leading edge.” Such an action would impose a huge cost on Netflix, unless it preemptively redesigns its envelopes. The proposed redesign would cut the “floppy leading edge” in half, to a length that could possibly remove the

A NET-FIX FOR NETFLIX, THE ENVIRONMENT, AND THE PEOPLE

problem that the envelopes create for the postal services’ machines. Netflix would be saving the USPS millions of dollars, saving itself money, and helping the environment. R. Edward Freeman, a business professor at the University of Virginia, stressed, in his paper “Managing for Stakeholders,” the need for corporations to benefit all its stakeholders, not just those financially invested in the company. He believes that, by doing so, a corporation can actually see greater profits than if it were to solely cater to the needs of its investors.6 In the case of Netflix and its envelopes, Freeman couldn’t be more correct. By reducing the size of its envelope, the company

THE CALL FOR CORPORATE ACTION

would cut costs for itself and the USPS, thereby increasing profits for its investors, as well as pleasing its customers by increasing the speed of delivery by making the envelope easier to process. A redesign could create positive change in Netflix’s operations. The redesigning of the Netflix envelope appears to be a no-brainer. Not only would the solution benefit all its stakeholders and help preserve the environment, but Netflix would also reduce costs and save money as well. In this day and age, companies are looking for ways to increase profits, while, at the same time, society demands social responsibility. Often,

these two ideals clash. Corporations have been known to follow the teachings of Milton Friedman, a Nobel Prize winning economist who argued that “the social responsibility of business is to increase its profits” for the sake of its shareholders.7 Friedman may not agree with environmental issues; but, in the case of Netflix, the two ideals converge. What’s best for stockholders also benefits the environment and other stakeholders. If a corporation can make a small change to help itself, while also benefiting the environment and its stakeholders, there is no question as to the decision it should make.

BRYAN YOUNG

Epstein, Ethan. “Netflix is the big loser in Postal Service changes.” MSNBC. MSNBC, 30 Mar 2010. 6 May 2010 <http://www.msnbc.msn.com/id/36100708/ns/business-the_big_ money>. 2 USPS. “Nonmachinable.” USPS. 6 May 2010 <http://www.usps.com/prices/USPS_prices_ nm_pop.html>. 3 Zachary, G. Pascal. “The evolution of the NetFlix envelope.” Business 2.0 Magazine. Business 2.0 Magazine, 21 Apr 2006. 6 May 2010 <http://money.cnn.com/2006/04/20/technology/ business2_netflixgallery/index.htm>. 4 Mayerowitz, Scott. “Netflix Envelopes ‘Jamming’ Postal System?” ABC News. ABC News, 30 Nov 2007. 6 May 2010 <http://abcnews.go.com/Business/IndustryInfo/ story?id=3932667&page=1>. 5 Savitz, Eric. “Netflix: Postal Service Inspector General Proposes Applying Surcharge To DVD Mailers.” Barron’s. Barron’s, 5 Dec 2007. 6 May 2010 <http://blogs.barrons.com/ techtraderdaily/2007/12/05/netflix-postal-service-inspector-general-proposes-applyingsurchage-to-dvd-mailers>. 6 Freeman, R. Edward. “Managing for Stakeholders.” Business and Its Publics: Inquiry and Discourse. 3rd ed. 2010. Print. 7 Friedman, Milton. “The Social Responsibility of Business Is to Increase Its Profits.” Business and Its Publics: Inquiry and Discourse. 3rd ed. 2010. Print. 1

HOW TREK CAN CHANGE AFRICA, ONE BIKE AT A TIME

HOW TREK CAN CHA

AFRI

ONE BIKE AT A TIME

THE CALL FOR CORPORATE ACTION

SAMANTHA ALTSHUL

ANGE

ICA,

essay by

SAMANTHA ALTSHUL In Africa, something as seemingly simple as bicycle ownership can help build a local economy. Sami Altshul investigates the potential impact of this “game changer” offering a solution that can generate new business for the Trek Bicycle Corporation. Pointing to Africa’s ready customer base, Altshul suggests that Trek build bikes in Africa to both generate revenue for the company and increase economic opportunity for the region.

HOW TREK CAN CHANGE AFRICA, ONE BIKE AT A TIME

Imagine Manhattan without easy access to mass transportation: no subways, cabs, or even streetsâ&#x20AC;&#x201D;just dirt paths. The Manhattan we know today would cease to be a thriving economic and cultural center. The woman who lives on 122nd Street but works on 38th Street would have to walk 84 blocks to get to work, and another 84 blocks to go home. We live in a fast paced community where mass transportation is vital, but not all humans can take for granted such a network; instead, they have no public transportation system to rely on at all.

THE CALL FOR CORPORATE ACTION

SAMANTHA ALTSHUL

In Zimbabwe, Abel wakes up at four every morning to walk nine miles to the nearest high school. While he’s busy being a tenth grader, his eleven year old brother is left in charge of his younger siblings. Abel arrives home at seven in the evening, only to return to manage the house. The one thing Abel wants is a bicycle so he would be able to get to and from school faster and manage the household better.1 Transportation is not an end but rather it is an important means to other economic, educational, social and personal ends. It is a network to opportunity; it attaches workers to employment, producers to consumers, students to schools, and everyone to family and friends. Limited access to transportation restricts access to the best possible life; David Ho explains, “Poorer people have little chance of owning cars or motorcycles...This lack of transport really limits job opportunities, local trade, and service delivery.”2 With walking as the only mode of transportation, money and time is spent getting to jobs, schools, and gaining access to markets. But someone could help to lessen this inefficiency. Stephen Lande, the president of Manchester Trade, said, “‘We don’t expect the U.S. to get out and build roads, but to get involved in all the investment that could make the development corridor work and which could lead to manufacturing.’”3 While the construction and maintenance of roads could increase West African trade by 400%, why should a corporation invest in a system that cannot help the poorest Africans?4 If a car is too expensive, then a system of roads fails to solve the transportation problem. Rosalind McLymont argues that “It will take an enormous amount of money to build and maintain the infrastructure Africa needs to make the continent a competitive player in global trade...The trans-Africa highway network covers 100,000 kilometers, putting the cost of the entire project in the tens of billions of dollars.” Yet, the best solution lies with the bicycle. Instead of investing billions of dollars in roads, a small

portion of that same money can go towards the creation of bicycles that can handle the dirt paths. While there are many NGOs out there already donating bicycles to Africa, donations can only go so far. Only certain communities are receiving these bikes while other villages still have to spend hours walking as their only mode of transportation. With no means to access opportunities in employment, education or health care, let alone the means to gather food and water quickly, these people are trapped in a cycle of poverty with little way out. Ghana has 13,387 bicycles, but the Sierra Leone has only 85. Why help only certain communities when all areas need equal access to transportation and the means it allows? The Sierra Leone economy shouldn’t be struggling while the Ghana economy is booming, simply because they do not receive equal access to bicycles. There are only so many bicycles being donated, but what if there were a greater amount of bikes available to Africa? I call on the Trek Bicycle Corporation to expand into Africa, to set up manufacturing facilities in all regions, and to thereby create equal access to cheap transportation. It’s a stark contrast to the donations NGOs are currently making in Africa, so why would someone pay for a bike when others are receiving them for free? Simply put, the donations are not being evenly distributed across the continent, and the donated bikes aren’t going where they are most needed. Trek has the resources to make bikes, not to simply distribute them. If they could provide basic, single gear bikes at a very low cost, they could change African communities forever. They could make cheap steel bikes, or even make bamboo bikes. “Bamboo has a higher tensile strength than steel and can be taped together with natural fiber and resin. A finished frame should be light, easy to handle and ideal for carrying goods...Material will come from bamboo forests in the surrounding Ashanti region, with wheels and other parts imported.”5 With a cheap

bike, communities can now interact with other communities to create a market of exchanged goods not produced in their own communities. Trek already exists in South Africa, but by expanding its market to the rest of the continent and creating a new line of bikes, Trek would be doing good for the sake of doing good, rather than for the benefit of its shareholders. Instead, they would be approaching the concept of corporate social responsibility through the relationship of the company and its potential stakeholders: new customers. “One problem is that few bikes are manufactured in Africa;”6 yet by alleviating this problem, Trek may actually entice the American consumer. Their new relationship to the African consumer may influence a new relationship with other stakeholders, like new American consumers. African economies would grow as the bike may be seen as an investment, not a cost. Additionally, by making these bikes in Africa, Trek would be providing means to workers via wages, and would be helping the economy grow from within. Workers don’t need to be specialists because, “the bamboo bike is easier to build than any other bike. We built a bike in a shack in Ghana with no electricity. So you don’t need much infrastructure at all.”7 This effort would provide pockets of workers in each region, and would create interwoven markets that can fuel prosperous local trading. “By providing low-cost bicycles as well as tools and workshops, the centre has helped hundreds of people to start...to take action on transportation in their city.”8 Also, the market for bikes would continue growing and Trek could offer other products. Attached racks, where one can put schoolbooks or locally grown goods, would expand the market; there would not only be demand, but also the necessary capital. The Afribike Center in downtown Johannesburg’s master mechanic said, “‘We aren’t just putting cyclists on the road; we’re sowing the seeds of a growing African movement towards low-cost, sustainable transportation.’”9

HOW TREK CAN CHANGE AFRICA, ONE BIKE AT A TIME

The key for the corporation is to look at this program with a long-term perspective. The short-term goals are simply to get cheap bikes in the hands of villagers, but eventually the goals grow to benefit Trek. While they could potentially lose money in the short run for this proposed idea, they have the ability to market themselves using this idea. More people could potentially be interested in buying Trek bikes because of this cause. Trek could even market these bikes so that part of the proceeds from a bike bought in America can go to the production of a bike in Africa. They must leverage their valued relationship with close, local stakeholders to

THE CALL FOR CORPORATE ACTION

make an impact with new stakeholders in Africa. The issue of transportation has not been resolved; nobody with the means to transportation has tried to help out. NGOs can only donate so many bikes because they simply don’t have the means to produce the bikes themselves. Additionally, they have not distributed the donations evenly. By having Trek produce bikes that are made specifically for these dirt roads, there can be an unlimited number of bikes made available to African villages. The tenth grader in Zimbabwe isn’t much different from the urbanite who would have to walk 84 blocks to

work; yet, because she lives in Manhattan, she does not have to walk. She can get to work by train, car, or even bicycle. Abel, on the other hand, doesn’t have any other choice but to walk if he wants an education and still take care of his family. But if Abel were able to buy a cheap bike from Trek, his life would be changed for the better. He wouldn’t be spending six hours a day walking to and from school; he could take care of his family. If one bike could affect Abel in a positive way, imagine the economic opportunity available to a small African community if they had access to bicycles.

