the call for corporate action: nyu stern student voices: vol. 3 / spring 2015

FOR CORPORATE ACTIONNYU STERN STUDENT VOICES

VOL. 3 / SPRING 2015

Edited by

PROFESSOR JEFFREY J. YOUNGER,JACQUELINE ALLEN, LIZ IACONIS & ANNA MANCUSI

Designed by

TIFFANY LI & LINDA ZHANGPhotography by

JING HAO

FOR CORPORATE ACTIONNYU STERN STUDENT VOICES

VOL. 3 / SPRING 2015

D Cover photo by Vincent Chen, NYU Stern ‘17“A moment of serenity in a city that is always chaotic.”

Contents

6Animal Rights: How Morality & Profit Can Coexist in the Pork IndustryBRENDON KHAN

12

4

The Benevolent Banker: Liberating China from Shadow Banking AbuseJARED SCHULMAN

Letter from the DeanDEAN GEETA MENON

18

5

The Green Pizza BoxJULIE CHEN

Introduction toBusiness and Its PublicsPROFESSOR BATIA WIESENFELD

34

52

Aeriform Gold: Capturing Methane for Profit and Social ValueSTEPHEN KRAFCIK

The Domestic War on WomenANNELIEKE DOMPELING

28

46

63

Abolishing Modern-Day Slavery from FootballPATRICK LEE

Online Privacy: Fair Compensation for Personal InformationMICHAEL FRENKEL

AcknowledgementsPROFESSOR JEFFREY J. YOUNGER

22New Delhi, Old Misogyny: The Influence of BollywoodRIA SINGH

40

58

Solving Jellyfish OverpopulationWYMAN LI

CONTENTS / 03

Purest Water on EarthHALEY SAN GIACOMO

D Photo by Jing Hao, NYU Stern ‘17

04 / LETTER FROM THE DEAN

LETTER FROM THE DEANI AM THRILLED TO WRITE THIS FOREWORD

for the third edition of The Call for Corporate Action. It showcases the critical thinking NYU Stern undergraduates are doing in our Business and Its Publics course about the impact that the modern business organization has on our global society. Within the pages of The Call are student essays that analyze the challenges facing business and society today, and, perhaps more importantly, offer creative suggestions for positive change. Topics span international borders and discuss issues of global importance, such as animal rights in the food industry, shadow banking in China, sustainability of pizza boxes, as well as the effect of Bollywood on gender roles. I am so proud of our students who are tackling social, corporate, governmental, environmental, and international issues through thoughtful inquiry and discourse. I hope you enjoy this edition of The Call for Corporate Action and that it will encourage continued conversations about these topics and more.

GEETA MENONDean of the Undergraduate College

Abraham Krasnoff Professor of Global Business and

Professor of Marketing

Leonard N. Stern School of Business

New York University

INTRODUCTION TO BUSINESS AND ITS PUBLICS / 05

INTRODUCTION TO

BUSINESS AND ITS PUBLICSWHAT DOES BUSINESS DO BEST? BUSINESS

is better than any other institution at turning problems into opportunities. Business invents and innovates – creating new products, services, and new production processes so that existing products and services can be offered to more people at lower cost and higher quality. It also borrows and reuses – taking great ideas applied in one market and finding ways to reapply them to different markets. It curates – selecting the most effective solutions and diffusing those even when it means abandoning options that they invested in earlier, sharing both the risk and the return. It scales up, and quickly, growing and, in the process, becoming more efficient and more dominant. Business has become good at partnering – with suppliers and distributors, with customers, even with competitors when there is a shared need, and increasingly with non-profits and government agencies. Formidable problems face our society today. Natural resources are dwindling; we are abusing our environment; social inequality and low social mobility leave many helpless and hopeless; and extremism threatens to curtail the freedoms we rely upon. Will business add to the problems or offer the solutions? The essays in this volume offer cause for optimism. In each one, the author seized upon a serious social ill – a problem they feel passionate about and wish to solve – and outlined a path

for corporate action. These essays reflect the idea that business seeks to create value by solving social problems, and the students who wrote these pieces direct attention to the most important of these problems. Moreover, the authors leverage the many strengths of business to offer implementable and promising solutions. Each one might ultimately seek to capture some portion of the value created and distribute it to those who have invested in creating solutions, but they recognize that value must be created before it can be captured and distributed. In this way, these essays reflect the philosophy behind the Business and Its Publics course. Business and Its Publics introduces students to the role of business in the broader society as well as the relationships between business and other important societal institutions. Students explore the novel partnerships that are being developed between business and other institutions to address society’s most pressing needs. The course prepares students to offer novel, value-creating solutions to these problems by developing the critical thinking skills that enable students to analyze issues, evaluate arguments, and become aware of (indeed, embrace) multiple perspectives. As evidenced by this collection of essays, this approach is one that will continue to leverage the strength of business to advance our society, and make the world a better place.

