P.S. You Should Read This

Even the best of intentions can be twisted. An article in the WSJ sheds light on how companies such as Rhodia have taken advantage of an UN rule, which was meant to curb pollution, and made money off it.

Rhodia is a chemical manufacturing company which destroys nitrous oxide, a greenhouse gas. Under the UN rule, it can therefore receive pollution “credits” which it can sell to polluters in countries for revenue. The original plan was for money to flow from the richer countries to the poorer countries, thus incentivizing the poor countries to develop green technology. Companies such as Rhodia, however, take advantage of it and make enough money to de-incentivize their own countries from being green.

Although Rhodia claims that it is “committed’ to protecting the environment, figure make it is clear that the pollution credit business is profitable, far more than even their primary product, adipic acid. The UN also defends the rule, by saying that greenhouse gas cutting obligations are being fulfilled, even to the developed countries. Yet the fact remains that the primary purpose of the program is being undermined by Rhodia.

I guess the main takeaway from this situation would be that the UN will probably have to place tighter controls on the companies that it issues “credits” too. It definitely did have the right idea by trying to automate the process and using the markets, as it would require far too much work to deal with each organization individually. Sanctioning who they give credits to, and putting a cap on the number of the credits awarded per company, would go a long way in fixing this problem.

Corporate Social Responsibility is a much talked about subject these days. Every company seems to be adopting it, and generating press about their efforts at being a good citizen. Well according to one study in Business Week, philanthropic efforts by corporations have actually dropped in comparison to those 25 years ago.

The study used a much more quantitative measure to conduct this study, rather than basing it off the popular press. It notes that in contrast to 25 years ago, when corporations donated 2% of their pre-tax earnings for philanthropic causes, companies nowadays only allocate 0.7% of their earnings. I guess that companies have started finding it easier (and cheaper) to publicize good actions than to actually do them. After all, the only thing that matters to their business is what the public thinks of them, rather than how much good they are actually doing. However, I agree that just looking at a single figure is not reflective of all the efforts, but it is definitely better than a purely qualitative measure.

The study could be improved by looking at a number of factors, ranging from conducting surveys of employee happiness to having a detailed analysis of each of the company’s efforts (and “crimes”). It should also be noted that the simple action of donating a significant portion of a company’s revenue does not make it a socially responsible one, as it could be causing damage (like undercutting employees or pollution) or having poor practices in so many other ways. Similarly, a company does not need to donate to be responsible. It could just prevent pollution, increase expenses (by offering higher wages) or even generate awareness.

Despite the study being flawed, I still feel that it does hold truth. The only way to inculcate the concept of CSR is to bring out the truth about companies, both the good as well as the bad ones. Society in itself will need to make a more of an effort to ingrain these concepts, and prevent itself from being swayed by simple press releases and media articles.

Time recently published an article called “Your Laptop’s Dirty Little Secret”, and it brought up a number of issues. It focuses on the fact that electronic waste gets shipped off from western regions such as the U.S. to emerging countries, and explores the impact of this on those countries. I found the article truly eye-opening, as it isn’t one which gets a lot of press or media coverage, in contrast to other forms of pollution. More traditional industries such as the heavy metal industry have been sensationalized whenever they raise any environmental issues.

The fact that it does not get as much press has also meant that the electronics industry has been thought of as a “clean” by much of the public. This in turn has resulted in the average consumer feeling a lot more comfortable buying from the electronics industry, armed with the knowledge they aren’t doing too much bad in the world. The article also noted that the U.S had refused to join a convention to ban such an export of toxic waste, and that it was the primary reason why the dumping has continued. I found that especially surprising, considering that the U.S. has taken such prominent steps to be Green. Looking at the other side, it is quite saddening to see that developing nations are willing to take on such waste for money, but altogether not very surprising. Often, there is a cost to economic growth and developing, and the environment usually bears that cost. I guess that the only way such a dumping will stop is if greater awareness is raised, countries start developing a conscience, and we as individuals start taking the initiative in curtailing our purchases of electronic products.

Looks like not everything that gets outsourced is good.

One of my college professors once told me that the one most important thing one should know about monetary economics is the word: expectations. Expectations apparently drives everything and countries can rise (or crumble) based on people’s opinion. Sounds implausible? Think again.