SAMANTHA ALTSHUL

“Young superheroes in a hut.” Chattanooga Times Free Press 13 Apr 2010: ProQuest Newsstand, ProQuest. Web. 28 Apr 2010. 2 Ho, David. “Bamboo bikes.” New Internationalist 1 Nov 2008: CBCA Complete, ProQuest. Web. 28 Apr 2010. 3 McLymont, Rosalind. “Road warriors.” Journal of Commerce 18 Feb 2008: ABI/INFORM Global, ProQuest. Web. 28 Apr 2010. 4 Ibid. 5 “International: On your bike: Transport in Africa.” The Economist 29 Nov 2008: ABI/ INFORM Global, ProQuest. Web. 28 Apr 2010. 6 Ibid. 7 Ho. 8 Johnson, Elena. “The Right To Bike: Southern Africans promote sustainable transportation for women and men.” Alternatives Journal 25.4 (1999): 5 Platinum Periodicals, ProQuest. Web. 28 Apr 2010. 9 Ibid. 1

ERADICATING THE MODERN DAY FOOD DESERT

essay by

STEPHANIE MIAO Food Deserts—neighborhoods bereft of fresh produce—is the topic of Stephanie Miao’s intriguing plea for corporate action. With a boost from a recent federal health initiative, Whole Foods is in a unique position to extend its current strategy while providing fresh food to impoverished areas of inner city America.

THE CALL FOR CORPORATE ACTION

STEPHANIE MIAO

Eradicating THE MODERN DAY Food Desert 39

ERADICATING THE MODERN DAY FOOD DESERT

The yearly healthcare cost for obesity-related diseases in the United States is $147 billion dollars, which is not the price tag that consumers see on their cartons of McDonald’s French fries, bars of Hershey’s chocolate, or 48-oz. Big Gulps of Dr. Pepper. Instead, a vast population of consumers sees only the short-term benefits of cheap, convenient ways to satiate hunger.

THE CALL FOR CORPORATE ACTION

STEPHANIE MIAO

The problem lies in perception. Hidden to their eyes are the risks of obesity, heart disease, high blood pressure, and other conditions brought upon by poor nutrition. Furthermore, the individuals most prone to these effects are the 23 million people who do not even have access to healthy food. These consumers live in lowincome areas called “food deserts,” which are overrun with fast-food joints and convenience stores that ordinarily stock only packaged, processed foods with long shelf lives. The nearest chain supermarket, a main source of fresh produce for Americans, is often miles away; and, moreover, the supermarket industry, which “suffers from tight profit margins and is thus particularly risk-adverse,” is hesitant to enter areas where demand and concern for healthy food seems low.1 However, rather than interpreting the unhealthy eating habits of food desert populations as lack of enthusiasm for healthy goods, corporations should instead see the potential in these latent markets and reach out to change the perception of health and diet in America’s food deserts. By educating these communities about nutrition, the corporation will have, ultimately, created a new market where it can sell goods and make profits. The socially responsible value platform and green image of Whole Foods Market as a high-end, healthy retailer puts the company in the perfect position to reeducate these communities and provide them with access to healthier food. Government Attention towards Food Deserts Food deserts have recently been called to public attention by First Lady Michelle Obama’s Let’s Move campaign, a program that aims to “combat the epidemic of childhood obesity.”2 In her campaign, Michelle Obama addresses food deserts as a major issue since “school-aged children are not getting the recommended levels of fruits, vegetables, whole grains, and low-fat dairy products.”3 To bring more nutritious options to

these poorer areas, the Obama administration is investing $400 million in its Healthy Food Financing Initiative which aims to “promote a range of interventions that expand access to nutritious foods, including developing and equipping grocery stores and other small retailers selling healthy food in communities that currently lack these options.”4 However, Marianne Bitler, a professor at the University of California-Irvine, and Steven J. Haider, a professor at Michigan State University, observe in their “Economic View of Food Deserts in the United States” that corner stores and bodegas are not willing to take on the burden of selling perishable goods; and conversely, produce suppliers are unwilling to sell their goods in such small quantities.5 A well-established, socially responsible corporation, such as Whole Foods, is more apt to handle the task of supplying to food deserts than the smaller retailers currently in place. The Customer Base of Whole Foods At first thought, the idea of Whole Foods Market placing its high-end supermarkets in low-income neighborhoods seems an unreasonable proposal. After all, Whole Foods Markets are found in affluent suburban and urban neighborhoods, and, furthermore, target a health-conscious, educated, upper-middle class demographic. These educated customers are not only conscientious of what they eat, but also of what brands they buy and of the values those brands promote. They are the customers who, as PwC’s Managing Director of Corporate Responsibility, Shannon Schuyler describes in a recent presentation at NYU, are willing to pay a marked up price of $5 for their Starbucks coffee every morning because they know some of the proceeds go to improving the lives of farmers in Africa. These customers care whether a company is socially responsible, and can afford to demonstrate this concern through their purchases. If dedicated, Whole Foods could market itself under a new, added image as a crusader

against the modern day food desert. Values of Whole Foods Indeed, the corporate heads at Whole Foods Market are mindful of the attitudes of their consumer base. On the website, there is a dedicated section to “Core Values,” that says, “Yes, [Whole Foods is] a publicly held company and [has] to make a profit to survive in the marketplace. But [it’s] proven that a company can do good and do well if the doing comes from the heart.”6 The corporation’s CEO and founder, James Mackey, outlines the values of Whole Foods Market in his editorial piece, “Rethinking Corporate Social Responsibility.”7 He directly opposes economist Milton Friedman’s shareholder theory, which states that a corporation’s sole purpose is to make profit and to focus on the benefits to its shareholders.8 Instead, Mackey takes up R. Edward Freeman’s stakeholder model, identifying Whole Foods Market as a company with “multiple stakeholders and multiple responsibilities.”9 In the past, Whole Foods has displayed this sense of responsibility through various philanthropic acts. The stores hold days throughout the year where 5% of a store’s profits are donated to different nonprofit organizations. The company has also launched a micro-financing donation system called the Whole Plan Foundation Annual Prosperity Campaign where over $2 million has been collected at checkout registers to “enable women entrepreneurs...to create or expand a home-based business.”10 However, Whole Foods could take its corporate social responsibility platform a step further by committing itself to resolving the issue of food deserts. A Secondary Branch Building a traditional high-end Whole Foods Market in the middle of a food desert would be akin to planting an apple seed in the Sahara and expecting it to grow. The high prices of their traditional stores will discourage low-income customers; but lowering prices in low-income

ERADICATING THE MODERN DAY FOOD DESERT

areas would be unfair to the rest of the consumer base, and would further erode company profits. Additionally, the high-end, high-quality image of Whole Foods Markets must be maintained; and placing a Whole Foods Market in a low-income setting may sully the corporation’s image in the eyes of either a shareholder or a wealthy customer. To solve these branding and price problems, Whole Foods should open a secondary branch designed to enter low-income markets. Just as the supermarket chain Supervalu has branches like Acme and Sunflower Market, the new Whole Foods branch will still be associated with the Whole Foods Market, but operate under a different name, such as “Essential Foods” or “Whole Produce.” Of course, the name will not be the only change made in the secondary branch; it should also adopt a no-frills approach by removing its ultrahealthy packaged snack brands, New Age beauty products, and cafeteriastyle restaurant. True to the proposed name, the store will stock only essentials such as conventionally grown produce (which is cheaper than organic), whole-wheat grains, fresh meat, and dairy. Since these items are perishable, the store will have to start with a considerably small inventory before more demand is generated. Whole Foods Market will not run into the same problem that convenience stores have with suppliers who are unwilling to ship small amounts of produce; the secondary branch can obtain its inventory directly from its larger, traditional stores. As long as quality is maintained at these secondary branches, any concerns about the Whole Foods image will not only be resolved, but the corporation could also market their secondary branch to investors and socially-conscious consumers as a socially responsible initiative that will simultaneously improve living conditions in these areas and create a new market for healthy food. Price Concerns The opening of a secondary branch

