The Call for Corporate Action: NYU Stern Student Voices: Vol. 3 / Spring 2015

FOR CORPORATE ACTION NYU STERN STUDENT VOICES VOL. 3 / SPRING 2015

Edited by

PROFESSOR JEFFREY J. YOUNGER, JACQUELINE ALLEN, LIZ IACONIS & ANNA MANCUSI Designed by

TIFFANY LI & LINDA ZHANG Photography by

FOR CORPORATE ACTION NYU STERN STUDENT VOICES VOL. 3 / SPRING 2015

D Cover photo by Vincent Chen, NYU Stern ‘17 “A moment of serenity in a city that is always chaotic.”

JING HAO

Contents 4

6

Animal Rights: How Morality & Profit Can Coexist in the Pork Industry

12

BRENDON KHAN

22

New Delhi, Old Misogyny: The Influence of Bollywood

40

WYMAN LI

DEAN GEETA MENON

The Benevolent Banker: Liberating China from Shadow Banking Abuse

28

Abolishing Modern-Day Slavery from Football

58

HALEY SAN GIACOMO

18

34

PATRICK LEE

46

Online Privacy: Fair Compensation for Personal Information MICHAEL FRENKEL

Purest Water on Earth

5

Introduction to Business and Its Publics

PROFESSOR BATIA WIESENFELD

The Green Pizza Box JULIE CHEN

JARED SCHULMAN

RIA SINGH

Solving Jellyfish Overpopulation

Letter from the Dean

Aeriform Gold: Capturing Methane for Profit and Social Value STEPHEN KRAFCIK

52

The Domestic War on Women ANNELIEKE DOMPELING

Acknowledgements

63

PROFESSOR JEFFREY J. YOUNGER

D Photo by Jing Hao, NYU Stern ‘17 CONTENTS / 03

LETTER FROM THE DEAN I AM THRILLED TO WRITE THIS FOREWORD for the third edition of The Call for Corporate Action. It showcases the critical thinking NYU Stern undergraduates are doing in our Business and Its Publics course about the impact that the modern business organization has on our global society.

Within the pages of The Call are student essays that analyze the challenges facing business and society today, and, perhaps more importantly, offer creative suggestions for positive change.

Topics span international borders and discuss issues of global importance, such as animal rights in the food industry, shadow banking in China, sustainability of pizza boxes, as well as the effect of Bollywood on gender roles.

I am so proud of our students who are tackling social, corporate, governmental, environmental, and international issues through thoughtful inquiry and discourse. I hope you enjoy this edition of The Call for Corporate Action and that it will encourage continued conversations about these topics and more.

GEETA MENON Dean of the Undergraduate College Abraham Krasnoff Professor of Global Business and Professor of Marketing Leonard N. Stern School of Business New York University

04 / LETTER FROM THE DEAN

INTRODUCTION TO

BUSINESS AND ITS PUBLICS WHAT DOES BUSINESS DO BEST? BUSINESS is better than any other institution at turning problems into opportunities.

Business invents and innovates – creating new products, services, and new production processes so that existing products and services can be offered to more people at lower cost and higher quality. It also borrows and reuses – taking great ideas applied in one market and finding ways to reapply them to different markets. It curates – selecting the most effective solutions and diffusing those even when it means abandoning options that they invested in earlier, sharing both the risk and the return. It scales up, and quickly, growing and, in the process, becoming more efficient and more dominant. Business has become good at partnering – with suppliers and distributors, with customers, even with competitors when there is a shared need, and increasingly with non-profits and government agencies.

Formidable problems face our society today. Natural resources are dwindling; we are abusing our environment; social inequality and low social mobility leave many helpless and hopeless; and extremism threatens to curtail the freedoms we rely upon. Will business add to the problems or offer the solutions?

The essays in this volume offer cause for optimism. In each one, the author seized upon a serious social ill – a problem they feel passionate about and wish to solve – and outlined a path

for corporate action. These essays reflect the idea that business seeks to create value by solving social problems, and the students who wrote these pieces direct attention to the most important of these problems.

Moreover, the authors leverage the many strengths of business to offer implementable and promising solutions. Each one might ultimately seek to capture some portion of the value created and distribute it to those who have invested in creating solutions, but they recognize that value must be created before it can be captured and distributed.

In this way, these essays reflect the philosophy behind the Business and Its Publics course.

Business and Its Publics introduces students to the role of business in the broader society as well as the relationships between business and other important societal institutions.

Students explore the novel partnerships that are being developed between business and other institutions to address society’s most pressing needs. The course prepares students to offer novel, value-creating solutions to these problems by developing the critical thinking skills that enable students to analyze issues, evaluate arguments, and become aware of (indeed, embrace) multiple perspectives. As evidenced by this collection of essays, this approach is one that will continue to leverage the strength of business to advance our society, and make the world a better place.

BATIA WIESENFELD Andre J.L. Koo Professor of Management Chair, Management and Organizations Department

INTRODUCTION TO BUSINESS AND ITS PUBLICS / 05

ANIMAL RIGHTS: How Morality & Profit Can Coexist in the Pork Industry ESSAY BY

06 / BRENDON KHAN

BRENDON KHAN

Ghandi once said, “A nation’s greatness is measured by how it treats its weakest members.”

With that philosophy in mind, Brendon Khan explores the rights of industrial farm animals.

In particular, Brendon targets “gestation crates”, equipment used to confine sows during pregnancy. Using both ethical and financial arguments, Brendon demands a stop to this deplorable practice.

ANIMAL RIGHTS: HOW MORALITY & PROFIT CAN COEXIST IN THE PORK INDUSTRY / 07

T

HE MISTREATMENT OF animals on factory farms in the United States is a social injustice. This situation is especially grave for the millions of sows confined to individual gestation crates, narrow pens where they are held for their entire lives until the time of slaughter. Although these living conditions are inhumane, major U.S. pork companies continue to use this system as part of their supply chain. However, recently, consumers, and many other institutions have started to exert pressure on pork companies to abandon the practice. To that end, companies must now find alternative sow housing methods in order to continue efficient meat production and appease an increasingly aware society.

WHY IS ANIMAL WELFARE A SOCIAL ISSUE?

Animals have never enjoyed the same rights as humans, as historically, we humans have deprived animals of both their freedom and ultimately the right to live, in order to supply the market with meat.

Yet science has proven that animals possess physical and mental awareness, the same qualities as those of human beings.1 Nevertheless, the fact that 95% of Americans eat meat has made the meat industry a giant that will last into the foreseeable future.2 Recognizing this reality, animal rights activists focus their attention on finding ways to improve animals’ quality of life on factory farms. Yet, even here, they encounter challenges –especially in the U.S. pork industry where pork farmers use gestation crates to house sows, often under deplorable conditions. In order to highlight the seriousness of this problem, organizations like the Humane Society of the United States (HSUS) have begun to educate consumers about the horrible conditions suffered by sows in gestation crates.

The HSUS, a non-profit organization that promotes the humane treatment of animals, investigated factory farms and revealed the severe deprivation suffered by the sows. In 2012, it released documentaries of undercover investigations at Smithfield Foods, Tyson Foods, Sea08 / BRENDON KHAN

board Foods, and Prestage Farms, which detailed the unhealthy and inhumane conditions pigs suffer in gestation crates.

They revealed that crates are 2 feet wide, restricting any movement besides standing and sitting. Farmers also rarely release sows from their crates.3 Consequently they are unable to socialize, a punishment akin to solitary confinement for humans, since according to the Humane Society, both pigs and humans possess a similar sense of awareness.

The HSUS documentaries clearly outline these facts, leading the viewers to understand why farmers must stop these inhumane practices.

The HSUS findings have established the inhumaneness of gestation crate housing as a pressing social issue. The public has responded to these revelations and has supported the HSUS in their efforts to implore companies and governments to ban the practice on sow farms.

However, the HSUS still faces many challenges before gestation crates are eliminated industry-wide. Seaboard Foods, the pork-producing subsidiary of Seaboard Corporation and a U.S. pork giant, adamantly refuses to abandon the use of the system.

HOW SEABOARD CONTRIBUTES TO THE SOCIAL PROBLEM

There is good reason to specifically target Seaboard in the movement to ban gestation crates. Since 2011, Seaboard has continually ranked within the top three largest hog producers in the U.S., processing approximately 10 million hogs annually.4,5 Seaboard’s use of gestation crates means that the sow welfare problem is still prevalent in the U.S. In fact, the HSUS compiled a list of specific details from investigations at Seaboard.

This included allowing urine and feces to build up in crates where pigs eat and drink over long periods of time. Additionally, crated sows developed sores (often untreated), and showed visible signs of frustration, biting and clawing at bars to escape. Some cases of stress due to isolation were so severe that they resulted in death.6 The HSUS has already tried to

appeal to Seaboard to alleviate these conditions, and has reached out to the public, sparking numerous petitions against the pork company. It recognizes that to move toward the solution of this problem, it must push for Seaboard Foods to abandon the use of gestation crates.

Seaboard’s preference for gestation crates becomes apparent however, through the analysis of their advantages.

Gestation crates provide farmers with a convenient way to tend to sows’ basic needs. First, they make indoor housing of sows practical, allowing both farmers and sows to easily avoid outdoor maladies such as bad weather, parasites, and disease. Second, the fact that sows live individually in separate crates prevents any fighting that could occur if they roamed freely together. Farmers also have an easier time feeding and medically tending to sows stored in gestation crates.7 We see then that Seaboard, in choosing the gestation crate system, has opted for a tradeoff of morality for convenience.

Seaboard’s stance stems from the responsibility it has to its shareholders to use a supply-chain mechanism that generates the most share value for the company. However, there should be a way for Seaboard to generate value without sacrificing a moral stance. With an appropriate system, Seaboard could create value for both itself and society. According to the article “The Big Idea: Creating Shared Value” by Michael E. Porter and Mark. R Kramer, the concept of shared value “is about expanding the total pool of economic and social value.”8 Instead of having to tradeoff between profit and social gain by using gestation crates, Seaboard could implement a housing system humanely suited for its sows and gainful to itself as a company.

HOW SEABOARD CAN CREATE VALUE FOR SOCIETY

I propose that Seaboard implement a group housing system on its farms. A group housing system would solve the social issue of sow mistreatment since it is a more humane alternative to gestation crates. In a group housing system, farmers house sows in large pens together,

allowing for greater mobility. Sows can then also interact with each other, alleviating the stress of isolation.

It is possible to address or even eliminate the disadvantages of group housing that make the gestation crate system attractive. According to research done by the Feet First Team, an international collaboration of researchers, veterinarians, and nutritionists, problems such as fighting are preventable under a group housing setting through a change in management style. Farmers should seek

housing systems for gestating sows, such as deep-bedded hoop barns, without increasing labor.”10 Tracking 957 litters from 353 sows, researchers found that sows in the hoop barns gave birth to more live pigs per litter than sows in crates, most likely due to extra space.11 This evidence shows that there is a positive relationship between sows’ reproductive efficiency and standard of living, one which gives Seaboard advantage.

Seaboard could also benefit from the cost-efficiency of the group housing sys-

“

welfare, with 70% believing that companies should increase compensation to farmers who impose “stringent animal welfare standards.”14 Additionally, twothirds of consumers expect food companies to provide humanely raised meat if consumers demand it.15 As one of the largest American pork producers, these statistics definitely apply to Seaboard’s market base. Therefore Seaboard could potentially lose consumer demand if it continues to use the unpopular gestation crate system. On the other hand, if Sea-

[Restrained sows] are unable to socialize, a punishment akin to solitary confinement for humans, since according to the Humane Society, both pigs and humans possess a similar sense of awareness.

to acclimate gilts (pigs that were never pregnant) to the new system, including “the feeding plan, floor options, and interactions with other sows in a group setting.”9 Increases in farmers’ monitoring and observation of sows could minimize the amount of injury and aggression in the group environment. There may be some minimal costs to implementation, but with these new management practices in place, Seaboard can make the group housing system the ethical solution to the gestation crate problem.

tem. A survey of general contractors and suppliers in the Midwest familiar with agricultural construction allowed researchers to develop cost estimates for both group and crate housing systems. Estimates showed that the cost per gestating sow for group housing “hoop barns” was $552, while the cost for individual gestation stalls was $815.12 If Seaboard implemented such a system, it could potentially reduce costs and increase output, and even expand operations.

HOW SEABOARD CAN CREATE VALUE FOR ITSELF

Seaboard’s potential gains move beyond the production process. As mentioned, the main catalyst for the pork industry’s shift away from gestation crates is a growing consumer uproar. According to phone surveys of 6365 American households by researchers at Oklahoma State University, 62% of respondents believe that society should address the animal welfare problem, even in the face of human suffering.13 Many Americans are willing to pay more for improved animal

The Production/Supply Aspect

Seaboard could reap many benefits from the system, potentially enough to outweigh the inconvenience. First, would be the benefit of efficiency. A two and a half year study by researchers at Iowa State University has shown that “reproductive performance can be maintained or enhanced in well-managed group

The Sales/Demand Aspect

board adopts the humane group housing system, it could instead gain consumer favorability, improve the reputation of its brand, and potentially increase sales in the long run.

Seaboard’s refusal to make the shift could also put it at a severe competitive disadvantage. This is especially so since Seaboard’s main competitors have already ceded to consumer pressure, and have adopted more humane housing systems. For example, Smithfield Foods, the largest pork producer in the U.S. recently announced that it has asked its sow growers to convert to group housing systems by 2022. It intends to provide a “sliding scale of incentives to accelerate the timetable”, guaranteeing growers who make the shift contract extensions.16 Additionally, it has also reported that its hog-producing subsidiary, Murphy Brown, transitioned 54% of pregnant sows on its U.S. farms to group housing systems.17 According to President and CEO C. Larry Pope, “a well-planned renovation to a group housing system will help main-

ANIMAL RIGHTS: HOW MORALITY & PROFIT CAN COEXIST IN THE PORK INDUSTRY / 09

tain the farms’ value for years to come, while at the same time supporting our companywide commitment to animal care.”18 Smithfield’s acknowledgement of the system as a cost-efficient, humane sow housing method shows that it has achieved shared value. Concerned consumers might then recognize it as a desirable alternative to Seaboard. The fact that Smithfield and other pork companies such as Hormel and Tyson have taken this position essentially isolates Seaboard as a market “villain” to consumers.

The extent of competition that Seaboard faces grows wider when we consider retail brands. Seaboard only markets three retail pork brands in the U.S.: Prairie Fresh Premium Pork, Daily’s Premium Meats, and 67th Street BBQ.19 Consumers have a wide array of alternatives from Smithfield Foods alone, as it carries twelve retail pork brands, including: Smithfield, Farmland, and John Morrell to name a few.20 Other companies moving away from crates, such as Tyson and Hormel, also have popular retail brands, leaving Seaboard at a further disadvantage.

Additionally, pressure from consumers and the HSUS has caused some of the largest U.S. retailers opt to eliminate gestation crates from their supply chain as well. Target, the 4th largest U.S. retailer, plans to eliminate the practice by 2022.21 Should more retailers follow suit and, if Seaboard does not make the shift in time, it could suffer from devastating decreases in consumer demand.

Seaboard and Shareholder Confidence

Seaboard could also suffer conse-

10 / BRENDON KHAN

quences relating to its capital base. The HSUS recently launched an ad campaign targeting Seaboard’s investors. The ad points out the fact that other leading pork companies have started phasing out gestation crates from their supply chain and paints Seaboard as a company that is “unresponsive to changing requirements of the marketplace.”22 The HSUS has threatened to target shareholders before, buying enough shares in both Seaboard and Tyson in 2012 so that it could attend shareholder meetings and submit shareholder proposals.23 It actually managed to rally Tyson’s shareholders in August 2013 to pressure the company to disclose the financial and operational risks of using gestation crates at a time when Tyson also refused to abandon the system.24 Five months later, in January 2014, Tyson released a statement encouraging its hog farmers to phase out the gestation crate system, making the HSUS’ efforts successful.25 With the HSUS now targeting Seaboard investors, Seaboard should phase out the system to both demonstrate its awareness of consumer preference and promote investor confidence.

Changing the Legislative Environment

In addition to the pressure it faces from non-governmental organizations, Seaboard runs the risk of being subject to government intervention. Four states in the U.S have already banned gestation crates as a response to growing public dissatisfaction. Another five have passed laws that would gradually phase out the crate system. Of these nine states, Seaboard has live sow farms in only Col-

orado, with other farms in Oklahoma, Kansas, and Texas.26 Colorado’s 2008 legislation phases out sow gestation crates over a ten-year period.27 Consequently, Seaboard could face disruption in its supply chain if it does not completely phase out the system by 2018. Additionally, with mounting pressure from NGOs, more states could continue to ban gestation crates, limiting Seaboard’s option to continue using the system. By making the shift to group housing now, Seaboard could avoid the excessive restructuring costs resulting from bans in their production states.

CONCLUSION

In closing, the best way to solve the problem of inhumane gestation crate use in the U.S. pork industry is to create shared value for both pork corporations and society. My proposal for pork giant Seaboard Foods to switch to more humane group housing would lead to a big improvement in sow welfare and appease the different sectors of society, such as the HSUS, consumers, and regional governments –all wishing to solve the sow welfare problem. At the same time, it also creates value for Seaboard itself, allowing it to enjoy production, sales, marketing, and financial benefits as well as keeping it up to date with changing market and legislative conditions. While society may eventually bestow animals the full rights they deserve, the immediate solution lies in demonstrating to corporations that they do not need to tradeoff between morality and profit. v

Dvergara. “The Animal Mind.” Serendip Studio, 22 Feb. 2010. Web. 01 May 2014. <http://serendip.brynmawr.edu/exchange/node/6356>.

2 Newport, Frank. “In U.S., 5% Consider Themselves Vegetarians.”

Gallup, 26 July 2012. Web. 01 May 2014. <http://www.gallup.com/ poll/156215/consider-themselves-vegetarians.aspx>.

3 “Crammed into Gestation Crates: Life for America’s breeding pigs.”

The Humane Society of the United States, 19 Feb. 2004. Web. 01 May 2014. <http://www.humanesociety.org/issues/confinement_ farm/facts/gestation_crates.html>.

4 “Testimony of Rod K. Brenneman President and CEO Seaboard Foods Before the House Committee on Agriculture Subcommittee on Livestock, Dairy, and Poultry To Review The State of U.S. Pork Industry.” (n.d.): n. pag. House Committee on Agriculture, 12 May 2011. Web. 2 May 2014. <http://agriculture.house.gov/ sites/republicans.agriculture.house.gov/files/pdf/hearings/ Brenneman110504.pdf>.

5 “Facts & Figures.” Seaboard Foods:. N.p., 20 Oct. 2014. Web. 27 Dec. 2014. <http://www.seaboardfoods.com/about-factsfigures/Index. htm>.

6 The Humane Society of the United States. “AN HSUS REPORT: Undercover Exposés at Two of the Nation’s Largest Pork Producers.” (n.d.): n. pag. Jan. 2012. Web. 2 May 2014. <http://www. humanesociety.org/assets/pdfs/farm/seaboard_prestage_gestation. pdf>.

7 “Nebraska Farmer Goes to Market.” Translating Food Technology: Why Would Pig Farmers Insist on Using ‘Gestation Crates?’ N.p., n.d. Web. 2 May 2014. <http://nebraska.farmergoestomarket.com/ index.php/recent-stories/13-technology/69-translating-foodtechnology-why-would-pig-farmers-insist-on-using-gestationcrates>.

8 Porter, Michal E. and Kramer, Mark R. “The Big Idea: Creating Shared Value.” Business and its Publics: Readings for Inquiry and Discourse.

NYU Stern School of Business. USA: McGraw Hill Education, 2011.

Page 110.

9 Ter Beek, Vincent. “Swine Management Changes with Switch to Group Housing.” PigProgress. N.p., 10. Oct. 2012. Web. 5 May 2014. <http://www.pigprogress.net/Home/General/2012/10/ Swine-management-changes-with-switch-to-group-housingPP009445W/>.

10 “Alternatives to Sow Gestation Stalls Researched at Iowa State.” Iowa State University College of Agriculture and Life Sciences. N.p., 19 Apr. 2007. Web. 04 May 2014. <http://www.cals.iastate.edu/news/ releases/alternatives-sow-gestation-stalls-researched-iowa-state>.

