Tax avoidance, and corporate responsibility

uncle-sam-pay-your-taxes1Would you consider Apple, Coca-Cola, General Electric, Google, Microsoft, Nike and PepsiCo good corporate citizens? Certainly they position themselves that way, and they deserve credit for their leadership around human rights (Apple, Nike), climate change (GE), water (Coca-Cola), renewable energy (Google, Microsoft) and sustainable agriculture (PepsiCo).

But when it comes to paying corporate income taxes, they have some explaining to do.

That, at least, is the conclusion that I came to after reading an excellent report on tax avoidance titled Offshore Shell Games, and published last month by Citizens for Tax Justice and US PIRG.

Corporate taxation is all over the news these days as US firms move their headquarters overseas for tax reasons, in a process known as inversion. But aggressive maneuvering to avoid taxes is nothing new, as I wrote today in a story for Guardian Sustainable Business.

Here’s how the story begins:

America’s a great country. That’s why people from all over the world — including, lately and tragically, thousands of poor children from Central America — clamor to get in. So why are some of America’s wealthiest companies trying to get out?

It’s simple, really — they don’t want to pay US taxes.

You’ve probably heard about Walgreen’s, your neighborhood pharmacy that is contemplating moving its headquarters to Switzerland to reduce its tax bill. Medtronic, the big medical device company based in Minneapolis, Minnesota, has plans to move to Ireland, for tax-avoidance purposes. Then there’s Mylan, a maker of generic drugs based near Pittsburgh, Pennsylavia, which intends to incorporate in the Netherlands, where the tax rate is lower. Mylan’s CEO, as it happens, is Heather Bresch — the daughter of US Senator Joe Manchin, a West Virginia Democrat — and she says she has no choice but to go.

Other companies aren’t going so far as to relocate their headquarters, a process known as inversion that often requires them to acquire a company based elsewhere. Instead, to avoid US taxes, they are parking their earnings offshore, often in tax havens like Bermuda and the Cayman Islands that levy no corporate income taxes. That tactic, which like the inversions is legal, is being employed by companies that position themselves as good corporate citizens — among them Apple, Coca-Cola, General Electric, Google, Microsoft, Nike and PepsiCo.

Exploiting loopholes in the tax laws may or may not be legal–the IRS is hopelessly outgunned by big corporate tax departments–but it’s unethical.

The report from Citizens for Tax Justice and US PIRG, which makes for surprisingly compelling reading, details a number of questionable tax avoidance strategies that allow companies to shift earnings, purely for tax purposes, from high-tax jurisdictions like the US to tax havens. Here are my favorite fun facts from the report:

The report found that subsidiaries of US companies reported earning $94bn in Bermuda, which has a gross domestic product of just $6bn. That doesn’t compute. US firms reported earning another $51bn in the Cayman Islands, where GDP is about $3bn.

This is outrageous, and please don’t tell me that the way to fix the problem is to reduce the admittedly high US corporate income tax rate. The US cannot compete with places where the tax rate is zero.

All of these companies, of course, benefit enormously from government services–public education, police, the rule of law, highways, etc. Those companies that don’t pay their fair share shift the burden to others–small businesses that can’t afford high-priced accountants, companies that don’t have overseas operations and therefore can’t take advantage of the opportunity engage in tax-avoiding shenanigans and, of course, the rest of us.

You can read the rest of my story here.

The upside of outsourcing

To match Insight INDIA-OUTSOURCING/I heard an excellent, in-depth interview this week with William Easterly, the development economist and author of a new book called The Tyranny of Experts: Economists, Dictators and the Forgotten Rights of the Poor. Easterly, a controversial figure, is critical of top-down development experts — he names Jeffrey Sachs and Bill Gates, among others — who push technocratic, centralized approaches to alleviating poverty. Instead, he argues that the best way to promote economic development is for westerners to push for democracy, human rights and free markets in the world’s poorest countries.

Easterly cites, among others, the Nobel laureate Amartya Sen, who has said: “No famine has ever taken place in the history of the world in a functioning democracy.” Others disagree, noting that parts of India came perilously close to famine just a decade ago. What’s more, China has lifted hundreds of millions of people out of poverty while suppressing human rights, but allowing economic freedom.