THE CALL FOR CORPORATE ACTION

solves the issue of Whole Food Market’s image, but the problem of high prices still exists. Whole Foods Market cannot lower its quality even in its secondary branches. One solution would be to incorporate government subsidies from programs such as the aforementioned $400 million Health Food Financing Initiative. Though this initiative targets small business owners in food deserts, Whole Foods Market could appeal explaining why it, as a steady, 30-year-old corporation, could put the money to effective use and provide a consistent stream of healthy foods to now barren food deserts. It could offer practical evidence citing its ability to purchase large quantities of produce from suppliers and noting its core values, as demonstrated by its socially responsible past actions. With these subsidies, Whole Foods Inc. could cut prices in their secondary branch stores, thereby making healthy alternatives economically viable for low-income families. Creating Demand for Healthy Foods Even with the availability of affordable healthy food, the problem of food deserts is not completely solved until there is legitimate demand in the market for these healthy options. So, how does a corporation go about taking the French fries out of consumers’ hands and filling them with carrots? Currently, the government, the school system, and nonprofit organizations are implementing nutrition education programs in schools such as Food Bank NYC’s Cookshop Classroom for children in Kindergarten through second grade. This kind of measure may still not be enough to nurture good nutrition in food desert areas. An article by journalist Martha Mendoza in USA-Today simply states, “Nutrition education is ineffective.”11 Though nutrition education programs have been implemented in a number of elementary and middle schools throughout the United States, many studies in California and Pennsylvania have shown that the health videos and cooking workshops are not get-

ting the message to children. Experts attribute this lack of interest to many factors: local grocery stores do not carry the necessary fresh produce; there are abundant advertisements for unhealthy foods; and, most of all, though kids might be eating healthy in class, their eating habits at home remain unchanged because their parents’ eating habits remain unchanged.12 Indeed, Whole Foods Market will have to come up with a more innovative approach to reeducate the adults in food desert communities. An effective way to convince consumers to buy a product is to let them sample it first. Whole Foods might contact companies in the area and set up a day of the week where it would sell employees a well-prepared, discounted lunch to replace fast food options. The local corporation might further extend its outreach to the community by sponsoring neighborhood events such as dinners and picnics. These events would not only build a solid reputation for the secondary branch, but would also help reduce its loss on perishable inventory.

STEPHANIE MIAO

Gray, Steven. “Can America’s Food Deserts Really Bloom?” Time Magazine 26 May 2009. Web. 6 May 2010 <http://www.liu.edu/CWIS/CWP/library/workshop/citmla.htm>. 2 “Accessing Healthy and Affordable Food.” Let’s Move Campaign. White House. 6 May 2010 <http://www.letsmove.gov/accessing/index.html>. 3 Ibid. 4 “Obama Administration Details Healthy Food Financing Initiative.” Press Center. U.S Department of the Treasury. 19 Feb 2010 <http://www.treasury.gov/press-center/pressreleases/Pages/tg555.aspx>. 5 Bitler, Marianne, and Haiser Steven. “An Economic View of Food Deserts in the United States.” Understanding the Economic Concepts and Characteristics of Food Access. (2009): Print. 6 Mackey, John. “Rethinking Corporate Social Responsibility.” Whole Foods Blog. 28 Sep 2005. Web. 6 May 2010 <http://www2.wholefoodsmarket.com/blogs/jmackey/category/socialresponsibility>. 7 Ibid. 8 Friedman, Milton. “The Social Responsibility of Business Is to Increase Its Profits.” Business and Its Publics: Inquiry and Discourse. 3rd ed. Boston: Pearson Learning Solutions, 2009. 37–41. Print. 9 Mackey. 10 Mackey. 11 Mendoza, Martha. “Nutrition Education is Ineffective.” USA Today. 4 Jul 2009. Web. 6 May 2010 <http://www.usatoday.com/news/health/2007-07-04-fightingfat_N.htm>. 12 Ibid. 1

BURNED OUT: A CASE FOR ENERGY PARITY

BUR NED OUT A CASE FOR

THE CALL FOR CORPORATE ACTION

Spread photo by Mingo Hagen ( flickr.com/mjhagen)

ENERGY PARITY

ALBERT HONG

essay by

ALBERT HONG Albert Hong reconsiders the central power grid in this intriguing essay warning us of the disparity of energy access. For Albert, microfinancing may provide a unique solution by financing small scale power sources designed to connect local hydro and wind power to usable energy without the need for a defined grid.

BURNED OUT: A CASE FOR ENERGY PARITY

Climate change, the growing cost of oil per gallon, the inevitable depletion of natural oil reserves—these have been the traditional instigators of sustainable energy development. But hidden beneath ecological and economic reasons, there is a fourth reason that is, perhaps, the most pressing and most overlooked factor—poverty. Numerous sources attest to “a direct relationship between the absence of adequate energy services and many poverty indicators such as infant mortality, illiteracy, life expectancy, and total fertility rate.”1 These reports suggest that energy availability and accessibility is crucial when it comes to addressing poverty, one of the most imperative social issues of our time.

THE CALL FOR CORPORATE ACTION

ALBERT HONG

Today, 1.6 billion people in developing countries do not have access to basic energy services. Developing countries use a mere 34 gJ per person compared to an astounding 194 gJ per person in developed countries, an indication that the rich-poor gap for energy is at its widest.2 These numbers are alarming considering that these energy services are crucial to meeting basic societal needs: food, shelter, clothing, clean water, sanitation, medical attention, education, and information access. Thus, energy is not a form of convenience, but a “determinant of poverty or development.”3 In order to fulfill their basic needs, the poor naturally prefer fuel sources with cheaper up-front costs. These sources include biomass, wood, and dung, which represent the three worst fuels in terms of efficiency and particulate cleanliness. The heavy pollution that is emitted by these forms of fuel gets trapped inside huts and small houses, both of which typically lack ventilation. This takes a heavy toll on individual health and the poor’s ability to work productively, thereby perpetuating the cycle of poverty.4 The World Health Organization estimates that “just over half of worldwide deaths in children under the age of five are caused by indoor air pollution, while the proportion of the total global burden of disease in children of the same age caused by indoor air pollution is a staggering 80%.”5 These three forms of alternate fuel, which are the most common in the developing world, also entail huge costs in terms of human energy, as each source must be gathered, collected, and transported. With heavy workloads and lowincome livelihoods, women cannot manage without their children, particularly their daughters. According to the World Bank, boys in the Ethiopian village of Delanta reported that they “miss one to two days of school a week in order to work, and girls miss two to three days to help their mothers who are overburdened.”6 “When survival of the family becomes the goal, there is no opportunity to

develop human potential and talent. This is a loss not only to the individual, but to society as well.”7 Access to the right types of energy could help change all of this. “When more time is spent on collection and preparation of fuel, less time is spent pursuing more productive activities, such as education; this is unfortunate in a country where, in 2003, only 41.5% of the adult population was literate and only 57.4% of the youth population was literate.”8 Accessible energy frees up time otherwise spent looking for fuel; and it provides for productive, wealthbuilding activities such as agriculture, manufacturing, mining, and other industries that gradually help eradicate poverty. Then why is it that India’s electrical grid infrastructure has the potential to cover 90% of its geographic area, but reaches only 43% of the population?9 The reason is mainly one of initial capital expense. “[Modern energy sources] are too expensive and...[it] can prove difficult to achieve regular supplies to isolated rural communities.”10 Extensions to existing grids incur high capital costs that energy suppliers find hard to justify financially with their razor-thin profit margins on their products. In the past, the solution to the price problem has been government subsidies, encouraging energy suppliers with a financially attractive consumer base to extend their grid. India was one of the first to test this model, but the result has been less than viable, with commercial businesses and affluent opportunists reaping most of the benefits. For isolated, impoverished communities, renewable stand-alone energy sources are the most viable solution. A wind turbine in West China that runs off the Gobi Desert’s winds; solar stoves that require only the sun to heat meals; micro-hydrodams on the deltas of Brazil strong enough to power a community (yet too small to disrupt ecosystems)—these are the solutions that can power the poor and help them become independent of the system that currently perpetuates

their poverty. The viability of these localized, stand-alone, small-scale power sources is further accentuated by research showing that the poor can be uplifted from poverty using far less energy than developed nations consumed to grow in the past. In Goldemberg’s 1 kilowatt per capita scenario, researchers found that “if all developing countries achieved a level of energy services comparable to that of Western Europe in the 1970s, a mere 1 kilowatt per capita (or just a 10% increase in today’s energy per capita)...would allow populations of developing countries to enjoy a standard of living as high as that of Western Europe in the 1970s.”11 With micro-hydrodams reaching sub-$200 levels, small-scale power sources are undoubtedly the way to go. Localized power simply seems to be the more cost-efficient alternative. Costs are, however, still prohibitively high, leaving the poor to burn manure to cook their meals. The New York Times reports, “Wind energy would cost nearly one-third more than coal and about 14% more than natural gas.”12 To further exacerbate the problem, the World Energy Council (WEC) reported that conventional investors are refusing to take a stake in the energy market in developing countries because of political volatility, inclinations towards corruption, weak governments, and, most important to investors, low rates of return compared to other conventional energy investment portfolios. This conundrum brings microfinancing to the forefront as a new possibility for achieving cheap, equitable energy for the poor. People are much more inclined, not only to borrow, but also to pay back small, manageable debts (versus the huge sums for which sophisticated investors typically ask). Microcredit offers a way to gain the confidence of the poor, who traditionally have refused to believe in the affordability of renewable energy technology. Fortunately, many microfinance firms specifically target energy sustainability initiatives, such as GreenMicrofinance and E+Co. GreenMicrofinance provides pooled

