Exciting Case Competition with Final Round in Davos 2016

Decarbonize Norway’s sovereign wealth fund
in this year’s Business for a Better World MBA case competition

Team registration is now open for the third-annual CK-Schulich Business for a Better World case competition, a partnership between Corporate Knights magazine and York University’s Schulich School of Business.

With a prize pool in 2015/2016 of $10,000, the final round of this MBA competition will see three top teams present their case analysis in front of a live panel of high-profile judges in Davos, Switzerland, coinciding with the World Economic Forum in January.

Student teams will be asked this year to decarbonize the holdings of the Norway Government Pension Fund Global, the largest sovereign fund in the world with a value of $940 billion (USD). Managed by Norges Bank Investment Management, the fund is commonly referred to as The Oil Fund because it has been built from the surpluses of Norway’s petroleum income. Teams will have four key objectives:

• Minimize the carbon footprint of the fund;
• Reduce risks that might strand assets;
• Maximize returns and engagement impact with companies;
• Position the fund to thrive in and drive a world that does not exceed an average 2-degree temperature increase.

Throughout this competition, students will have access to a tool, designed by Corporate Knights, which will help them assess the carbon profile of the fund’s holdings and allow them to watch this profile change as the holdings mix is altered.

“With our first two competitions, teams were asked to broadly improve the sustainability performance of a case subject. This year, apropos to the lead-up of the Paris climate summit in December, we’re taking a different approach targeted strictly at carbon,” says Tyler Hamilton, editor-in-chief of Corporate Knights. “The case subject will be a sovereign fund worth nearly a trillion dollars. The MBA team that can show the best returns with the lowest portfolio carbon footprint will take the top prize, and send a strong message to investors around the world.”

For more details or to register a team, visit http://www.corporateknights.com/affiliates/2016contest/

The registration deadline is October 16. Case details will be released on October 2, so teams that register early will have an advantage.

Contacts:

Toby Heaps, CEO, Corporate Knights, toby@corporateknights.com

Dirk Matten, Professor, Schulich School of Business, DMatten@schulich.yorku.ca

Julia Shtopel, Schulich MBA student and event organizer, julia.lev1103@gmail.com

About Corporate Knights Inc.

Founded in 2002, Corporate Knights Inc. is a Toronto-based media, research and financial products company focused on clean capitalism. Corporate Knights, the company’s quarterly magazine, was named “Magazine of the Year” in 2013 by the National Magazine Awards Foundation. It is distributed in Canada as an insert inside the Globe and Mail and in the United States inside the Washington Post. With a circulation of more than 120,000, Corporate Knights is one of the most widely read publications devoted to business and sustainability issues. Corporate Knights Inc. is proud to be a certified B Corporation. Visit: www.corporateknights.com

About the Schulich School of Business

Known as Canada’s Global Business School, the Schulich School of Business is ranked among the world’s leading business schools by a number of global surveys. Schulich’s MBA program has been ranked #1 in the world by the Aspen Institute and on the Corporate Knights Global Green MBA Ranking. In Canada, the school has been ranked #1 by Forbes, The Economist and others. The Schulich School is based out of Toronto's York University. Visit: www.schulich.yorku.ca

Why diversity quotas in the boardroom may be a good idea

Today we feature a guest post from our colleague over in the law school, Aaron A. Dhir, who is an Associate Professor at Osgoode Hall Law School and a Senior Research Scholar at Yale Law School. Aaron's book on boardroom diversity is out next month and it is causing quite a stir. So we asked him to tell us a little about the issue of diversity quotas on boards and why, despite the controversy, his research suggests that it might be a good idea. 

The lack of diversity in the governance of business corporations is quickly becoming one of the most discussed topics in corporate governance.  It has ignited a heated global debate, leading policymakers to wrestle with difficult questions that lie at the intersection of market activity and social identity politics.

My new book, Challenging Boardroom Homogeneity, will be published next month by Cambridge University Press.  In it, I draw on semi-structured interviews with corporate board directors in Norway and documentary content analysis of corporate securities filings in the United States to empirically investigate the two main regulatory models designed to address diversity in the boardroom — quotas and disclosure.

In this post, I focus on quotas.  While quotas are anathema in the United States, their presence in Europe is striking.  In their most potent form, quotas mandate particular levels of gender balance in the boardroom.  Countries such as Norway, France, Italy, Iceland, Belgium, and (just last month) Germany have all taken this path.  In Germany, both genders must constitute at least 30 percent of the supervisory boards of specified German companies beginning in 2016.  In Norway, non-compliant firms run the risk of court-ordered dissolution.

Little is known about the day-to-day operation of corporate quotas around the world.  To fill this void in our knowledge, I interviewed Norwegian corporate directors about their experiences under Norway’s controversial law – the very first quota on the books.  The participants in my study included men and women, as well as directors appointed before and after the law came into effect.