I’m in no position to try to adjudicate the debate about how poor countries become rich, but I was thinking about Easterly’s faith in markets and global trade as I wrote my story this week for Guardian Sustainable Business. The story looks at an idea called “socially-responsible outsourcing” or simple “impact sourcing,” and a nonprofit called DDD that tries to put that idea into practice. (DDD stands for Digital Divide Data.) DDD operates businesses in Cambodia, Kenya and Laos that employ young people, typically high school age, to provide information technology and web research, mostly to clients in the US. The goal of the enterprise is to provide economic opportunity to the poor, DDD’s founders told me.

Here’s how my story begins:

So much attention is paid to deplorable factory conditions in poor countries that it’s easy to forget that global supply chains for electronics, apparel and toys have helped lift masses of people out of poverty. Since 1980, 680 million people have risen out of poverty in China which has seen its extreme-poverty rate fall from 84% to about 10%, largely because of trade, reports The Economist.

Now, a small number of companies, nonprofits and foundations want to see if the rapidly growing global supply chains that process data and operate call centers — an industry usually described as business processing outsourcing, or BPO — can be deployed to help alleviate poverty in Africa and South Asia. Can outsourcing, a business driven by the search for cheap labor, reconfigure itself to do good?

“By responsibly and ethically employing hundreds of thousands of people, BPOs have a role to play in shifting the social landscape in emerging economies around the world,” says a report called Outsourcing for Social Good from Telus International, a Canadian outsourcing firm, and Impakt, a social responsibility consultancy.

Others agree. The Rockefeller Foundation has committed $100m to a project called Digital Jobs Africa that aims to improve one million lives in six African nations. A nonprofit called Samasource organizes poor women and youth in Africa and Asia to deliver data services to such businesses as Microsoft and Google. And a company called Cloud Factory that operates in Kenya and Nepal says digital outsourcing can “flatten the world, connect people into the global economy and raise up leaders to fight poverty and change their communities.”

The pioneer of what is called socially-responsible outsourcing or simply impact sourcing is DDD (Digital Divide Data), a New York-based nonprofit that operates for-profit data centers in Cambodia, Laos and Kenya. DDD and its impact-oriented peers set themselves apart from outsourcing giants such as Tata, Accenture and Infosys because, they says, they deliberately seeks out workers in the some of the world’s poorest places and provides them not just with jobs, but with the education, training and career counseling they need to rise into the middle class.

“Our ultimate mission is to alleviate poverty,” says Jeremy Hockenstein, 42, the founder and CEO of DDD. “We focus on students who are finishing high school, who are very motivated and very smart and who come from low-income homes.”

Having met Jeremy Hockenstein (via Skype) and his co-founder Michael Chertok (face to face), I have no doubt of their good intentions. Both gave up more lucrative careers to start the nonprofit. DDD is about helping its global employees, not exploiting them.

But their work raises an intriguing question about how much intentions matter when it comes to infotech outsourcing, or all of global trade, for that matter. Despite all the the abuses in the global manufacturing supply chain, it seems inarguable that the factory jobs created in China, Mexico, India and Bangladesh have benefited the poor in those countries. Is it possible the Walmart and Apple have done more to alleviate poverty than Bill Gates and Jeffrey Sachs?

You can read the rest of my story here.

Has success spoiled Green Mountain Coffee?

image“Doing well by doing good” has become a cliche on the corporate-responsibility circuit. And for good reason–smart companies that serve their customers, provide opportunity to their workers and connect with their communities are likely to deliver superior shareholder returns.

But doing well can complicate the desire to do good. That’s been the challenge lately for the company formerly known as Green Mountain Coffee Roasters and now called Keurig Green Mountain Coffee.  Thanks to the sales of Keurig coffee machines and literally billions of single-serve coffee pods — which cannot be recycled — the Vermont-based firm has been on a tear, rapidly growing its revenues and stock price, while generating enormous amounts of waste. And to what end?