BURNED OUT: A CASE FOR ENERGY PARITY

microloan packages that exceed the amount that most conventional microfinance institutions, like Grameen Bank, are willing to offer. These loans allow for purchases that typically range from a couple hundred dollars to a maximum of $1 million. E+Co is a sustainable energy investment fund that packages and conglomerates microloans from four other microfinance institutions to finance similar purchases. Both have commanded success in Nicaragua and in multiple African countries, as well as in rural communities in North America. A general solution seems to be at hand, so it is now a matter of where to begin. According to the Energy, Environment and Development Network for Africa (AFREPEN), Africa, which hosts the majority of the globe’s impoverished, has more than 3,140 TWh of exploitable hydro-power potential, 9,000 MWh of geothermal potential, unlimited solar potential, and—in select countries, such as Ethiopia— significant wind potential.13 With an exploitable reserve potential of 7,432 terajoules (TJ) of solar, 901 TJ of wind, and 12,000 TJ of geothermal, Ethiopia represents one of the most promising countries in terms of alleviating energy poverty.”14, 15 Ethiopia, thus, proves itself to be an attractive initial target. At present, large-scale hydropower dams like the Gibe 3 Dam, power 97% of Ethiopia’s lands; but, in addition to their environmental and social detriments, large-scale dams come with costs (like the $1.7 billion for Gibe 3 alone) that tend to trickle down to the rural poor. This ultimately makes the energy unaffordable and inaccessible given its centralized structure amidst a decentralized population.”16 Micro-hydrodams present a realistic solution. They incur capital costs as low as $150 per dam, require only cheap localized infrastructure costs, are easy to deploy, have almost no discernible environmental impact (no reservoir required), and have a flow requirement of only 2 gallons/ sec, which is easily met by most small streams.”17 The dry season (when rivers dry

THE CALL FOR CORPORATE ACTION

up and dams shut down) presents a problem for these dams, however. Luckily, the windy season starts in accordance with the dry season. Enough wind blows to produce almost 901 terajoules of electricity in the regions of Nazaret (9.3 m/s), Ashegoda (8.5 m/s) and Harena (6.9m/s).18 Therefore, when the rivers are too dry to power the dams, there is enough wind to sustain wind turbines as another source of energy. This complementary relationship between hydropower and wind power is an invaluable asset. By switching between hydro and wind power between the rainy and dry seasons, Ethiopia would not only reduce wear-and-tear on the dams and turbines by halving their annual operating time, but it would also create a diversified, reliable power grid.19 The Ethiopian Electric Power Corporation (EEPCO) needs to take advantage of this unique natural phenomenon and partner with GreenMicrofinance, LLC and E+Co to facilitate bulk borrowing of “community microloans” to finance mass quantities of small-scale turbines and micro-hydrodams (as buying in bulk reduces costs). The EEPCO should pursue exclusive purchase agreements with the following companies in exchange for a discounted price per unit: Proven Energy, a UK firm specializing in small-scale wind turbines featuring self-contained maintenance with extensive fieldexperience in remote locations including Antarctica; Appropriate Infrastructure Development Group, a firm responsible for the development of a $150 micro-hydrodam made of PVC; and Sun Ovens International, the world’s leading solar stove manufacturer by volume. By promising exclusive contracts with these three companies, the Ethiopian government, acting as a middleman for the people, can expect to negotiate lower prices in exchange for bulk orders. If Ethiopia were to pursue these channels, it would have amazing potential to address its energy problems. It is no question that Ethiopia’s unique natural environment provides the perfect setting for the rapid de-

ployment of localized, diversified, and seasonally independent renewable energy sources. With unprecedented levels of poverty and a wide rich-poor energy disparity, it makes unquestionable sense for Ethiopia to tap into renewable energy sources from the hills of Nazaret to the streams of Gonder, and come to the realization that centralized grids are not the solution for most of the world’s people. From the financing to the products themselves, localization is the key to a powered Ethiopia; and, hopefully, a powered developing world. Energy disparity is real. It is a global problem that cuts short the lives of millions of poor men, women, and children around the globe. The solutions are, and have always been, right before our eyes. It is time to embrace this reality, acknowledge the correct tools, and relinquish grandiose visions of towering dams and vast wind farms in favor of an even more impressive image—the rise and prosperity of an entire nation.

ALBERT HONG

Parliamentary Office of Science and Technology. Dec 2002. “Access to Energy in Developing Countries.” Postnote. Milbank. 23 April 2009. 2 Ibid. 3 Reddy, Amulya K.N. “Energy and Social Issues.” World Energy Assessment: Energy and the Challenge of Sustainability. United Nations Development Programme. 23 Apr 2009. 4 Ibid. 5 World Bank. “Achieving Better Results in Human Development.” Global Monitoring Report 2008. 59–89. 6 Ibid. 7 Reddy. 8 World Bank. 9 International Energy Agency. 1997. “Indicators of Energy Use and Energy Efficiency. Paris. 6 May 2009. 10 Parliamentary Office. 11 Goldemberg, J., T.B. Johansson, A.K.N. Reddy, and R.H. Williams. 1985. “Basic Needs and Much More with One Kilowatt per Capita.” Ambio. 14 (4–5): 190–200. 12 Wald, Matthew L. “Cost Works against Alternative and Renewable Energy Sources in Time of Recession.” 28 Mar 2009. The New York Times. 23 Apr 2009 <http://www.nytimes. com/2009/03/29/business/energy-environment/29renew.html>. 13 Karekezi, Stephen, Waeni Kithyoma, and Jennifer Wangeci. “The Potential for Small and Medium Scale Renewables in Poverty Reduction in Africa.” AFREPREN/FWD. 6 May 2009 <http://www.afrepren.org/Pubs/WorkingPapers/wpp355_sum.htm>. 14 Gashie, Workeneh. “Occasional Paper 28: Towards a Sustainable Power Sector in Ethiopia: The Potential Contribution of Renewables.” AFREPREN/FWD. 7 May 2009 <http://www. afrepren.org/Pubs/Occasional_Papers/summ/oc28_sum.htm>. 15 Gashie, Workeneh. “The Role of Small and Medium-Scale Renewable Energy Technologies in Poverty Alleviation, Environmental Sustainability and Economic Development in Ethiopia.” AFREPREN/FWD. 6 May 2009 <http://www.afrepren.org/Pubs/ WorkingPapers/wpp356_sum.htm>. 16 Pottinger, Lori. “Clean Energy for Ethiopians, Not Damnation of River Dwellers.” International Rivers. 3 Apr 2009. 6 May 2009 <http://internationalrivers.org/en/blog/loripottinger/clean-energy-ethiopians-not-damnation-river-dwellers>. 17 “Micro Hydro Power—Pro and Cons.” 26 Oct 2008. Alternative Energy News. 6 May 2009 <http://www.alternative-energy-news.info/micro-hydro-power-pros-and-cons>. 18 The Wind Energy Projects in Ethiopia. Oct 2006. Ethiopia: Ethiopian Electric Power Corporation, 2006. 19 Ibid. 1

SIGNALING AWAY THE DANGERS OF PESTICIDES

essay by

IRINA BURDEYNIK The technological solution offered here by Irina Burdeynik might just be genius. If this aural approach to agriculture could work, the shift from chemical pest prevention would deliver an environmental success story. Let’s hope a multitude of crop damaging insects can be repelled by Irina’s innovation.

THE CALL FOR CORPORATE ACTION

IRINA BURDEYNIK

SIGNALING AWAY THE

DANGERS OF

PESTICIDES

SIGNALING AWAY THE DANGERS OF PESTICIDES

If you have ever eaten a tomato, then you know they are red, juicy, and, in most cases, very fragile. But, have you ever come home from the supermarket to find that your tomatoes are extremely large, rigid, and could bounce like tennis balls if you were to throw them against the wall? Or have you sliced open a tomato to find a white core instead of a vibrant red one? All these signs might suggest the presence of unnatural chemical substances in the tomato. These chemicals, commonly referred to as pesticides, are widely used in American agriculture, as well as in foreign farming. Pesticides can successfully drive away bugs, insects, and crop predators; but they can also inadvertently cause health problems, create runoff pollution, and compromise the ecosystem. Todayâ&#x20AC;&#x2122;s society direly needs corporations to implement technological innovation to produce a safer, more practical alternative to pesticides.

THE CALL FOR CORPORATE ACTION

IRINA BURDEYNIK

Pesticide chemicals, particularly insecticides, are favorable to farmers because they effectively keep crops safe from pests, thereby increasing crop yields and enabling farmers to sell larger quantities at a discount. In the United States, the problems caused by various insects translate to over $1 billion in annual losses for the agriculture industry.1 However, pesticides are not cheap. In 2005, the cost of pesticides for common crops averaged about $27.50 per acre.2 On a fairly large farm of about 2,000 acres, the cost of pesticides would total $55,000. Aside from this financial cost, there are also far greater social costs that producers do not account for as they become increasingly reliant on pesticides. Since 1971, environmentalists and the EPA, inspired by Rachel Carson’s book, Silent Spring, took action to ban the dangerous hydrocarbon, DDT, after Carson highlighted its destructive forces on the wilderness and its undeniable link to human cancer.3 The horrors brought about by the popular insecticide opened many eyes to the consequences of pesticides and started a new era of pesticide control that continues to flourish today. Health risks and ecological poisoning have become a major concern for both the manufacturers and applicators of insecticides. In 2010, 56,285 pesticide applicators in fields throughout Iowa and North Carolina were analyzed for their effects on local cancer rates.4 The studies showed that workers who were exposed to chemicals, such as “maneb, mancozeb, methyl-parathion, and carbaryl,” had a higher risk of developing melanoma skin cancer.5 The USDA’s Agricultural Marketing Service sampled produce sold in different regions of the United States, and found that, out of 745 samples of grape juice, 392 were found to have residues of this very same carcinogenic substance, carbaryl.6 A study by the Center for Disease Control and Prevention found that, between 2001 and 2006, New York City experienced 58 cases of injuries related to “bug bomb” pesticides that are used for

