A couple of times here at BLPB, we’ve talked about whether consumers will reward companies for ethical conduct (or punish them for unethical conduct).  Marcia in particular has expressed doubts that consumers genuinely do express their preferences with their dollars.
 
Well, it’s something of a sui generis situation, but we have one new datapoint: Trump’s properties (or rather, the properties that license his name) appear to be suffering as a result of his presidential campaign.  Foursquare has the numbers, and they show, among other things, that women in particular – who dislike Trump more than men – are steering clear.  Anecdotal evidence suggests that some travel agents and meeting planners have been explicitly instructed by their clients to book anything but Trump.
 
I don’t know if there are broader lessons here, but it seems if consumers have enough political objections to a company, they will indeed vote with their feet.

I arrived at the SEALS conference yesterday afternoon, and a majority of the blog’s co-editor professors are here.
At 3pm (until 6pm) Josh, Ann, Joan, Marcia and I (among others) will be taking part in the discussion group on sustainability and sustainable business.
If you are here, come join us at 3pm.

Greetings from SEALS in lovely Amelia Island. On Wednesday I presented on a proposed bilateral investment treaty between the US and Cuba, and tomorrow I am part of a discussion group on Sustainable Business. I will focus on the roles and responsibilities of corporate sponsors of the Rio Olympics. According to the official Olympics website, “[m]ore than just providing products and services for the event, [the sponsors] ensure that sport always comes first and that the whole world is inspired alongside us.”

Sponsors can spend up to $200 million for the privilege to inspire us. For many sponsors, the chance to have over a billion people watch their commercials and logos appear repeatedly over a period of a few weeks on television is worth the tens of millions of dollars. They often invest in slick YouTube campaigns that show their real or imagined connections to young athletes finally achieving their lifelong dream of bringing home the gold for their country. Apparently, 54% of consumers surveyed felt more positive about Nike after the company sponsored the Olympics based on how it chose to advertise. Many companies use these kinds of sponsorships as part of their corporate social responsibility initiatives. Dow is the official “carbon” partner of the games.

As anyone who watches the news knows, the $12 billion Rio Olympics has been fraught with controversy. According to reports, the crime rate is soaring and the bay is so filthy that the athletes have been warned to keep their mouths closed during water events. Brazil was one of the ten largest economies in the world when it was awarded the games years ago and now is in free fall. As part of the deal to get the games, Brazil promised the IOC and its citizens gleaming new transportation systems, hospitals, and infrastructure but one in seven of Rio’s citizens still live in one of the 1,000 favelas and those have not improved at all. A number of people have actually lost their homes to make way for Olympic venues. Rio’s street children have asked the head of the IOC for assurances that their human rights will be respected.

Human Rights Watch prepared a report last year that outlines some key concerns about the human rights abuses that typically occur at mega sporting events. Although the Olympic Charter states at p. 14 that “the practice of sport is a human right,” the HRW report identified violations that typically occur at these kinds of events. Many have already been documented in Rio including: forced evictions without due process or compensation due to massive new infrastructure construction; environmental activism; threats, intimidation, and arrests of journalists; silencing of civil society and rights activists, and discrimination.What does any of this have to do with business? I have some questions about the role of business that I will explore tomorrow and in my research.

West Virginia Professor Jena Martin has written about the concept of the “corporate bystander.” She notes that, “TNCs often get involved in relationships with state actors who violate international human rights. TNCs then argue that they cannot be held accountable for the violations because they merely observed the underlying atrocities and did not participate in the acts that caused them.” The large corporate sponsors who tout their corporate social responsibility initiatives and who vehemently oppose human rights shareholder proposals because they already have a program in place will likely distance themselves from what is going on in Brazil. They are just sponsors after all. But is that an appropriate response? Should the IOC do more to require human rights safeguards? Should corporate sponsors conduct impact assessments or is their involvement too attenuated? Do the consumers who felt better about Nike after watching the Olympics commercials care about the street children in Brazil or the women who are displaced from their homes? Would they think twice about buying sneakers if they read some of the links in this blog? Does any of this move the share price in either direction?  What is the actual business case for balancing the corporate sponsorship with the human rights impact?

