This week’s top ethical consumption story is (1) New York Governor Cuomo’s decision to ban state government agencies from doing business with groups that support BDS. In climate change news: (2) several Aussie Catholic orders, following Pope Francis’ lead, will divest fully from fossil fuels; (3) a former SEC commissioner is arguing that ‘prudence’ in investment management should include managing climate-related risk; (4) Mark Carney praised Alberta’s climate change plan; and (5) Cambridge and NYU will not go fossil free. Also this week: (6) India’s mandatory corporate social responsibility law was amended to include sports; (7) the South Korean Oxy boycott leads to layoffs; and (8) can big data end boycotts?
1. Boycotting a boycott: NY won’t do business with BDS supporters
New York Governor, Andrew Cuomo, has signed an executive order directing state agencies not to do business with organizations that support the Boycott, Divest, and Sanctions (BDS) movement. BDS boycotts Israeli companies for human rights reasons. Cuomo’s decision has been fiercely opposed by civil liberties organizations, some of which claim that the order constitutes “21st-century McCarthyism” and violates the First Amendment.
While alarming in this writer’s view, it is important to note that Cuomo’s decision is not without precedent. In February 2016 the UK issued a new procurement policy barring public bodies from undertaking procurement boycotts unless the UK Government has put in place formal legal sanctions. Although targeted at BDS the procurement policy covers all boycotts. Last year BDS was ruled hate speech in France.
In May a law barring the Government of Ontario from doing business with BDS-supporters was proposed as a private member’s bill in that province. Although the bill failed, it demonstrates increasing hostility to BDS amongst government bodies in Canada. For instance, in February the Government of Canada passed a motion formally condemning BDS. And you may recall the political scuffle from May 2015 when it was rumored that then-Public Safety Minister Steven Blaney was prepared to direct the Ministry to apply hate crime laws against groups promoting the BDS movement. These rumors prompted an onslaught of public pressure. While Minister Blaney unequivocally denied the rumors, calling them “inaccurate and ridiculous”, moves to ban BDS in Canada and elsewhere serve as a reminder that the freedom of boycott movements is not a foregone conclusion, and that ongoing efforts will be needed to preserve the space for consumers to act as moral agents.
2. Aussie Catholic orders, following Pope Francis’ lead, divest fully from fossil fuels
Four Australian Catholic orders will divest completely from fossil fuels. The decision has been interpreted as a response the papal encyclical on the environment that Pope Francis released in 2015, which called for “swift and unified action” to protect the environment and combat climate change.
The move accompanies an open letter from multi-faith religious leaders calling on the Government of Australia to protect the Great Barrier Reef and transition to a low carbon economy immediately. Faith organizations, notably the United Church, have been significant actors in the fossil-free movement; however, this recent announcement is unprecedented for the Catholic Church.
3. ‘Prudence’ in investment management should include managing climate-related risk, former SEC commissioner argues
Bevis Longstreth, a former commissioner of the SEC (the US securities regulator) has written a proposal that would potentially open the floodgates to further divestment from fossil fuel producing companies. Fossil fuel divestment is a movement in which asset holders pledge not to invest in companies which produce fossil fuels, or some variationon that general theme. The movement now encompasses at least $2.6 trillion in assets, following a fifty-fold increase in the three months leading up to the Paris climate summit.
Longstreth’s proposal discusses how the duty of prudence, which governs the investment of funds held by non-profit corporations and some other institutions in the US, should be exercised in light of climate change risks. This duty has become an obstacle for some organizations that wish to engage in socially responsible investment, which can be riskier and typically brings in a lower return on investment, but are bound by an obligation to preserve the endowment. The proposal argues for a legal reinterpretation of prudent management such that it takes into account climate-related risks.
4. Mark Carney praises Alberta’s climate change plan
Bank of England Governor Mark Carney praised Alberta’s climate change plan while in Edmonton to speak at a University of Alberta convocation ceremony. Mark Carney, also the former Governor of the Bank of Canada, has commanded attention recently by calling for greater attentiveness to the financial risks of the ‘carbon bubble’.
5. Campus divestment news: Cambridge, NYU will not go fossil free
6. India’s mandatory corporate social responsibility law amended to include sports
The Indian Companies Act – a law passed in India in 2014 that requires companies to use two percent of profits for corporate social responsibility (CSR) activities – has been amended to allow the use of CSR funds for sports, including sports infrastructure.
7. Oxy boycott leads to layoffs
“Oxy out”, a South Korean consumer boycott of Oxy Reckitt Benckiser, prompted by lung damage deaths connected to the company’s humidifier disinfectants, has led to mass layoffs by the company. The company’s sales have dropped considerably since the boycott was announced.
8. Big data to end retail boycotts?
A recent article heralded Qloo for its potential to end the retail boycott. Qloo, which claims to have “mapped the [consumer] taste genome”, uses big data to analyze consumer preferences, which they can then use to shape business decisions. Specifically, Qloo can identify cultural sensitivities so that businesses are able to avoid issues that might potentially prompt consumer boycotts – for example, Target’s laudable transgender inclusive bathroom policy.