domestic pest control.7 The New York Times reported that these injuries have included “respiratory problems and gastrointestinal reactions,” and had often resulted from “serious explosions” that hospitalized several people.8 In addition to health risks, unabsorbed pesticides can contaminate streams, groundwater, and drinking water. Many pesticides harm the bees and birds that help (not harm) crops and are crucial in balancing our ecosystems. In 2009, the EPA banned the insecticide carbofuran, because it not only killed millions of birds, but was also found in our food and water.9 As Rachel Carson predicted, pesticides have become an extremely dangerous threat to natural processes and the future of our environment. The notion of corporate social responsibility, the popularity of the green movement, and increased pressure from government regulators have pushed large-scale crop producers to innovate and seek new methods for reducing and containing pesticide application. One popular method, encouraged by the United States Department of Agriculture, is the use of “guided measure technology.” This technology includes Global Positioning Systems, Real Time Kinetics, and lasers to reduce the amount of pesticides sprayed on farmland.10 USDA studies claim that these technologies can save farmers approximately $400 million annually and can lower pesticide use by 25 million pounds nationwide.11 There have also been proposals to use petroleum products on a larger scale because evidence points to petroleum’s positive effect on plant life, as well as its stellar performance in killing mosquitoes and their larvae.12 Furthermore, in India, household remedies of lime, eggs, and brown sugar have been glorified as the new all-natural, cost-saving alternative to pesticides.13 However, none of these solutions have shown optimal success in winning the battle over pesticides thus far. These alternatives may work to reduce or eliminate pesticide use in the short-term, but they fail to eliminate

the pesticide problem in the long-run. For instance, the initial investment into the GPS and laser technologies ranges from $10, 000 to $60,000. This is not a small cost for farmers to internalize into their costs of production as they are already paying about $27.50 per acre for the chemicals they are spraying.14 Petroleum use is not practical because it is excessively flammable and messy to handle; the rising costs of oil and gas have to be considered as well. The “lime and egg solution,” with a shelf life of only six months, may be “ideal for small-scale farmers,” but it is simply a laughing matter for farmers on the corporate level.15 These solutions are not ideal for commercial-size farms because they cannot efficiently replace pesticides in everyday scenarios. There is, however, another approach to the pesticide problem—an approach where corporations could take advantage of their vast marketing power, their resources, and their own reputational interests. The ideal pesticide-alternative technology already exists in the small-scale consumer products that keep suburban homeowners’ backyards bug-free using sound waves. One model, manufactured and distributed by Black & Decker, is the EP110, a household pest repellent that is available for roughly $30. To ward away insects, it emits ultrasonic signals with high frequencies that humans are incapable of hearing. If large-scale, agriculture-specific versions of this technology were created, the ultrasonic sirens could effectively eradicate bugs on vast farmlands. This would simultaneously reduce both the farmers’ costs of purchasing pesticides and the social costs of disease and ailments to which consumers and farm workers are susceptible. The Black & Decker Manufacturing Company has the drive, opportunity, and the engineering resources necessary to implement this solution at its European R&D Center in Spennymoor, England.16 The center’s industrial design manager, Mark Stratford, explains that “’if you have a unique product you can command

SIGNALING AWAY THE DANGERS OF PESTICIDES

more money for it’” and that “‘there is no benchmark and no competition’” within the market for original products.17 If Black & Decker were to create a bug controller that could wipe-out pesticides on a large-scale, then it can not only market itself as an eco-friendly company, but can also reap the financial rewards by adding farmers to its list of consumers. Furthermore, an integrated partnership with an electronic sound technology corporation, such as Panasonic, could significantly enhance the likelihood of ultrasonic bug repellents gaining widespread market appeal in the agricultural sector. Panasonic has the capability to create a vast sound system capable of resonating throughout hundreds of thousands of acres. In 2009, Panasonic opened an “Eco Ideas House” in Japan to focus on energy technologies and environmental protection.18 Since one hindrance to implementing the ultrasonic system is the vast amount of electric power required to operate the system, Panasonic would most likely be willing to develop a solar powered sound system as a part of its “Eco Ideas” initiative. Both companies could additionally profit from upgrades and maintenance fees they may need to perform on the equipment, depending on the nature of the problem. Sound-based systems would also be more successful and sustainable in the long run than pesticides because they are easily adaptable: as pests evolve resistance to certain sounds (in the same way they become resistant to pesticides), the programmers can expand and change the frequency to repel new generations of insects. Farmers would benefit greatly from replacing pesticides with the new ultrasonic technology. As mentioned previously, pesticides cost about $27.50 per acre; and, in 2002 alone, “$8.2 billion” was spent on agricultural pesticides in the U.S.19 These costs are incurred every year as pesticides are absorbed into the soil and cannot be re-used. The ultrasonic repellent is a one-time investment that can be used as long as the farm is

THE CALL FOR CORPORATE ACTION

in operation. In the long-run, investing in the new equipment may cost U.S. agriculture about $8 billion (plus maintenance fees over 5–10 years), but this is not an annual cost. This would enable producers to protect their crops and still sell them at a relatively low-cost, while also accounting for marginal social costs. The EPA, NGOs, and other nonprofit organizations that work towards a safer world without pesticides have a window of opportunity to step-in and make this proposed solution a reality. Through grants and subsidized programs, the initial investment into the ultrasonic product could be an easier feat for farmers to overcome. One such program that might be interested in providing grants to farms that implement technology is the Pesticide Registration Improvement Act and Pesticide Registration Fund, which distributes money in “partnership grants” to subsidize innovations and technology for pesticide reduction.20 Many organizations exist solely to fight the battle against negative externalities from pesticides. If the ultrasonic solution were achieved, these members of our community would benefit most from the development. The problem of pesticides is multisided; and, likewise, the solution must be multi-faceted, taking into account the perspectives of a variety of stakeholders via this ultrasonic innovation. Consumers want their food to be organic and pesticide-free; but, growing poverty and high unemployment rates force people into buying the cheapest available goods. Therefore, the only thing that would be beneficial to all parties is a cheaper alternative to pesticides. The combination of Black & Decker’s engineering and Panasonic’s resources could lead to a solution of epic proportion. Only the future will tell if technology is truly the ideal alternative to the dangers of pesticides.

IRINA BURDEYNIK

Francis, C. K., ed. “Petroleum and Products Are Ideal Insecticides; Used with Success on a Large Scale.” Oil and Gas Journal (2002): 28. LexisNexis Academic. PennWell Publishing Company, 13 Sep 2002. Web. May 2010.<http://ezproxy.library.nyu.edu:2076/us/ lnacademic/auth/checkbrowser.do?rand=0.07502889108234811&cookieState=0&ipcount er=1&bhcp=1>. 2 CSP Job Sheet EPM40. Rep. USDA, 2006. United States Department of Agriculture. National Resources Conservation Service. Web. May 2010 <http://www.in.nrcs.usda.gov/programs/ CSP/CSP_PGMS/cspfiles/EPM40_Pest_Overspray_Job_Sheet.pdf>. 3 “Pesticides and Public Health | EPA History | US EPA.” US Environmental Protection Agency. Web. May 2010 <http://www.epa.gov/history/publications/formative6.htm>. 4 Shetler, Gordon. “Farm Pesticides Linked to Deadly Skin Cancer4.” Farm Pesticides Linked to Deadly Skin Cancer (2010). Environmental Health News. Environmental Health Science, 31 Mar 2010. Web. May 2010. 5 Ibid. 6 Pesticide Data Program—Annual Summary, Calendar Year 2008. Rep. USDA Agricultural Marketing Service, Dec 2009. Web. 1–202 <http://www.ams.usda.gov/AMSv1.0/getfile?dD ocName=STELPRDC5081750>. 7 Chan, Sewell. “State Moving to Limit Use of Bug Killer by the Public.” The New York Times 21 Oct 2008. The New York Times Company. Web. May 2010 <http://query.nytimes.com/ gst/fullpage.html?res=9906E6D71E3DF932A15753C1A96E9C8B63>. 8 Ibid. 9 “Pesticide banned for food crops.” The Brattleboro Reformer 12 May 2009. ProQuest Newsstand, ProQuest. Web. 6 May 2010 <http://proquest.umi.com/pqdweb?did=17075619 91&Fmt=3&clientId=9269&RQT=309&VName=PQD>. 10 CSP Job Sheet EPM40. Rep. USDA, 2006. United States Department of Agriculture. National Resources Conservation Service. Web. May 2010 <http://www.in.nrcs.usda.gov/programs/ CSP/CSP_PGMS/cspfiles/EPM40_Pest_Overspray_Job_Sheet.pdf>. 11 Ibid. 12 Francis, C. K., ed. “Petroleum and Products Are Ideal Insecticides; Used with Success on a Large Scale.” Oil and Gas Journal (2002): 28. LexisNexis Academic. PennWell Publishing Company, 13 Sep 2002. Web. May 2010 <http://ezproxy.library.nyu.edu:2076/us/ lnacademic/auth/checkbrowser.do?rand=0.07502889108234811&cookieState=0&ipcount er=1&bhcp=1>. 13 “‘Lime and egg’ recipe as pesticide alternative.” New Straits Times 19 Jul 2009, ProQuest Newsstand, ProQuest. Web. 5 May 2010. 14 CSP Job Sheet EPM40. 15 “‘Lime and egg’.” 16 Weaver, Tanya. “A clean sweep.” Engineering (London, England) 250.3 (2009): 18–20. OmniFile Full Text Mega. Web. May 2010. 17 Weaver. 18 “Panasonic Releases Eco Ideas Report 2009.” JCN Newswire – Japan Corporate News Network 29 Jun 2009 ABI/INFORM Global, ProQuest. Web. 6 May 2010. 19 CSP Job Sheet EPM40. 20 Implementing the Pesticide Registration Improvement Act (PRIA) – Fiscal Year 2009. Rep. EPA, 2010. EPA. Web. May 2010 <http://http://www.epa.gov/pesticides/fees/2009annual_ report/pria_annual_report_2009.pdf>. 1