A strong majority of the directors I interviewed supported the law.  The dominant narrative my interviewees conveyed was that quota-induced gender diversity has positively affected boardroom work and firm governance.  Generally, respondents emphasized the range of perspectives and experiences that women bring to the board, as well as the value of women’s independence and outsider status.  They also stressed women’s greater propensity to engage in more rigorous deliberations, risk assessment, and monitoring.

But even if diversification has positive effects on company governance, the question remains:  Why are quotas an appropriate mechanism by which to achieve those benefits? 

Some commentators impugn the wisdom of quotas, charging that they stigmatize and marginalize their beneficiaries.  As one critic wrote in The New York Times:  “women admitted to boards in order to fulfill a quota are unlikely to be seen as equals whose presence at the table is merited.”  These critiques must be taken seriously.  If the recipients of affirmative action feel isolated, or that they are perceived as mere tokens, how can such measures possibly be justified?

Without question, quotas are an imperfect means of diversifying corporate boardrooms and in the book I explore the limitations of the quota model.  That said, critics sometimes paint an incomplete picture and seldom ground their arguments in the voices of those who presumably matter the most — those who actually live under quota regimes.  What do they themselves say about quotas’ possibly pernicious effects? 

My research asks exactly that question.  Only a small minority of board members I interviewed felt that female directors were stigmatized or isolated.  My female interviewees explained this in different ways.  Some highlighted the importance of the substantial number of women required by the law.  By mandating gender balance, the law made marginalization difficult, if not impossible.  As one female director told me:  “you can’t stigmatize 40 percent of the board. . . . [Y]ou could have stigmatized one person, or 15 percent. . . . But you can’t stigmatize 40 percent.”

The majority of female participants reported that they felt comfortable on the boards on which they sat, discussed their contributions to these boards, and confirmed the feeling that their boards recognized or appreciated these contributions.  Though their stories are complex, most characterized the quota as a positive vehicle that had democratized access to the upper echelons of the corporation — a space previously closed to them.  This suggests that the benefits of the quota law have outweighed any stigmatizing costs, to the extent that these costs have materialized. 

Some critics may suggest that these results are self-evident – of course the beneficiaries of quotas will support the measures that opened up the otherwise closed doors of the boardroom.  The reality, however, is far more complex.  Most directors, including women, were initially opposed, hesitant, or agnostic about quotas.  It was only after seeing the law in action and directly experiencing its effects that they eventually came to endorse it.  A significant degree of the support ultimately stemmed from the view that the law was necessary to diversify boards in a meaningful way.  For some directors, this acceptance of quotas caused them to question their own deeply held beliefs in free market principles.

There are many difficult and unresolved questions about the value and effects of quota laws.  Whether a quota is appropriate for a given country will depend on that country’s socio-political context, its corporate governance culture, and characteristics particular to firms and industries.  As policymakers around the world wrestle with these issues, however, it will be important to draw from the experiences of those who have lived under quota regimes.  These narratives give us reason to believe that quotas are worthy of careful public policy consideration.

This post first appeared (in modified form) on The Faculty Lounge. My sincere thanks to Andy and Dirk for inviting me to contribute this guest post to the Crane and Matten blog. 

Aaron A. Dhir, Associate Professor, Osgoode Hall Law School & Senior Research Scholar, Yale Law School. 

Are Americans working too much?

With many people currently enjoying or looking forward to their summer holidays it is sobering to consider some of the differences in expectation that workers in different countries will have about how much paid time off they can enjoy. Statutory minimum leave varies enormously by country, from zero days in the US, through to 5 working days in China, 10 working days in Canada, and all the way up to 25 working days plus public holidays in countries like Denmark and Norway. Of course, variations in legislated minimums give plenty of scope for more explicit CSR type policies in low-regulation countries such as the US, but even looking at the average leave taken across countries, Scandinavia and most of Europe far outpace North America. Sure, a lot of the talk now is about Americans not having enough jobs, but another way of looking at it is maybe some Americans are simply working too much.

We have been interested in debates about working hours, flexible work arrangements, forced overtime and the like for some time. In the first two editions of our Business Ethics textbook we included cases on young professionals and excessive working hours.  In the most recent 3rd edition, this changed to a case about forced labor, which is a related but quite different issue. These are complicated problems, especially when much of the excessive hours worked by professionals is, in principle, voluntary. Even in sweatshops, some argue that workers choose to work long hours for low pay, because it is better than the alternative - which is no job and no pay.

Anyway, arriving in the inbox today was a nice infographic from onlinemba.com, the fruits of whose labors we've featured before in our survey of the best and worst corporate responsibility infographics. It tells an interesting, and well documented, story of the problems of excessive working hours in the US. We're not sure the call for a return of a 40 hour week will be heeded in the current climate, but it certainly helps start an important conversation. And with many in the CSR world apparently uninterested in working hours in the developed world as a relevant topic, it provides a decent business case for changing that perspective.