BATIA WIESENFELDAndre J.L. Koo Professor of Management

Chair, Management and Organizations Department

ANIMAL RIGHTS:How Morality & Profit Can Coexist in the Pork Industry

06 / BRENDON KHAN

ESSAY BY BRENDON KHAN

ESSAY BY BRENDON KHAN

Ghandi once said, “A nation’s greatness is measured by how it treats its weakest members.” With that philosophy in mind, Brendon Khan explores the rights of industrial farm animals. In particular, Brendon targets “gestation crates”, equipment used to confine sows during pregnancy. Using both ethical and financial arguments, Brendon demands a stop to this deplorable practice.

ANIMAL RIGHTS: HOW MORALITY & PROFIT CAN COEXIST IN THE PORK INDUSTRY / 07

08 / BRENDON KHAN

THE MISTREATMENT OF animals on factory farms in the United States is a social injustice. This situation is especially grave for the mil-

lions of sows confined to individual ges-tation crates, narrow pens where they are held for their entire lives until the time of slaughter. Although these living condi-tions are inhumane, major U.S. pork com-panies continue to use this system as part of their supply chain. However, recently, consumers, and many other institutions have started to exert pressure on pork companies to abandon the practice. To that end, companies must now find alter-native sow housing methods in order to continue efficient meat production and appease an increasingly aware society.

WHY IS ANIMAL WELFARE A SOCIAL ISSUE?

Animals have never enjoyed the same rights as humans, as historically, we hu-mans have deprived animals of both their freedom and ultimately the right to live, in order to supply the market with meat. Yet science has proven that animals pos-sess physical and mental awareness, the same qualities as those of human beings.1 Nevertheless, the fact that 95% of Ameri-cans eat meat has made the meat industry a giant that will last into the foreseeable future.2 Recognizing this reality, animal rights activists focus their attention on finding ways to improve animals’ quality of life on factory farms. Yet, even here, they encounter challenges –especially in the U.S. pork industry where pork farm-ers use gestation crates to house sows, often under deplorable conditions. In order to highlight the seriousness of this problem, organizations like the Humane Society of the United States (HSUS) have begun to educate consumers about the horrible conditions suffered by sows in gestation crates. The HSUS, a non-profit organization that promotes the humane treatment of animals, investigated factory farms and revealed the severe deprivation suffered by the sows. In 2012, it released docu-mentaries of undercover investigations at Smithfield Foods, Tyson Foods, Sea-

board Foods, and Prestage Farms, which detailed the unhealthy and inhumane conditions pigs suffer in gestation crates. They revealed that crates are 2 feet wide, restricting any movement besides standing and sitting. Farmers also rare-ly release sows from their crates.3 Con-sequently they are unable to socialize, a punishment akin to solitary confine-ment for humans, since according to the Humane Society, both pigs and humans possess a similar sense of awareness. The HSUS documentaries clearly outline these facts, leading the viewers to under-stand why farmers must stop these inhu-mane practices. The HSUS findings have established the inhumaneness of gestation crate housing as a pressing social issue. The public has responded to these revelations and has supported the HSUS in their ef-forts to implore companies and govern-ments to ban the practice on sow farms. However, the HSUS still faces many chal-lenges before gestation crates are elim-inated industry-wide. Seaboard Foods, the pork-producing subsidiary of Sea-board Corporation and a U.S. pork giant, adamantly refuses to abandon the use of the system.

HOW SEABOARD CONTRIBUTES TO THE SOCIAL PROBLEM There is good reason to specifically target Seaboard in the movement to ban gestation crates. Since 2011, Seaboard has continually ranked within the top three largest hog producers in the U.S., processing approximately 10 million hogs annually.4,5 Seaboard’s use of gesta-tion crates means that the sow welfare problem is still prevalent in the U.S. In fact, the HSUS compiled a list of specific details from investigations at Seaboard. This included allowing urine and feces to build up in crates where pigs eat and drink over long periods of time. Addi-tionally, crated sows developed sores (of-ten untreated), and showed visible signs of frustration, biting and clawing at bars to escape. Some cases of stress due to iso-lation were so severe that they resulted in death.6 The HSUS has already tried to