The head of the IOC has signed on to work with the UN on the Sustainable Development Goals–seventeen economic, environmental, social, and governance initiatives that the private sector, government, and civil society aim to achieve by 2030. How does that square with conducting the Olympics in locales with human rights and environmental violations? Should the IOC only hold the Olympics in host countries with “perfect” human rights records and what would that even look like?

I will be discussing these issues tomorrow and will explore it more firsthand when I head to Rio on Saturday. In the meantime, corporate sponsors may hope that the press coverage on Friday evening focuses on panoramic shots of Sugarloaf and Copacabana Beach and not the planned protests before the opening ceremonies.

The Federal Reserve Board announced its enforcement actions against Goldman Sachs from 2012-2014 events where a Goldman Sachs banker, a former NY Fed employee, received confidential documents from a NY Fed employee.  The individuals involved plead guilty to the resulting charges and Goldman Sachs paid fines in New York.  The Federal Reserve Board took separate actions this week based upon evidence that the banker “repeatedly obtained, used and disseminated [confidential supervisory information or CSI] … including CSI concerning financial institutions’ confidential CAMELS ratings, non-public enforcement actions, and confidential documents prepared by banking regulators.”  Even though Goldman Sachs terminated the banker involved and reported the matter to authorities, apparently the misconduct was sustained over a long-enough period of time and used to “solicit business” in a way that compelled Federal Reserve Board Action.

The Fed’s release and copies of the orders are available here.  The sanctions against Goldman Sachs include the monetary fine as well a requirement to ‘Within 90 days of this Order, …submit to the Board of Governors an acceptable written plan, and timeline for implementation, to enhance the effectiveness of the internal controls and compliance functions regarding the identification, monitoring, and control of confidential supervisory information.”

Financial press coverage of the matter is available in a variety of outlets:

NY Times

Bloomberg

CNN

-Anne Tucker

I am traveling to the SEALS Annual Meeting today, which means my summer is over.  We start orientation next week at WVU College of Law, and I have absolutely no idea where the time went. 

I will be keeping myself busy at the conference, where I am participating in a number of events, including a discussion group on Sustainability & Sustainable Business and one on White Collar Crime.  Today, I thought I’d write a little bit about the first subject, and engage in a bit of shameless self-promotion, as well. 

The intersection of sustainability and business is a significant part of my work.  My areas of focus are business law and energy law, and I have spent much of my research time looking at how companies respond to regulation, including the effects of environmental regulations.  (I also teach courses in Energy Law and Business Organizations, as well as a course called Energy Business: Law and Strategy, which merges the two subjects.)  

I was recently asked to submit a response to Prof. Felix Mormann’s paper, Clean Energy Federalism, which appeared in the Florida Law Review.  His paper, which I think is well done, offers “two case studies, a novel model for policy integration, and theoretical insights to elucidate the relationship between environmental federalism and clean energy federalism.” His article argues that renewable portfolio standards (mandates that require a certain percentage of electricity generated come from renewable energy sources) and feed-in tariffs (guaranteed payments for renewable energy that are independent of the market price) can be used together to find a “better, more efficient allocation of investor and regulatory risk.”  

The recent influx of cheap natural gas from shale formations (using hydraulic fracturing and horizontal drilling) has lead some to believe that renewable energy goals like the ones Prof. Mormann proposes will be ineffective, or at least much weaker. Although cheap natural gas does change way the electricity market was expected to evolve, my response argues that the change does not necessarily make renewable energy goals unattainable or even less attainable.  My response, Natural Gas is Changing the Clean Energy Game, But the Game is Not Over, appears in the Florida Law Review Forum. Here’s the abstract (and the paper is available here):      

In his article, Clean Energy Federalism, Professor Felix Mormann analyzes the keys facets of how energy law and environmental law intersect, as he considers how to implement a program to “decarbonize America’s energy economy.” In this forward-thinking piece, Professor Mormann considers the potential role of renewable portfolio (RPSs) and feed-in tariffs (FITs) and how concurrent implementation at the federal and state level could support a lower-carbon energy future. His conclusion—“that one clean energy policy (RPS) be implemented at the federal and another (FIT) at the state level”—is likely correct from a policy-optimization perspective. Still, as Professor Mormann acknowledges, such policies can face enormous political hurdles.