PHARMACEUTICAL COMPANIES: QUAGMIRE TO GOLDMINE

PHARMACEUTICA COMPANIES Q U A G M I R E G O L D M I N E

THE CALL FOR CORPORATE ACTION

T O

RACHNA JAIN

AL essay by

RACHNA JAIN U.S. pharmaceutical industries face a challenging conundrum. They have the power to alleviate suffering and save lives yet they are also driven by market demands that often disregard diseases that afflict poorer populations. Rachna Jain has found that many pharmaceutical companies focus primarily on wealthy markets and western diseases, leaving those afflicted in developing countries with little access to life saving medications. Here, Rachna makes a case for the underserved and suggests that Pfizer can benefit financially while also serving constituents in the developing world.

PHARMACEUTICAL COMPANIES: QUAGMIRE TO GOLDMINE

To be in good health is one of lifeâ&#x20AC;&#x2122;s most fundamental desires. When we get sick, we go to the doctor and get a prescription for the medicine needed. However, what happens when you cannot afford the drugs, or even worse, there is no drug to cure your disease? Several million people in the developing world have to cope with this predicament on a regular basis.

THE CALL FOR CORPORATE ACTION

RACHNA JAIN

The pharmaceutical industry is one of the largest and most influential in today’s global society, but it also harbors a great ethical flaw. Pharmaceutical companies research and develop, drugs; however, their aim is not to solely heal people.They are also in the business of making money. While developed countries benefit from the innovations that pinpoint ailments prevalent in the US market, less research is conducted on diseases that primarily affect developing nations. This inequity is caused when the business plans of pharmaceutical companies do not include small, unprofitable markets of developing countries. Many of the world’s deadliest illnesses, such as leishmaniasis and malaria, are not getting sufficient R&D funding from pharmaceutical companies because they are “thirdworld” diseases. Only 1% of the 1393 new drugs registered during 1975– 1999 were for these neglected diseases, yet these illnesses constitute more than 10% of the global disease burden.1 Affected persons often cannot afford to buy drugs and thus are “off the radar screen.” Thus, “third world” diseases only receive $1 out of every $100,000 spent on medical R&D.2 Improvement in people’s standard of living is contingent upon improving the populace’s health; these advancements will result in a more productive labor force, lower unemployment, and a lower rate of disease transmission. However, advances are difficult to come by because the industry is more interested in profits than in people’s well-being. Roy Vagelos, the former head of Merck, explained, “A corporation with stockholders can’t stoke up a laboratory that will focus on Third World diseases, because it will go broke.”3 He further declared, “That’s a social problem, and industry shouldn’t be expected to solve it.”4 Society, however, would beg to differ. The industry’s pricing strategies are unjustifiable: They spend enormous amount of money in defense strategies to maintain monopoly, but often have low marginal costs of production. Secondly, within the in-

dustry, patents protect corporations, which allow them to charge extremely high prices for these drugs until the patent expires. Corporate Crime Reporter, a website, listed Pfizer, the industry’s leader, as #17 on the list of the “Top 100 Corporate Criminals of the 1990s” for international price fixing. Pfizer spent more than 7.9 billion in R&D funding in 2008; however, less than .001% went towards developing new treatments for developing world diseases.5 Diseases such as malaria, trypanosomiasis, and lymphatic filariasis are not even on the “cure” list towards which Pfizer is striving.6 Not until 2007 did Pfizer say it is starting to work on a drug for malaria.7 Pfizer has been accused of moral depravity for pricing lifesaving drugs beyond the reach of millions of people.8 Oxfam International, a confederation of thirteen organizations working to find lasting solutions to poverty and injustice, is campaigning to end the company’s single pricing policy, and is pressing for more flexibility in patent laws.9 In a news report released simultaneously in eight countries, Oxfam claimed that Pfizer aggressively enforced its patents in poor countries, driving up the cost of medicines, and, unlike some of its competitors, did not reduce the price of branded drugs.10 David Earnshaw of Oxfam Brussels said, “The developing world accounts for only 5% of the pharmaceutical industry’s income. Behaving responsibly in developing countries is not going to cost Pfizer a lot of money.”11 The report maintained that despite owning three important drugs for infectious diseases—the antifungal fluconazole (Diflucan), the antiobiotic azithromycin (Zithromax), and the antiretroviral nelfinavir (Viracept)—Pfizer has shown little flexibility on pricing.12 Economic theories from R. Edward Freeman and Milton Friedman are relevant in examining the pharmaceutical industry. Though Friedman encourages corporations’ growth in revenue, he also promotes business free of “deception and fraud.”13 Freeman takes the idea a step further, de-

manding respect for all stakeholders through corporate social responsibility.14 By restricting access to products, Big Pharma is shunning CSR and playing with life and death scenarios. Many governments provide suboptimal R&D incentives, seeing pharmaceutical R&D as a global public good; so each country has an incentive to free ride on research financed by other governments.15 However, R&D preeminence enables one person or company to efficiently create a monopoly and thus retain exclusive control of their intellectual property, which then drive up the asking price and their profits. The CEO of Novartis said, “We have no model which would [meet] the need for new drugs in a sustainable way...You can’t expect for-profit organizations to do this on a large scale.”16 However, the industry is not battling with low-margin profits; the combined worth of the world’s top five drug companies is twice the combined GDP of all sub-Sahara Africa.17 Profits are especially high in the United States because the government does not regulate drug prices. A retired drug company executive was quoted saying, “It’s obvious that some of the industry’s surplus profits could be going into research for tropical diseases, instead it’s going to stockholders.”18 The patent-based model does not encourage pharmaceutical companies to support the “cash-strapped and unstable markets of developing countries.”19 And no solution has been fully implemented since these companies are adamant about charging high prices to recover the cost of introducing a drug to a market. As per the Global Health Forum, we need to encourage pharmaceutical companies to “target markets that would otherwise be economically unattractive,” and find a way so that patent laws do not prevent poor countries from improving their people’s health.20 Obviously, pharmaceutical companies did not cause the health crisis. However, they are vital players that have the ability to positively affect the future of millions of impoverished people.

PHARMACEUTICAL COMPANIES: QUAGMIRE TO GOLDMINE

One possible solution would be to subsidize the drug companies to produce medication for “third world diseases” and tax them for production of more profitable drugs, such as Viagra and diet.21 We can focus research investments on disease-specific interventions and disease-specific health policies. The public and private sectors need to work collaboratively together to develop new drugs and vaccines, and to devise and implement strategies that ensure accessibility to products and services. While neither the public nor the private sector alone can eliminate these problems, focused partnerships involving both sectors have the potential to reduce the severity of these problems. In a world in which differences between the wealth of rich nations and that of poor ones are enormous, a “one price fits all” approach does not work.22 In order for the companies such as Pfizer to help emerging markets, they need to work with governments, shareholders, and all stakeholders, including those afflicted. Perhaps we can take a cue from the open-source models in software such as Linux or even Wikipedia. In these models, a community of users creates and shapes a product that is virtually free. The product is kept alive through multiple contributors. Recently, Merek, heading the opensource movement, introduced Sage, a non-profit medical research organiza-

THE CALL FOR CORPORATE ACTION

tion that plans to revolutionize how information is shared.23 Other companies, such as Pfizer should stop trying to figure out a profit-maximizing way of stripping money from the destitute. Instead, Pfizer can maintain market shares while providing an open access platform through which research, scientists, clinicians, and maybe even patients can have access to data. It is imperative that Pfizer, as an industry leader, takes a step in setting up the open-source system that allows others to follow. Pfizer could create drugs through the open-source process of drug research. Pfizer could recruit local African, Asian or Latin American scientists and share its resources. Once the drugs are created, any company should be allowed to produce generic version of these drugs. Pfizer, the original drug manufacturer, would have a first-tomarket advantage in producing the drugs since they would have access to the original formulas for the drugs. This system, accompanied with the current system of price cuts for drugs sold in developing markets, would create a situation in which all parties obtain some reward. Countries would finally be able to produce cheap drugs for their citizens, while Pfizer would have obtained positive publicity and retained a portion of the market share. And as developing countries’ economies mature into emerging markets, it is in the best interest of

Pfizer to cultivate positive relationships with these customers. Certainly there are issues with the open-source model, but they can be dealt with creatively. Pfizer may worry that the cheap drugs intended for the poor will be pilfered or shipped overseas to be sold at a profit to the first world. They can prevent this problem by investing in different packaging; simply changing the color of the pill could also help differentiate the two drugs.24 As we move forward, we need to look for new ways to improve public health. GlaxoSmithKline offers a promising model. Unlike their competitors, they are determined to cut prices, to be more flexible with their intellectual property, and to increase transparency to facilitate research.25 Along with that, GSK made price reductions on 110 products to developing countries with an average price reduction of 45% in April 2009.26 Furthermore, it will invest 20% of its profits in least-developed countries’ health infrastructure.27 As an industry leader, Pfizer should consider crafting proposals to tackle diseases of the developing world and avoid being left behind. No proposal will entirely solve the issue, but taking action offers a concrete step toward the future and will most certainly increase global wellness.