appeal to Seaboard to alleviate these con-ditions, and has reached out to the public, sparking numerous petitions against the pork company. It recognizes that to move toward the solution of this problem, it must push for Seaboard Foods to aban-don the use of gestation crates. Seaboard’s preference for gesta-tion crates becomes apparent however, through the analysis of their advantages. Gestation crates provide farmers with a convenient way to tend to sows’ basic needs. First, they make indoor housing of sows practical, allowing both farmers and sows to easily avoid outdoor mala-dies such as bad weather, parasites, and disease. Second, the fact that sows live in-dividually in separate crates prevents any fighting that could occur if they roamed freely together. Farmers also have an eas-ier time feeding and medically tending to sows stored in gestation crates.7 We see then that Seaboard, in choosing the gestation crate system, has opted for a tradeoff of morality for convenience. Seaboard’s stance stems from the re-sponsibility it has to its shareholders to use a supply-chain mechanism that gen-erates the most share value for the com-pany. However, there should be a way for Seaboard to generate value without sacrificing a moral stance. With an ap-propriate system, Seaboard could create value for both itself and society. Accord-ing to the article “The Big Idea: Creating Shared Value” by Michael E. Porter and Mark. R Kramer, the concept of shared value “is about expanding the total pool of economic and social value.”8 Instead of having to tradeoff between profit and social gain by using gestation crates, Sea-board could implement a housing system humanely suited for its sows and gainful to itself as a company.

HOW SEABOARD CAN CREATE VALUE FOR SOCIETY I propose that Seaboard implement a group housing system on its farms. A group housing system would solve the social issue of sow mistreatment since it is a more humane alternative to gestation crates. In a group housing system, farm-ers house sows in large pens together,


allowing for greater mobility. Sows can then also interact with each other, allevi-ating the stress of isolation. It is possible to address or even elim-inate the disadvantages of group hous-ing that make the gestation crate system attractive. According to research done by the Feet First Team, an international collaboration of researchers, veterinari-ans, and nutritionists, problems such as fighting are preventable under a group housing setting through a change in management style. Farmers should seek

to acclimate gilts (pigs that were never pregnant) to the new system, including “the feeding plan, floor options, and in-teractions with other sows in a group set-ting.”9 Increases in farmers’ monitoring and observation of sows could minimize the amount of injury and aggression in the group environment. There may be some minimal costs to implementation, but with these new management practic-es in place, Seaboard can make the group housing system the ethical solution to the gestation crate problem.

HOW SEABOARD CAN CREATE VALUE FOR ITSELF

The Production/Supply Aspect Seaboard could reap many benefits from the system, potentially enough to outweigh the inconvenience. First, would be the benefit of efficiency. A two and a half year study by researchers at Iowa State University has shown that “repro-ductive performance can be maintained or enhanced in well-managed group

housing systems for gestating sows, such as deep-bedded hoop barns, without in-creasing labor.”10 Tracking 957 litters from 353 sows, researchers found that sows in the hoop barns gave birth to more live pigs per litter than sows in crates, most likely due to extra space.11 This ev-idence shows that there is a positive rela-tionship between sows’ reproductive effi-ciency and standard of living, one which gives Seaboard advantage. Seaboard could also benefit from the cost-efficiency of the group housing sys-

tem. A survey of general contractors and suppliers in the Midwest familiar with ag-ricultural construction allowed research-ers to develop cost estimates for both group and crate housing systems. Esti-mates showed that the cost per gestating sow for group housing “hoop barns” was $552, while the cost for individual gesta-tion stalls was $815.12 If Seaboard imple-mented such a system, it could potential-ly reduce costs and increase output, and even expand operations.

The Sales/Demand Aspect Seaboard’s potential gains move be-yond the production process. As men-tioned, the main catalyst for the pork in-dustry’s shift away from gestation crates is a growing consumer uproar. Accord-ing to phone surveys of 6365 American households by researchers at Oklahoma State University, 62% of respondents be-lieve that society should address the ani-mal welfare problem, even in the face of human suffering.13 Many Americans are willing to pay more for improved animal

welfare, with 70% believing that com-panies should increase compensation to farmers who impose “stringent animal welfare standards.”14 Additionally, two-thirds of consumers expect food com-panies to provide humanely raised meat if consumers demand it.15 As one of the largest American pork producers, these statistics definitely apply to Seaboard’s market base. Therefore Seaboard could potentially lose consumer demand if it continues to use the unpopular gestation crate system. On the other hand, if Sea-

board adopts the humane group housing system, it could instead gain consumer favorability, improve the reputation of its brand, and potentially increase sales in the long run. Seaboard’s refusal to make the shift could also put it at a severe competitive disadvantage. This is especially so since Seaboard’s main competitors have al-ready ceded to consumer pressure, and have adopted more humane housing sys-tems. For example, Smithfield Foods, the largest pork producer in the U.S. recently announced that it has asked its sow grow-ers to convert to group housing systems by 2022. It intends to provide a “sliding scale of incentives to accelerate the time-table”, guaranteeing growers who make the shift contract extensions.16 Addition-ally, it has also reported that its hog-pro-ducing subsidiary, Murphy Brown, tran-sitioned 54% of pregnant sows on its U.S. farms to group housing systems.17 According to President and CEO C. Lar-ry Pope, “a well-planned renovation to a group housing system will help main-