11 Ibid.

12 Ibid.

13 Lusk, Jason L., F. Bailey Norwood, and Robert W. Prickett. “Consumer Preferences for Farm Animal Welfare: Results of a Nationwide 1

“

Telephone Survey.” (n.d.): n. pag. Department of Agricultural Economics Oklahoma State University, 17 Aug. 2007. Web. 5 May 2014. <http://asp.okstate.edu/baileynorwood/Survey4/files/ InitialReporttoAFB.pdf>.

14 Ibid.

15 Ibid.

16 “Smithfield Foods Recommends Its Contract Growers Convert to Group Housing for Pregnant Sows.” Smithfield Foods. N.p., 07 Jan. 2014. Web. 5 May 2014. <http://investors.smithfieldfoods.com/ releasedetail.cfm?releaseid=817511>.

17 Ibid.

18 Ibid.

19 “Our Retailer Products.” Seaboard Foods: Our Retail Products. N.p., n.d. Web. 5 May 2014. <http://www.dailysmeats.com/RetailerBrandProduct/index.htm>.

20 “A Family of Brands You Trust.” Our Brands. Smithfield Foods, n.d.

Web. 5 May 2014. <http://www.smithfieldfoods.com/our-brands/>.

21 “Target to Eliminate Controversial Pig Cages from Pork Supply : The Humane Society of the United States.” Press Releases. Humane Society of the United States, 26 Oct. 2012. Web. 5 May 2014. <http:// www.humanesociety.org/news/press_releases/2012/10/target_ gestation_crates_102612.html>.

22 Brady, Diane. “The Humane Society’s New Pitch: This Pork Producer Is a Bad Investment.” Bloomberg Business Week. Bloomberg, 21 Apr. 2014. Web. 5 May 2014. <http://www.businessweek.com/ articles/2014-04-21/the-humane-societys-new-pitch-this-porkproducer-is-a-bad-investment>.

23 Huffstutter, P.J. “Animal Activists Tap Wall Street to Change Farm Practices.” Reuters. Thomson Reuters, 30 Aug. 2012. Web. 6 May 2014. <http://www.reuters.com/article/2012/08/30/us-usawallstreet-farm-activism-idUSBRE87T1GF20120830>.

24 Knowles, David. “Tyson Foods Pressured to Abandon Pig Gestation Crates.” NY Daily News. N.p., 16 Aug. 2013. Web. 6 May 2014. <http://www.nydailynews.com/news/national/tyson-foodspressured-abandon-pig-gestation-crates-article-1.1429355>.

25 Andrews, James. “Smithfield, Tyson Encouraging Transition Away From Gestation Crates | Food Safety News.” Food Safety News.

N.p., 10 Jan. 2014. Web. 6 May 2014. <http://www.foodsafetynews. com/2014/01/smithfield-tyson-to-make-distance-from-gestationcrates/#.U2_JXZG4lSU>.

26 “Our Retailer Products.”

27 “Colorado Governor Signs Gestation and Veal Crate Ban.” Wisconsin Ag Connection. N.p., 10 Jan. 2014. Web. 6 May 2014. <http://www.wisconsinagconnection.com/story-national. php?Id=1221&yr=2008>.

D Photo by flickr.com/farmsanctuary

The most eye-opening part of my research was learning about how animals feel emotions and pain, possess complex social hierarchies, and mirror human behavior in many other ways. We all know that animals can feel, but I think we lose perspective and allow these inhumane conditions because we think animals are more different from humans than they really are.

BRENDON KHAN Accounting & Finance ‘17

ANIMAL RIGHTS: HOW MORALITY & PROFIT CAN COEXIST IN THE PORK INDUSTRY / 11

THE BENEVOLENT BANKER Liberating China from Shadow Banking Abuse ESSAY BY

Author Jared Schulman explores China’s entrenched Shadow Banking network and investigates opportunities for shared value creation. He describes how banks expanding to western China might bring lucrative commercial banking to China’s emerging middle class and relieve financial coercion. Jared’s work appears especially prescient as changes in the Chinese banking system are already stirring.

12 / JARED SCHULMAN

JARED SCHULMAN

U

NIVERSAL ACCESS to capital markets is arguably the most important prerequisite to achieving widespread and sustainable economic growth.

Without it, enterprise cannot flourish, innovation stagnates, and human potential remains untapped under an ocean of seemingly inescapable poverty. Authors Daron Acemoglu and James Robinson of Why Nations Fail explain that the success of a nation’s economy is directly proportional to the inclusiveness of its component institutions.1 Therefore, financial systems that ignore entire geographic districts lose not only the business of hundreds of millions of small and medium-sized firms and depositors, but perhaps more importantly, the competitive advantage offered by establishing shared value in regions uncontested by rival firms.

Despite her capital rich cities, China still harbors a largely state-controlled commercial banking industry that habitually shies away from virgin domestic markets. As a result, financially marginalized western cities like Wenzhou remain entangled in the throes of a cashless reality. They are defined by an entrenched system of loan-sharking and consumer abuse. However, China’s commercial banking industry stands at the doorstep of what may be the most profitable opportunity for domestic credit expansion to ever grace East Asia. The country suffers from a weakened but still threatening Shadow Banking sector currently undergoing searing political, social, and corporate scrutiny. Six hundred million western Chinese people cry out for a new and safer source of capital. Will China’s commercial banking network answer the call for corporate action?

A ROAD LESS TRAVELED: WENZHOU’S FAILING SOLUTION TO DRY CAPITAL MARKETS

Historically, cities lacking well-developed access to capital have reacted in one of two ways. Some regions have simply remained “without.” An example is Mumbai, India. In Mumbai prior to 1990, regional GDP regularly fell significantly below the national average as a result of what some economists have coined “localized growth bias.”2 This term describes disparate economic performance as a function of variant capital access measures. In Mumbai as in China, banks and bankers exist to serve the needs of the corporate class. For decades, there has been no avenue (formal nor informal) for those of lower socio-economic standing to receive desperately needed financial services. Lately, however, the ultra-poor have made noteworthy economic gains due in large part to firms like Grameen Bank and Acumen Fund.3 Meanwhile however, Mumbai’s burgeoning middle-class has remained locked in a precarious position of moderate wealth, recognized by firms like Grameen as too rich for microfinance, but by the Commercial Bank of India as too poor a market for banking privileges. Thus, over 50% of Mumbai natives are still without institutionalized credit or capital.4 Regions like Wenzhou, facing a similar type of capital inaccessibility, have sought a different solution. In the late 1980s, China’s economic growth erupted after Deng Xiaoping opened the East Asian market to Western powers.5 Integral to Deng’s plan for increased Chinese economic prowess

was the creation of “Special Economic Zones” (SEZs) in the East. These SEZs boasted custom legal and commercial institutions tailored to attract international trade dollars.6 Prudently executed, the SEZs quickly monopolized foreign investment contracts, leaving western Chinese cities like Wenzhou in relative economic squalor. The result of this power shift was somewhat predictable; China’s banking agencies settled in the East, far away from struggling cities like Wenzhou in the West.7 Unlike Mumbai, however, Wenzhou’s city officials engineered an alternative financing scheme. They allowed non-regulated financial entities—“Shadow Banks”—to serve a capital-hungry population largely ignored by formal banks like the Industrial and Commercial Bank of China (ICBC).8 Today, once dominant Shadow Banks are under attack from Beijing. The storm has exposed an Achilles heel ripe for exploitation by established Chinese commercial banking institutions. As a result, banks like ICBC stand poised to profit enormously by capitalizing on this current instability in western China’s unregulated lending network. Moreover, competitive and lucrative expansion into virgin western credit markets would likely have positive social benefits. Namely, it would grant 60-70% of Mainland China’s inhabitants access to regulated systems of financial intermediation, accountable to the law.9

THE BENEVOLENT BANKER: LIBERATING CHINA FROM SHADOW BANKING ABUSE / 13

THE PERFECT STORM: BREAKING DOWN ICBC’S COMPETITIVE OPPORTUNITY TO EXPAND

From the late 1980s until fairly recently, informal lending arrangements have effectively serviced western Chinese provinces with growth-sustaining cash. Regional GDP growth has continually been on par with that of Shanghai, at about 7-11% per annum. Business expansion has been rapid, and western China’s poster city, Wenzhou, has observed the emergence of a robust middle and upper class.10 Since the global financial crisis of 2008, however, the financial relationship between the Shadow Banks and borrow-

headquartered in western China are demanding immediate induction into the country’s formal financial network. 14 This combined stakeholder pressure has increased the demand for what is sure to be a successful banking expansion.

The potential clash between ICBC and incumbent Shadow Banks has already been mitigated via recent policy changes that aim to outlaw unregistered lending.

General Secretary Xi Jinping’s legislative move to wage war on Shadow Banks has reduced informal loan activity by an estimated 35%. Should ICBC expand, it would encounter significantly weakened resistance.15 This regulation follows a string of over

“

This payment rigidity illustrates the chief sustainability and ethics issues with Shadow Banking. The industry is not legally compelled to abide by regulatory statutes.18 This means that firms and households that borrow from informal lenders have no means of renegotiating payment schedules, or filing for bankruptcy. They can’t even lodge formal complaints of loan misconduct with China’s Commercial Banking Regulatory Commission (CBRC).19 If they cannot repay, they are abused, publicly defamed, and sometimes even harassed to the point of suicide.20 To defend the Chinese populace, the Party has stepped in to curb predatory lending practices. And in the

Six hundred million western Chinese people cry out for a new and safer source of capital.

Will China’s commercial banking network answer the call for corporate action?

ers of western China has soured.11 Since 2008, three powerful stakeholder groups have united against informal lenders. The first group consists of China’s Communist Party leaders, who have officially called for a reduction in Shadow Banking activity.12 The second group is comprised of increasingly wealthy and educated consumers. These individuals have expressed the need for more sophisticated financial products.13 And finally, two million private corporations

14 / JARED SCHULMAN

50 suicides in Wenzhou in late March of 2013. Early Bloomberg reports described the victims as overwhelmingly representative of the city’s elite business class.16 Following further investigation, official UN reports traced the suicides back to informal loan agencies. These “shadow banks” had been illegally and aggressively pressuring debtors to repay on schedule despite their continued protests that cash was simply unavailable.17

same stride, it has opened up a once monopolized western credit market to commercial banking institutions like ICBC. Average consumers have also contributed to the destabilization of western Shadow Banking regimes. As of 2013 year end, China’s GDP per capita was increasing at a rate 5 times that of the U.S. As a result, an increasingly wealthy and educated population is exhibiting expected shifts in consumer tastes. Most notably, recent surveys conducted by the IMF show a

distinct shift in demand for sophisticated financial products among an aging population looking to invest in mutual and exchange-traded funds.21 Younger demographic groups are also experiencing an increasing affinity for online shopping, luxury goods, and previously unsought credit card services.22 On the supply side, incumbent Shadow Banks are confined to interest-bearing loans and very little else, thereby creating enormous unmet demand. And since Chinese households are among the world’s top savers by income, this ignored demand for sophisticated banking and investment products suddenly appears immensely profitable.

However, the most vocal in airing the need for financial revolution in western China, are the region’s burgeoning private and quasi-private corporations.

Accounting for over 40% of China’s economic output, these business stakeholders have been demanding formal financial inclusion since well before 2008.23 Voicing complaints often identical to western Chinese consumers, these firms are in desperate need of regulated banking institutions. Shadow Banking loans carry an outrageously inflated interest rate 6-7 percentage points higher than commercial banks. Once again, this is due to a lack of regulation.24 As a result, since early 2003 western China’s leading entrepreneurial firms have been petitioning Party officials to secure the provision of loans at a centrally monitored interest rate.25 Government-regulated banking advisory firms are also demanded by private corporations. These would allow growing western Chinese firms to begin trading publicly on international exchanges.

Most sought after by private enterprise however, appears to be the establishment of legitimate corporate financial services

for sophisticated financial maneuvers such as leveraged buyouts, and mergers and acquisitions. And while commercial banks may not operate in this sphere, their expansion would be a welcome first step in achieving this end.26 Altogether, the enthusiasm for regulated commercial banking services promises enormous benefits not only for ICBC, but for each of its many counter-parties.

REALISTICALLY SPEAKING: FORESEEN HURDLES AND SOLUTIONS IN ICBC’S EXPANSION

The extension of ICBC’s commercial banking services would be a corporate solution to a pressing societal problem.

This would also represent a corporate action, which, if implemented with prudence and managed expectations, could prove highly profitable for ICBC. However, there are challenges associated with such a venture that warrant discussion.

First, thorough information is needed to assess growth strategies. Business expansion would require a large initial capital outlay on the part of ICBC. Such capital is needed to establish physical branches, local employee training, and other operations. It is therefore strategically imperative that ICBC be able to sort productive from unproductive investments quickly and effectively. Fully vetted information can ensure that resources are allocated efficiently.

Fortunately, several options do exist for monitoring progress. One easily attainable metric would be a calculation of existing branches per town, city, and province. From this informational standpoint, other proxies for success could be developed. Some examples include regional customer traffic per month, rates

of checking and savings account creation, and a comparison of loan repayment ratios by branch or region. These metrics would track data comparatively and serve as baseline indicators for operational success. ICBC could spread its investments strategically based on initial reports of success and failure. In this way, ICBC would maximize information while streamlining a western expansion. Project success would be maximized.

There are also systemic political impediments to expansion that might arise.

The first of these obstacles lies within the very lending practices of China’s “Big Four” commercial banks. ICBC, the largest of the four, was nominally privatized in 2006 following an IPO on both the Shanghai and Hong Kong Stock Exchange.27 To date however, the Chinese Communist Party still wields majority ownership of the company and influences the lending and investment decisions of the firm. Should ICBC wish to make its western transition in the most efficient manner possible, the Party must relax its grasp on chief loan officers and executives. It must allow the firm to make informed, credit-driven lending decisions based on the reliability of the borrower instead of encouraging capital allocation to fulfill a political agenda. After all, reluctance from China’s banking network to lend to promising but politically unimportant firms is what precipitated Shadow Banking’s rise in the first place.28 If ICBC makes the financial investment to push westward, serious changes to lending policies are necessary.

Commercial banks have historically avoided establishing a presence in western China due to high market entry costs, significant levels of poverty, lack of infrastructure, and enormous distances

THE BENEVOLENT BANKER: LIBERATING CHINA FROM SHADOW BANKING ABUSE / 15

between households, towns, and cities.29 What we’ve observed in recent decades however, is that despite the ethical and social negatives of Shadow Banking in places like Wenzhou, informal lending has been an extremely effective first step in developing what was once a rural farming region into a thriving medium-sized industrial city. Thus, the modernity once featured only in China’s East is now observed throughout cities like Wenzhou as well. China’s once-forgotten West is ready to embrace a sophisticated commercial banking industry.

16 / JARED SCHULMAN

WIN-WIN: UNITING PROFITSEEKING WITH SOCIETAL NEED

Coupling the market share and power of ICBC with a virgin credit market 600 million strong is a recipe for mutual advantage. Political heads, ground-level consumers, and private corporations all clamor for the death of Shadow Banking and await the rise of China’s modern financial system. Meanwhile, firms like ICBC are in constant search of profitable new markets while the Chinese Communist Party is in constant pursuit of public

approval and legitimacy. Such expansion could therefore enhance the reputation of both the Party and its closely guarded commercial banking sector in one move.

The stage is set for a new type of producer-consumer interaction—one that aligns the goals of each party, and puts ICBC on a path toward engagement linked to healthy profit. Hundreds of millions of voices from western villages, towns, and cities chant in cadence for economic empowerment through financial inclusion.

So the question remains: will ICBC answer the call for corporate action? v

Acemoglu, Daron, and James A. Robinson. Why Nations Fail: The Origins of Power, Prosperity, and Poverty. New York: Crown, 2012.

Print 2 “India.” Central Intelligence Agency. Central Intelligence Agency, 23 Feb. 2012. Web. 06 May 2013. <https://www.cia.gov/library/ publications/the-world-factbook/geos/in.html>.

3 Ibid.

4 “Consulate General of the United States Mumbai, India.” 2013 Press Release. N.p., n.d. Web. 12 May 2013. <http://mumbai.usconsulate. gov/press_releases_2013.html> 5 Vogel, Ezra. “Deng Xiaoping and the Transformation of China [Hardcover].” Sun-Yat Sen Business School. N.p., n.d. Web. <http:// bus.sysu.edu.cn/en/News/Content.aspx?typeid=647f157e-8fa04ea0-8aa3-75761f1b6513&newsid=0f2b5b8c-736d-4042-b58bf91192a897dd> 6 Ibid.

7 Rana, Shruti. “The Development of the New Chinese Banking System: Domestic Modernization or Global Financial Manipulation.” Law MC. N.p., n.d. Web. <http://law.mc.edu/files/1513/3406/8607/ Rana%20Clean.pdf> 8 “ICBC Raised 19 Billion In World’s Biggest IPO.” Washington Post.

The Washington Post, 20 Oct. 2006. Web. 12 May 2013. <http:// www.washingtonpost.com/wpdyn/content/article/2006/10/20/ AR2006102000207.html> 9 Lewis, John Wilson. “Population Distribution.” Encyclopedia Britannica Online. Encyclopedia Britannica, n.d. Web. 12 May 2013. <http://www.britannica.com/EBchecked/topic/111803/ China/70992/Population-distribution>.

10 OECD (2011), “Regional contribution to GDP growth,” in OECD Regions at a Glance 2011, OECD Publishing. < http://www.oecd.org/ gov/regional-policy/48339015.pdf> 11 Ibid.

12 Rapoza, Kenneth. “How Scary Is China’s Shadow Banking System?”

Forbes. Forbes Magazine, 02 Apr. 2013. Web. 12 May 2013. <http:// www.forbes.com/sites/kenrapoza/2013/04/02/how-scary-ischinas-shadow-banking-system/> 13 “Wooing the Chinese Consumer.” Harvard Business Review. N.p., n.d. Web. 12 May 2013. <https://hbr.org/2012/02/wooing-thepromiscuous-chinese> 14 Ibid.

15 Sheng, Andrew. “Lending in the Dark.” Project Syndicate RSS. N.p., n.d. Web. 12 May 2013. <http://www.project-syndicate.org/ commentary/the-risk-profile-of-chinese-shadow-banking-byandrew-sheng-and-geng-xiao> 16 “Shadow Loans Hard to Squelch in China City Hit by Suicide.”

1

“

Bloomberg. N.p., n.d. Web. 06 May 2013. < http://www.bloomberg. com/news/2013-03-26/shadow-loans-hard-to-squelch-in-chinacity-hit-by-suicide.html> 17 Prasso, Sheridan. “Flourishing Shadow Banking Poses Risks to China and India’s Stability.” Asia Society. N.p., n.d. Web. 12 May 2013. <http://asiasociety.org/blog/asia/flourishing-shadow-bankingposes-risks-china-and-indias-stability> 18 Ibid.

19 Wang, Aileen. “China Needs Faster Financial Reform to Curb Shadow Banking Risks: Think Tank.”Reuters. Thomson Reuters, 22 Apr. 2013. Web. 12 Feb. 2013. <http://www. reuters.com/article/2013/04/22/us-china-banking-shadowidUSBRE93L0MK20130422>.

20 Barboza, David. “In Cooling China, Loan Sharks Come Knocking.”

The New York Times. The New York Times, 13 Oct. 2011. Web. 12 May 2013. <http://www.nytimes.com/2011/10/14/business/ global/as-chinas-economy-cools-loan-sharks-come-knocking. html?pagewanted=all&_r=0>.

21 Wong, Lin. “People’s Republic of China and the IMF.” People’s Republic of China and the IMF. N.p., n.d. Web. 12 May 2013.

22 Ibid.

23 “Industry, Value Added (% of GDP).” The World Bank. N.p., n.d. Web. 12 May 2013. <http://data.worldbank.org/indicator/NV.IND.TOTL. ZS>.

24 Ibid.

25 “Shadow Bankers Vanishing Leave China Victims Seeing Scams.”

Bloomberg.com. Bloomberg, n.d. Web. 12 Sept. 2012. <http://www. bloomberg.com/news/2012-09-12/shadow-bankers-vanishingleave-china-victims-seeing-scams.html>.

26 Ibid.

27 “ICBC Raised 19 Billion In World’s Biggest IPO.” Washington Post.

The Washington Post, 20 Oct. 2006. Web. 12 May 2013. <http:// www.washingtonpost.com/wpdyn/content/article/2006/10/20/ AR2006102000207.html> 28 “Shadow Bankers Vanishing Leave China Victims Seeing Scams.”

Bloomberg.com. Bloomberg, n.d. Web. 12 Sept. 2012. <http://www. bloomberg.com/news/2012-09-12/shadow-bankers-vanishingleave-china-victims-seeing-scams.html>.