My story about Green Mountain was posted today at Guardian  Sustainable Business.  With apologies for my formatting problems today (I’m working on an iPad) here is a link that you can copy into a browser –  http://flip.it/sSCuG  - and here is how the story begins:

Not long ago, Green Mountain Coffee and it’s chief  executive, Bob Stiller,  were hailed as corporate responsibility pioneers. Green Mountain was the world’s largest buyer of Fair Trade coffee. The company offset the carbon emissions of its energy use and won a “green power” award from EPA. Twice, it topped CR Magazine’s list of the 100 best corporate citizens.

Today, Keurig Green Mountain (KGM), as it is now known, remains a corporate-responsibility standout. But the Vermont-based firm has a dark stain on its reputation. Since acquiring Keurig, the inventor of a single-serve coffee machine and its patented K-Cups, the company has become the driving force behind what critics say is an environmental scourge – the throwaway coffee pods made of plastic and aluminum foil that waste energy and materials, and are all but impossible to recycle.

Meanwhile, Stiller, an ex-hippie who briefly became a billionaire, was forced out of KGM after going on a spending spree with borrowed money, acquiring a 164-foot yacht, a $10m, 7,500-square-foot Palm Beach mansion and a $17.5m Manhattan condo formerly owned by New England Patriots quarterback Tom Brady. Green living, that’s not.

What went wrong with Green Mountain? In a word, success. Its story challenges easy pieties about doing well by doing good. This is a company that has done very well – but only by setting aside, at least for now, the environmental values it once held dear.

Green Mountain shareholders certainly aren’t complaining. Shares of Keurig Green Mountain (NASDAQ:GMCR) have grown 50% in the last year and 548% in five years. Sales have skyrocketed to $4.4bn last year from $492n in 2008. Those Keurig machines and the little plastic cylinders that pop into them have driven that growth, accounting for more than 90% of revenues.

Keurig Brewing Systems are now used in 16m US homes, about one in six, the company estimates. In 2013, KGM says it sold roughly 8.3bn “portion packs”.

To be fair, Keurig Green Mountain recognizes that the waste created by its coffee pods is a problem and promises to reduce it. Monique Oxender, the company’s senior director of corporate responsibility, told me: “Recycling is one of those areas where we have a lot of work to do, and we know that.”

This isn’t a simple story.  Keurig Green Mountain says it intends to make 100% of K-Cup packs recyclable. And the company argues that the single serve machines save resources in the the coffee-growing supply chain because the machines waste less coffee than traditional brewing methods.

But Keurig also has announced alliances with Coca Cola and Campbell Soup to develop single serve machines for cold drinks and soups. In the company’s latest annual report, CEO Brian Kelly writes: “Our mission is to have a Keurig® System on every counter and a beverage for every occasion.” That sounds like a recipe for a whole lot more waste.

By now, we should know better. As author and activist Amy Larkin told me:  “We now understand waste, water usage, manufacturing, mining, freight transport and packaging and their impact on the world. It seems madness to develop a product line that increases all of the above.

That said, Green Mountain remains a sustainability leader in other arenas, particularly as a strong support of the Fair Trade movement. I’m told that its coffee buying team is one of the most progressive and creative in the industry.

In other words, it’s complicated–a lot more complicated than “doing well by doing good. ”

 

Biz Stone: A good guy who’s doing very well

Biz Stone, co-founder of Twitter, speaks at the Charles Schwab IMPACT 2010 conference in BostonI’m a big fan of Twitter. It’s how I keep up with  the news that I need to know, so I follow Jo Confino, Heidi MooreJoel Makower,  Andy RevkinBryan WalshTom PhilpottDavid Biello, Marcus Chung and Aman Singh. It’s also how way I keep up with the news that I want to know, so I follow Adam Kilgore, Buster Olney, Keith Law, Sam Miller@GioGonzalez47 and @ThisisDSpan. I follow colleagues at Fortune like Adam Lashinsky, economists who write for the public (thanks, @EconTalker!)Twitter has become what the newspaper industry once wanted to create on the Internet, a product informally dubbed “the daily me” that gave each reader news tailored to his or her interests.