This Response acknowledges the enormous role fossil fuels still play in our electricity generation sector and notes that renewables still account for less than 15% of the overall U.S. generation market. The energy sector, though, can be expected to continue its diversification, in part because diversification is valuable for utility reliability and resilience, as well as for financial management purposes. With lower natural gas prices, fuel switching has continued at pace, with the bulk of the new natural gas generation replacing coal-fired generation. This is a positive development for those looking to displace coal, but the change to natural gas also delays at least some of the shifting to renewables.

This response argues that all is not lost because of that delay. The coal-fired generation that is displaced by natural gas could create at least some opportunity for a parallel increase in renewable electricity generation. Although some may believe that low natural gas prices undercut the option of bringing new renewable energy online, that does not need to be the case. Professor Mormann’s option is still a reality, and the likelihood of success is more a question of priority than opportunity.

 

I was recently invited to write a short piece on crowdfunding and investor protection for a special issue of one of the publications of the CESifo Group Munich, the CESifo DICE Report–“a quarterly, English-language journal featuring articles on institutional regulations and economic policy measures that offer country comparative analyses.”  The group of authors for this publication (present company excluded) was truly impressive, and I have enjoyed reading their submissions.  My contribution is published here on the CESifo website and here on SSRN, for those who care to look it over.  

I did not hesitate to accept the CESifo Group’s invitation to publish this paper, even though it is not primary scholarship and the deadline was tight for me given other professional obligations.  (The editors did allow me to negotiate a bit on the timing, however.)  The purpose of my post today is to explain why I decided to take this opportunity.  With the limited time that we all have to produce research papers, why would I invest in this kind of an “extra” publication–one that is not likely to get me full scholarly credit (whatever that may mean) in a critical assessment of my body of work?  Here are four reasons why I value this kind of project (if I can fit it in with my primary professional obligations).

  1. A publication with an interdisciplinary international research group puts a scholar’s name and pre-existing scholarship (some of which typically is cited in the piece) in front of a new audience.
  2. A short, summary research paper of this kind offers the opportunity to synthesize or re-synthesize ideas from prior research and writing–a skill that (in my experience) improves with practice and is useful in other writing as well as in teaching.
  3. The reductive, focused writing process may reveal fresh insights, and these may lead to new research, writing, or teaching.
  4. Leveraging prior research by using it for multiple, distinct projects is efficient–and smart.

You may or may not agree with these reasons.  You may have other reasons for publishing this kind of work–or reasons for not doing so.  I invite you to add them in the comments.  And if you are untenured, not yet fully promoted, or otherwise subject to adverse employment action relating to scholarship activity, you’ll likely want to check with your dean and trusted senior members of your faculty (including any associate dean for faculty development) before accepting a publication invitation of this kind.  Each institution honors these “extra” publications differently . . . . 

The University of Nebraska College of Law is hiring, and business law is one of their areas of interest. See the ad below:

——————

The UNIVERSITY OF NEBRASKA COLLEGE OF LAW invites applications for entry-level and lateral

candidates for one or more tenure-track or tenured faculty positions. Our needs include courses related

to

• Business Law (e.g., Business Associations; Corporate Finance, Corporate Governance, Insurance Law,

Bankruptcy, Corporate Restructuring, Nonprofit Organizations, Risk Management / Compliance, or White

Collar Crime)

• Criminal Law (e.g., Federal Criminal Law or White Collar Crime, Criminal Procedure 2, Post-Conviction

Remedies, or Criminal Sentencing);

• Health Care (e.g., Federal Regulation of Health Care Providers, Health Care Finance, Torts,

Administrative Law, Medical Malpractice, Privacy Law, Law and Medicine, Public Health Law, Bioethics

and the Law, and the Law of Provider and Patient);

• Litigation Skills and Related Courses (e.g., Trial Advocacy, Civil Rights Litigation, Pretrial Litigation or

other litigation skills courses, Conflicts of Laws);

• Family Law;

• Education Law; and

• Election Law.