29 Schwab, Deborah “China’s Hidden Risks: Shadow Banking and US Delisting.” China’s Hidden Risks: Shadow Banking and US Delisting. N.p., n.d. Web. 06 May 2013. <http://www.cfainstitute. org/learning/products/publications/contributed/Pages/ china_s_hidden_risks__shadow_banking_and_u.s._delisting. aspx?WPID=AlsoViewedProducts> D Photos by Andy Fang, NYU Stern ‘17

My paper is just one of many that are beginning to assess the major trends that will continue to shape China over the next decade.The country is experiencing and will continue to experience tremendous change that will affect most aspects of citizens’ lives. By encouraging the country’s state owned commercial banks to move west in supplying services to a vast segment of the population that remains un-banked, the CCP can grow revenue while solving a pressing societal challenge.

JARED SCHULMAN Business & Political Economy ‘16

THE BENEVOLENT BANKER: LIBERATING CHINA FROM SHADOW BANKING ABUSE / 17

THE

GREEN PIZZA BOX

The volume of pizza eaten in the United States is stunning. Author Julie Chen takes a look at a new packaging technology that offers a simple, feasible mechanism, which will allow delivery pizza places to reduce their environmental impact. She calls upon Dominos Pizza Inc. to step up and make a change.

18 / JULIE CHEN

ESSAY BY

JULIE CHEN

I

N THE U.S. PIZZA IS A $38.7 billion industry with expected future growth of 2% per year.1 Quick-service restaurants account for 67% of the total industry revenue. 2 “During the period from 2003 to 2013, the delivery segment declined from $11.1 billion to $9.6 billion,” however, “…the carry-out segment grew from $12.1 billion to $14.6 billion.”3 This is because more and more people are opting for carryout pizza to save on delivery and dine-in costs. On the whole, people prefer delivery and carryout from quick service restaurants because of their convenience.

Every year, 3 billion pizzas are sold in the U.S., and the last time someone ate pizza from a restaurant, 7 in 10 used takeout delivery.4 Assuming 70% of pizzas sold each year are takeout or delivery, that’s at least 2.1 billion pizza boxes used annually in the U.S. alone.

Over 2 billion pizza boxes is a significant amount – because as ubiquitous as pizza boxes are, they are unfortunately not environmentally friendly. Pizza boxes are made from corrugated cardboard, which is recyclable. However after being used, the leftover oil and grease renders them unrecyclable. “Since the paper is mixed with water in a large churner, the oil eventually separates from the paper fibers. The oil does not dissolve in the water; instead it mixes in with the paper.”5 This makes an entire recycling batch unusable and incurs costs for recycling companies.

An added layer of complexity is that different municipalities have different policies for recycling pizza boxes. For example, New York City deems them unrecyclable, whereas San Francisco requests that residents compost pizza boxes.6 It is difficult for national pizza companies to communicate how to recycle in an environmentally friendly way given that approaches vary depending on location.

Pizza companies can control what their boxes are made of however. Unfortunately, while pizza boxes may include some recycled material, they are typically made of 70% virgin wood.7 Introducing the GreenBox, a pizza box made of 100%

post-consumer recycled content and graphic design created with water-based ink. The top of the box is perforated to break into four serving plates –saving water from washing dishes and preventing the need for wasteful paper plates.

The bottom of the box is convertible to a storage box, avoiding waste associated with storing leftovers such as aluminum foil and plastic wrap. Moreover, with the multiple perforations, it is easier to break down the box to recycle parts that are not soiled by food.

The GreenBox has been featured in Time magazine, on Rachael Ray, and on CBS, among other news outlets.8 In 2010, Business Insider dubbed it one of the “15 most brilliant new ideas we’ve seen this fall”, with 87.1% of readers calling it brilliant.9 The GreenBox also received a Responsible Packaging Award, “recognized as much because it incorporates 100% post-consumer recycled content as for its ingenious and intuitive design that increases functionality for the consumer and drastically reduces the waste traditionally associated with pizza packaging.”10 The GreenBox is already being used by places such as Whole Foods and several smaller pizza stores. However, it has not been adopted by any of the major players in the pizza industry in the U.S. “In 2014, IBISWorld estimates the top four industry companies to represent 39.6% of total industry revenue, which indicates a low level of concentration

among the industry’s largest players.”11 The last time they ate pizza from a restaurant, 75% of consumers got it from a major pizza chain.12 If any of these companies started using the GreenBox, it would make a major environmental impact.

Domino’s Pizza Incorporated holds the second largest market share at 9.7%.

Domino’s store count has been growing moderately, while its sales per store are increasing at an impressive rate, thanks to their popular new menu.13 Unlike the leading company, Pizza Hut (with 15.3% market share), Domino’s main focus is on delivery and carry-out.14 Domino’s is the market share leader in the delivery segment with a 23.6% share based on reported consumer spending and holds the second largest market share in the carry-out segment.15 Most, if not all, of Domino’s transactions require the use of a pizza box. “Domino’s delivered over 400 million…pizzas last year. That’s just over one pizza for everyone in the U.S.,” totaling over 400 million pizza boxes.16 The Quick Service Restaurant industry in which Domino’s operates is extremely competitive, and it is vital that Domino’s is able to maintain their competitive position across all aspects of its business. The 2013 annual report states the following: If we are unable to maintain our competitive position, we could experience downward pressure on prices, lower demand for our products, reduced margins, the

THE GREEN PIZZA BOX / 19

“

Assuming 70% of pizzas sold each year are takeout or delivery, that’s at least 2.1 billion pizza boxes used annually in the U.S. alone.

inability to take advantage of new business opportunities and the loss of market share, all of which would have an adverse effect on our operating results and could cause our stock price to decline.17 By introducing the GreenBox to their U.S. stores, Domino’s can build on a competitive edge in a new way. Domino’s has always been innovative, pioneering insulated pizza bags as well as the 3-D car-top signs.18 “We believe this focus on innovation, when coupled with our scale and share leadership, will allow us to grow our position in both U.S. pizza delivery and carry-out.”19 The innovation of the GreenBox directly correlates with Domino’s mission to bring innovative products to their consumers.

Economist Michael Porter agrees with such product differentiation and stresses shared value as well. “Strategy theory holds that to be successful, a company must create a distinctive value proposition that meets the needs of a chosen set of customers.”20 Domino’s has identified its brand as, “particularly strong among pizza consumers for whom a meal is a fairly spontaneous event.”21 The functionality of the GreenBox focuses on convenience

“

in the carryout and delivery space and aligns well with the needs of Domino’s main consumer group.

In terms of feasibility, Domino’s is one of the largest domestic volume purchasers of pizza boxes.22 They have the ability to leverage their purchasing power with third party suppliers to manufacture the GreenBox for them. Yet the GreenBox blog states that their product is already affordable. “A lot of green products are eco-friendly, and that’s great, but they also cost five to ten times more,” on the other hand, the GreenBox is “right in line with other pizza box costs, and a great way to be green and stay within reason as far as costs go.”23 Domino’s has some flexibility in terms of which partners they choose to supply pizza boxes. Referring to multiple third party suppliers, they state, “while we may incur additional costs if we are required to replace any of our supply partners, we do not believe that such additional costs would have a material adverse effect on our business.” 24 Domino’s adoption of the GreenBox seems both timely and advantageous.

Domino’s current box is used at 4,986 domestic stores. Yet while a large-scale

As a student club meeting finished I noticed the trash pile was huge with bulky pizza boxes. Then it occurred to me how much pizza all of my high school and college clubs ordered, and how many boxes we tossed out. I researched how environmentally-friendly pizza boxes are and was shocked with what I found, leading to the conception of my essay.

20 / JULIE CHEN

JULIE CHEN Finance & Management ‘17

redesign would require significant upfront costs, Domino’s could leverage the fact that its franchise operations are divided into four regions.25 Domino’s could implement the new box by region, therefore spreading out the upfront costs.

While the initial costs are significant, they are worth the long-term benefits.

Waste that is not recycled goes into landfills. Further, the number of landfills today is rapidly increasing, leading to higher possibilities of groundwater contamination.26 Community action group WeGreen USA states, “The amount of waste collected in an average American household is far greater than that of any developed or developing country in the world today.”27 Of course, landfills are not filled with mostly pizza boxes, but a large chain like Domino’s still has the ability to make a difference and set a strong environmental example. The GreenBox improves the utility of the box itself and reduces other waste associated with pizza. It further increases Domino’s value as a company by “redefining productivity in the value chain.”28 The box fits with Domino’s innovative mindset, increases convenience for consumers, and creates opportunity for profit. Moreover, the shared value created, “is not on the margin of what companies do but at the center.”29 The GreenBox introduces a slew of marketing opportunities for Domino’s.

As evidenced by the amount of media attention the box has garnered on its own, Domino’s has the ability to use it to their advantage. In the past five years, Domino’s has invested over $1.4 billion in advertising within the United States.30

Through their strength in advertising, major brand presence, and widespread store base, they can promote the new box along with their efforts to be environmentally conscious and set themselves apart from their competitors. With the GreenBox, Domino’s has the opportunity to further associate their brand with innovation and convenience.

Within social media, Domino’s currently falls behind Pizza Hut in online mentions by over six million, tracked over a six month period.31 In an effort to increase their presence on social media and stimulate the carry out segment of their business, Domino’s can launch creative online campaigns. For example, within two weeks of posting a picture on social media of you enjoying the new features of Domino’s box (with a designated hashtag), you might present the post at your nearest Domino’s for a discount on your order.

The GreenBox is a novel item that people would want to try for themselves and has a lot of potential to pique customer curiosity and drive sales. Domino’s operates 10,886 stores internationally, including all 50 states and over 70 international markets.32 After successfully implementing the box through its stores in the U.S., Domino’s can further expand the GreenBox’s use across its international franchises to make a greater impact.

When corporations adopt the mindset of creating shared value, the corporation and society benefit in both direct and indirect ways. In this instance, a business expert in consumer marketing and advertising may be more effective than government in raising awareness of an issue. By switching to the GreenBox, Domino’s has the ability to raise awareness about landfills, waste, and recycling. Even if consumers are not ordering from Domino’s primarily for the environmental friendliness

Brennan, Andy. “Rising Dough: Pizza Innovation and Improved Incomes Will Drive Demand and Revenue.” Rep. no. OD4320.

IBISWorld. Apr. 2014. Web. 10 May 2014. <http://www.ibisworld. com/industry/pizza-restaurants.html> 2 Ibid.

3 Domino’s Pizza, Inc. 2013 Annual Report. BamSEC. Web. 10 May 2014. <http://www.dominos.com.au/media/68298/dpe_2013_annual_ report_web.pdf> 4 Morris, David. “The Pizza Market in the U.S.: Foodservice and Retail.”

Rep. 2nd ed. Rockville: Packaged Facts, 2012. MarketResearch. com. Packaged Facts, Sept. 2012. Web. 10 May 2014. <http://www. packagedfacts.com/> 5 “Frequently Asked Questions: Contamination.” Stanford Buildings & Grounds Maintenance. Stanford University. Web. 10 May 2014. <http://bgm.stanford.edu/pssi_faq_contamination>.

6 Recology SF. “Residential Recycling, Composting & Trash Services.”

Recology SF – Recycling, Composting & Trash. Recology. Web. 10 May 2014. <http://recologysf.com/index.php/for-homes/ residential-recycling-compost-trash>.

7 Wright, Jennifer. “Grads’ Backup Plans.” Bloomberg Businessweek.

Bloomberg L.P., Web. 10 May 2014. <http://images.businessweek. com/ss/09/09/0903_grad_backup_plans/21.htm>.

8 “GreenBox Press.” GreenBox NY. GreenBox NY. Web. 10 May 2014. <http://greenboxny.com/PRESS.html>.

9 Krueger, Alyson, and Eunju Lie. “The 15 Most Brilliant New Ideas We’ve Seen This Fall.” Business Insider. Business Insider, Inc., 29 Nov. 2010. Web. 10 May 2014. <http://www.businessinsider. com/the-15-most-brilliant-new-ideas-weve-seen-this-fall-201011?op=1>.

10 “Now THAT’S How You Shift a Paradigm!!!” The GreenBox NY Blog.

GreenBox NY., Web. 10 May 2014. <http://thegreenboxnyblog. blogspot.com/2010/10/now-thats-how-you-shift-paradigm.html>.

1

of the box, they will likely become more aware of their own waste and recycling habits. Although reducing landfill waste may not be a priority for Domino’s, or the only reason for them to adopt the GreenBox, it is undoubtedly a societal issue that could benefit from the move.

Corporations are extremely powerful.

They have the ability to spark changes in their competitors’ actions and the ability to affect consumer mindsets. They can support the greater good, without compromising profitability. By bringing important issues into the spotlight through corporate action, even a small change such as switching pizza boxes can cause a domino effect. If all corporations were to make decisions based on creating shared value, our society would benefit and improve over the long-term.

And that’s powerful, too. v

Ibid.

Morris.

13 Brennan.

14 Domino’s Pizza, Inc. 2013 Annual Report.

15 Ibid.

16 “Pizza.” Domino’s. Domino’s. Web. 10 May 2014.

17 Domino’s Pizza, Inc. 2013 Annual Report.

18 “Pizza.” Domino’s.

19 Domino’s Pizza, Inc. 2013 Annual Report.

20 Porter, E. Michael and Mark R. Kramer. “The Big Idea: Creating Shared Value.” Business and Its Publics: Readings for Inquiry and Discourse. Vol. Spring 2014. McGraw Hill Education. pg 107-127.

Print.

21 Domino’s Pizza, Inc. 2013 Annual Report.

22 Ibid.

23 “The GreenBox In The Carolinas: Wolfman Pizza Blazes The Trail!!!”

The GreenBox NY Blog. GreenBox NY. Web. 10 May 2014. <http://thegreenboxnyblog.blogspot.com/2010/09/greenbox-incarolinas-wolfman-pizza.html>.

24 Domino’s Pizza, Inc. 2013 Annual Report.

25 Ibid.

26 “Landfill Problems.” WeGreen-USA. WeGreen-USA, Web. 10 May 2014. <http://www.wegreen-usa.org/landfill-problems.html>.

27 Ibid.

28 Porter.

29 Ibid.

30 Domino’s Pizza, Inc. 2013 Annual Report.

31 Martinez, Elizabeth. “Pizza Restaurants – US – November 2013 Social Media Overview.” Rep. Mintel. Nov. 2013. Web. 10 May 2014. <http://reports.mintel.com/display/637782/>.

32 Domino’s Pizza, Inc. 2013 Annual Report.

D Photos courtesy of GreenBox 11

12

THE GREEN PIZZA BOX / 21

Ria Singh targets India’s “rape culture” with an essay that is both horrific and intriguing. The number of reported rapes in the world’s largest Democracy is more than unsettling, and the solution seems out of reach. Here, Ria calls for Bollywood’s largest film distributer to make a small change toward a large difference.

22 / RIA SINGH

NEW DELHI, OLD MISOGYNY

The Influence of Bollywood ESSAY BY

RIA SINGH

NEW DELHI, OLD MISOGYNY: THE INFLUENCE OF BOLLYWOOD / 23

I

WALKED THROUGH THE crowded market in the urban province of Munirka in New Delhi with my uncle in 2012.

Even in my oversized traditional Indian kurti and my long pants, I could still sense men’s eyes ogling me, and a few even went as far as whistling and making lewd comments. Not six months after I returned to the U.S., a 23-year old woman coming from the movies in Munirka with her male friend was attacked and gang raped on a bus in broad daylight.

After receiving fatal wounds to her internal organs, the young woman was thrown onto the busy street and left to die.

Today’s typical young woman in New Delhi is not unlike those in cities like London or New York. She buys her clothing from shopping malls, texts, uses social media, and goes to coffee shops with her friends. However, unlike a young woman in other global cities, the New Delhi woman’s safety is in endless jeopardy.

According to the National Crime Records Bureau, “a woman in India is raped every 20 minutes.”1 Rape culture in New Delhi has skyrocketed in recent years. Yet women in New Delhi are not acting differently than women in London or New York; so why are rapes and gender violence so prevalent?

Society has begun to accuse the mammoth Hindi film industry, Bollywood, and its negative portrayal of women in films for the increasing gender violence in New Delhi. While Bollywood generates about 1,000 films annually,2 very few feature notable lead actresses. These actresses or “item girls” portray wives, mothers, or

24 / RIA SINGH

love interests and usually have roles that include over sexualized dance sequences. In contrast, actors are the “heroes” in films and overshadow the actresses.

Although it is difficult to prove causality, Bollywood undoubtedly reflects and perpetuates gender disparity and the views of a patriarchal society. Yash Raj Films is the main film production company in Bollywood releasing films with scandalous “item numbers” and love story plots. Yash Raj Films has the potential to change the portrayal of women on screen.

By implementing a two-pronged plan, including releasing a new film with strong lead actresses and setting up community “think tanks,” Yash Raj Films can inspire change to combat rape culture and gender violence in New Delhi, India.

India is the world’s largest democracy, yet women in the capital city are alarmingly oppressed. The fear of being sexually harassed or even raped at any given moment hovers over women’s heads.

According to Sex Roles: A Journal of Research, over 25,000 cases of molestation and 12,000 rapes were reported in 1995 in New Delhi.3 As of 2013, the National Crime Records Bureau reported over 33,000 rape cases.4 Besides physical assaults and violence, women in New Delhi face constant harassment in the form of “eve teasing.” The term itself is a euphemism in India and includes, “stares, comments or remarks, verbal abuse, [or] an unwelcome touch.”5 After the brutal bus gang rape in Munirka, women’s rights demonstrations swept through the capital city; however, no solid progress has been reported and

countless horrific incidents continue.6 Rapes and violence against women in India has, in fact, risen by 7.1% since 2010.7 According to The New York Times, “sociologists and experts say the attacks are the result of deeply entrenched, misogynistic attitudes and the rising visibility of women.”8 It is certainly difficult to prove that there is one main cause for gender violence in New Delhi; however, Bollywood is a potent source that perpetuates gender stereotypes in Indian culture and has reflected the values of the public for decades.

In the 1999 report, Making Sex Violent: Love as a Force in Recent Hindi Films, Steve Derne analyzed 108 scenes from nine Hindi films.9 The scenes were rated using a coding scheme for presence of sexual violence, primary perpetrators and victims, gender, and severity of sexual violence.10 The study concluded that the films “conveyed the notion that force and physical aggression were legitimate means of expressing romantic love.” 11 Various age groups watch Bollywood films and avoiding issues of sexuality at home is the cultural norm. Therefore, Indian films portray an “arena for the construction of sexuality for the common person, and serve as primary sources…about how men and women are to behave in sexual relationships.”12 In a different study on sexual violence in India, the Journal of the Indian Academy of Applied Psychology published an in-depth study about eve teasing. According to the study, out of 100 males interviewed, “76% think that the influence of cinema/satellite channels is responsible for eve teasing in society”13 and “70%

of the [100] female respondents said that they ignore the situation because they feel that they are alone and helpless.”14 The media, including Bollywood, is influential in shaping the culture of Hindi-speaking regions of India. If the power of persuasion did not exist, then corporations would not spend billions of dollars on advertising in films and on television.15 Although trying to measure the magni-

She is surrounded by a group of men and exclaims, “I know you want it but you’re never going to get it, tere haath kabhi na aani (I won’t ever come into your hands).”16 She further provokes the men by saying “I’m too sexy for you…silly boys.

They follow me. They start softly whispering.”17 While women are presented as sexual teases and objects for the “heroes” to enjoy, they are also routinely chased

“

films (which are made in and about India) threaten the legitimacy of traditional Bollywood features.

Furthermore, the global market for Indian films has the potential to skyrocket, given the popularity of Indian entertainment around the world. Countries such as Bangladesh, Nepal, Sri Lanka, and even Japan, Germany, and Russia already have sizeable audiences for Bollywood films.21

Yash Raj Films has enough power and influence to change the portrayal of women on screen.

tude of Bollywood’s influence is difficult, the public’s perception of Bollywood shows that there is a fundamental link between India’s film industry and gender disparity. Take the new hit film Dhoom 3

by Yash Raj Films, for example. The main character, Sahir, played by Aamir Khan, runs an Indian-themed magic show in Chicago. In an early scene in the movie, Sahir is looking for an assistant and Aaliya, played by actress Katrina Kaif, appears in jeans, a trench coat, and glasses to the interview. Her audition scene also happens to be an “item number” song and dance, and she begins peeling off her layers of clothing until she bears a scanty, revealing outfit. During her scene, Sahir is sitting in a chair and enjoying the “audition”, while Aaliya teases him. Throughout the rest of the film, Aaliya has no substantial lines, no character development, and is a love interest for the “hero” in the final scenes of the film.