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So when I heard that Biz Stone, the co-founder of Twitter, and author of a new book about values and business was coming to Washington, I decided to hear what he had to say. I wasn’t disappointed. I wrote about Biz’s talk and his new book, Things a Little Bird Told Metoday in the Guardian Sustainable Business.

Even if you have little interest in Twitter, the book is worth reading. Here is how my Guardian story begins:

How should we define success in business? Biz Stone, the co-founder of Twitter, says that to be judged successful, a company needs to make money, make the world a better place and bring joy to the people who work there.

“It’s a ridiculously high bar,” he says. “But if you don’t set the bar high, you’re never going to get there.”

Stone has written a new book called Things a Little Bird Told Me: Confessions of the Creative Mind. The book is less about the mind than the heart, less about creativity than values and less about Twitter (and that little bird) than about Stone, an unabashed idealist and, it would appear, a genuinely nice guy. This is the rare Silicon Valley story with little to say about technology, venture capitalists, monetizing users and IPOs but a lot to say about how listening, empathy and generosity can help build a sustainable business and change the world.

“It may sound like a lofty goal,” Stone writes,”but I want to redefine capitalism.”

You can read the rest of the story here. You also might want to check out Biz’s new venture, Jelly, whose ultimate aim is to “build worthwhile empathy.”

Who’s responsible for obesity?

photo (7)While I have long been inclined to think of American’s obesity epidemic as fundamentally a matter of individual responsibility — after all,  despite what has been called an obesogenic environment, many Americans manage to keep fit or at least avoid getting too fat through a combination of healthy eating and exercise — I’m gradually coming around to the belief that big food companies and the US government need to take some of the responsibility for obesity-related diseases, and for their costs.

The other day in Guardian Sustainable Business, I wrote a story about Lunchables, the fun-to-assemble packaged lunches aimed at kids that were invented in 1988 by Oscar Mayer, then and now a division of Kraft. I did the story after learning that a healthier and more “natural” packaged lunch had been introduced by Revolution Foods, a company I admire. (See my 2012 blog post, Healthy school lunches: You say you want a revolution.)

As part of my research, I read a chapter about Lunchables in a 2013 book by Michael Moss, a New York Times reporter, called Salt Sugar Fat: How the Food Giants Hooked Us. I’ve since read nearly all of the book, and it delivers on the promise of its title, by showing how big food companies, notably Kraft, Kellogg’s, Coca-Cola and PepsiCo, formulated their products with unhealthy ingredients, employed the world’s best food scientists to figure out how to get people to consume more of them, and then marketed them in ways that were often calculated to deceive. For example, they used unrealistic portion sizes on nutrition labels, or added a very small amount of fruit juice to a product and then boasted that it contains “real fruit.”

The government hasn’t been helpful in this regard either, despite the well-publicized efforts by First Lady Michelle Obama. Farm bill subsidies flow to cheap corn and soy, used to feed chickens, fatten cows or sweeten soft drinks, and not to healthier fruits and vegetables. The USDA coordinates marketing checkoff programs to promote meat, milk and cheese. Dairy marketers “teamed up with restaurant chains like Domino’s to help foster concoctions like ‘The Wisconsin,’ a pie that has six cheeses on top and two more in the crust,” Moss writes. Americans now eat about 33 pounds per capita of cheese and cheese-like products per year, he reports, triple the amount we consumed in the 70s.

As it happens, Lunchables deserve a small portion of the “credit” for the growth in consumption of fat-laden cheese and pseudo-cheese. Interestingly, the product was created way back when to increase sales of bologna–which were falling as a result of health concerns about processed meat. It worked, as my story notes:

Back in the 1980s, health-conscious shoppers began to shy away from processed meat because of worries about fat and salt. Executives at Oscar Mayer, facing declining bologna sales, could have sought healthier alternatives. Instead, they invented Lunchables, the packaged, refrigerated, convenient meal in a box.