RACHNA JAIN

Aggarwal, Vikas. “Drugs for neglected diseases.” Pharmaceutical News, Pharmaceutical Articles, and Pharmaceutical Jobs for You ! | Pharmainfo.net. 01 Apr 2009 <http://www.pharmainfo.net/vikas/ drugs-neglected-diseases>. 2 “Oxfam calls for complete revamp of medical R&D.” Oxfam International. 13 Nov 2008. 01 Apr 2009 <http://www.oxfam.org/ en/pressroom/pressrelease/2008-11-13/oxfam-calls-completerevamp-medical-rd>. 3 Shah, Anup. “Pharmaceutical Corporations and Medical Research ? Global Issues.” Global Issues : social, political, economic and environmental issues that affect us all ? Global Issues. 1 Apr 2009 <http://www.globalissues.org/article/52/pharmaceuticalcorporations-and-medical-research>. 4 Ibid. 5 “Corporate Watch : Pfizer Inc : Corporate Crimes.” Corporate Watch : Homepage : Corporate Watch Latest News. 05 Apr 2009 <http:// www.corporatewatch.org.uk/?lid=330>. 6 “Oxfam to Pfizer: Promoting Health of People in Impoverished Countries Can Strengthen Shareholder Value and Save Lives.” Business Resources, Advice and Forms for Large and Small Businesses. 01 Apr 2009 <http://www.allbusiness.com/medicine-health/ diseases-disorders-infectious/6161069-1.html>. 7 Ibid. 8 “Oxfam accuses Pfizer of “moral bankruptcy”” 01 Apr 2009 <http:// www.bmj.com/cgi/content/full/323/7306/186/b>. 9 “Private sector.” Oxfam International. 01 May 2009 <http://www. oxfam.org/en/about/issues/private-sector>. 10 “Oxfam accuses Pfizer of “moral bankruptcy”” 01 Apr 2009 <http://www.bmj.com/cgi/content/full/323/7306/186/b>. 11 Ibid. 12 Ibid. 13 Friedman, Milton. “The Social Responsibility of Business Is to Increase Its Profits.” Business and Its Publics: Inquiry and Discourse. New York, NY: Pearson Custom Publishing, 2008. 1–5. 14 Freeman, Edward. “Managing for Stakeholders.” Business and Its Publics: Inquiry and Discourse. New York, NY: Pearson Custom Publishing, 2008. 7–19. 15 Frank, R.H. “Can Socially Responsible Firms Survive in Competitive Environments?” Business and Its Publics: Inquiry and Discourse. New York, NY: Pearson Custom Publishing, 2008. 87–92. 1

“Global Health Overview – Global Issues.” Global Issues : social, political, economic and environmental issues that affect us all ? Global Issues. 10 Apr 2009 <http://www.globalissues.org/article/588/ global-healthoverview>. 17 Hunt, Dennis. Are We There Yet?: A Guide to Life, Living and Death. Matador, 2007. 18 Silverstein, Ken. “Millions for Viagra, Pennies for diseases of the poor.” Congressman Jesse Jackson, Jr. Web Site. 22 Apr 2009 <http:// www.jessejacksonjr.org/query/creadpr.cgi?id=603>. 19 Matlin, Arianne. “Innovations and incentives: why pharmaceutical companies are becoming interested in neglected tropical diseases.” 21 Apr 2009 <http://74.125.95.132/ search?q=cache:ZIwZIgSGX2MJ:www.globalforumhealth.org/ filesupld/global_update5/art/Update5_InnovationIncentives_ AMatlin.pdf+innovations+and+incentives%3B+why+pharmaceuti cal+companies+are+becoming+interested+in+neglected&cd=1&h l=en&ct=clnk&gl=us&client=safari>. 20 Ibid. 21 Macpherson, Melanie. “Pharmaceutical Companies.” 25 Apr 2009 <http://74.125.95.132/search?q=cache:Z2MzpIMdI8UJ:www. methody.org/uploads/doc/Bp%2520%2520HealthCommittee%2520-%2520Pharmaceutical%2520Co mpanies.doc+mmacpherson986%40c2kni.net&cd=1&hl=en&ct=c lnk&gl=us&client=safari>. 22 Nelson, Bryn. “Something wiki this way comes.” Nature Publishing Group : science journals, jobs, and information. 22 Apr 2009 <http:// www.nature.com/news/2009/090304/full/458013a.html>. 23 Sage. 20 Apr 2009 <http://sagebase.org>. 24 “Drugs companies and the developing world | Quagmire to goldmine? | The Economist.” Economist.com. 20 Apr 2009 <http://www.economist.com/business/displayStory.cfm?story_ id=11376895>. 25 “GSK publishes 2008 Corporate Responsibility Report.” GlaxoSmithKline - improving health and quality of life - do more, feel better, live longer - GSK.com. 06 May 2009 <http://www.gsk.com/ media/pressreleases/2009/2009_pressrelease_10036.htm>. 26 Ibid. 27 “GSK breaks industry ranks to improve access to medicines.” Oxfam International. 17 Feb 2009. 03 Apr 2009 <http://www. oxfam.org/en/pressroom/pressrelease/2009-02-17/gsk-breaksindustry-ranks-improve-access-medicines>. 16

THIRD-WORLD LABOR AND THE AMPUTATION GENERATION

THIRD-WORLD essay by

JOSSIE CARRERAS Jossie Carrerasâ&#x20AC;&#x2122; insight into the problems of prosthetics is eye opening. The majority of prosthetic pieces are expensive and designed for the needs of the industrialized worker. Carreras suggests a shift in focus that would positively impact local economies in the developing world.

THE CALL FOR CORPORATE ACTION

LABOR AND THE AMPUTATION GENERATION

JOSSIE CARRERAS

THIRD-WORLD LABOR AND THE AMPUTATION GENERATION

The term amputee refers to a person who has completely or partially lost a limb as a result of injury or sickness.1 This condition is alarmingly common throughout developing countries where people are more likely to have landmine accidents, suffer industrial accidents, and fall victim to natural disasters. Additionally, many amputations result from a general lack of basic health care in these countries, which can lead to diabetes, gangrene, and infections.2 In Iraq, one in every 987 people has lost a limb. In Afghanistan, the figure grows to one in every 631 people. In Angola, one in every 334 people is an amputee, and in Cambodia the figure is one in 290.3,4 The alarming number of amputees in the third world is not only a health issue anymore; the situation has compromised these countriesâ&#x20AC;&#x2122; economies because amputees lack both the adequate prosthetic pieces and the appropriate health care required to be permanently rehabilitated and to rejoin the workforce.

THE CALL FOR CORPORATE ACTION

JOSSIE CARRERAS

It is usually the case that the governments of developing countries cannot afford to provide adequate healthcare and rehabilitation for their amputees. Thus, there tends to be a lack of personnel trained to fit and adjust prosthetics within these countries. However, the root of the problem lies not only in the government’s inability to provide a health care system that supports amputees over the course of a lifetime, but also in the inadequacy of conventional prosthetic limbs in developing countries. Conventional prosthetics are designed for firstworld lifestyles, and usually do not hold up to the challenges presented by rural environments and hard, manual labor. Furthermore, amputees in developing countries are unable to afford prosthetics and their constant maintenance. Given such obstacles, the possibility of short-term profit for prosthetic companies in developing countries seems feeble, which is why most prosthetic companies have adhered to their current principal market: the industrialized world. However, if prosthetics companies saw an opportunity to generate income from the third-world market, perhaps they would invest in the creation of prosthetics that meet the conditions required by amputees in third-world countries. This action would significantly alleviate the suffering of poor amputees worldwide. Historically, the duty of aiding amputees in developing countries has fallen upon nonprofit organizations. For example, in Sierra Leone, nonprofits have been collaborating to deliver health care to amputees over the past ten years. Nearly a decade ago, Sierra Leone emerged from war and was immediately faced with the problem of providing health care to the many civilians who had lost limbs in the conflict. The Sierra Leonean government and nonprofits, including the Global Action Foundation and the United Nations, have collaborated to provide “free emergency care, prosthetics, physiotherapy, and mental health care” for amputees.5 Unfortunately, the level of attention and the quality of these services have been

decreasing, as the nonprofits have moved on to other emerging global issues. Nonprofits can be very effective in improving life conditions for amputees given that their missions generally involve providing a service without necessarily profiting from it; however, the drawback is that the services provided by nonprofits are often temporary. To implement long-term solutions, perhaps it would be wise to turn to the business model, to seek alternatives to the problem that result in a mutual benefit for both prosthetics suppliers and amputees. Today, many corporations have attempted to alleviate the situation of third world amputees by donating prosthetic limbs and parts. In Haiti, after the January 2010 earthquakes, companies like Hanger Prosthetics and Orthodontics organized campaigns to collect used prostheses, wheelchairs, and crutches for disabled Haitians. New England Brace, another prosthetic company, plans to hold fundraising events to set up prosthetic shops and clinics in Haiti.6 While these and other prosthetic companies are surely on the right track in terms of having the initiative to get involved in the issue, it is debatable whether this approach will yield a long-term improvement on the conditions of Haitian amputees and whether these actions are sustainable to the corporation. Paraplegic Erin Strait describes how “while the direct transfer of Western prosthetics technology is useful in the short term, for long term benefit to the poorer amputees in the third world, culture-specific designs and materials are more appropriate.”7 The term “culture-specific design” refers to prosthetics that are tailored to a more rural lifestyle for people in developing countries. In these places, many amputees are farmers and herdsmen that rely on physical labor to survive. These people depend on the ability to perform basic movements, such as squatting and walking on uneven terrain, activities for which conventional prosthetics do not allow. Furthermore, the loss of a limb