Song lyrics in item numbers are vulgar and openly promote eve teasing and even acts of sexual aggression. The song “Sheila Ki Jawani,” from the movie Tees Maar Khan, for example, depicts Katrina Kaif provocatively dancing in an indecent outfit singing disturbing lyrics.

and harassed by men. The Times of India, in describing the film, adds: “There could hardly be a more graphic message: if you harass a woman enough, no matter how often she says no, she will ultimately say yes.”18 Such elements of Bollywood undoubtedly over-sexualize and exploit women. If Yash Raj Films continues to create the typical ‘love story’ films that promote gender disparity, the situation in New Delhi will not improve.

Film festivals presenting movies about India are expanding internationally. The Indian Film Festival of Los Angeles, for example, shows films made by independent Indian filmmakers, who are putting forth novel themes in their films compared to the typical Bollywoord fare.19 Sold is one of the films at the festival, and it is about a 13-year old girl sold into prostitution. The filmmaker, Jeffrey Brown, describes how he wanted the film to be a “call to action globally for people to take a stand against child prostitution and slavery.”20 The film explores serious social issues, but still has song and dance numbers, thus appealing to the same entertainment-driven audiences that Bollywood relies on. Foreign filmmakers highlighting new and complex themes in their

By introducing new films about India with diverse, complex plots, the global market demand for Indian films could continue to grow, including in Hollywood. Slumdog Millionaire is a clear example of a successful film about India not associated with Bollywood. The film won “eight Oscars, including best picture, and made $377 million at the worldwide box office.”22 Slumdog Millionaire included song and dance sequences, but it also exposed important social issues like poverty and prostitution. New kinds of Indian films and Indian film festivals in other countries have the potential to overshadow Bollywood.

Yash Raj Films has the opportunity to make a significant impact on Bollywood and promote Indian culture in the global market. Opponents of the idea that Bollywood over sexualizes women and contributes to rape culture claim that the industry is solely for entertainment. Yet if audiences were content with the way Bollywood creates movies, then why was Slumdog Millionaire so wildly successful on a global scale? By implementing a low budget two-pronged plan, Yash Raj Films can appeal to new markets while also building a reputation as a company

NEW DELHI, OLD MISOGYNY: THE INFLUENCE OF BOLLYWOOD / 25

that creates shared value, “which involves creating economic value in a way that also creates value for society by addressing its needs and challenges.”23 The first prong of the plan would be for Yash Raj Films to create a new, groundbreaking film to compete with those Indian films like Slumdog Millionaire, appearing around the world. Even within Bollywood, Yash Raj Films’ competitor Eros Entertainment recently released

an innovative film with a plot other than the typical ‘boy meets girl’. Zindagi Na Milegi Dobara (You Won’t Get Life a Second Time) is a film that features three male best friends going on an adventure to Spain before one of them gets married.

While the film does have some references to love, it is ultimately a comedy and drama about friendship and living life to the fullest. According to IMDB, the film had a gross profit of $3,076,226 in the United States.24 Rather than releasing yet another film where an actress is portrayed as a love interest dancing around in

26 / RIA SINGH

revealing clothing, Yash Raj Films could create a revolutionary film starring strong actresses.

Films featuring strong female leads have recently had incredible success. Frozen, for example, is the highest grossing animated movie of all time.25 Rather than being a film about the princess finding her prince charming, it is a movie about sisters and female empowerment. A Bollywood movie inspired by Bridesmaids, Mean Girls, or even Frozen could become a global blockbuster. Although animated movies and Bollywood movies exist in different realms, international audiences are craving movies with new themes like gender equality and female empowerment.

To further promote their new film, Yash Raj Films could release a television trailer that also includes messages from the actresses about empowerment.

Trailers for Bollywood films usually include clips from the “item numbers.”

However, by airing a trailer with empowering messages, Yash Raj Films could reach the New Delhi community in a new way. Karan Johar, a film director, stated to BBC News that Bollywood’s current reach in cinema halls is, “limited to 45 million.”26 However, 76.7% of urban households in India own televisions.27 Therefore, Yash Raj Films can advertise the new film to a wide audience while also sending a powerful message through the media.

One concern the company may have is the failure of the film. Yet audiences will likely be intrigued to see the film, precisely because it is breaking barriers by introducing concepts new to Bollywood.

Furthermore, if the media deems the film controversial, the public will want to see for themselves what exactly is so

controversial – thus generating more potential revenue for Yash Raj Films.

Changing the mindset of a country requires no less than a cultural tsunami, and an important step in creating social change is starting the conversation. The second point of the plan would be for Yash Raj Films to sponsor community “think tanks,” or public areas where the community can get together and discuss social problems to come up with new solutions. A model corporation that Yash Raj Films can follow is BMW and their Guggenheim Lab initiative. The BMW Guggenheim Lab travels to different cities across the globe to set up temporary community spaces where citizens come together and discuss pressing social issues.28 One of the Lab sessions was held in Mumbai from December 9, 2012 through January 20, 2013. Throughout the Lab, BMW sponsored over 165 free programs including workshops, film screenings, talks, and community roundtable discussions where citizens could discuss pressing social challenges with each other.29 Today, the physical structure where the Lab events were held serves as a permanent space where community members can still gather.

Yash Raj Films could sponsor a lowcost initiative like the BMW Lab to inspire conversation among communities in New Delhi, and even satellite spaces so more people can become involved. The “think tanks” will urge communities to take action against violence. Communities can set up neighborhood watch programs and decide how to implement safety measures like distributing rape whistles and pepper spray. Yash Raj Films can also partner with other large corporations in the food industry, fashion industry, and automobile industry to continue to grow their efforts and attract a larger portion of the community. Of course, creating the events, speakers, and discussions would take time and careful planning, and the overall cost of the structure and advertising will require some funding. Yet the space that Yash Raj Films creates in New Delhi can be used as a center for its own New Delhi film festival and can showcase

Indian films with meaningful messages like the ones shown at the Indian Film Festival of Los Angeles. The site can serve as an outdoor space for the premiere of the new, groundbreaking film Yash Raj Films releases. Not only would the film get publicity, but their corporate social responsibility initiatives would also receive notice.

Jacqueline Novogratz, the CEO of the non-profit Acumen, described the fundamental idea that “human dignity is more important to the spirit than wealth.”30 Human dignity does not exist in the revolting rape culture spreading throughout New Delhi. I remember hearing about the horrifying gang rape that happened on December 16, 2012 in Munirka. That young

Tulshyan (2), Ruchika. “Rape Every 20 Minutes For The World’s Largest Democracy?” Forbes. Forbes Magazine, 02 Jan 2013. Web. 11 May 2014. <http://www.forbes.com/sites/worldviews/2013/01/02/ rape-every-20-minutes-for-the-worlds-largest-democracy>.

2 Ghosh (1), Palash. “Bollywood At 100: How Big Is India’s Mammoth Film Industry?” International Business Times. 3 May 2013. Web. 11 May 2014. <http://www.ibtimes.com/bollywood-100-how-bigindias-mammoth-filmindustry-1236299>.

3 Ramasubramanian, Srividya, and Mary B. Oliver. “Portrayals of Sexual Violence in Popular Hindi Films, 1997–99.” Sex Roles: A Journal of Research 48.7-8: 327-36. Springer Link. Web. 4 May 2014.

4 PTI. “Statistics: 92 women raped in India every day, 4 in Delhi.”

India Today. 24 Sept. 2014. Web. 24 Dec 2014. <http://indiatoday. intoday.in/story/indiarape-92-women-every-day-4-delhistatistics/1/380956.html>.

5 Ghosh (2), Deepa. “Eve Teasing: Role of the Patriarchal System of the Society.”Journal of the Indian Academy of Applied Psychology 37 (2011): 100-07. Web. 4 May 2014.

6 Tulshyan (2).

7 Tulshyan (1), Ruchika. “How Bollywood Is Failing The Women Of India.”Forbes. Forbes Magazine, 19 Apr. 2014. Web. 11 May 2014. <http://www.forbes.com/sites/ruchikatulshyan/2014/04/19/howbollywood-is-failing-the-women-of-india/>.

8 Timmons, Heather, and Sruthi Gottipati. “Indian Women March: ‘That Girl Could Have Been Any One of Us’.” The New York Times.

The New York Times, 30 Dec. 2012. Web. 5 May 2014. <http://www. nytimes.com/2012/12/31/world/asia/rape-incites-women-to- fightculture-in-india.html?pagewanted=all&_r=0>.

9 Derne, S. (1999). Making Sex Violent: Love as Force in Recent Hindi Films. Violence Against Women, 5, 548–575.

10 Ibid.

11 Ibid.

12 Ibid.

13 Ibid.

14 Ibid.

1

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woman could have been anyone. Had I not left India six months earlier than I did, it could have even been me on that bus. Yash Raj Films has enough power and influence to change the portrayal of women on screen. While results would not be easy to measure, empowering women on screen and hosting community discussions are crucial steps to inciting social change. v

Bhasin, Kamla. “India: Republic Day Thoughts: For A Gender just World, be the Change.” Women’s Feature Service: 1. Jan 21 2012.

ProQuest. Web. 11 May 2014. <http://www.countercurrents.org/ bhasin230113.htm>.

16 “Sheila Ki Jawani.” - Bollywood Song Lyrics Translations. Web. 11 May 2014.

17 Ibid.

18 Aiyar, SA. “Films Sanctify Pestering and Stalking of Women.” The Times of India. Web. 11 May 2014.

19 Sinha-Roy, Piya. “Move over Bollywood: U.S. Festival Spotlights Independent Indian Films.” Reuters. 08 Apr. 2014. Web. 11 May 2014. <http://www.reuters.com/article/2014/04/08/us-indianfilmfe stivalidUSBREA3729620140408>.

20 Ibid.

21 Ghosh (1).

22 Sinha-Roy. 23 Kramer, Mark R and Porter, Michael E. “The Big Idea: How to Create Shared Value.” Business & Its Publics. New York, NY: Stern School of Business, New York U, 2014. 107-27. Print.

24 “Zindagi Na Milegi Dobara.” IMDb. IMDb.com. Web. 11 May 2014.

25 Gomez, Jeff. “Why ‘Frozen’ Became The Biggest Animated Movie Of All Time.” Business Insider. Business Insider, Inc, 01 Apr. 2014. Web. 11 May 2014. <http://www.businessinsider.com/why-frozen-is-ahuge-success-2014-4>.

26 Ghosh (1).

27 “Half of India’s Homes Have Cellphones, but Not Toilets.” The Hindu.

Web. 11 May 2014. <http://www.thehindu.com/news/national/halfof-indias-homes-have-cellphones-but-not-toilets/article2992061. ece>.

28 “Mumbai Lab Locations.” Mumbai Lab. Web. 11 May 2014.

29 Ibid.

30 Novogratz, Jacqueline. “Business & Its Publics Plenary.” Paulson Auditorium at the NYU Stern School of Business. March 10, 2014.

D Photos by flickr.com/meanestindian 15

I was inspired to write about my topic because of my Indian heritage and my frequent visits to India. A lot of gender violence was happening right next door to my family’s home in New Delhi, and it felt personal to me, being so close to what was going on. I know there is no easy solution to gender violence like rape and other brutality, but I wanted to start uncovering some causes and potential solutions.

RIA SINGH Finance & Marketing ‘17

NEW DELHI, OLD MISOGYNY: THE INFLUENCE OF BOLLYWOOD / 27

Human trafficking takes a different turn with this essay, as Author Patrick Lee describes a nefarious system of bait-and-switch targeting young male African football players. Eager to become stars in Europe, boys are enticed to leave their home country and then abandoned with no financial means to return. Patrick recommends immediate action from NIKE, explaining how the corporation can change this practice from within the system.

28 / PATRICK LEE

ABOLISHING MODERN-DAY SLAVERY FROM FOOTBALL ESSAY BY

PATRICK LEE

ABOLISHING MODERN-DAY SLAVERY FROM FOOTBALL / 29

O

N JANUARY 2009, A 16-year-old boy named Ibrahim Karabouré was abandoned in a hotel in Paris more than 4,000 miles away from his home. Just about a month before, an agent who introduced himself as Jean-Michael approached Ibrahim in Abidjan, Ivory Coast with a promise that he would make him a famous professional football player in Europe – all for a fee of 1 million West African CFA francs, or approximately USD 1,850. Blinded by his eager ambition to become the next Didier Drogba,

30 / PATRICK LEE

an Ivorian national football hero with a glittering professional career in Europe, Ibrahim immediately borrowed money from his friends and followed Jean-Michael who paid for his plane ticket and a fake passport with an older birthday.

Ibrahim spent the next few weeks on trial runs, playing with a team from Dubai and other non-European football teams before being abandoned on his first night in Europe. Now Ibrahim plays for an eight-division team in Les Clayes-sousBois, France; most of the players on his team are high school students who play football only as a hobby.1

Ibrahim Karabouré’s story is a glimpse into a rather unrecognized form of human trafficking that plagues the football community worldwide. However, the trafficking of young Africans players to Europe is neither an unusual nor a recent phenomenon. Back in 2005, Belgian Senator Jean-Marie Dedecker, investigated and uncovered 442 cases of illegal trade of Nigerian footballers to Belgium alone; in 2012, a special report from a British sports channel approximated that “as many as 20,000 footballers have been illegally shipped from Africa to Europe.”2, 3 This vicious cycle of human trafficking

continues to thrive and expand because the structure of trade has already been established between African and Europe.

The initial stage of the network begins at unlicensed “football factories” – camps without trainers or proper training facilities that are spread out along rural African roadsides. As the name “factory” suggests, these unlicensed facilities view their students as commodities and investments. This dangerous business-only mindset begins with a “hard-sell” that entices some children out of normal schooling and into full-time football training.

Moreover, since the academies are not

transfer of adolescents.”6 Consequently, UEFA banned international transfers of players younger than 18. Nevertheless, agents like Jean-Michael forge their player’s birthdates and other clubs often turn a blind eye to this age restriction.

With such ineffective regulation, NGOs take matters into their own hands.

One group, Culture Foot Solidaire, is helping hundreds of stranded African youngsters return to their homes in Africa. Nevertheless, the founder of the organization admitted, “more needs to be done to curb the problem,” because NGOs lack the preventive measures to tackle the

“

neocolonial perspective of football academies and their agents, training and exporting players is fundamentally equivalent to “procurement, refinement, and export of natural resources.” 9 However, if external corporations enter the market and restructure the product, shifting a commodity view to one of educated player with professional potential, they can address the problem and gain economic benefit.

Eliminating this social injustice by creating shared value would be most effective if Nike, Inc. takes charge. Domestically, Nike has already engaged in corpo-

With the failure of both the state and the community sectors to stop trafficking, the responsibility of thwarting social injustice should fall into the hands of the market sector.

affiliated with any formal football club or federation, the players are not protected by FIFA regulations. With a lack of education and protection, players find themselves vulnerable to exploitation.

Foreign agents, both licensed and unlicensed, sign players from these facilities with intentionally ambiguous and tightly binding pre-contracts, which authorize the agents to sell players to European clubs. However few lucky players actually sign contracts with professional football clubs. Most of the players are abandoned by their agents and enter a life of prostitution, drugs, and crime.4, 5 The issue of human trafficking of young footballers has attracted a lot of attention in recent years. Legendary Italian football player and current president of the Union of European Football Association (UEFA), Michel Platini, addressed this issue in 2007, remarking that “it’s necessary for European football to recover its humanity, to put an end to bogus

root of the issue.7 With both the state and the community sectors failing to stop trafficking, the responsibility of thwarting social injustice should fall into the hands of the market sector. From a market perspective, exporting players to foreign countries can be perceived as simple business operations and human trafficking as essentially a market failure. One might address this issue through purely philanthropic means. Yet another option remains. Porter and Kramer’s essay “The Big Idea: Creating Shared Value,” offers a unique solution of creating shared value. It describes ways in which corporations can advance social conditions by altering their operating practices without having to devalue their assets.8 In fact, creating shared value is a very effective solution to this problem.

Corrupt football academies act as suppliers selling young players to foreign customers. In doing so, young players are considered commodities. From the

rate social responsibility (CSR) activities involving football by launching programs such as NikeGO in Washington DC, an after-school program that encourages physical activities for children.10 Now would be a good time to expand their CSR outside of the United States, explore shared value, and improve their corporate image internationally.

Nike is uniquely positioned to tackle this issue because it has prior experience in building football-training facilities.

One such training center, the Nike Academy in England, already holds annual global competitions in 55 countries in search of young football talent. Further, Nike has an established brand image already associated with football via endorsements.

For 45 days prior to the 2014 Brazil World Cup, Nike initiated a campaign called “Risk Everything”. It included a 4-minute video starring football superstars such as Cristiano Ronaldo and was designed to increase the excitement and anticipation

ABOLISHING MODERN-DAY SLAVERY FROM FOOTBALL / 31

for the World Cup worldwide.11 By acting on its strengths, Nike can attack social injustice related to football, boost its brand image, and reinforce its position as the leading sports retailer.

The first step Nike needs to take is to design a system of football academies that not only targets football training, but also provides a proper education for its students. Current football factories are solely focused on developing pro football players rather than promoting well-rounded individuals; both approaches are required. The importance of a complete education for developing athletes is well illustrated by La Masia, Barcelona’s youth football academy. La Masia is renowned for emphasizing a well-rounded education and for encouraging humanistic development as wholesome individuals – individuals not exclusively defined by their athletic abilities.

Needless to say, La Masia is the top youth system in the world and has produced a number of world class players.12 Nike could develop a similar arrangement. The students in a Nike football academy would attend regular school hours during the day followed by football

32 / PATRICK LEE

training in the afternoon. Aside from producing more skilled players, this system would be designed to improve the lives of students who are not able to make it to the professional level. When players like Ibrahim are not talented enough and lack education, they have few options; poverty is a likely outcome. Players with a richer education, however, would be in a position to explore different professional options.

Before building any structure of football academies, Nike would need to investigate the new value chain. The most effective way for Nike to accomplish this is through a partnership with UEFA. This governmental organization, which oversees all of the 202 football clubs and 60 thousand registered professionals in Europe, can statistically analyze and pinpoint the best locations for constructing Nike academies throughout Africa to meet the demands of the youngsters that dream of becoming professional football players. In essence, the new Nike Football Academy would solve the problem by allowing sales and production to grow to meet market demand. Student players will more likely enter Nike Football

Academy because it provides better training and education. Agents will prospect in these legitimate and licensed facilities because the quality of players from Nike Academy will likely be higher than other academies. Naturally, Nike academies will drive the “football factories” out of business.

In order for this plan to work however, market corruption will need to be eliminated. Hence, the UEFA should issue licenses to agents who want to use the facility to scout young players. In order to earn this license, agents would need to pass the required tests and complete an interview process. Moreover, UEFA should implement a system to oversee all graduates of these academies and licensed agents to ensure that no youngsters are being exploited. The players and agents will be required to periodically update their progress electronically while agents help players sign with professional football teams. Throughout, players will be protected by existing UEFA and FIFA regulations.

The final step that Nike can take to maximize its shared value is to enable cluster development. The cluster can be seen in two different ways. First, the network of football academies, agents, players, and football clubs, is a cluster of market components. Nike and UEFA should create a virtual database in which Nike constantly updates the basic information and progress of each of its players. In return, football clubs will update what type of players they are looking for in the next trials and any other relevant information. With a transparent flow of information, all of the stakeholders in the system will benefit. The second form of cluster development is local economic stimulation around the Nike football academies. To enable this, Nike can hire proficient trainers and coaches around the community to draw them away from illegal football academies. Moreover, Nike needs to hire teachers and other necessary professionals to run their academies smoothly. These new facilities will not only deter child trafficking, but will also

help to improve the economy around the community as well.

With the expansion of Nike Football Academy across Africa, Nike can pursue additional projects that create shared value. For instance, customers in America and Europe can bring in their old Nike football cleats and other football products to Nike stores to donate to children abroad who can’t afford cleats. In return, Nike might offer a small discount on their purchase. Through this marketing strategy, Nike will encourage their current customers while also financially

benefitting both their customers and African children.