Kids loved them – they found it fun to assemble the crackers, bologna and cheese – and so did harried parents. But food critics were, and still are, appalled by the fat, sugar and salt packed into Lunchables’ familiar yellow packages.

Today, Lunchables is a $1bn brand with a persistent image problem – and it’s facing a new competitor aimed at health-conscious parents.

The new arrival is Revolution Foods, a small company based in Oakland, California, that has already enjoyed success delivering healthier meals for kids to schools. Last fall, Revolution Foods introduced packaged Meal Kits. They can now be found in more than 1,000 stores, including Safeway, Target, King Sooper’s (a unit of Krogers) and Whole Foods.

Will Kraft Foods, Oscar Mayer’s parent company, respond with better-for-you versions of Lunchables, or will the company stand pat and risk further damage to its reputation?

To be sure, Kraft has already improved the nutritional profile of Lunchables, reducing sodium, fat and calories. What’s more, the company is in a tough spot because people like foods with fat, salt and sugar. When companies like PepsiCo and Campbell’s Soup removed fat, salt or sugar from products, sales reportedly declined.

I’m not sure how to resolve what appears to be an unavoidable tension between what’s good for business and what’s good for the health of Americans. Despite the rhetoric about social responsibility that comes out of the food industry — this page about Kellogg’s “Passion for Nutrition” is a personal favorite — companies like Kraft and Kellogg’s and Pepsico pay people to go to work every day and sell as many boxes of Lunchables or Frosted Flakes, or bags of Fritos, or cans of Pepsi as they possibly can. Of course, as these companies are quick to remind us, they also offer plenty of healthier alternatives. Consumers do have choices.

So can we blame the food companies when some people make themselves sick by consuming too much of their products? Hard to say, but I’m less likely to brush away the question than I used to be.

You can read the rest of my story here.

Costco, Trader Joe’s, QuikTrip and the “good jobs strategy”

zton_book-257x300As the issue of income inequality takes center stage in Washington, creating risks to the reputations of some of America’s biggest employers, such as Walmart and McDonald’s, Zeynep Ton’s new book, The Good Jobs Strategy, could not be more timely.

Ton, who teaches at MIT’s business school, argues that smart companies invest in their employees, who provide superior service to customers, who become loyal, thus generating profits and shareholder returns. What’s more, she says, this strategy works in the brutally competitive, low margin retail industry, at such companies as Costco, Trader Joe’s, QuikTrip and the big Spanish retailer Mercadona.

I met Zeynep Ton last week at the Hitachi Foundation in Washington, and wrote about her book, and her ideas, today in Guardian Sustainable Business.

Here’s how my story begins:

About 46 million Americans, or 15% of the population, live below the poverty line, and about 10.4 million of them are the working poor. They bag groceries at Walmart or Target, take your order at McDonald’s or Burger King, care for the sick, the elderly or the young.

Conventional wisdom says that’s unavoidable: to stay competitive, keep prices low and maximize profits, companies, particularly in the retail and service industries, need to squeeze their workers. But in a provocative new book, The Good Jobs Strategy, author and teacher Zeynep Ton argues that the conventional wisdom is wrong. Instead, she says, smart companies invest in their employees, and they do so to lower costs and increase profits.

Of course, the idea that companies need to properly reward their key employees is hardly radical. That’s how business works on Wall Street and in Silicon Valley, where the competition for talent is fierce. But Ton, who teaches at the MIT Sloan School of Management, says that a good jobs strategy can also work in retail. In fact, she makes her case after a close study of four mass-market retailers who invest in their employees, keep costs low and deliver superior shareholder returns.

“It’s not the case that success comes from cutting labor costs,” Ton says. “Success can come from investing in people.” What’s more, she says, executives need to understand that that treating workers well “does not depend on charging customers more”.

You can read the rest here.

Regular readers will not be surprised to hear that I’m inclined to agree with Ton. Ten years ago, in my own book, Faith and Fortune, I reported on companies like Southwest Airlines, Starbucks and UPS that pursue their own version of a “good jobs strategy.” To her credit, Ton has shown that the strategy works in retail, and that it can actually help drive prices lower–a potentially valuable lesson for companies like Walmart and McDonald’s.