[Restrained sows] are unable to socialize, a punishment akin to solitary confinement

for humans, since according to the Humane Society, both pigs and humans

possess a similar sense of awareness.“

10 / BRENDON KHAN

tain the farms’ value for years to come, while at the same time supporting our companywide commitment to animal care.”18 Smithfield’s acknowledgement of the system as a cost-efficient, humane sow housing method shows that it has achieved shared value. Concerned con-sumers might then recognize it as a de-sirable alternative to Seaboard. The fact that Smithfield and other pork compa-nies such as Hormel and Tyson have tak-en this position essentially isolates Sea-board as a market “villain” to consumers. The extent of competition that Sea-board faces grows wider when we consid-er retail brands. Seaboard only markets three retail pork brands in the U.S.: Prai-rie Fresh Premium Pork, Daily’s Premi-um Meats, and 67th Street BBQ.19 Con-sumers have a wide array of alternatives from Smithfield Foods alone, as it car-ries twelve retail pork brands, including: Smithfield, Farmland, and John Morrell to name a few.20 Other companies moving away from crates, such as Tyson and Hor-mel, also have popular retail brands, leav-ing Seaboard at a further disadvantage. Additionally, pressure from consum-ers and the HSUS has caused some of the largest U.S. retailers opt to eliminate ges-tation crates from their supply chain as well. Target, the 4th largest U.S. retailer, plans to eliminate the practice by 2022.21 Should more retailers follow suit and, if Seaboard does not make the shift in time, it could suffer from devastating decreases in consumer demand.

Seaboard and Shareholder Confidence Seaboard could also suffer conse-

quences relating to its capital base. The HSUS recently launched an ad campaign targeting Seaboard’s investors. The ad points out the fact that other leading pork companies have started phasing out gestation crates from their supply chain and paints Seaboard as a company that is “unresponsive to changing requirements of the marketplace.”22 The HSUS has threatened to target shareholders before, buying enough shares in both Seaboard and Tyson in 2012 so that it could attend shareholder meetings and submit share-holder proposals.23 It actually managed to rally Tyson’s shareholders in August 2013 to pressure the company to disclose the financial and operational risks of us-ing gestation crates at a time when Tyson also refused to abandon the system.24 Five months later, in January 2014, Ty-son released a statement encouraging its hog farmers to phase out the gestation crate system, making the HSUS’ efforts successful.25 With the HSUS now target-ing Seaboard investors, Seaboard should phase out the system to both demon-strate its awareness of consumer prefer-ence and promote investor confidence.

Changing the Legislative Environment In addition to the pressure it faces from non-governmental organizations, Seaboard runs the risk of being subject to government intervention. Four states in the U.S have already banned gestation crates as a response to growing public dissatisfaction. Another five have passed laws that would gradually phase out the crate system. Of these nine states, Sea-board has live sow farms in only Col-

orado, with other farms in Oklahoma, Kansas, and Texas.26 Colorado’s 2008 leg-islation phases out sow gestation crates over a ten-year period.27 Consequently, Seaboard could face disruption in its supply chain if it does not completely phase out the system by 2018. Addition-ally, with mounting pressure from NGOs, more states could continue to ban ges-tation crates, limiting Seaboard’s option to continue using the system. By making the shift to group housing now, Seaboard could avoid the excessive restructuring costs resulting from bans in their produc-tion states.

CONCLUSION In closing, the best way to solve the problem of inhumane gestation crate use in the U.S. pork industry is to create shared value for both pork corporations and society. My proposal for pork giant Seaboard Foods to switch to more hu-mane group housing would lead to a big improvement in sow welfare and appease the different sectors of society, such as the HSUS, consumers, and regional gov-ernments –all wishing to solve the sow welfare problem. At the same time, it also creates value for Seaboard itself, allowing it to enjoy production, sales, marketing, and financial benefits as well as keeping it up to date with changing market and legislative conditions. While society may eventually bestow animals the full rights they deserve, the immediate solution lies in demonstrating to corporations that they do not need to tradeoff between mo-rality and profit. v


BRENDON KHANAccounting & Finance ‘17

The most eye-opening part of my research was learning about how animals feel emotions and pain, possess complex social hierarchies, and mirror hu-man behavior in many other ways. We all know that animals can feel, but I think we lose perspective and allow these inhumane conditions because we think animals are more different from humans than they really are.“

1 Dvergara. “The Animal Mind.” Serendip Studio, 22 Feb. 2010. Web. 01 May 2014. <http://serendip.brynmawr.edu/exchange/node/6356>.