can alienate an amputee from society merely because of physical appearance, and it is not always possible for amputees to conceal their prosthetics. For example, it is not uncommon for people in developing countries to go barefoot. This is not always due to a lack of shoes, as entering mosques and temples and working in rice fields are activities that require the person to be barefoot. This means that an ideal prosthetic foot for this type of environment should resemble a real foot. Thus, a “culture-specific” prosthetic should allow its user to perform the motions that he or she requires for physical labor, while resembling a real limb as closely as possible. Another problem is the high cost of conventional prosthetics. “When the costs to make a limb in a developing country can be cut to as little as US $41...the costs over a lifetime of replacements and maintenance can still amount to thousands of dollars. This presents a major problem since the average family income in rural areas is typically around $300 USD annually.”8 Therefore, the ideal prosthetic for a third world amputee should not only be one that is initially affordable, but also one that requires a minimal number of adjustments and replacements over the amputee’s lifetime. If companies researched and developed prosthetics that meet all of the criteria discussed above, they would be able to establish a permanently beneficial relationship with third-world amputees. This is not impossible, as it has been proven by the developers of the Jaipur Foot. There are 5.5 million amputees in India, a number growing by 25,000 each year.9 In light of this situation, master craftsman Ram Chandra and Dr. Pramod Karen Sethi invented the Jaipur Foot, a prosthetic foot that caters to the needs of amputees in India. The Jaipur prosthetic foot adapts to the lifestyle of poor amputees in India by allowing them to squat, sit cross-legged, and walk long distances. Indian amputees travel with their families from all over India to the Jaipur clinic, but they cannot afford

THIRD-WORLD LABOR AND THE AMPUTATION GENERATION

boarding and lodging for an extended period of time; therefore, the Jaipur foot can be custom-fit in a day by a less than fully trained physician (a feature necessitated by the lack of trained personnel).10 In order to provide affordable prosthetics to poor amputees, the Jaipur Foot organization has adopted a strict principle of cost-efficiency. “About 90% of the company’s expenses in the 2002 fiscal year were directly related to the cost of producing and fitting prostheses for the poor.... Only 4% of its expenditures went toward administrative and overhead expenses.”6 Manufacturing the Jaipur foot costs only $7.68, and is sold for $30. The prosthetic’s functionality does not limit itself to Indian amputees; the model is currently distributed in camps in nineteen countries, including Afghanistan, Bangladesh, the Dominican Republic, Nigeria, and Somalia.11 Jaipur Foot clinics fit about 16,000

THE CALL FOR CORPORATE ACTION

prosthetics every year. The prosthetic’s innovative technology has allowed rickshaw operator amputees to work again, farmer amputees to resume their duties, and classical Indian dancer amputees to perform once again. The developers of the Jaipur Foot have shown that, by investing money on research for the development of “culture-specific” prosthetics, an organization can generate income from the high demand for prosthetics in developing countries rather than resorting to occasional donations. The Jaipur Foot’s practical and innovative design should inspire prosthetics companies to invest in research that can lead to manufacturing practical, affordable prosthetics for third-world amputees. With the ability to reach more locations and more people, prosthetics companies can help deliver the technology of the Jaipur Foot on a broader scale and even improve upon it to make it more profitable and more accessible.

The alarming number of amputees in third-world countries is a result of multiple factors. Governmental and nonprofit organizations, as well as corporations themselves, have tried to help through providing free services and donations. These aids, however, do not establish a mutually beneficial relationship and, thus, tend to be temporary. Furthermore, they do not lead to the full rehabilitation of amputees. If prosthetic companies research and develop parts that can fit the lifestyles of amputees in developing countries, they would be able to financially benefit from the resulting product. The Jaipur Foot’s success serves as a testament to the feasibility and the potential benefit of such a prosthetic. This technology could lead to permanent rehabilitation of millions of amputees, improved size and capacity of labor forces throughout the third-world, and a stronger global economy.

JOSSIE CARRERAS

U.S. National Library of Medicine. “Amputees.” Medicine Plus. 29 Jul 2001. Web. 27 Apr 2010. Strait, Erin. “Prosthetics in Developing Countries.” Diss. Iowa State University. 2006. Web. 27 Apr 2010. 3 Aleccia, JoNel. “Limb loss a grim, growing global crisis.” Haiti’s Amputees: Building a Life Worth Living. MSNBC. 20 Mar 2010. Web. 27 Apr 2010. 4 Hughes, Stuart, “Cambodia’s Landmine Victims” BBC News, Wed. 11 Nov 2003. 5 Kelly, J. Daniel. “Haitian Amputees – Lessons Learned from Sierra Leone.” New England Journal of Medicine. 362.42 (2010): Web. 26 Apr 2010. 6 McCormack, Kathy. “NH high-tech, prosthetics companies help Haitians.” Boston Globe 10 Feb 2010. Web. 26 Apr 2010. 7 Ibid. 8 Strait. 9 Pralahad, C.K. The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits. New Jersey: Pearson Education, Inc., 2010. 10 Ibid. 11 Ibid. 1

ACKNOWLEDGEMENTS

From left: Sarah Kuszelewicz, Alex Jagendorf, Professor Jeffrey J. Younger, David Olmos & Kate Woska

Acknowledgements This work, which began two years ago, has involved literally hundreds of student essays. While I will not list all the submissions, I sincerely thank all those students for their hard work, as they are the ultimate inspiration for this magazine. I would also like to extend a supreme thank you to the individual student authors whose essays were selected from among so many; your work shines. To the finalists, I hope current and future student writers are inspired by the high caliber of your prose and the challenge of your ideas.

THE CALL FOR CORPORATE ACTION

ACKNOWLEDGEMENTS

This publication was assembled and edited by NYU students, most notably by student editor, Kate Woska, who did a majority of the heavy lifting. Also crucial to the process were our talented art designer, David Olmos, and our skilled photographers, Sarah Kuszelewicz and Alex Jagendorf (see opposite). Their work is present on every page and the dramatic results speak for themselves. Thank you to NYU Stern Dean Peter Henry for his gracious opening letter and to Professor Matt Statler for his introduction to the BiP course. Thank you also to Beth Murray, Anna Davitt, and undergraduate deans, Fred Choi and Susan Greenbaum, for their interest and support along the way. I owe gratitude to the many dedicated instructors who manage the weekly discussions, critical thinking, and critical writing sessions that make up Business and Its Publics: Inquiry and Discourse. Their hard work is also evident here. The plenary and inquiry discussion sections are currently overseen by Professor George Smith, and past years have been managed by Professors Batia Wiesenfeld and Doug Guthrie. The administration of the class-wide student course is handled ably by Kristy McCadden. NYU Sternâ&#x20AC;&#x2122;s professional faculty lead the smaller class discussions and thanks are due to all: former dean Sally Blount, current dean Susan Greenbaum, Aaron Hipscher, Anthony Karydakis, Barbara Holt, Bruce Buchanan, Eric Schoenberg, Gerald Rosenfeld, Ingo Walter, Jeanne Calderon, Jeff Carr, Jen Petersen, Jen Tosti, Karen Brenner, Larry White, Lee Sproull, Les Levi, Michael Pollack, Paul Wachtel, Rachel Kowal, Rex Mixon, Richard Freeman, Richard Sylla, Sam Craig, Shelly London, Tom Cooley, and Tunku Varadarajan. Thank you. Discourse Instructors lead the critical writing portion of the class and, without their dedication, you would not be reading this publication. Management Communication Chair Irv Schenkler and Professor Robert Lyon formulate much of the discourse curriculum and numerous colleagues put the plans into play. Thank you to the following: Aya Tanaka, Brian Hanssen, Briana Barocas, Bruce Meyerson, Carol Newell, Claudia Caruana, Cynthia Wiseman, Dianne McGuire, Eileen Gilmartin, Ellen Pluta, Hatim El-hibri, Josh Stager, Larry Menna, Leah Hanes, Martin Schell, Mathew Powers, Michelle Belino, Paul Melton, Rachel Somerstein, Rob Wosnitzer, Sam Carter, Sam HowardSpink, Selda Fikret-Pasa, Sharmila Mukherjee, Solon Barocas, Stacy Rosenberg, and Tom Monaco. Thank you. Finally I would like to thank our own Management Communication Department for their support throughout this project. Thanks to Aline Wolff, Diane Lennard, Irv Schenkler, Patricia Bower, Robert Lyon and Susan Stehlikâ&#x20AC;&#x201D; and a special thank you to MC Administrator, Todd Amodeo and assistant, Megan Nimerosky. Finally, I will save the best thanks for last. Thank you to my wife, my impetus, Lorinda Karoff.

acknowledgements by

PROFESSOR JEFFREY J. YOUNGER Clinical Assistant Professor Management Communication New York University Stern School of Business 44 West Fourth Street, Suite 3-100 New York, NY 10012 jyounger@stern.nyu.edu

The Call for Corporate Action: NYU Stern Student Voices published by NYU Stern School of Business April 2011

THE CALL for Corporate Action

The Call for Corporate Action: NYU Stern Student Voices published by NYU Stern School of Business April 2011