Of course, even with all these additional measures, the Nike Football Academy itself will be unable to accommodate all the children that want to be professional football players. From a societal standpoint, those who fail trying to become the greatest players in Europe are victims of today’s winner-take-all society. Not everyone that graduates from Nike football academy will be able to strike it rich and be famous. Professors Frank and Cook mention that the intense competition for the

Biermann, Christoph, and Maik Grossekathöfer. “A New Slave Trade?

Europe’s Thirst for Young African Footballers – Spiegel Online.”

Spiegel Online. N.p., 4 June 2010. Web. 11 May 2014. <http://www. spiegel.deinternational/world/a-new-slave-trade-europe-s-thirstfor-young-african-footballers-a-698508-4.html> 2 Dey, Srinwantu. “The Soccer Slaves.” Goalden Times The Soccer Slaves Comments. N.p., n.d. Web. 19 Nov. 2014. <http://www.goaldentimes. org/2013/08/03/the-soccer-slaves/>.

3 “Footballs Slave Trade.” SkySports. 27 Mar. 2012. Web. 11 May 2014. <http://www1.skysports.com/football/news/20438/7620180/ footballs-slave-trade>.

4 “Labour Migration, Human Trafficking and Multinational Corporations.” Google Books. Ed. Ato Quayson and Antonela Arhin. Routledge. Web. 11 May 2014. <http://books.google.com/ books?id=4xNJlLwyrnQC>.

5 McDougall, Dan. “The Scandal of Africa’s Trafficked Players.” The Observer. Guardian News and Media, 06 Jan. 2008. Web. 11 May 2014. <http://www.theguardian.com/football/2008/jan/06/ newsstory.sport4>.

6 Scherrens, Jonas. The Muscle Drain of African Football Players to Europe: Trade or Trafficking? Rep. Print.

7 Aarons, Ed. “African Trafficking ‘growing’” BBC Sport. 14 Oct. 2011. Web. 11 May 2014. <http://www.bbc.com/sport/0/ football/15296412>.

8 Porter, Michael E., and Mark R. Kramer. “The Big Idea: Creating Shared Value: How the Reinvent Capitalism-and Unleash a Wave of 1

“

top level generates, “unproductive patterns of consumption and investment.”13 Therefore, the most important role of Nike Football Academy will be to focus the school not solely on football, but to also integrate regular school curriculum as these children develop into adults. Moreover, as the Nike Football Academy expands, other facilities will hopefully follow suit and start to develop their players in a similar way. In the end, the overall quality of football in Africa will slowly increase and players will not necessarily have to turn to Europe to achieve their dreams. v

Innovation and Growth.” Harvard Business Review. Jan 2011. Web. Biermann, Christoph.

10 “NikeGO and the United States Soccer Foundation Award Eight $100,000 Grants to Communities Dedicated to Getting Kids Active through the Game of Soccer.” RSS. 27 May 2004. Web. 11 May 2014. <http://www.csrwire.com/press_releases/24936-NikeGO-and-theUnited-States-Soccer-Foundation-Award-Eight-100-000-Grantsto-Communities-Dedicated-to-Getting-Kids-Active-Through-theGame-of-Soccer>.

11 Calvillo, Jorge. “Cristiano Ronaldo, Neymar, Piqué and The Incredible Hulk Together in New Nike Ad for the Brazil World Cup [Video].”

Latinos Post RSS. 29 Apr. 2014. Web. 11 May 2014. <http://www. latinospost.com/articles/36468/20140429/cristiano-ronaldoneymar-piqu%25C3%25A9-and-the-incredible-hulk-together-innew-nike-ad-for-the-brazil-world-cup-video.htm>.

12 Longman, Jeré. “Growing Players on Home Soil in Spain.” The New York Times. The New York Times, 26 May 2011. Web. 11 May 2014. <http://www.nytimes.com/2011/05/27/sports/soccer/la-masia-amodel-for-cultivating-soccer-players.html?pagewanted=1&_r=0>.

13 Frank, Robert H., and Philip J. Cook. The Winner-take-all Society: Why the Few at the Top Get so Much More than the Rest of Us. New York: Penguin, 1996. Print.

D Opening spread photo by flickr.com/joshjdss Dominant photo by flickr.com/103706303@N04 Secondary photo by flickr.com/gatesfoundation 9

As I was reading the accounts of the children who were abandoned in the streets of Europe, I was surprised how easily they were persuaded to follow strangers halfway around the globe, and how easily they could have prevented their eventual fate if they had been smarter and more careful. I have been watching European football and the famous sports stars on TV since I was in middle school but never once considered the ‘losers’ of the whole system.

I think these stories really bring out the dark side of the winner-takes-all society that we live in today.

PATRICK LEE Finance & Mathematics ‘17

ABOLISHING MODERN-DAY SLAVERY FROM FOOTBALL / 33

34 / STEPHEN KRAFCIK

AERIFORM GOLD: Capturing Methane for Profit and Social Value ESSAY BY

STEPHEN KRAFCIK

Author Stephen Krafcik sees “flaring” – long associated with natural gas operations – and wonders why valuable fuel is being leaked or burned off rather than collected. He cites innovative technologies that now make it possible to capture this wasted methane and notes that regulation is close behind. Combining foreign policy, environmental responsibility, and shared value, Stephen argues that Royal Dutch Shell should take its first steps in Majnoon, a major oil field in southern Iraq.

AERIFORM GOLD: CAPTURING METHANE FOR PROFIT AND SOCIAL VALUE / 35

T

WENTY-FIVE YEARS ago, one of the worst oil spills in United States history took place in Prince William Sound on the Gulf of Alaska; the supertanker Exxon Valdez ran aground, spilling some 10.8 million gallons of oil.1 Public outrage and a flood of new regulations followed. Then in 2010, BP’s Deepwater Horizon drilling platform exploded, killing 11 workers and flooding the Gulf of Mexico with 4.9 million barrels of oil.2 It was by far the largest oil spill in world history, and a watershed moment for the oil and gas industry.

Since those spills and the emerging zeitgeist related to climate-change, oil and gas companies worldwide have been taking steps to better their public images by generating value for their stakeholders. Some companies have begun to invest in alternative energy; others have made efforts to promote STEM education; and many have taken a role in protecting and serving the communities in which they operate.3 With these socially responsible trends in mind, Royal Dutch Shell should look to become a leader in developing sustainable operations, creating shared value, and curbing negative externalities.

While there are many available options, the most profitable and influential move Shell could make now to establish itself as a clean, forward-thinking business is to begin capping methane emissions from operations worldwide. As a first step, Shell can start with the Majnoon oil field in Iraq.

THE PROBLEM

Methane is the main component of natural gas, which, when vented or leaked directly into the atmosphere, is far more dangerous than carbon dioxide – within 20 years of its emission, methane is 84 times more potent.4 The Environmental Defense Fund’s Chief Scientist, Steve Hamburg, has said, “By emitting just a little methane we’re greatly accelerating the rate of climatic change.”5 From 2012 to 2013, Shell’s greenhouse gas emissions (GHG) increased

36 / STEPHEN KRAFCIK

by 1 million tonnes on a CO2-equivalent basis. One reason for the increase, cites Shell management, is the restart of largescale production at Majnoon in Iraq; and Majnoon is one of the few locations where Shell continuously vents and flares unwanted natural gas.6 Venting, or simply releasing the excess natural gas into the atmosphere, is near equivalent to releasing pure methane, but is less common than flaring.

More commonly, oil and gas companies flare, or burn, excess natural gas which converts methane into CO2, a significant but less potent GHG than methane7 – but no flare is 100% efficient and some methane is inevitably emitted during flaring. Indeed, from 2011 to 2018, methane emissions in the U.S. from the oil and gas industry are expected to grow by 4.5 percent largely due to flaring, according to a report from the Environmental Defense Fund, which works with the industry. 8 Shell does not release specific methane emission numbers, but rather total emissions – which account for methane plus all other greenhouse gasses – on a CO2-base scale. Thus, it’s impossible to know exactly how much methane Shell is releasing. Nevertheless, Shell cites Majnoon, one their few global locations that still makes heavy use of flaring and venting, as a reason for the increase in their GHG emissions in 2012; and because flaring inevitably emits methane, it’s likely that a significant portion of those increased emissions consisted of methane, not to mention carbon dioxide, hydrocarbons, and a host of other dangerous pollutants that flaring is known to release. 9

A SOLUTION

As mentioned, flaring burns natural gas, which releases methane along with high levels of carbon dioxide and other greenhouse gases into the atmosphere.

Everything about flaring is inefficient. According to World Bank’s Global Gas Flaring Reduction Partnership (GGFR), the gas burn-off process is untenable. “Every year,” they state, “billions of dollars worth of natural gas are wasted; burned or flared

at oil fields across the world. Such flaring produces some 400 million tons of greenhouse gas emissions.”10 Flaring is not only inefficient, but every billion cubic foot of methane flared or leaked instead of captured and sold is money left on the table.

Thus besides contributing to climate change, endangering workers, and generating bad press, flaring hurts Shell’s bottom line.

Luckily, technology exists which, if implemented, can replace flaring and venting, and capture methane. The EPA’s natural gas STAR program and the O&G industry together have identified nearly 100 methane control options that are viable.11 However it is the recommendation of this essay that Shell start with the two most profitable and effective methods: reduced emission completions (commonly called “green completions”) and plunger lift systems. By implementing both, Shell could reduce methane emissions by 40 percent.12 Green completions are used during the cleanup stage of drilling and effectively separate leftover gas from other material instead of letting it escape into the atmosphere. Essentially, after a well is completed, hydraulically fractured, or repaired, companies like Shell flow the well for a period to remove debris. This procedure is called “wellbore cleanup” and occurs before the well is connected to any permanent processing equipment.

Historically, the methane released during wellbore cleanup was flared. Green completions allow the methane to be captured and sold.13 Plunger lift systems are a second tool used to capture methane. When a well has been in production for a period of time, water and other liquids accumulate inside the wellbore, reducing the rate of flow. To clean the worn wellbore, companies have to open the well, which vents methane.

Plunger lift systems are an alternative method to lift debris out of the well while capturing methane that would otherwise escape into the atmosphere.14

PRESENTING AN OPPORTUNITY

When it comes to flaring, pollution, inefficient operations, and general stakeholder neglect, few countries rival Iraq. As postwar Iraq – home to the fourth largest petroleum reserves in the world – plans to ramp up production, flaring and its associated problems are likely to increase.

Currently Iraq ranks among the world’s top 5 flaring countries according to the World Bank.15 The amount of gas flared in Iraq represents a loss of $5 million per day and would be sufficient enough to cover all of the country’s electricity demand. 16 Besides energy concerns, a reduction in flaring could improve the health of Iraqi citizens, improve local air quality, and improve vegetation and watersheds – crucial components of postwar rebuilding.17 It should be noted that current Sunni militant action is threatening Iraq.

However, according to the Iraq Oil Ministry, 90 percent of the country’s oil is safe from attacks, with 100,000 police tasked with protecting oil facilities.18 So while ISIS may complicate things on the ground, these obstacles don’t counter the nature of this proposal. Similarly, plunging oil prices do not remove the necessity of methane capture. The need to reduce flaring and venting remains vital.

Reducing methane emissions in the region presents an intriguing opportunity for Shell to benefit various stakeholders, and serve the company’s bottom line by capturing and selling methane instead of flaring or venting it. For these reasons, Shell should seize the opportunity to generate shared value by creating economic value in a way that also creates value for society.19

ENTER MAJNOON

The Majnoon field, located in southern Iraq, is one of the largest oil fields in the world. Royal Dutch Shell is the operator, developing the field together with partners Petronas and Iraq’s Missan Oil Company. Majnoon is one of Shell’s few facilities that continuously flares, and as Shell’s website states, “Flaring from the

“

Flaring is not only inefficient but every billion cubic foot of methane flared or leaked instead of captured and sold is money left on the table.

Majnoon field in Iraq will continue to rise in future years as production increases.”20 But that doesn’t have to be the case.

Shell could begin to install green completions and plunger lift systems in Majnoon to both reduce flaring and minimize methane emissions. Shell has already worked to reduce flaring and cap emissions in other parts of southern Iraq and could use this experience to do the same at Majnoon. These efforts are being conducted by Basra Gas Company, a joint venture established by Shell, Mitsubishi Corporation, and Iraq’s state-run South Gas Company, that is working to commercialize a portion of the large amount of Iraqi gas flared every day. Installing green completions and plunger lift systems in Majnoon would be a logical continuation of those efforts.

The first step in the process is buying and transporting the equipment (green completions and plunger lift systems); the second step is installing the equipment and training current employees to operate the new systems; and the last step is to measure emissions over a period of time to ensure that the green completions and plunger lift systems are effectively capping methane.

Based on British Petroleum (BP) and EPA reports, Shell could expect the total value of natural gas and condensate recovered in Majnoon to be worth well over $100,000 per well per year.21, 22 Shell could expect to recover its initial investment in just 2 years – from then on all revenues gained from the methane capturing systems will be profit.

The gas captured at Majnoon should first be sold to the local market; this

approach would give Shell an important role in providing a stable supply of energy to Iraq, and would further stimulate economic activity and development in the war-torn country. Once domestic demand in Iraq is met, and pending relevant permits from the Iraqi government obtained, the gas could then be exported to countries such as Turkey and Jordan, whose leaders have expressed interest in gas imports.23, 24 While the price of oil is currently at an all-time low, prices will fluctuate and gas will always be marketable.

DRAWBACKS

Installing green completions and plunger lift systems in Majnoon will test Shell’s commitment to long-term sustainability. Not only will this equipment cut into short-term profits, but it will also negate a main benefit Iraq currently offers: little to no regulation. Add onto this the precarious logistics of the operation, and one can see why Shell might be hesitant.

First, in terms of profit, capture systems represent a significant capital investment and will surely cut into shortterm returns. Making matters worse, Shell is already being mandated by new U.S. regulation to install green completions at all U.S. sites by 2015. Thus not only would Shell have to buy methane-capturing equipment for Majnoon, but also for all operations in the U.S. at around the same time. Taken together, the next couple of years would see Shell substantially increase capital investment, something they may not be willing to do –especially if shareholders are seeking short-term value instead of long-term sustainability.

This latter point is why the highly capital

AERIFORM GOLD: CAPTURING METHANE FOR PROFIT AND SOCIAL VALUE / 37

intensive oil & gas industry (O&G) usually reserves upstream expenditures for investments which generate more shortterm value for shareholders. Therefore, by going forward with the Majnoon plan as presented, Shell would be challenging prevailing industry norms as well as testing investors’ patience.

Second, Shell may be hesitant to cap methane in Majnoon because doing so would negate the benefit of lax regulation in Iraq. To put it simply, management may be reluctant to do something they don’t have to do, especially when it costs them money in the short run. Few O&G companies operating in Iraq are concerned with GHG emissions –in fact, many likely came to Iraq in part because of minimal regulations, Shell included.

Finally, the logistics of transporting green completions and plunger lift systems to Majnoon may prove to be tricky, and costly. Not only are there security concerns in the country, but also much of Iraq’s infrastructure has been degraded since the war, and continues to be so amidst insurgent fighting. Shell may be reluctant to spend money on trucks, drivers, equipment, and security, when the payout is delayed – and when potential profits represent only a fraction of Shell’s yearly revenues.

38 / STEPHEN KRAFCIK

TURNING NEGATIVES INTO POSITIVES

Certainly, these drawbacks are significant. And if Shell is solely concerned with increasing shareholder value in the short run, it’d be smart to table this proposed project. However, if Shell truly values the principles of shared value, long-term sustainability, and innovation – things any successful 21st century O&G company must value – then many of these negatives can be seen as positives.

While short-term profits will likely fall due to increased capital expenditures, in the long-run Shell may be far healthier in terms of sustainability and reputation than its rivals. This enhanced status is important considering that Shell would like a long, fruitful relationship with the Iraqi state going forward, as well as positive public relations worldwide.

Furthermore, while Shell is being mandated by the U.S. government to purchase green completions for all stateside operations by 2015, they can purchase the necessary technology for both U.S. operations and Majnoon in bulk – thereby incurring a cheaper per-unit cost. Also, in light of the new U.S. regulation and increased demand, green completion systems are likely to decrease in price as entrepreneurs further develop the technology.

Finally, although Iraq’s infrastructure has suffered since the war (and continues to suffer as it combats ISIS), Shell could turn this negative into a positive by working with local contractors, communities, and authority figures to build up infrastructure, or at the very least point out where improvements could be made. In theory, the Iraqi citizens would be happy to collaborate since Shell is now considering local interests in capping methane emissions. These strong, respectful relationships among community, company, and the environment are the future of the 21st century O&G industry, and are at the heart of creating shared value.

CONCLUSION

By moving forward with the Majnoon methane cap plan, Shell would be ushering in this new shared value age. Though capping methane in one operation is admittedly a small step, it’s just the first step.

From here, Shell can look to cap methane – and other GHG emissions – worldwide, all the while paying attention to the various concerns of the many stakeholders of a 21st century O&G company. Once relationships strengthen, and Shell’s image is renewed in a positive light, shareholders will reap the profits of a healthy, sustainable, and forward-thinking company.

This is the essence of shared value, and it’s what the Majnoon plan offers on a small scale.

What separates the Majnoon plan from promoting STEM education, investing in alternative energy, and the many other sustainable activities of Shell, is that capping methane in Majnoon is integral to Shell’s business. By taking this step, Shell is making a statement which education initiatives or alternative energy investments never could: We recognize that petroleum is our core business, and will continue to be so for many decades to come. We’re committed to making changes within that core business to better serve our stakeholders.

That message should resonate with the hyper-aware younger generation and create forward drive, spurring more shared value type of thinking within the company as it evolves into the future.

R. Edward Freeman wrote in Managing for Stakeholders, “The fuel for capitalism is our desire to create something of value, and to create it for ourselves and others.”25 That has to be, in essence, Shell’s 21st century business model. As corporations, especially O&G corporations, with their wide-ranging networks and massive investments, grow to represent the most powerful institutions in the world, shareholders and stakeholders demand value.

To respect only the former and ignore the latter would be a tragic mistake. Capping methane in Majnoon is the first step Shell can take to avoid such mistakes. v

“Final Report, Alaska Oil Spill Commission.” Oil Spill Facts. The State of Alaska, Feb. 1990. Web. 05 Jan. 2015. <http://www.evostc.state. ak.us/index.cfm?FA=facts.details>.

2 The Ocean Portal Team. “Gulf Oil Spill.” Smithsonian Ocean Portal.

N.p., n.d. Web. 06 Jan. 2015. <http://ocean.si.edu/gulf-oil-spill>.

3 Coe, Sarah. “3 American Oil Companies That Give Back in BIG Ways.”

Drillinginfo. N.p., 20 May 2013. Web. 11 Jan. 2015.

4 Hamburg, Steve. “Methane: The Other Important Greenhouse Gas.” Environmental Defense Fund. Web. 9 May 2014. <http://www.edf. org/climate/methane>.

5 Ibid.

6 “Royal Dutch Shell Sustainability Report 2013 – Flaring.” Royal Dutch Shell Sustainability Report 2013. Rep. Royal Dutch Shell, Web. 10 May 2014. <http://reports.shell.com/sustainability-report/2013/ our-performance/environmental/flaring.html>.

7 Editorial Board. “The High Cost of Flaring Methane Gas.” San Antonio Express-News. N.p., 30 Sept. 2014. Web. 11 Jan. 2015. <http://www. mysanantonio.com/opinion/article/The-high-cost-of-flaringmethane-gas-5791878.php>.

8 ICF International. “Economic Analysis of Methane Emission Reduction Opportunities in the U.S. Onshore Oil and Natural Gas Industries.” (n.d.): 2-3. EDF. Environmental Defense Fund, Mar. 2014. Web. 8 Jan. 2014. <https://www.edf.org/sites/default/files/ methane_cost_curve_report.pdf>.

9 “Royal Dutch Shell Sustainability Report 2013.”

10 “Global Gas Flaring Reduction Partnership.” Global Gas Flaring Reduction. The World Bank Group, n.d. Web. 06 Jan. 2015. <http:// go.worldbank.org/425VOGDYS0>.

11 “Recommended Technologies and Practices.” Environmental Protection Agency. Environmental Protection Agency, Web. 10 May 2014. <http://www.epa.gov/gasstar/tools/recommended. html#content>.

12 Harvey, Susan, Vignesh Gowrishankar, and Thomas Singer. “Leaking Profits.” Rep. National Resources Defense Council. Natural Resources Defense Council, March/April 2012. Figure 3. Web. 10 May 2014. <http://www.nrdc.org/energy/files/Leaking-ProfitsReport.pdf>.