Zeynep Ton

Zeynep Ton

That said, her book raises a question that is hard, at least for me, to answer: If the good jobs strategy is so good, why don’t more companies embrace it? For that matter, why haven’t those companies that treat their employees well trounced their competitors? In theory, the companies that practice a “good jobs strategy” should be able to attract the best people, deliver the best customer service and force their rivals to copy them or suffer. That’s the way markets are supposed to work.

I put this question to Ton and she offered two answers. First, markets are imperfect. Second, the “good jobs strategy” is hard to execute because it requires redesigning workplaces, providing lots of training, finding the right balance between standardizing tasks and empowering employees, and so forth. Maybe. But I suspect there are other reasons why the “good jobs strategy” has not swept across America. Your thoughts are most welcome.

Chocolate, and the Congo

Joe Whinney, in the DRC

Joe Whinney, in the DRC

I met Joe Whinney, the chief executive and founder of Theo Chocolate, last month here in Washington, and liked him right away–he’s an unpretentious high school dropout, with a great deal of enthusiasm for his work. It’s important work: Theo Chocolate is helping to alleviate poverty in one of the world’s most godforsaken places, the Democratic Republic of the Congo.

I wrote about Joe and Theo today for Guardian Sustainable Business. Here’s how my story begins:

Buying a Theo chocolate bar will not put a stop to the long-running conflict in the Democratic Republic of the Congo. But it will help, at least a little.

Seattle-based Theo sources cacao beans from war-torn eastern Congo and pays premium prices for them. By doing so, the chocolate maker provides a livelihood to about 2,000 farmers and indirect benefits to perhaps another 20,000 people in the Congo.

As a small company, with revenues of about $12m last year, Theo can only do so much. But its work in the Congo demonstrates how companies, big or small, can find ways to attack some of the world’s most intractable problems, if they have the will to do so.

“We’re trying to build a business that can change the way an entire industry conducts itself,” says Joe Whinney, Theo’s founder and CEO. His hope is that other chocolate companies invest in the livelihood of cacao farmers, as Theo has.

I hope you read the rest of the story. This is the second time this week that I’ve written about the DRC, where more than 5 million people have died in the past two decades; my previous story looked at Intel’s progress in eliminating conflict minerals from the Congo from its supply chain.

While I’m by no means an expert on the DRC, both stories suggest to me that businesses can play an important role in resolving conflicts and promoting economic development in even the poorest places in the world. NGOs like the Enough Project, which is working closely with Intel, the Eastern Congo Initiative, a group supported by the actor and activist Ben Affleck that is allied with Theo, are doing good work in the DRC, but it will take enlightened businesses like Intel and Theo Chocolate to provide sustainable livelihoods for people living there.

Theo’s work is especially impressive because of the way the company goes well beyond Fair Trade to support cacao farmers. It will be interesting to see if the world’s biggest chocolate companies follow this pioneering small one into the DRC.

By the way, I’m delighted that Joe Whinney will be joining us in May for the FORTUNE Brainstorm Green conference, about business and the environment.

Theo Classic Bars

Intel: Taking a stand on “conflict minerals”

International-CES-Sets-Trends-for-Future-2Last week, I attended my first International Consumer Electronics Show in Las Vegas. It’s a big  deal: 1.8 million square feet of noisy exhibition space inside a gigantic convention center, 3,200 exhibitors, all of them clamoring for attention, and 152,000 attendees, which explains, among other things, why there were about 1,000 people, no exaggeration, on the line waiting for taxis at the airport. All against the backdrop of Vegas.

I was there to moderate a panel about conflict minerals for Intel, about which, more below, but I have to say that I was underwhelmed by the rest of the show. Most of the gadgetry on display at the show struck me as expensive or useless, or both. No, I don’t want or need an 85-inch bendable TV. No, I don’t want or need wearable computers. (Nor does my dog need an integrated health and wellness platform.) The BMW i3 is a very cool new electric car but I am perfectlyu capable of making my own restaurant reservations, thanks, and I have Pandora on my phone, so I don’t need it built into the vehicle.