2 Newport, Frank. “In U.S., 5% Consider Themselves Vegetarians.” Gallup, 26 July 2012. Web. 01 May 2014. <http://www.gallup.com/poll/156215/consider-themselves-vegetarians.aspx>.

3 “Crammed into Gestation Crates: Life for America’s breeding pigs.” The Humane Society of the United States, 19 Feb. 2004. Web. 01 May 2014. <http://www.humanesociety.org/issues/confinement_farm/facts/gestation_crates.html>.

4 “Testimony of Rod K. Brenneman President and CEO Seaboard Foods Before the House Committee on Agriculture Subcommittee on Livestock, Dairy, and Poultry To Review The State of U.S. Pork Industry.” (n.d.): n. pag. House Committee on Agriculture, 12 May 2011. Web. 2 May 2014. <http://agriculture.house.gov/sites/republicans.agriculture.house.gov/files/pdf/hearings/Brenneman110504.pdf>.

5 “Facts & Figures.” Seaboard Foods:. N.p., 20 Oct. 2014. Web. 27 Dec. 2014. <http://www.seaboardfoods.com/about-factsfigures/Index.htm>.

6 The Humane Society of the United States. “AN HSUS REPORT: Undercover Exposés at Two of the Nation’s Largest Pork Producers.” (n.d.): n. pag. Jan. 2012. Web. 2 May 2014. <http://www.humanesociety.org/assets/pdfs/farm/seaboard_prestage_gestation.pdf>.

7 “Nebraska Farmer Goes to Market.” Translating Food Technology: Why Would Pig Farmers Insist on Using ‘Gestation Crates?’ N.p., n.d. Web. 2 May 2014. <http://nebraska.farmergoestomarket.com/index.php/recent-stories/13-technology/69-translating-food-technology-why-would-pig-farmers-insist-on-using-gestation-crates>.

8 Porter, Michal E. and Kramer, Mark R. “The Big Idea: Creating Shared Value.” Business and its Publics: Readings for Inquiry and Discourse. NYU Stern School of Business. USA: McGraw Hill Education, 2011. Page 110.

9 Ter Beek, Vincent. “Swine Management Changes with Switch to Group Housing.” PigProgress. N.p., 10. Oct. 2012. Web. 5 May 2014. <http://www.pigprogress.net/Home/General/2012/10/Swine-management-changes-with-switch-to-group-housing-PP009445W/>.

10 “Alternatives to Sow Gestation Stalls Researched at Iowa State.” Iowa State University College of Agriculture and Life Sciences. N.p., 19 Apr. 2007. Web. 04 May 2014. <http://www.cals.iastate.edu/news/releases/alternatives-sow-gestation-stalls-researched-iowa-state>.

11 Ibid.12 Ibid.13 Lusk, Jason L., F. Bailey Norwood, and Robert W. Prickett. “Consumer

Preferences for Farm Animal Welfare: Results of a Nationwide

Telephone Survey.” (n.d.): n. pag. Department of Agricultural Economics Oklahoma State University, 17 Aug. 2007. Web. 5 May 2014. <http://asp.okstate.edu/baileynorwood/Survey4/files/InitialReporttoAFB.pdf>.

14 Ibid.15 Ibid.16 “Smithfield Foods Recommends Its Contract Growers Convert to

Group Housing for Pregnant Sows.” Smithfield Foods. N.p., 07 Jan. 2014. Web. 5 May 2014. <http://investors.smithfieldfoods.com/releasedetail.cfm?releaseid=817511>.

17 Ibid.18 Ibid.19 “Our Retailer Products.” Seaboard Foods: Our Retail Products. N.p.,

n.d. Web. 5 May 2014. <http://www.dailysmeats.com/Retailer-BrandProduct/index.htm>.

20 “A Family of Brands You Trust.” Our Brands. Smithfield Foods, n.d. Web. 5 May 2014. <http://www.smithfieldfoods.com/our-brands/>.

21 “Target to Eliminate Controversial Pig Cages from Pork Supply : The Humane Society of the United States.” Press Releases. Humane Society of the United States, 26 Oct. 2012. Web. 5 May 2014. <http://www.humanesociety.org/news/press_releases/2012/10/target_gestation_crates_102612.html>.

22 Brady, Diane. “The Humane Society’s New Pitch: This Pork Producer Is a Bad Investment.” Bloomberg Business Week. Bloomberg, 21 Apr. 2014. Web. 5 May 2014. <http://www.businessweek.com/articles/2014-04-21/the-humane-societys-new-pitch-this-pork-producer-is-a-bad-investment>.