13 Bunzey, Rachel. “Natural Gas and Green Completion in a Nut Shell.”

Energy in Depth. Energy in Depth, 26 November 2012. Web. 10 May 2014. <http://energyindepth.org/marcellus/natural-gas-and-green1

“

completion-in-a-nut-shell>.

“Plunger Lift.” Petrowiki. Society of Petroleum Engineers. Web. 10 May 2014. <http://petrowiki.org/Plunger_lift.>.

15 “World Bank Sees Warning Sign in Gas Flaring Increase.” The World Bank. The World Bank, 3 July 2012. Web. 10 May 2014. <http://www. worldbank.org/en/news/press-release/2012/07/03/world-banksees-warning-sign-gas-flaring-increase>.

16 Berdikeeva, Saltanat. “As Iraq’s Oil Boom Progresses, So Does Gas Flaring.” National Geographic. National Geographic, 25 September 2012. Web. 10 May 2014. <http://energyblog.nationalgeographic. com/2012/09/25/as-iraqs-oil-boom-progresses-so-does-gasflaring/>.

17 Ibid.

18 “Iraq Exodus? Oil Majors Withdraw Staff as Terror Threat Rises.”

RT Business. TV-Novosti, 19 June 2014. Web. 06 Jan. 2015. <http:// rt.com/business/167004-foreign-oil-evacuate-iraq/>.

19 Porter, Michael E., Mark R. Kramer. “Creating Shared Value.”

Harvard Business Review. Business. Jan-Feb 2011. Web. 11 May 2014. <https://hbr.org/2011/01/the-big-idea-creating-shared-value/ar/1>.

20 “Royal Dutch Shell Sustainability Report 2013.”

21 Harvey.

22 “U.S. EPA and Devon Energy, Reduced Emissions Completions (Green Completions), Natural Gas STAR Producers Technology Transfer Workshop, Casper, Wyoming.” PowerPoint. Environmental Protection Agency. Environmental Protection Agency, 30 August 2005. Web. 10 May 2014. <http://www.epa.gov/gasstar/workshops/ techtransfer/2005/casper.html>.

23 Carlisle, Tamsin. “Turkey Seeks Gas from Iraq to Diversify Supplies: Officials.” Platts. McGraw Hill Financial, 21 May 2012. Web. 10 May 2014. <http://www.platts.com/latest-news/natural-gas/erbil/ turkey-seeks-gas-from-iraq-to-diversify-supplies-6313786>.

24 Tayseer, Mohammad. “Jordan Begins Study on Importing Gas From Iraq, Al Rai Reports.” Bloomberg BusinessWeek. Bloomberg L.P., 9 April 2012. Web. 10 May 2014. <http://www.bloomberg.com/ news/2012-04-09/jordan-begins-study-on-importing-gas-fromiraq-al-rai-reports.html>.

25 Edward R. Freeman. “Managing for Stakeholders.” Web. 11 May 2011. <http://redwardfreeman.com/stakeholder-management/>.

D Opening spread photo by flickr.com/deepwaterhorizonresponse Dominant photo by flickr.com/pmeimon 14

While researching I was inspired by the oil industry’s capacity to do good.

More than most other industries, oil is thrust in the middle of international relations and therefore plays a role on a supranational scale. It also transforms, and therefore plays a role in, local communities and individual countries. These dual macro and micro roles place the oil industry in a unique position to help stakeholders from the bottom up, or from the top down -- a luxury and responsibility few other industries have.

STEPHEN KRAFCIK Business & Political Economy ‘17

AERIFORM GOLD: CAPTURING METHANE FOR PROFIT AND SOCIAL VALUE / 39

The jellyfish population is exploding – clogging intake pipes and over consuming valuable ocean nutrients. Author Wyman Li looks for a solution by exploring an unusual opportunity in consumer-packaged goods.

If jellyfish tissues can be reworked into superabsorbent paper products, as innovators at Cine’al Ltd. claim, then a new market may solve several problems at once.

ESSAY BY

WYMAN LI

SOLVING JELLYFISH

OVERPOPULATION 40 / WYMAN LI

E

NGINEERS AT SWEden’s Oskarshamn nuclear power plant, one of the largest nuclear power plants in the world, had to take emergency action when swarms of jellyfishes clogged up the pipes responsible for providing water to cool the plant’s turbines. Workers labored for two days to unblock the cooling pipe before the reactor could be restarted.1 Jellyfish related incidents like this are beginning to occur more frequently. Jellyfish have disrupted power generation in coastal power plants all over the world. Things are even worse in the fishing business, where jellyfish wiped out billions of dollars in earnings over the last few decades.2 All these incidents are the direct result of an overabundance of jellyfish in the ocean.

Over the last decade, the jellyfish population spiked dramatically; from 2002 to 2011, the number of jellyfish in the ocean increased six fold.3 If jellyfish continue to reproduce at such a rapid pace, their impact on society will be much grimmer than economic losses alone.

JELLYFISH OVERPOPULATION IS HARMING THE OCEAN

The most devastating effect of jellyfish overpopulation is its damage to the marine ecosystem. In the past 10 years, populations of several jellyfish species increased at the expense of their main competitor, fish. In the past, the intricate lattice of ocean life has kept the jellyfish population in check. Predators like leatherback turtles, salmon, and sharks dine on jellyfish, while jellyfish compete with other fish for fish eggs and plankton.4 Natural predators and competitors were able to keep jellyfish at a sustainable level. However, due to overfishing of jellyfish predators and competitors, this delicate balance has been disrupted.5 By removing the curb on the jellyfish population, they were able to flourish and overtake their ecosystem.

To make matters worse, global warming has created a more desirable condition for jellyfish to accelerate their rates of reproduction. They thrive in the more

acidic and warmer oceans that are killing other fish.6 According to Sun Song, the director of the Institute of Oceanology in Qingdao, China, “when an ecosystem becomes dominated by jellyfish, fish will mostly disappear.”7 “Once that happens,” he warns, “there is almost no method to deal with it.”8 If nothing is done and the jellyfish population continues to rise, the ocean’s biodiversity and marine life will be devastated. If trends continue, the ocean may one day reach a tipping point at which jellyfish supplant all other fish.

MANY SOLUTIONS HAVE BEEN ATTEMPTED; HOWEVER FEW CAN ACTUALLY WORK

Although scientists are desperate to solve this crisis, many of their potential solutions have not been viable. A team at the Korean Advanced Institute of Science and Technology, for instance, invested in jellyfish killing robots. They developed the “Jellyfish Elimination Robotic Swarm” or JEROS, a team of automated robots that are able to shred 1,985 pounds of jellyfish per hour.9 Unfortunately, JEROS is not a viable solution on an ocean-wide scale.

Developing and maintaining enough robots throughout the vast volume of water in the world is not economically feasible.10 At Piraino’s lab in Italy, researchers are looking into how to make jellyfish more palatable to humans.11 They are looking to expand the demand for jellyfish beyond just Asian countries by turning jellyfish into a more desirable cuisine. However there is a problem; of the 85 species of jellyfish, only 12 are edible.12 Even if the researchers were successful, they would not be able to impact the majority of the species of jellyfish.

CINE’AL’S SOLUTION

Fortunately, Cine’al Ltd., an Israeli nanotechnology company, may have found a feasible solution. Researchers at Cine’al aimed to reduce jellyfish population by turning them into a highly demanded commodity. They saw that, through evolution, jellyfish have designed a layer of potent superabsorbent flesh. That design, as it turns out, has

many features modern human engineers still cannot match.13 A typical jellyfish is composed of over 90% water. Unlike any other creatures, jellyfish do not keep this large quantity of water content locked in a system of tubes, running through a circulatory system. Instead, they hold all their water in their body tissues, like water in a sponge.14 The fact that jellyfish are able to retain so much water without decomposing is impressive. Cine’al believes that if they could incorporate jellyfish’s super-absorbent tissue into consumer products, they could create an international demand for jellyfish.15 From a simple beverage spill to a complicated oil spill, absorptive ability is important to virtually every level of life. Its application in society is vast.

Inspired by this, Cine’al Ltd. developed Hydromash, an absorptive material derived from jellyfish. By breaking down the jellyfish into its base tissues and then combining the desirable tissues with special nanoparticles, Cine’al was able to develop a dry, flexible, and strong raw material. The resultant raw material can be further developed and incorporated into various products like paper towels, diapers, toilet paper and more.16 If Cine’al were able to successfully introduce their technology into the market, there would be a powerful financial incentive to control the population of an increasingly dangerous pest species. Jellyfish would become a highly demanded commodity, encouraging fisheries to catch jellyfish and reducing the jellyfish population.

History has shown that market demand is a powerful source in reducing population.

Consider the beaver trade in the 1800s for instance. The market demand for beaver fur was so powerful that it led to a massive decline in beaver population.17 If a similar economic demand for Hydromash existed, simply buying diapers and paper towels made from jellyfish would solve the overpopulation crisis.

ONLY WITH SUPPORT FROM A LARGER CONSUMER COMPANY CAN CINE’AL HOPE TO SUCCEED

SOLVING JELLYFISH OVERPOPULATION / 41

Unfortunately, Cine’al may not be in the position to introduce its own lines of absorptive products. Currently, Cine’al is just a small start up company composed mostly of engineers and scientists.18 It does not have any expertise in manufacturing, marketing, and selling consumer products. Without financial support, manufacturing infrastructure, and brand recognition, it would be difficult for them to be successful. Even if

Gamble, that can more effectively sell Hydromash-based products to the general public.

Proctor and Gamble is in the perfect position to support Cine’al and absorb Cine’al’s technology into Proctor and Gamble’s various consumer goods. Proctor and Gamble’s “Global Baby and Family Care” product lines consist mostly of synthetic superabsorbent polymers.

Their various brands such as Pampers di-

“

decides to adopt Hydromash, suppliers would likely manufacture Hydromash in large quantities.20

SHARED VALUE FOR PROCTOR AND GAMBLE IN ADOPTING HYDROMASH As the world’s largest consumer products company with an estimated 4.4 billion people using their products

Unlike any other creatures, jellyfish do not keep this large quantity of water content locked in a system of tubes, running through a circulatory system. Instead they hold all their water in their body tissues like water in a sponge.

Cine’al were able to introduce their own products they would have a lot of trouble competing with other well-established brands. Their products would likely only attract niche groups of consumers. The impact that Cine’al set out to make on the environment would be insignificant.

Therefore, it would be in Cine’al’s best interest to instead license their technology to a larger company, like Proctor and

42 / WYMAN LI

apers, Bounty paper towels, and Charmin toilet paper are sold in over 80 countries and produced revenue of 22 billion dollars in 2013.19 If Proctor and Gamble replaces these synthetic polymers with Hydromash, Cine’al would be able to bring their technology to a large number of consumers. Further, with their global popularity, Proctor and Gamble holds tremendous sway in the market. If P&G

everyday, Proctor and Gamble, has the responsibility and the opportunity to create change in the environment.21 The company is currently focused on three key environmental issue areas in its corporate social responsibility initiative.

It hopes to conserve resources by using less energy, water, and materials; it has plans to increase the use of renewable resources by implementing renewable

materials and renewable energy into their products; and finally, P&G is looking to reduce waste by focusing on recyclable and reusable products overall.22 Hydromash fits perfectly under Proctor and Gamble’s current initiatives.

Besides reducing the population of jellyfish, widespread adoption of Hydromash can also assist in Proctor and Gamble’s third initiative, to reduce waste.

Each year, 27.4 billion disposable diapers are used in the U.S., creating more than 3.4 million tons of waste.23 The synthetic superabsorbent polymers in each diaper take hundreds of years to decompose. As the top selling brand of diapers, P&G can dramatically reduce waste by adopting Hydromash. Since Hydromash is created from organic tissue, it is able to decompose in just 30 days.

In supporting Cine’al, Proctor and Gamble can potentially benefit financially as well. Through this partnership they have access to a new technological innovation that can give them an edge over competing brands. According to Cine’al’s president, Ofer Du-Nour, lab tests have shown that Hydromash is twice as absorbent as most synthetic polymers in the market today.24 In Proctor and Gamble’s paper towel, toilet paper, and diaper brands, absorbency is a vital selling point. They pride themself on their product’s superior absorbency versus that of their competitors. By implementing Hydromash technology, the company can

further improve the absorbency of their products. This increase in quality could potentially lead to an increase in market share and revenue.

THE ISSUES BEHIND THIS PARTNERSHIP

There is, however, concern about the viability of the development of Hydromash on a large scale. Due to Hydromash’s early stages of development, the cost to mass-produce Hydromash, has not yet been determined. Although the production technologies used to create Hydromash have existed in the medical and engineering fields for several years, mass production costs might vary widely.25 Further, if the jellyfish population does in fact begin to decrease in the long term, Hydromash’s price would inevitably increase. If the cost far exceeds the price of synthetic polymers, Hydromash would not be financially feasible. Therefore, although Hydromash can provide great potential benefit, there is a large risk involved for Proctor and Gamble to replace their current proven synthetic material.

JAPANESE GOVERNMENT CAN SUBSIDIZE THE INCREASED COSTS

If the cost of Hydromash becomes much more expensive than synthetic polymers, it would be in the Japanese government’s best interest to subsidize the extra costs. Currently, jellyfish are

causing millions of dollars in damage to Japanese fisheries every year. In a study

by The Japanese Society of Fisheries Sciences, researchers determined that since the population explosion of jellyfish, catches of fish by Japanese fisheries decreased between 6.5% and 33.7%. The annual damage caused to fisheries by jellyfish was estimated to be between USD $68.2 million and $204.6 million.26 To reduce the impact of the declining fish population due to both overfishing and jellyfish overpopulation, the Japanese government is providing large subsidies to local fisheries. Currently Japan is the largest subsidizer of the fishing industry, giving away 5.3 billion dollars a year.27 Unfortunately, subsidizing fisheries is not a sustainable solution. In subsidizing fisheries, Japan is ignoring the negative external cost of overfishing and encouraging fisheries to capture more fish than the ocean can replace. As a result, there has been increasing international concern regarding Japanese subsidies. If Hydromash were widely adopted however, Japanese fisheries may be encouraged to catch more jellyfish than fish. The population of jellyfish in Japanese waters would then decrease and the population of fish stocks would have an opportunity to rebound. Japan could then reduce subsidies to fisheries, and hopefully silence the international criticism it currently receives.

Further, Japan can reduce the risk of the Hydromash’s potentially higher costs

SOLVING JELLYFISH OVERPOPULATION / 43

and encourage production. If the cost of mass-production of Hydromash is greater than expected, the Japanese government can place a price ceiling on supplies to P&G. To make up for losses that the suppliers would experience by selling below market price, the Japanese government can provide direct subsidies to the suppliers. In this way, the government can ensure a low and stable price for the Hydromash supplies, and encourage Procter and Gamble to implement this new invention within their products.

THE PARTNERSHIP THAT CAN SAVE THE ENVIRONMENT

With the combination of Cine’al’s new technology, Proctor and Gamble’s popular consumer brands, and Japanese government’s monetary support, the three organizations are in a position to produce an international demand for Hydromash-based products. With enough popularity, human demand for absorptive products can drive down the jellyfish population. Although the solution is not an easy one, the cost of ignoring the rising population of jellyfish is too high. This partnership is one of the few potential opportunities for all parties to gain value while also offering an environmentally sustainable solution to one of the world’s most dire environmental issues. v

42 / WYMAN LI 44

Davidson, Helen. “Jellyfish Clog Pipes of Swedish Nuclear Reactor Forcing Plant Shutdown.” Theguardian.com. Guardian News and Media, 02 Oct. 2013. Web. 12 May 2014. <http://www.theguardian. com/world/2013/oct/01/jellyfish-clog-swedish-nuclear-reactorshutdown>.

2 Subbaraman, Nidhi. “The Jellyfish Are Coming! Experts Tangle with Exploding Population - NBC News.” NBC News. Web. 12 May 2014. <http://www.nbcnews.com/science/environment/jellyfish-arecoming-experts-tangle-exploding-population-f8C11352067>.

3 Ibid.

4 McVeigh, Tracy. “Explosion in Jellyfish Numbers May Lead to Ecological Disaster, Warn Scientists.” The Observer. Guardian News and Media, 12 June 2011. Web. 12 May 2014. <http://www. theguardian.com/environment/2011/jun/12/jellyfish-planktonocean-acid>.

5 Ibid.

6 Davidson.

7 McVeigh.

8 Ibid.

9 Bagdore, Margot. “Do We Need Jellyfish-killing Robots? (Video).”

TreeHugger. 07 Oct. 2013. Web. 12 May 2014. <http://www. treehugger.com/ocean-conservation/jellyfish-killing-robots.html>.

10 Ibid.

11 Gray, Louis “Jellyfish on the Menu as Edible Fish Stocks Become Extinct.” The Telegraph. Telegraph Media Group, 28 Apr. 0015. Web. 12 May 2014. <http://www.telegraph.co.uk/earth/3776788/Jellyfishon-the-menu-as-edible-fish-stocks-become-extinct.html>.

12 Ibid.

13 Visser, Nick. “Diapers Made From Jellyfish May Be The Next Big Thing In Green Parenting.” The Huffington Post.

TheHuffingtonPost.com, 17 Apr. 2014. Web. 12 May 2014. <http:// 1

“

www.huffingtonpost.com/2014/04/17/jellyfish-diapers_n_5162755 html>.

14 Cortes, Amber. “Diapers and Tampons Could Soon Be Made from Jellyfish.” Grist. Web. 12 May 2014. <http://grist.org/list/diapersand-tampons-could-soon-be-made-from-jellyfish/>.

15 Visser.

16 Cortes.

17 Ibid.

18 “History.” History. Web. 12 May 2014. <http://people. westminstercollege.edu/faculty/tharrison/citycreek/Beaver/ history.htm>.

19 “Procter & Gamble.” PG.com Investor / Shareholder Relations: Current Events, Latest News. Web. 12 May 2014. <http://www.pginvestor. com/GenPage.aspx?IID=4004124&GKP=1073748359>.

20 “Nippon Shokubai.” Nippon Shokubai. Web. 12 May 2014. <http:// www.shokubai.co.jp/en/news/news0081.html>.

21 “Procter & Gamble.” PG.com Environmental Sustainability: Sustainable Packaging, Sustainable Operations. Web. 12 May 2014. <http://www.pg.com/en_US/sustainability/environmental_ sustainability/index.shtml>.

22 Ibid.

23 Ibid.

24 Visser, Nick.

25 Ibid.

26 “Japan to Oppose Fishing Subsidies Ban in TPP Trade Negotiations.”

Japan Times RSS. Web. 12 May 2014. <http://www.japantimes.co.jp/ news/2013/06/09/business/japan-to-oppose-fishing-subsidiesban-in-tpp-trade-negotiations/>.

27 Ibid.

D Opening spread photo by flickr.com/r_kim Secondary photo by flickr.com/robinhughes

As I was researching, perhaps the most interesting thing I discovered is that the solution to jellyfish overpopulation is already in our hands. Unlike other environmental issues, to solve jellyfish overpopulation we do not need to invest in alternative energy or dramatically change our lifestyle. Our fishing industries already have the means to dramatically reduce the jellyfish population simply by fishing them. Therefore, the solution is to simply discover a method to turn jellyfish into a demanded commodity.

WYMAN LI Finance & Accounting ‘17

SOLVING JELLYFISH OVERPOPULATION / 45

46 / MICHAEL FRENKEL

ONLINE PRIVACY Fair Compensation for Personal Information ESSAY BY

MICHAEL FRENKEL

Author Michael Frenkel sees a unique opportunity in illuminating the shadowy practice of online personal data collection. Noting that private consumer information is often extracted without compensation or permission, Michael proposes an interesting scheme that both rewards Internet users and builds value for Google.

ONLINE PRIVACY: FAIR COMPENSATION FOR PERSONAL INFORMATION / 47

I

MAGINE FOR A SECOND that you own one of the world’s most valuable commodities, and every day you are giving it away for free. As technology has advanced, new methods of data collection have become available to companies and entrepreneurs. Known as “big data”, this ability to analyze vast amounts of information allows companies to find relationships that humans could not previously detect. And with the advent of the Internet, big data has found a prime target for its collection methods: the average Internet user. Further, while numerous websites have the ability to collect personal information from an Internet browser, or place tracking programs directly onto a home computer, many users are in the dark about whether any of this is happening.