I guess that it is really during this tremulous period that the true effect of market expectations can be seen. The Dow, S&P 500 and NASDAQ plunged again today, just like as they have for the past few months. According to the WSJ , the drop was due to “worries about economic growth.” While I’m no genius, I’ve known for quite some time that the U.S. economy hasn’t been in the best the shape. So what was the reason for the drop? The simple concept of “Expectations”. People (investors in this case) fear that the economy is in tatters and expect it to remain that way. They then trigger a sell-off by selling the stocks they own, driving the stock prices down, and effectively, cause the major indices to drop. This drop then affects other people, who start panicking and selling, effectively causing the light drop to become a free fall There you have it: a self-fulfilling prophecy. It really is a fascinating concept, but one which most people would be unable to appreciate in these dire circumstances

Expectations can be seen everywhere, and not just the macro level. Take a small bank for example. Imagine that a rumor gets started that the bank was in a crisis (even if it actually wasn’t), and that people would lose all their savings. What happens next is a bank run, in which everyone “runs” to the bank to try to recover as much of their savings. The bank, facing a sudden escalation in demand for cash, finds itself short of cash as it had given out loans. It is then forced to close simply because customers “expected” it to, rather than due to any actual problems of its own. This is just another example of the role expectations can play in people’s lives.

So the next time you see someone believing that he was meant to do great things, don’t rebuke him. For all you know, he really could become great. I think it’s about time that we all started believing in something and expecting the best out of any situation. I’m sure that it would do us a world of good.

Google was recently asked to hand over records of video viewership to Viacom by a federal judge. Viacom had earlier filed a 1 billion dollar suit against Google for copyright infringement, due to the number of videos which had been posted illegally on YouTube, the largest video site on the web.

The main objection to the decision was the fact that user information, such as the login name and the IP address, would be handed over to Viacom. The implications: Viacom would be able to tell exactly which users watched which videos, thus exposing the habits of millions of people. Although both Google and Viacom have said that the IP addresses do not allow the exact identification of individuals, IP addresses have been used in the past in combination with other data to identify people.

This in turn raises many questions and concerns. Does Google even have a right to pass over such information, especially as it violates the privacy of the users? Viacom also claims that the viewer information is necessary to analyze the popularity of copyrighted clips, but surely a simple view count of the clips, rather than the IP addresses, would be able to determine that. So why is such information needed? While I may not have the answers to those questions, what I do know is that users in the future will be a lot more careful with the websites they give their personal information to. I’m afraid that the popularity of websites such as YouTube could get hurt by this ongoing saga.

I chanced upon the news last week that Wal-Mart was undergoing a radical change, with the unveiling of a brand new logo. At first, I was baffled by the announcement. Why would they get rid of something which the whole world has gotten used to over the last couple of decades? The logo had been a symbol of the discount giant and everything that it stood for, ranging from low prices to massive stores.

It was then clear to me that the logo also weighed down the multinational corporation in more ways than one. The company had been receiving bad press from all directions, ranging from its poor environmental practices to its treatment of employees and suppliers. The negative connotations associated with the logo far outweighed the positives, and CEO Lee Scott decided that it was time for it to go. After all, what better way to kick start the new campaign to freshen up Wal-Mart’s image than by changing fundamentals such as the logo?

So how does the new logo compare with the old one? Well for starters, the bold capital letters have been replaced with lowercase letters. One interpretation of this could be the company’s desire to portray a warmer, friendlier image. The hyphen/star is now gone, and the company’s name has become a single word. What’s more, a sunburst has been added to end of the name, brightening up the logo with the role of cementing the cleaner feel to it.

Will it be successful? Only time will tell. There have been numerous companies which have changed their logos over the last few years, but that hasn’t necessarily made them more successful. Take Starbucks for example (forgive my harping on the company). The company came up with a new logo, but that hasn’t stopped it from having to shut down stores and shelve expansion plans.

One thing is for certain though. If Wal-mart believes that changing the logo alone, without altering its’ business practices, will remake the company’s image in the public’s eye, then it is deeply mistaken. It will have to continue showing the world its eco-friendly stance on a sustained basis, and avoid as much bad press as possible. The new logo could prove to be a useful stepping stone, but it is nothing more.

Everyone seems to love taking a shot at Starbucks. Its stock price has plummeted over the last couple of years, it has started scaling back expansion plans, and even has a new CEO. What’s more, the company just announced plans to close 600 stores in the U.S. There are also those who complain about the Starbucks service, ranging from breakfast sandwiches which “interfere with the smell of coffee” to their new Piker Place Roast Coffee, which isn’t “boldenough”. Apparently, even McDonald’s serves better coffee. The sign of a crumbling empire?

No way.

Could you possibly imagine the world without Starbucks? I couldn’t. Its about time that people realize that Starbucks isn’t about just coffee, but rather, the experience. It’s a place where people hang out, take a break from life, or even get work done in a great ambiance. You wouldn’t catch me saying: “Hey, want to grab coffee sometime?… We could go to that McDonald’s down the street.” No coffee company is the world has nearly as much brand recognition or as strong a fan base. Sure, Starbucks may not grow as much as it used to, but then again, which company grows for eternity? It also has great prospects internationally, and being a mature company is not necessarily a bad thing.