23 Huffstutter, P.J. “Animal Activists Tap Wall Street to Change Farm Practices.” Reuters. Thomson Reuters, 30 Aug. 2012. Web. 6 May 2014. <http://www.reuters.com/article/2012/08/30/us-usa-wallstreet-farm-activism-idUSBRE87T1GF20120830>.

24 Knowles, David. “Tyson Foods Pressured to Abandon Pig Gestation Crates.” NY Daily News. N.p., 16 Aug. 2013. Web. 6 May 2014. <http://www.nydailynews.com/news/national/tyson-foods-pressured-abandon-pig-gestation-crates-article-1.1429355>.

25 Andrews, James. “Smithfield, Tyson Encouraging Transition Away From Gestation Crates | Food Safety News.” Food Safety News. N.p., 10 Jan. 2014. Web. 6 May 2014. <http://www.foodsafetynews.com/2014/01/smithfield-tyson-to-make-distance-from-gestation-crates/#.U2_JXZG4lSU>.

26 “Our Retailer Products.”27 “Colorado Governor Signs Gestation and Veal Crate Ban.”

Wisconsin Ag Connection. N.p., 10 Jan. 2014. Web. 6 May 2014. <http://www.wisconsinagconnection.com/story-national.php?Id=1221&yr=2008>.

D Photo by flickr.com/farmsanctuary

Liberating China from Shadow Banking Abuse

THE BENEVOLENTBANKER

Author Jared Schulman explores China’s entrenched Shadow Banking network and investigates opportunities for shared value creation. He describes how banks expanding to western China might bring lucrative commercial banking to China’s emerging middle class and relieve financial coercion. Jared’s work appears especially prescient as changes in the Chinese banking system are already stirring.

ESSAY BY JARED SCHULMAN

12 / JARED SCHULMAN

UNIVERSAL ACCESS to capital markets is arguably the most im-portant prerequisite to achieving wide-

spread and sustainable economic growth. Without it, enterprise cannot flourish, innovation stagnates, and human poten-tial remains untapped under an ocean of seemingly inescapable poverty. Authors Daron Acemoglu and James Robinson of Why Nations Fail explain that the success of a nation’s economy is directly propor-tional to the inclusiveness of its compo-nent institutions.1 Therefore, financial systems that ignore entire geographic districts lose not only the business of hundreds of millions of small and medi-um-sized firms and depositors, but per-haps more importantly, the competitive advantage offered by establishing shared value in regions uncontested by rival firms.

Despite her capital rich cities, China still harbors a largely state-controlled commercial banking industry that ha-bitually shies away from virgin domestic markets. As a result, financially marginal-ized western cities like Wenzhou remain entangled in the throes of a cashless re-ality. They are defined by an entrenched system of loan-sharking and consumer abuse. However, China’s commercial banking industry stands at the doorstep of what may be the most profitable opportu-nity for domestic credit expansion to ever grace East Asia. The country suffers from a weakened but still threatening Shad-ow Banking sector currently undergoing searing political, social, and corporate scrutiny. Six hundred million western Chinese people cry out for a new and safer source of capital. Will China’s commercial banking network answer the call for cor-porate action?

A ROAD LESS TRAVELED: WENZHOU’S FAILING SOLUTION TO DRY CAPITAL MARKETS

Historically, cities lacking well-de-veloped access to capital have reacted in one of two ways. Some regions have sim-ply remained “without.” An example is Mumbai, India. In Mumbai prior to 1990, regional GDP regularly fell significant-ly below the national average as a result of what some economists have coined “localized growth bias.”2 This term de-scribes disparate economic performance as a function of variant capital access measures. In Mumbai as in China, banks and bankers exist to serve the needs of the corporate class. For decades, there has been no avenue (formal nor infor-mal) for those of lower socio-economic standing to receive desperately needed financial services. Lately, however, the ultra-poor have made noteworthy eco-nomic gains due in large part to firms like Grameen Bank and Acumen Fund.3 Meanwhile however, Mumbai’s burgeon-ing middle-class has remained locked in a precarious position of moderate wealth, recognized by firms like Grameen as too rich for microfinance, but by the Com-mercial Bank of India as too poor a mar-ket for banking privileges. Thus, over 50% of Mumbai natives are still without insti-tutionalized credit or capital.4