In fact, I have just about everything electronic or digital that I need on my phone, my iPad and laptop. As an industry expert named Brian Lam told Nick Bilton of The Times in this excellent summary of CES:

“You only need a phone and a tablet and a laptop, and maybe you need a TV and some headphones, but that covers 90 percent of the needs for 90 percent of the population,” said Mr. Lam, the editor of The Wirecuttera gadget website. “But this industry that employs all of these engineers, and has all of these factories and sales people, needs you to throw out your old stuff and buy new stuff — even if that new stuff” is only slightly upgraded.

That said, I enjoyed learning about the issue of conflict minerals, and meeting Intel’s CEO, Brian Krzanich, who has led the company (and the electronics industry) effort to do something about the fact that the sales of tantulum, tungsten, tin and gold are helping to finance a two-decade old war in the Democratic Republic of the Congo.

I wrote about conflict minerals today for Guardian Sustainable Business. Here’s how my story begins:

This year’s Consumer Electronics Show in Las Vegas showcased 110-inch curved TV sets, watches that monitor your vital signs, self-driving cars … and the technology industry’s efforts to curb violence in the war-torn Democratic Republic of the Congo.

Those efforts are being led by Intel, the giant (annual revenues of $52bn) maker of microprocessors for computer, tablets and mobile phones, among other things, and its new CEO, Brian Krzanich.

Near the end of a high-profile keynote address in which he demonstrated “smart earbuds”, 3D printing, advances in video gaming and an embedded processor designed to enable “wearable computing“, Krzanich paused and said:

“Okay. I’m going to switch gears for a minute now. … This is not an issue we would normally talk about at CES, but it is an issue that is very important and personal to me. That issue is conflict minerals.”

After he showed a somber video about the devastation in the Congo, where more than 5 million people have died since 1994 – many killed by armed groups using profits from the mining of four minerals, tantulum, tungsten, tin and gold – Krzanich promised that every Intel microprocessor will henceforth be conflict-free. The world’s first conflict-free processors will be validated as not containing minerals sourced from mines that finance fighting in the Congo, he said.

The story goes on to say that not all companies are on board with the effort to curb conflict minerals. In fact, the US Chamber of Commerce, the Business Roundtable and the National Association of Manufacturers have filed a lawsuit challenging a provision of the Dodd-Frank financial reform law that requires companies to report on their use of conflict minerals.

So this unorthodox, corporate-backed antiwar effort has sparked its own backlash–from business groups. It’s remarkable how the chamber winds up on the wrong side of so many issues.

You can read the rest of my story here. If you are really interested in the topic, here’s the video of my panel with Krzanich, Sasha Lehznev of the Enough Project and the actor and activist Robin Wright, who, I was pleased to read, won a Golden Globe last night for her performance on House of Cards.

[Disclosure: Intel paid me to moderate the panel at CES.]

Investing in Bangladesh factories–for a profit

bangladesh-garment-workersOliver Niedermaier is selling a “capitalist solution to one of capitalism’s worst problems” — the unsafe, exploitative, polluting factories in the global south. That’s the topic of my latest story for Guardian Sustainable Business.

Here’s how it begins:

After more than a decade of corporate investment in social responsibility programs, codes of conduct, teams of inspectors and public reporting – all of it intended to improve the working conditions of factories in poor countries – anyone paying attention knows the system isn’t working very well. The Tazreen factory fire and Rana Plaza building collapse in Bangladesh were poignant symbols of its failure.

Maybe it has failed because Western clothing brands and retailers – Nike, Gap, Walmart and the rest – have been behaving like regulators by writing rules and meting out punishment. At least, so argues Oliver Niedermaier, the founder and CEO of Tau Invesment Management. He advocates that businesses should instead try acting like capitalists, using markets and the potential of investment gains to reform their global supply chains.

Tau plans to raise $1bn to turn around factories in poor countries, beginning with the garment industry. Tau promises to deliver “improved transparency, greater dignity for workers, cleaner environments for communities, and enhanced performance and value for stakeholders”.