Infographic source: OnlineMBA.com
Photo by LaPrimaDonna. Reproduced under Creative Commons Licence

A cloud of well known words with some rays of sunshine

This morning the Summit opened. It was a well organized and well choreographed session. Our ten year old is a well behaved boy indeed (sorry for masculin-izing the UNGC, I just go by the blue colour of the UN...).

Ban-Ki Moon opened, followed by a number of panellists and it were the usual, well meaning speeches by many leaders in business, and civil society. Moon announced the goal of raising the membership from currently 8,000 to 20,000 by 2020. Bloomberg ventured to step out of his role as Mayor and into that of a concerned citizen by pointing to two of the major challenges for future sustainability: 1bn deaths due to tobacco consumption over the next decade, and a similar level of road fatalities, given the current trends in automotive growth. These were quite daunting, but nevertheless refreshing new angles on the issues.



Maybe i am hanging out too much on conferences that my ears are by now a bit teflonized for much of the sustainability rhetoric. But reflecting back on this opening session, I feel quite good about the UNGC. It has certainly changed the game for many of the companies involved, most of them – which I did not know – are in fact SMEs.



So the ten year old gives us some reason for pride and satisfaction. But you keep wondering if the bigger worry in fact are not those little friends of our laureate who he hangs out with. In other words, the biggest worry still are those companies who haven't even signed up (or the 1,300 which had to be expelled). I think this aspect highlights the magnitude of the underlying issue and in fact one reason why what has been achieved by the GC is undeniably a success.



I liked Philip Jennings, the General Secretary of the gobal federation of trade unions (UNI Global Union). He highlighted the persistent plight of the trade union movement and the apparent tensions between a company publishing all sort of niceties on employees in their CSR report while at the same time busting their unionized workers. Point well made.



The agenda for the future was probably best put by John Ruggie (Harvard University) in the afternoon plenary, posing that the era of 'declaratory CSR is over' and companies now have to 'know and show' concrete progress. He argued that sustainability, as suggested in the new Blueprint for Corporate Sustainability Leadership is not a 'technocratic fix' but rather an active engagement with stakeholders in concrete situations. This new Blueprint is probably becoming a rather influential tool in the future, the Director General of the Norwegian Oil Fund pointed out: they will use it as a guideline in talking to companies and aligning their investment decisions on it. It seems to be a step closer to what many businesses are calling for: a more level playing field.

Diversity in diversity management

You may remember that in one of our posts last month we asked what exactly made women different in a business ethics context. One of the big issues here is the "glass ceiling"that hinders women from getting to the top of the corporate ladder. Discrimination is often invisible but incontrovertible to those that encounter it.

To be sure, this is a problem faced by women everywhere, but at the same time, such institutional discrimination also varies quite significantly between countries. In our business ethics book, we reported on evidence of female held directorships in Europe - where female representation in the boardroom ranged from 0% in Portugal to 29% in Norway. So it was with some interest that we read in the Financial Times last week about evidence emerging of female board memberships in the Gulf region - an area not traditionally known as a leader in diversity management.

The picture painted by the report is of a region that, in terms of diversity management, demonstrates much like Europe quite a bit of, well ...diversity. Some Gulf countries are actually emerging as leaders in the region, with women making up 2.7 per cent of boards in Kuwait, and 3% in Oman. This not only compares favourably to other Gulf states, such as Abu Dhabi (0.6%) and Saudi Arabia (0.1%), but also stacks up pretty well against other ostensibly less conservative countries such as Italy (2%) and Japan (0.4%).

Of course, board memberships do not tell the whole story about gender discrimination in business, but it certainly gives a good flavour of the types of challenges facing women looking to secure advancement to the executive suite. So it's good to see some progress being made in the Gulf, and hopefully will act as a further spur for laggard countries in Europe and elsewhere. Who knows, perhaps even Italy's womanizing PM, Silvio Berlusconi will be able to prompt a greater attention to gender among Italy's boardrooms, especially having appointed the former model and (as the media puts it "ex-showgirl") Mara Carfagna, as Equal Opportunities Minister (pictured right).

But whatever progress is made in Italy or Kuwait, though, such countries will still remain far, far behind the leaders in female board membership. Right now, the place to go for high flying women is Norway, where women now make up 40% of board positions. But we're not talking voluntary social responsibility here; Norway's female friendly pattern is a result of good old fashioned regulation. As the International Herald Tribune reported a couple of months ago, it's not been a easy transition for Norway, but with appropriate mentoring, training schemes, support mechanisms and enforcement, a genuine change in attitudes seems to have accompanied the 2003 law that forced Norwegian companies to fill 40% of board seats with women. Such positive discrimination isn't always popular, but as the chart from the IHT shows, it certainly makes a difference.