Regions like Wenzhou, facing a similar type of capital inaccessibility, have sought a different solution. In the late 1980s, Chi-na’s economic growth erupted after Deng Xiaoping opened the East Asian market to Western powers.5 Integral to Deng’s plan for increased Chinese economic prowess

was the creation of “Special Economic Zones” (SEZs) in the East. These SEZs boasted custom legal and commercial in-stitutions tailored to attract internation-al trade dollars.6 Prudently executed, the SEZs quickly monopolized foreign invest-ment contracts, leaving western Chinese cities like Wenzhou in relative economic squalor. The result of this power shift was somewhat predictable; China’s bank-ing agencies settled in the East, far away from struggling cities like Wenzhou in the West.7

Unlike Mumbai, however, Wenzhou’s city officials engineered an alternative financing scheme. They allowed non-reg-ulated financial entities—“Shadow Banks”—to serve a capital-hungry pop-ulation largely ignored by formal banks like the Industrial and Commercial Bank of China (ICBC).8

Today, once dominant Shadow Banks are under attack from Beijing. The storm has exposed an Achilles heel ripe for ex-ploitation by established Chinese com-mercial banking institutions. As a result, banks like ICBC stand poised to profit enormously by capitalizing on this cur-rent instability in western China’s un-regulated lending network. Moreover, competitive and lucrative expansion into virgin western credit markets would like-ly have positive social benefits. Namely, it would grant 60-70% of Mainland China’s inhabitants access to regulated systems of financial intermediation, accountable to the law.9

THE BENEVOLENT BANKER: LIBERATING CHINA FROM SHADOW BANKING ABUSE / 13

THE PERFECT STORM: BREAKING DOWN ICBC’S COMPETITIVE OPPORTUNITY TO EXPAND

From the late 1980s until fairly re-cently, informal lending arrangements have effectively serviced western Chi-nese provinces with growth-sustaining cash. Regional GDP growth has continu-ally been on par with that of Shanghai, at about 7-11% per annum. Business expan-sion has been rapid, and western China’s poster city, Wenzhou, has observed the emergence of a robust middle and upper class.10 Since the global financial crisis of 2008, however, the financial relationship between the Shadow Banks and borrow-

ers of western China has soured.11

Since 2008, three powerful stakehold-er groups have united against informal lenders. The first group consists of Chi-na’s Communist Party leaders, who have officially called for a reduction in Shadow Banking activity.12 The second group is comprised of increasingly wealthy and educated consumers. These individu-als have expressed the need for more sophisticated financial products.13 And finally, two million private corporations

headquartered in western China are de-manding immediate induction into the country’s formal financial network.14 This combined stakeholder pressure has increased the demand for what is sure to be a successful banking expansion.

The potential clash between ICBC and incumbent Shadow Banks has already been mitigated via recent policy changes that aim to outlaw unregistered lending. General Secretary Xi Jinping ’s legisla-tive move to wage war on Shadow Banks has reduced informal loan activity by an estimated 35%. Should ICBC expand, it would encounter significantly weakened resistance.15

This regulation follows a string of over

50 suicides in Wenzhou in late March of 2013. Early Bloomberg reports described the victims as overwhelmingly represen-tative of the city’s elite business class.16 Following further investigation, official UN reports traced the suicides back to informal loan agencies. These “shadow banks” had been illegally and aggressively pressuring debtors to repay on schedule despite their continued protests that cash was simply unavailable.17

This payment rigidity illustrates the chief sustainability and ethics issues with Shadow Banking. The industry is not legally compelled to abide by regu-latory statutes.18 This means that firms and households that borrow from infor-mal lenders have no means of renego-tiating payment schedules, or filing for bankruptcy. They can’t even lodge for-mal complaints of loan misconduct with China’s Commercial Banking Regulatory Commission (CBRC).19 If they cannot re-pay, they are abused, publicly defamed, and sometimes even harassed to the point of suicide.20 To defend the Chinese pop-ulace, the Party has stepped in to curb predatory lending practices. And in the

same stride, it has opened up a once mo-nopolized western credit market to com-mercial banking institutions like ICBC.

Average consumers have also con-tributed to the destabilization of western Shadow Banking regimes. As of 2013 year end, China’s GDP per capita was increas-ing at a rate 5 times that of the U.S. As a re-sult, an increasingly wealthy and educated population is exhibiting expected shifts in consumer tastes. Most notably, recent surveys conducted by the IMF show a

Six hundred million western Chinese people cry out for a new and safer source of capital.

Will China’s commercial banking network answer the call for corporate action?“

14 / JARED SCHULMAN

distinct shift in demand for sophisticated financial products among an aging pop-ulation looking to invest in mutual and exchange-traded funds.21 Younger demo-graphic groups are also experiencing an increasing affinity for online shopping, luxury goods, and previously unsought credit card services.22 On the supply side, incumbent Shadow Banks are confined to interest-bearing loans and very little else, thereby creating enormous unmet demand. And since Chinese households are among the world’s top savers by in-come, this ignored demand for sophisti-cated banking and investment products suddenly appears immensely profitable.