As the story goes on to say, this is an intriguing–but very much untested–idea. Can Tau raise the money? Will brands partner with the company, a newcomer to supply-chain issues? Most important, can factories in places like Bangladesh that adhere to the highest standards compete effective with those who do not?

I don’t have answers. But I do know that a new approach to the problem is desperately needed.

The NFL and brain injury: That’s entertainment?

Are you ready for some brain injuries?

Are you ready for some brain damage?

Fifteen years ago, with my friend and co-author Bill Carter, I wrote a book about the TV show Monday Night Football, which helped build the phenomenal popularity of the NFL. I was a big football fan then. So much so that I didn’t notice until last week that the opening sequence of Monday Night Football — ARE YOU READY FOR SOME FOOTBALL!!! — featured the helmets of the opposing teams crashing together.

A prescription, in other words, for brain injury.

The image flashed by briefly in the gripping and occasionally horrifying PBS Frontline documentary League of Denial, based on the book of the same name by investigative reporters Mark Fainaru-Ward and Steve Fainaru. Watch the program if it comes around again, or watch it on the web.

As regular readers of this blog know, I gave up watching the NFL about a year ago. But I decided to revisit the topic in my latest story for Guardian Sustainable Business.

Here’s how it begins:

Garment workers in Bangladesh and coal miners in India risk injury or death on the job. Their plight evokes outrage from advocacy groups and corporate-responsibility gurus.

Players in the National Football League are at risk, too – at risk of losing their mind, quite literally. Yet professional football remains America’s favorite sport, generating close to $10bn a year, with not much more than an occasional murmur of concern.

Strange.

Of course, any football fan knows that the game is violent and dangerous, especially at the pro level. Powerful men collide at high speed, and a bone-jarring tackle can break a leg or, occasionally, a neck.

But football is dangerous in another, more insidious way, as we were reminded last week by the publication of League of Denial: The NFL, Concussions and the Battle for Truth, an examination of football’s concussion crisis by investigative reporters Mark Fainaru-Ward and Steve Fainaru. As the book and an accompanying PBS Frontline documentary vividly demonstrate, football also is inherently dangerous to the brain – an inconvenient truth that the NFL went to extraordinary lengths to hide, deny and muddle.

Of course, as I note in the story, NFL players are paid a lot better than garment workers or coal miners. And today’s players surely are aware of the risks they face.  But the price they pay – brain damage that robs them of their very sense of self – is terribly steep. And to what end? To make our Sunday afternoons and Monday nights a little more fun? So corporate sponsors can sell beer and cars?

Frontline is produced by a PBS station in Boston, which sent a reporter out to get reaction from Bill Belichick, the coach of the New England Patriots, and star quarterback Tom Brady.

Belichick said:

First of all, I’m not really familiar with whatever it is you’re referring to, whatever this thing is. But it doesn’t make any difference whether there is or isn’t one going on. We have our protocol with all medical situations, including that one and that’s followed by our medical department, which I’m not a doctor and I don’t think we want me treating patients.

What we do in the medical department, that’s medical procedures that honestly I don’t know enough to talk about. But I can say this, there’s nothing more important to a coach than the health of his team. Without a healthy team, you don’t have a team. We try to do everything we can to have our players healthy, to prepare them, to prevent injuries and then to treat injuries and to have them play as close to 100 percent as we can because without them, you have no team.

Hmm. The Pats do “everything we can to have our players healthy…because without them, you have no team.” And if they lose their minds after they retire, well, you win some and you lose some.This guy has a heart of gold.

In fairness, the NFL is doing a better job these days of treating and preventing concussions. There have been rules changes, medical personnel on the sidelines, better understanding among all of the real risks of contact. Finally. But, remember, football is played in college and high schools, too, where kids model themselves on the hard-hitting pros. Frontline put a spotlight on a college and a high school player who, shockingly, suffered from brain injuries that appeared to be–no, we can’t be sure–related to football.

Do they understand the risks they are taking? Who’s looking out for them? Clearly not the NFL.