There is a wide array of benefits from big data analysis, ranging from customized online advertising and product recommendations, to enhanced methods of preserving national security (as seen by the NSA’s recent revelations). A study conducted by the Wall Street Journal revealed that the United States’ top 50 websites installed an average 64 pieces of tracking technology onto an individual’s computer, often without warning.1

48 / MICHAEL FRENKEL

Further, the size of the big data industry continues to grow, with estimates in 2013 reporting four zettabytes generated worldwide (one zettabyte is equal to 323 trillion copies of Leo Tolstoy’s War and Peace).2 As companies continue to aggregate more data, the average user has seen little to no direct compensation for their private information, and according to a recent report by White House technology experts, online privacy represents a market failure.3 Previous attempts to solve this issue have failed due to the fast-paced innovation of Silicon Valley. Further, attempts to regulate the industry may also fall by the wayside because of a lack of technical knowledge in Washington D.C. Solutions involving programs designed to keep users’ information private either work poorly or simply fail to deliver on what they promise. However Google is in the unique position to solve this problem by making use of its existing Google Shopping infrastructure. Google can develop a privacy tool that both informs users of websites’ data tracking and offers discounts for volunteering data. This solution would balance the market for online data.

One of big data’s most popular uses is to provide customized advertising for Internet users. With more data, Internet

advertisers are no longer limited to advertising products across specific websites, but can use tracking and display technology to serve the same ads on websites the targeted user visits. However, a large percentage of users actually block Internet advertising. The most popular add-on to the Internet’s most widely used browser, Google Chrome, is Ad-Block.4 Over 20 million individuals block an average of 22.7% of the Internet’s advertisements.5 These users do not receive the benefits of big data collection, yet are still giving away their information free of charge.

A common solution to the privacy problem is “Do Not Track” (DNT) programs. One of the most popular of these is Microsoft’s Do Not Track option built directly into the Internet Explorer browser. Oftentimes, these programs do not accomplish what they are intended to do. The DNT signals sent to advertising companies only indicate that the user prefers not to have their data or browsing habits tracked. Because there are no unified rules as to how these services should be treated, websites can simply choose to ignore the DNT signals and continue to track users’ behavior. The DNT programs are guilty of the same crime as big data trackers: misleading the Internet consumer. Companies make privacy rules difficult to comprehend or purposely misleading in order to continue collecting data without providing fair compensation. Businesses cannot expect a person to read a “terms and conditions” section or understand the privacy settings of every website they visit. Google however, has the advantage of using its own big data collection strategies to create a program that informs users whether websites are tracking their information. This is the first step in shifting the power in a heavily one-sided market.

According to attorney and privacy advocate Sarah Downey, data collection websites and trackers believe there is nothing wrong with ignoring DNT signals and continually collecting personal information against a user’s will.6 The Interactive Advertising Bureau and the Digital Advertising Alliance, who represent 90%

of advertisers (developing industry standards and offering legal support), have claimed that while DNT signals prompt advertisers to stop serving targeted ads, they still allow them to collect, store, and monetize data.7 Without government regulation, collecting data is a legal act. Further, when viewed through the lens of utilitarianism, it is justified based on the enhanced services companies can deliver to web surfers. The ends justify the means. However, in a society where businesses hold an increasing amount of influence over people’s lives, even more so than some government organizations, corporations must conform to a new sense of ethics

The companies who track data are difficult to manage in this scenario. How can one incentivize a business to pay for a vital resource that it had previously received for free? The solution lies in giving the consumer an advantage in avoiding data collection if desired, and compensation for volunteering data in a way that does not derive value from online advertisers and websites. Government regulation is unlikely, since the Obama administration is pursuing how companies may use data to discriminate against certain users rather than how they collect it.8 In the online privacy market, the real seller is the Internet user, and in order to create shared value, a corporation must step up

“

Google’s privacy tool would be able to analyze this information quickly and present users a message about whether the site tracks their personal information, and to what degree they are being monitored.

The user can then decide whether to continue on to the site and allow companies to track and store their information, in exchange for a discount redeemable through the Google Shopping exchange.

The promise of giving away value for actions that Internet surfers were previously performing for free would cause the program to grow quickly in popularity. As more web surfers use the Google privacy tool, the value of private information will resemble that of a free market and will

As companies continue to aggregate more data, the average Internet user has seen little to no direct compensation for their private information...

focused on providing fair services to each individual.

By applying deontological ethics, websites can no longer marginalize users who do not view ads. Deontological ethics dictates that some actions cannot be justified, regardless of the consequences, and that businesses treat each customer with respect. The duty of online big data is to provide customized products for their site visitors. When those visitors choose to ignore those products or advertisements because they do not see value in them, websites should compensate users for contributing to the online data market. A solution would pressure businesses to improve the services they offer in exchange for web data, not simply force them to transfer the value they receive to Internet users.

and reconceive the product Internet visitors are selling, their private information.

Google’s ability to conduct searches and store information makes it one of the most powerful Internet companies. It has the opportunity to create shared value by offering Google Chrome users an Internet privacy tool that informs the user of website tracking and empowers them to sell their personal information wisely. Similar to the code used by anti-virus programs that warn users of websites that potentially send malicious software to their computers, the privacy tool would let users know which websites are involved in data trafficking. Currently, users do not have the time to read the “terms and conditions” sections of websites or check whether a website is storing “cookies”, small pieces of data sent from a website and stored on a user’s computer. However,

fairly value the private information of Internet users. Discounts will represent the value users receive for previously forfeited personal information. The millions of users who block ads will have a more balanced stake in the market of online privacy.

Google should be willing to create this tool because the infrastructure of an exchange system is already in place through Google Shopping. Google Shopping operates by allowing businesses to advertise their products on Google’s site.

Google promises clients lower costs for advertising and a large client base. In return, Google charges its clients for every additional click that their advertisements generate. Clients can also lower the costs of advertising on Google Shopping by limiting the number of their advertisements.9 Google should reinvent their service in

ONLINE PRIVACY: FAIR COMPENSATION FOR PERSONAL INFORMATION / 49

order to make it possible for customers to purchase products directly from Google Shopping, allowing them to exchange the discounts received by giving data to websites. The discounts would incentivize users to purchase through Google Shopping and generate both more traffic for online retailers and direct profits for Google. The profits Google Shopping creates would cover the costs of the discounts that Google is paying for. Clients of Google Shopping would benefit as well since Google is incentivizing consumers to buy from their advertisements.

By offering a discount in exchange for having a user volunteer their personal data, Google creates an ecosystem that turns private information into a true commodity. As Google continues to grow and diversify across various industries, incorporating this program into their overall business model would grant the company a significant stake in the online

50 / MICHAEL FRENKEL

retail industry. With its recent acquisitions of Nest Labs, a home automation company, and development of its own mobile and laptop devices, Google has already shown an interest in expanding from a services-oriented company to a seller of goods. The company has also demonstrated interest in launching its own retail stores.10 By increasing its popularity with online retailers and its familiarity with Internet shoppers, Google can learn how to improve its own product sales in the long term and further diversify its business.

The challenge for a successful program is the mistrust some users may feel towards Google. Although their corporate motto is, “Don’t Be Evil,” the company has developed a reputation for being invasive regarding users’ privacy, which does not bode well for attracting a large user base.

However, this challenge is also another reason why Google should attempt to

solve the issue of online privacy. In the short-term, Google has the opportunity to improve its public image.

Google ranks among one of the top data trackers on the Internet; a majority of its services track both users’ personal information and their contact lists. As the most visited website according to Alexa,11 and as a search portal to many different webpages, Google has a responsibility to inform users about the nature of where they are going throughout the web. This solution gives Google the opportunity to create a fair market in online privacy. According to Sally Blount, fairness in markets has “more to do with procedural fairness than with outcome or process fairness.”12 The transactional nature of the service Google would provide creates a market that is free of bias and fair for all stakeholders involved.

While Google generates value for itself and its online retail partners, Internet

users will become more informed of which websites and companies track their information. Users can pressure companies that collect data to provide better services. If users deem a site’s content inadequate for the voluntary sacrifice of data, the site will suffer from reduced traffic. Online privacy will begin to resemble a free market rather than a false hope.

This will cause an industry wide shift in how online data traffickers conduct business. Instead of being satisfied with providing services to those users who view

advertisements while taking value from the entire population of the Internet, web businesses will have to learn to provide the same amount of value to each individual or face a loss of profit. Observers can measure the success of Google’s privacy tool by its market penetration. The more product purchases through Google Shopping, the more value users receive from their personal information. Websites who reform their services would also add value to the new ecosystem created by Google’s privacy tool.

DAngwin, Julia. “The Web’s New Gold Mine: Your Secrets.” The Wall Street Journal. Dow Jones & Company. 30 July 2010. Web. 11 May 2014. <http://online.wsj.com/articles/SB100014240527487039409 04575395073512989404>.

2 Podesta, John, Penny Pritzker, Ernest J. Moniz, John Holdren, and Jeffrey Zients. “Big Data: Seizing Opportunities, Preserving Values.” Rep. (2014). 01 May 2014. Web. 11 May 2014. <http://www. whitehouse.gov/sites/default/files/docs/big_data_privacy_report_ may_1_2014.pdf>.

3 Lohr, Steve. “White House Tech Advisers: Online Privacy Is a ‘Market Failure” The New York Times. The New York Times, 05 May 2014.

Web. 11 May 2014. <http://bits.blogs.nytimes.com/2014/05/05/ white-house-tech-advisers-online-privacy-is-a-market-failure/>.

4 Google Chrome Appstore, <https://chrome.google.com/webstore/ category/apps>. Web. 11 May 2014.

5 PageFair. The Rise of Adblocking. Rep. N.p., Aug. 2013. Web. 11 May 2014. <http://downloads.pagefair.com/reports/the_rise_of_ adblocking.pdf>.

6 Bott, Ed. “Why Do Not Track Is Worse than a Miserable Failure.”

ZDNet. ZDNet, 21 Sept. 2012. Web. 11 May 2014. <http://www.zdnet.

1

“

A Google privacy tool can create shared value by adding economic benefits to Google, Internet users, and online retailers, while also pressuring the rest of the Internet to provide better privacy policies. The societal benefits of this tool will help users protect their information and avoid misleading privacy rules from data traffickers.

As the industry for big data continues to grow, we must solve this pressing societal problem in order to create a balanced Internet, both socially and economically. v

com/why-do-not-track-is-worse-than-a-miserable-failure7000004634/>.

7 Ibid.

8 Podesta.

9 Weinstein, Mary. “Google Shopping Feed, Cost, and PPC Best Practices.” Web blog post. The YouMoz Blog. Moz. 17 Apr. 2013. Web. 11 May 2014. <http://moz.com/ugc/google-shopping-feed-cost-andppc-best-practices-16918>.

10 Efrati, Amir. “Google Works on Launching Retail Stores.” The Wall Street Journal. Dow Jones & Company, 18 Feb. 2013. Web. 11 May 2014. <http://online.wsj.com/articles/SB1000142412788732376480 4578312530021763450>.

11 “Top Sites.” Alex Top 500 Global Sites. Web. 11 May 2014. <http://www. alexa.com/topsites> 12 Blount, Sally. “Grand Illusion.” Business & Its Publics. New York: McGraw-Hill Education, 2011. 35 – 38. Print.

D Opening spread photo by perspecsys.com Secondary photo by flickr.com/donkeyhotey Tertiary photo by flickr.com/khalidalbaih

I first became interested in the flaws in data collection after Edward Snowden’s revelations about the NSA.The utilization of big data is something that many politicians in Washington D.C. have stated must be regulated to avoid corporations having more power over consumers. Shifting power back to consumers through compensation is just the first step in creating a free market for personal information.

MICHAEL FRENKEL Finance & Statistics ‘17

ONLINE PRIVACY: FAIR COMPENSATION FOR PERSONAL INFORMATION / 51

For victims of domestic abuse, a mobile phone may provide a critical lifeline. Yet for women below the poverty line, a phone may be unaffordable. In this essay, author Annelieke Dompeling suggests that Verizon explore a program of refurbished phones and discounted minutes to build a campaign of “shared value” – one that battles domestic violence while promoting company value.

52 / ANNELIEKE DOMPELING

THE WAR ON WOMEN ESSAY BY

ANNELIEKE DOMPELING

THE DOMESTIC WAR ON WOMEN / 53

W

HAT STRIKES ONE in every four American women and claims a life every six hours in the United States?

Domestic violence.

Letâ&#x20AC;&#x2122;s put things in perspective: the number of U.S. troops killed in Afghanistan and Iraq since 2006 is 6,614. The number of women in that same period who were killed as a result of domestic violence was nearly double.1 Further, in the

54 / ANNELIEKE DOMPELING

time it takes you to read this, 24 people, most of whom are women, will be violently assaulted by their intimate partners in the U.S.2 This scourge is the single greatest cause of injury to women aged 15 to 44,3 and demands more attention and resources. A 2012 survey from The Mary Kay Foundation found that 8 out of every 10 domestic violence shelters nationwide reported a 78% increase in women seeking help over the past four years.4 The need to help women suffering from abusive relationships presents businesses with a marketable opportunity to provide small-scale solutions that may not

eradicate the social problem completely, but can definitely make a positive impact.

DOMESTIC ABUSE: DONâ&#x20AC;&#x2122;T ISOLATE THE PROBLEM

Geographical isolation is one of the most dominant themes surrounding domestic violence in America.5 While rarely discussed, 15.1% of Americans, or 39.3 million, live below the poverty line, with rural counties having the highest overall poverty rates in the country.6 The impact of rural isolation is great because victims of abuse are unable to connect to social networks, allowing abusers to maintain power and control over their partners.

Research shows that women residing in rural areas are usually 100 miles from the nearest shelter and several miles from the nearest paved road.7 The limited access to transportation and communication resources makes it difficult for women to alert authorities and seek emotional support, and ultimately, to leave their abusive partners.

MCDOWELL COUNTY: CRISIS-MODE

McDowell County, the poorest county in West Virginia, has been emblematic of American poverty for the last 50 years.

An area where paved roads give way to dirt and forested hollows, the county once boasted a community of 100,000 residents and a booming mining industry that set coal production records. But the heavy dependence on coal mining proved problematic over time. The introduction of mining mechanization eroded jobs, eventually leaving 50.3% of the population below the poverty line by the 1990s.8 The county’s population has dramatically fallen to 21,3009 and today, McDowell is a community where residents describe never seeing neighbors and only interacting with people while grocery shopping.10 According to a report by Al Jazeera America, the lack of forward progress and poor career opportunities have driven many residents toward alcohol and prescription pill abuse.11 This situation has furthered abusive relationships and affected family stability; 46% of children in the county do not live with a biological parent.12 “I grew up in poverty,” said Florisha McGuire, principal of Southside K-8 School in McDowell County. “Neither one of my parents had a high school education… My dad was a profound alcoholic. There was domestic violence in my home.”13 According to reports, male abusers in the county isolate their partners by disabling telephone networks, which prevents women from calling to seek help or emotional support.14 McDowell County needs to improve these communication networks to help address the complex nature of rural battering.

A CASE FOR VERIZON: IT’S VIABLE

The need to alleviate domestic abuse in McDowell County presents an opportunity for creating shared value. The concept of shared value, introduced by economists Michael Porter and Mark Kramer, describes a business strategy that enhances the competitiveness of a company, while simultaneously improving the social conditions of the community in which it operates.15 Since 2000, Verizon has focused its corporate social responsibility efforts on domestic violence prevention. This CSR has included giving grants totaling over $65 million to domestic-violence shelters16 and creating the Domestic Violence Entrepreneurship Grant program –which awards up to $5,000 in donations to help women survivors start their entrepreneurial dreams.17 Verizon’s knowledge of and interest in domestic abuse in America provides a solid foundation for the company to effectively help domestic abuse victims in McDowell County.

This proposition recommends that Verizon partner with McDowell County’s Department of Social Services, its main local abuse shelter system, to earn real bottom-line profits. Verizon’s network is available to more than 97% of the U.S. population and covers over 306 million people, including rural areas of America.18 In addition there is a rising demand for victim support, which is not being supplied effectively by shelters. Despite this need, a survey reported that 87% of shelters believe that funding, services,

“

and prevention efforts will be down in upcoming years.19 Verizon can address this discrepancy by collecting and recycling phones donated from customers, rather than allowing those phones to waste away in national landfills. More than 55 million wireless phones are discarded each year in the United States.20 Following this plan, Verizon will refurbish the donated phones, and act as an intermediary between the donor and the shelter in McDowell County.

Why would customers put in the effort to bring in their old phones? The answer may be simple: Verizon can offer a sales promotion ranging from 10 to 20% on next phone purchases to those who donate old phones. This incentive will build brand loyalty as future phone purchases from Verizon allow customers to feel good about participating in a positive cause.

This will motivate customers to purchase phones at Verizon and potentially increase sales. If Verizon receives sufficient phone donations, there may be numerous expansion possibilities.

LEARNING FROM OTHERS

The ultimate goal is to help victims feel safer and less isolated by constructing a reliable communication network where they can access immediate emergency support. If this program works effectively in McDowell County, it can scale to other areas in the United States. Potential expansion strategies can be adapted from what other companies, similar to Verizon, have accomplished.

Verizon connects millions of people together and has the opportunity to break the cycle of abuse for women in this unfortunate situation by incorporating a new paradigm of shared value.

THE DOMESTIC WAR ON WOMEN / 55

For instance, Vodafone introduced its own line of mobile phones, TecSOS,21 which is specifically adapted for domestic abuse victims. This phone enables users to have immediate contact with emergency services through the touch of the central button. The design is such that the emergency contact learns the location of the victim from the handset and records all activity in the vicinity of the device. This program has had great success, with a user base of 31,700 women across Europe, and a reported 5,957 victims who claimed that the service directly saved their lives.22 An anonymous user of the phone describes the success of this program as follows, “My message to Vodafone is a massive thank you, and I hope that you can give TecSOS handsets to more women to help them. It really does give your life back.”23 Unlike TecSOS’s market however, Verizon will need to keep in mind that most women in McDowell County live below the poverty line and cannot afford excessive telephone bills.24 To overcome this obstacle, Verizon can learn from the success of another program. In 1995, Pacific Bell Wireless and Motorola partnered with a nationwide campaign called “Call to Protect” that also utilized

56 / ANNELIEKE DOMPELING

wireless phones to help fight domestic violence. The entire operation donated free airtime to victims of domestic violence, which facilitated more than 84,000 emergency calls from wireless phones.25 Once Verizon receives enough phones for this program to be scalable, the next step is to equip phones with free airtime and texting capabilities routed to the shelter in McDowell County. In this way the service can be both practical and accessible.

ASSESSING THE SUCCESS OF A LASTING IMPACT

In order to determine the success of the program, results from the corporation and the community need to be analyzed.

For Verizon, an analysis of the number of phones donated and sales data before and after the sales promotion will help determine success. If significant sales were made as a direct result of the proposed sales discount on next phone purchases, the campaign will have proved successful. The additional revenue from the program should be weighed against the costs, such as refurbishing and transporting the phones.

For McDowell County, the level of interaction between the victims and the shelter should be analyzed. This includes

the number of calls made since the inception of the program, and the personal improvement in women’s lives; direct effects can be determined through interviews.

IT’S A SMALL HURDLE IN A MUCH LARGER RACE

For every business endeavor, there will be barriers that may reduce a corporation’s willingness to invest. For Verizon those barriers might include absorbing the additional expense of the program, such as refurbishing the phones and any transportation costs. Yet with staggering profits of $3.7 billion from the fourth-quarter of 2013 alone,26 these costs are trivial compared with the big picture.

In “Managing for Stakeholders”, R. Edward Freeman says, “Capitalism is our desire to create something of value, and to create it for ourselves and others…with the spirit of accomplishing great tasks in collaboration with others.”27 Verizon connects millions of people together and has the opportunity to break the cycle of abuse for women in this unfortunate situation by incorporating a new paradigm of shared value. While this proposition will not eradicate domestic violence entirely, Verizon is poised to take a major step in the right direction. v

“Faces of the Fallen.” The Washington Post. The Washington Post, n.d.

Web. 07 May 2014. <http://apps.washingtonpost.com/national/ fallen/>.

2 Centers for Disease Control and Prevention. Centers for Disease Control and Prevention, 24 Feb. 2014. Web. 07 May 2014. <http:// www.cdc.gov/women/>.

3 Truth About Abuse Survey Report 2012. Mary Kay Foundation, 2012.

Web. 7 May 2014. <http://content2.marykayintouch.com/Public/ MKACF/Documents/2012survey.pdf>.