Minimum Required Qualifications: J.D Degree or Equivalent, Superior Academic Record, Demonstrated

Interest in Relevant Substantive Areas. Title of Asst/Assoc/or Full Professor will be based on

qualifications of applicant. Please fill out the University application, which can be found at

http://employment.unl.edu/postings/50660, and upload a CV, a cover letter, and a list of references.

General information about the Law College is available at http://law.unl.edu/. The University of Nebraska-

Lincoln is committed to a pluralistic campus community through affirmative action, equal opportunity,

work-life balance, and dual careers. See http://www.unl.edu/equity/notice-nondiscrimination Review of

applications will begin on August 25, 2016 and will continue until the position is filled. If you have

questions, please contact Associate Dean Eric Berger, Chair, Faculty Appointments Committee,

University of Nebraska College of Law, Lincoln, NE 68583-0902, or send an email to

lawappointments@unl.edu.

For reasons that don’t need exploring at this juncture, I was in the mood to rewatch two big business movies of the 1980s: The Secret of My Success (dir. Herbert Ross, 1987) and Working Girl (dir. Mike Nichols, 1988). 

Eighties business movies are something of their own minigenre – see, e.g., Trading Places, Wall Street, and Baby Boom – but the reason Secret of My Success and Working Girl are worth comparing is that they basically tell the same story, but with the genders flipped.

Both films are about young business naïfs (Michael J. Fox and Melanie Griffith, respectively), who have jobs at the bottom of the corporate ladder (mail room, secretary).  Frustrated that their talents and skills are being overlooked, both impersonate corporate executives, colonizing vacant offices and aggressively pursuing their innovative business strategies.  There is plenty of farce as they juggle their dual identities, and both enter into conflicted romances with executives who have been taken in by the charade.  Ultimately, their identities are revealed but their talents recognized, and they are rewarded with the jobs (and love interests) they deserve.

But despite the nearly mirror-image plots, the two could not be more different in social message.

In The Secret of My Success, Michael J. Fox plays a young college graduate, raised in farm country and new to the big city.  He’s been hired for a junior executive position but when he arrives on his first day, he finds his job has disappeared in a wave of layoffs.  He can’t find new work because of his lack of experience, and because employers are only interested in hiring minority women, not white men.

His parents suggest he seek a job from a distant uncle, who just happens to head a multinational conglomerate.  The uncle puts him in the mailroom – an indignity not to be borne – which is what prompts Fox to embark on his grand ruse.  It turns out that he has greater insight, smarts, and diligence than any of his colleagues. 

In other words, according to this movie, even though Fox is just out of college with no work experience, he is entitled to a management job on the strength of nepotism, and it is the height of injustice that he’s expected to work his way up through corporate ranks. 

In Working Girl, by contrast, Melanie Griffith plays a girl from the wrong side of the tracks (Staten Island), who has been trying to climb the corporate ladder for years.  She fought through night school to get her degree; since then, she’s struggled at a variety of low-status business jobs, trying to learn whatever she could along the way.  What’s held her back, explicitly, is sexism and classism.  When she ultimately snaps and begins her ruse, it’s because the game is stacked against her – as she puts it at the end of the film: “You can bend the rules plenty once you get upstairs but not while you’re trying to get there, and if you’re someone like me, you can’t get there without bending the rules.”  Notably, she’s talented and insightful, but the movie revolves around the fact that she has one particular good idea – unlike Fox, who essentially is ready to restructure the company after a couple of months. 

Working Girl, then, is about forcing open the doors of the business world to people who have historically been locked out; Secret of My Success is about how, well, people who look like Michael J Fox are just naturally entitled to great jobs. 

I’m not saying the politics of Working Girl are above reproach – Sigourney Weaver’s evil-businesswoman character ultimately bears the brunt of the film’s criticism, blunting the feminist message – but the movie goes out of its way to indict the business world for excluding people who don’t begin life with privilege.  Secret of My Success does the other thing.