4 Ibid.

5 Rhodes, Britt E. “Rural Domestic Violence: An Interdisciplinary Model for Rural Practice.” Contemporary Rural Social Work.

Volume 4. (2012):101-09. Web. 11 May 2014. < http://journal.und. edu/crsw/article/view/444>.

6 “National Poverty Center, Frequently Asked Questions.” University of Michigan Gerald R. Ford School of Public Policy. Regents of the University of Michigan. RSS. Web. 10 May 2014. <http://npc.umich. edu/poverty/>.

7 Rhodes.

8 Johnson, Kimberly. “As Coal Fades in West Virginia, Drugs Fill Void.”

Al Jazeera America. Al Jazeera America, 26 March 2014. Web. 07 May 2014. <http://america.aljazeera.com/features/2014/3/as-coalfades-inwestvirginiadrugsfillthevoid.html>.

9 Gabriel, Trip. “50 Years Into the War on Poverty, Hardship Hits Back.”

The New York Times. The New York Times, 20 Apr. 2014. Web. 07 May 2014. < http://www.nytimes.com/2014/01/05/business/50years-later-war-on-poverty-is-a-mixed-bag.html>.

10 Ibid.

11 Johnson.

12 Gabriel.

13 Johnson.

14 Chang, Alice F. and Pamela L. Mulder. “Domestic Violence in Rural 1

“

Communities.” Mulder & Chang. N.p., n.d. Web. 07 May 2014. <http://www.marshall.edu/jrcp/vole1/vol_e1_1/Mulder_Chang. html>.

15 Porter, Michael E., Mark R. Kramer. “Creating Shared Value.”

Harvard Business Review. Business. Jan-Feb 2011. Web. 11 May 2014. <https://hbr.org/2011/01/the-big-idea-creating-shared-value/ar/1>.

16 “Community Service and Philanthropy in 2013.” Verizon Corporate Responsibility. N.p., n.d. Web. 06 May 2014. <http://vz-cr-dev.com/ community-service-and-philanthropy/2013>.

17 Ibid.

18 “About Verizon Wireless.” Network. N.p., n.d. Web. 06 May 2014.

19 “Good Citizenship.” Good Citizenship. NAPSA, n.d. Web. 7 May 2014.

20 Truth about Abuse Survey Report 2012.

21 “TecSOS.” Vodafone. N.p., n.d. Web. 06 May 2014. <http://www. vodafone.com/content/index/about/foundation/mobiles_for_ good/tecsos.html>.

22 Ibid.

23 Ibid.

24 “McDowell County QuickFacts from the US Census Bureau.”

Quickfacts Census. N.p. 2013. Web. 06 May 2014. <http://quickfacts. census.gov/qfd/states/37/37111.html>.

25 “AT&T Press Release Headlines & News from AT&T.” AT&T. N.p., n.d. Web. 06 May 2014. <http://www.att.com/gen/pressroom?pid=4800>.

26 “Verizon Caps Strong Record of Success in 2013 With Fourth Consecutive Quarter of Double-Digit Earnings Growth.” Verizon News. Verizon, 2013. Web. 06 May 2014.

27 Freeman, R. Edward. “Managing for Stakeholders.” Business & Its Publics. McGraw Hill. 13-25. Print.

D Opening spread by photo flickr.com/scobleizer Dominant photo by flickr.com/jonjon_2k8 Secondary photo by flickr.com/ario

I hope that my essay really opens some eyes on the difficulty some women have in getting out of the vicious cycle that is domestic violence, and that people try to help those in need. I chose to focus on domestic violence mainly because of its underestimated significance, in comparison to other issues in the United States, especially in poverty driven areas.

ANNELIEKE DOMPELING Finance & Marketing ‘17

THE DOMESTIC WAR ON WOMEN / 57

PUREST WATER ON EARTH ESSAY BY

HALEY SAN GIACOMO

Fiji Water has strategically built itself into one of the worldâ&#x20AC;&#x2122;s most popular bottled water brands, yet ironically (and tragically) not all Fijians have enough clean water to drink. While water may be plentiful in Fiji, proper sanitation is lacking and waterless toilets may hold the key. Author Haley San Giacomo investigates the situation and uncovers some interesting facts.

58 / HALEY SAN GIACOMO

T

O OUTSIDERS, FIJI IS thought of as an island of paradise with beautiful beaches and crystal clear waters. Preserved in its “virgin ecosystem” is the “purest water on earth”, enjoyed by the most elite. Fiji is a place of purity –or at least that is what America’s most popular water brand, FIJI, proclaims.1 The truth is, the “reality of Fiji, the country, has been eclipsed by the glistening brand of Fiji, the water.”2 Clean drinking water is actually a rare commodity for the people of Fiji. In fact, only 47% of Fijians have access to clean drinking water. With long drought seasons and few resources from which to obtain clean water, half of the country almost always relies on emergency water supplies. Even hospitals are left without clean water, making patients cart their own if they hope to avoid the risk of further infection and disease. For any travelers visiting the beautiful island, drinking bottled water is a must as typhoid and parasitic infections run rampant.3 In the town of Rakiraki, families experience “the full range of Fiji’s water problems”.4 Crumbling pipes, lack of adequate wells, dysfunctional or flooded water treatment plants, and droughts, leave 6,000 families with little to drink.

With little support from the government, months go by without emergency supplies reaching Rakiraki. Fiji has some of the highest rates of typhoid and diarrhea, which have both increased in the past decade due directly to contaminated drinking water. In March 2010 alone, 110 cases of typhoid were reported.5 The issue in Fiji is worsening as the amount of clean drinking water becomes scarce.

The problem is not the lack of water in Fiji. Ironically, hidden several hundred feet under the surface of Fiji, there is an aquifer more than 17 miles long.

This unique “virgin ecosystem” holds a surplus of water, which is filtered down through volcanic rock, attracting natural minerals and silica on the way. The water is certainly there, but the infrastructure to access the water is not. Clean drinking

water is right under the natives’ feet, yet they have no means to reach it.

While the people of Fiji have no means to access this pure water, many people around the world enjoy it without restriction. American couple Lynda and Stewart Resnick saw the “virgin aquifer” as a business opportunity and jumped on it. They created the company FIJI Water, selling square bottles of the “purest water” all over the world. The company, which is located only 30 minutes from the town of Rakiraki, has been tapping the aquifer since 1996. It produces over 3.5 million liters of water a month.6 The brand has gained extreme popularity in the United States and the couple became millionaires. Yet, the people of Fiji don’t share the same sentiment regarding FIJI Water. The land that the company is tapping from is “sacred and central” to the “existence and identity” of Fiji.7 The Fijian citizens believe that they are being cheated and that the company knows they have the upper hand. FIJI Water is still 86 years away from the end of its 99-year lease granting it rights to the land. Senior Vice President of FIJI Water, Thomas Mooney, even stated in a recent interview that without the FIJI Water Company, “Fiji is kind of screwed.”8 In the past 25 years, the government of Fiji has seen four coups, and the most recent junta has been declared unconstitutional. In response, the military regime has “abolished the judiciary, banned unauthorized public gatherings, delayed elections until 2014, and clamped down on the media.”9 Such acts have bred corruption and paranoia. The military regime actually backs FIJI Water, and has even taken action against those who talk negatively about the company. One of these individuals includes Anna Lenzer, a New York journalist who wrote, “Fiji Water: Spin the Bottle.” This article uncovers many true characteristics of the FIJI Water Company and offers a major critique of the issues that Fiji faces today.

Anna Lenzer prefaces the article by communicating her own experience with the military regime of Fiji. Lenzer describes a day at an Internet café, when

she was writing emails to her friends, filling them in on her “visit to the Fiji Water bottling plant,” and also “forwarding a story about foreign journalists being kicked off the island.”10 As she was writing emails, the Internet connection died.

A few moments later, a police officer entered the café, approached her, and said, “We’re going to take you in for questioning about the emails you’ve been writing.”11 She was ultimately arrested for the content of her intercepted emails. Lenzer was continuously questioned as the government was “worried that [her] reporting would taint the Fiji Water brand.” 12 Questions like, “Who do you work for, another water company?” and “It would be good to come here and try to take away Fiji Water’s business, wouldn’t it?” were just a few.13 The regime is completely behind the company and continues to stop people like Lenzer from giving the brand negative press.

It is not completely unwarranted for the military regime to support the company. FIJI Water has, in fact, increased visitors to the island; Fiji’s tourism has risen 24% from 2009 to 2011.14 Meanwhile tourism in the Cook’s Islands, a comparable group of islands in terms of location and exotic appeal, has risen only 12% within the same time period.15 The FIJI Water Company has given around 400 jobs to the locals, as well as created the FIJI Water Foundation in an attempt to give back.

As part of its main project, the FIJI Water Foundation has teamed up with the organization, 1% of the Planet, to maintain the environment and ecosystem of Fiji. The contributions made are mainly toward the preservation of Fiji’s last “ancient rainforest”.16 However, not fully explained is the fact that this rainforest is the exact location of the FIJI Water facility. This rainforest is the first step in the production of the drinking water, as it collects the rainwater to deliver to the aquifer right below.17 Another big component of the FIJI brand is its sustainability practice. At the top of its marketing campaigns are its FijiGreen contributions and its assertion that it is “carbon-negative” -a claim

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“

Clean drinking water is actually a rare commodity for the people of Fiji.

that was pulled after a class action lawsuit in 2010.18 The brand has its highest proportion of consumers in California and, according to journalist Anna Lenzer, Fiji water was named as one of the “Top 10 Things Young Hollywood Can’t Get Through the Day Without”.19 This popularity is backed up by true sustainability practices; working with hydro geologists, FIJI Water ensures that production rates are consistent and sustainable. In the Water Management section of its website, the company states: “[the aquifer] is constantly replenished by rainfall, far faster than we could ever bottle the water”.20 With this prime replenishing source, exclusive rights, and apparent need all around, it seems unfair that the company is keeping the water all to itself.

In response to the need for clean water, the most pressing issue in Fiji, the foundation has helped around 200 villages build wells so that water is accessible.21 But this doesn’t seem to be solving the issue. These wells are dug close to the surface, and as soon as cyclone season hits, a 6-month long period, these wells become frequently flooded and end up contaminated. This again leaves the people of Fiji without water. With so much effort meant to sustain the rainforest and create the brand of the purest water on earth, it is ironic that the people of Fiji cannot enjoy their own natural supply of pure water.

The issue of clean drinking water seems to pass under the radar, as it is shadowed by the company’s efforts to maintain a green, eco-friendly name. Disease is still prevalent, and water is only potable half the time. One major problem: sanitation is overlooked. While the Ministry of Health has made great strides in Fiji,

60 / HALEY SAN GIACOMO

some villagers are still defecating openly and their water supply can become contaminated with fecal matter as soon as flooding occurs. 22 The FIJI Water Foundation has overlooked a possible partnership with organizations like The Bill and Melinda Gates Foundation. This foundation is very aware of the water supply issue. In its attempts to improve living conditions and access to clean water, it began by supplying a clean sanitation system. Clean water and hygiene are obvious issues in developing and underdeveloped countries, and sanitation itself, often neglected, is at the core of the whole problem.23 A key aspect of the Bill and Melinda Gates Foundation is its “Reinvent the Toilet Challenge.” This initiative includes “funding research to develop waterless, hygienic toilets that do not require a sewer connection or electricity and cost less than five cents per user per day.”24 After all, the toilet was named the best medical advancement in the past 200 years. When the sewage system and toilet were developed and implemented in the 19th century in Europe, child mortality rates dropped more than they had in history: from 20-35% to less than 5%.

Disease became less frequent, and water supplies stayed clean. Toilets seem like the perfect solution for the people of Fiji.

But it’s not just about the implementation of latrines and toilets to local villages in Fiji; it’s also about educating the people. The locals don’t understand the danger of raw sewage on the streets, and they need to be shown that this is a problem. In a recent Ted Talk, Rose George “plunged” deep into this sanitation issue in her discussion “Let’s talk crap. Seriously.” 25 She explained that the solution is not merely to give everyone a toilet. In

some developing countries, where governments have gone in and given out free latrines, they return a few years later to find that villagers have “lots of new goat sheds or temples or spare rooms” as they themselves “happily walk past them and go over to the open defecation grounds.”26 There is a real need to “manipulate human emotion”—to explain that open defecation is the cause of disease and high child mortality rates.27 The Fiji Water Company understands marketing and has great success in spreading a lifestyle. With the help of DevComm (Development Communications), the company can utilize its skills, combined with the talents of others, to create a strategic plan for communication. DevComm can help create a plan to bypass the military regime and truly educate the people of Fiji. The company can even use one of Rose George’s most powerful approaches: putting out a plate of feces and a plate of food. As locals sat and watched flies move from one plate to the next, “[p]eople who’d been thinking that what they were doing was not disgusting all suddenly thought, ‘Oops.’” 28 They realized they were ingesting other neighbor’s feces and that’s what triggered a change in their thinking.

The FIJI Water Company seems to have all the resources within its grasp. All it needs to do is reach out to a few organizations to catalyze improvements. The company already has its brand and is acknowledged for its green efforts, but if it improves the wellbeing of the Fijians, it will truly be giving back. v

Schwartz, Ariel. “Fiji Water Playing Chicken With Fiji [Updated].”

Fast Company. N.p., 29 11 2010. Web. 4 Apr 2013. <http://www. fastcompany.com/1706114/fiji-water-playing-chicken-fiji-updated>.

2 Lenzer, Anna. “Fiji Water: Spin the Bottle.” Mother Jones. N.p., 12 08 2009. Web. 4 Apr 2013. <http://www.motherjones.com/ politics/2009/09/fiji-spin-bottle>.

3 Ibid.

4 Ibid.

5 Rina, Samantha. “Typhoid rates in Fiji High.” Fiji Times. N.p., 27 11 2010. Web. 7 Apr 2013. <http://www.fijitimes.com/story. aspx?id=160722>.

6 Schwartz, Ariel.

7 Judkis, Maura. “Fiji Water Chimes In on Bottled Versus Tap.” U.S. News. N.p., 15 07 2008. Web. 4 Apr 2013. <http://money.usnews. com/money/blogs/fresh-greens/2008/07/15/fiji-water-chimes-inon-bottled-versus-tap>.

8 Ibid.

9 Lenzer, Anna.

10 Ibid.

11 Ibid.

12 Ibid.

13 Ibid.

14 “Visitor Arrival Statistics.” Fiji Islands Bureau of Statistics. Fiji Department of Immigration, n.d. Web. 12 May 2013. <http://www. spc.int/prism/country/fj/stats/Tourism/Visitor_Arrivals.htm>.

15 GOVERNMENT OF THE COOK ISLANDS. MINISTRY OF FINANCE AND ECONOMIC MANAGEMENT. Print. <http://www.

1

“

mfem.gov.ck/docs/Stats/2013/Tourism/Monthly/Mig March 2013. pdf>.

16 FIJI Water. N.p.. Web. 4 Apr 2013. <http://www.fijiwater.com/>.

17 Ibid.

18 “FIJI Water’s Carbon-Negative Claims Land It in Hot Water.” - Green Retail Decisions. N.p., 6 Jan. 2011. Web. 26 Dec. 2014. <http://www. greenretaildecisions.com/news/2011/01/06/fiji-waters-carbonnegative-claims-land-it-in-hot-water>.

19 Lenzer, Anna.

20 “Water Management | FIJI Water.” FIJI Water. N.p., n.d. Web. 27 Dec. 2014. <http://fijiwater.co.uk/giving-back/environment/sustainablepractices/water-management/>.

21 FIJI Water.

22 “WHO/UNICEF Water Supply Statistics, 2014 - Knoema.com.”

Knoema. N.p., n.d. Web. 27 Dec. 2014. <http://knoema.com/ WHOWSS2014/who-unicef-water-supply-statistics-2014>.

23 “Visitor Arrival Statistics.”

24 “Water, Sanitation & Hygiene.” Bill & Melinda Gates Foundation. N.p..

Web. 12 May 2013. <http://www.gatesfoundation.org/What-We-Do/ Global-Development/Water-Sanitation-and-Hygiene>.

25 George, Rose, perf. “Let’s talk crap. Seriously.” TEDTalks. N.p., 15 04 2013. web. 12 May 2013.

26 Ibid.

27 Ibid.

28 Ibid.

D Opening spread photo by flickr.com/magpie372 Secondary photo by flickr.com/thegaffneys

I was fortunate enough to be able to travel to Fiji and I was able to speak with some locals. It was extremely eye-opening to see an authentic image of Fiji, not the image that FIJI Water portrays. Because of this mix of emotion I was having, I really wanted to find out what the locals thought about the brand.

After receiving mostly negative feedback, I began to understand how brands have the ability to market themselves.

HALEY SAN GIACOMO Economics & Minor in Computer Science ‘16

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THE CALL FOR CORPORATE ACTION Jacqueline Allen SENIOR Editor Anna Mancusi Senior Editor Liz Iaconis ASSISTANT Editor Tiffany Li EXECUTIVE Designer Linda Zhang DEPUTY Designer Jing Hao PhotographY EDITOR

ABOVE: Anna Mancusi, Jacqueline Allen, Tiffany Li,

Jing Hao, Professor Jeffrey J. Younger LEFT: Linda Zhang

62 / ACKNOWLEDGEMENTS

ACKNOWLEDGEMENTS THANK YOU AND CONGRATULATIONS! This third edition of The Call is culled from ~1000 student essays written in the 2013 and 2014 semesters. We selected these final ten essays based on the quality of the critical thinking, the caliber of the writing, and the uniqueness of the content. We were looking for a breadth of social issues and well delivered logical arguments, but we were also seeking a certain “wow” factor –a topic that made us stop and think. Congratulations to the finalists and kudos to all who took part.

This publication was written, assembled, selected and edited by NYU students. Thanks to our selection committee including Senior Editors, Anna Mancusi and Jacqueline Allen.

They had help from Jane Ward, Lori Berenberg, Sydney Stein, and Rachel Crumpler. The editorial team included Anna Mancusi and Jacqueline Allen with help from Liz Iaconis.

Also crucial to the process were our talented art designers, Linda Zhang and Tiffany Li as well our lead photographer, Jing Hao. Other skilled student photographers include Andy Fang and Vincent Chen –it is his stunning photo of NYC that graces our cover. Together, their work is present on every page and the dramatic results speak for themselves.

Thank you to NYU Stern Undergraduate Dean Geeta Menon for her gracious opening letter and to Professor Batia Wiesenfeld for her introduction to the BiP course. Thank you all!

Overall, 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 evident within these essays. The plenary and inquiry discussion sections are overseen by Batia Wiesenfeld. The administration of the class-wide student course is handled ably by Kristy McCadden and Teaching Fellows Anna

Mancusi, Ashley Taylor, Stan Berus, Karen Wong, Cassidy Morris, and Ayush Jain.

NYU Stern’s professional faculty lead the smaller class “inquiry” discussions and thanks are due to all: Ingo Walter, Jenny Carpenter, Ken Bigel, Sam Preston, Arun Sundararajan, Barbara Holt, Batia Wiesenfeld, Bruce Buchanan, George Smith, Jeff Carr, Joe Foudy, Larry White, LeighAnne Walker, Maria Patterson, Mark Brennan, Matt Statler, Natalie Holder-Winfield, Paul Wachtel, R. Kabaliswaran, Richard Sylla, Roy Smith, Sam Craig, Scott Stimpfel, Shelly London, and Steve Marlowe.

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: Bruce Meyerson, Irv Schenkler, Matt Powers, Solon Barocas, Tim Doocey, Aya Tanaka, Bob Tanner, Brian Hanssen, Carol Newell, Claudia Caruana, Eileen Gilmartin, Ellen Pluta, Jane Ward, Jen Telesca, Josh Stager, Larry Menna, Laura Noren, Ofelia Magnen, Paul Melton, Rachel Crumpler, Rob Lyon, and Robert Wosnitzer.

Finally I would like to thank our own Management Communication Program for their support throughout this project. Thanks to Aline Wolff, Susan Stehlik, Irv Schenkler, Robert Lyon, Dave Purdy, Diane Lennard, Yu Shi—and a special thank you to MC Administrator, Janeece Lewis.

Most importantly, I thank all the hundreds of student essayists for their hard work. These writers are the ultimate inspiration for this magazine. It is my hope that the high caliber of prose and challenging ideas contained here inspire our current and future student writers.

JEFFREY J.YOUNGER Clinical Assistant Professor Management Communication Leonard N. Stern School of Business New York University

ACKNOWLEDGEMENTS / 63