However, the most vocal in airing the need for financial revolution in west-ern China, are the region’s burgeoning private and quasi-private corporations. Accounting for over 40% of China’s eco-nomic output, these business stakehold-ers have been demanding formal financial inclusion since well before 2008.23 Voic-ing complaints often identical to west-ern Chinese consumers, these firms are in desperate need of regulated banking institutions. Shadow Banking loans car-ry an outrageously inflated interest rate 6-7 percentage points higher than com-mercial banks. Once again, this is due to a lack of regulation.24 As a result, since early 2003 western China’s leading entrepre-neurial firms have been petitioning Party officials to secure the provision of loans at a centrally monitored interest rate.25 Government-regulated banking advisory firms are also demanded by private cor-porations. These would allow growing western Chinese firms to begin trading publicly on international exchanges.

Most sought after by private enterprise however, appears to be the establishment of legitimate corporate financial services

for sophisticated financial maneuvers such as leveraged buyouts, and mergers and acquisitions. And while commercial banks may not operate in this sphere, their expansion would be a welcome first step in achieving this end.26 Altogether, the enthusiasm for regulated commer-cial banking services promises enormous benefits not only for ICBC, but for each of its many counter-parties.

REALISTICALLY SPEAKING: FORESEEN HURDLES AND SOLUTIONS IN ICBC’S EXPANSION

The extension of ICBC’s commercial banking services would be a corporate solution to a pressing societal problem. This would also represent a corporate action, which, if implemented with pru-dence and managed expectations, could prove highly profitable for ICBC. Howev-er, there are challenges associated with such a venture that warrant discussion.

First, thorough information is needed to assess growth strategies. Business ex-pansion would require a large initial capi-tal outlay on the part of ICBC. Such capital is needed to establish physical branches, local employee training, and other opera-tions. It is therefore strategically impera-tive that ICBC be able to sort productive from unproductive investments quickly and effectively. Fully vetted information can ensure that resources are allocated efficiently.

Fortunately, several options do exist for monitoring progress. One easily at-tainable metric would be a calculation of existing branches per town, city, and province. From this informational stand-point, other proxies for success could be developed. Some examples include re-gional customer traffic per month, rates

of checking and savings account cre-ation, and a comparison of loan repay-ment ratios by branch or region. These metrics would track data comparatively and serve as baseline indicators for op-erational success. ICBC could spread its investments strategically based on initial reports of success and failure. In this way, ICBC would maximize information while streamlining a western expansion. Proj-ect success would be maximized.

There are also systemic political im-pediments to expansion that might arise. The first of these obstacles lies within the very lending practices of China’s “Big Four” commercial banks. ICBC, the largest of the four, was nominally privat-ized in 2006 following an IPO on both the Shanghai and Hong Kong Stock Ex-change.27 To date however, the Chinese Communist Party still wields majority ownership of the company and influenc-es the lending and investment decisions of the firm. Should ICBC wish to make its western transition in the most efficient manner possible, the Party must relax its grasp on chief loan officers and exec-utives. It must allow the firm to make in-formed, credit-driven lending decisions based on the reliability of the borrower instead of encouraging capital allocation to fulfill a political agenda. After all, re-luctance from China’s banking network to lend to promising but politically unim-portant firms is what precipitated Shadow Banking’s rise in the first place.28 If ICBC makes the financial investment to push westward, serious changes to lending pol-icies are necessary.

Commercial banks have historical-ly avoided establishing a presence in western China due to high market entry costs, significant levels of poverty, lack of infrastructure, and enormous distances


between households, towns, and cities.29 What we’ve observed in recent decades however, is that despite the ethical and social negatives of Shadow Banking in places like Wenzhou, informal lending has been an extremely effective first step in developing what was once a rural farm-ing region into a thriving medium-sized industrial city. Thus, the modernity once featured only in China’s East is now ob-served throughout cities like Wenzhou as well. China’s once-forgotten West is ready to embrace a sophisticated commercial banking industry.

16 / JARED SCHULMAN

WIN-WIN: UNITING PROFIT-SEEKING WITH SOCIETAL NEED

Coupling the market share and power of ICBC with a virgin credit market 600 million strong is a recipe for mutual ad-vantage. Political heads, ground-level consumers, and private corporations all clamor for the death of Shadow Bank-ing and await the rise of China’s modern financial system. Meanwhile, firms like ICBC are in constant search of profitable new markets while the Chinese Commu-nist Party is in constant pursuit of public

approval and legitimacy. Such expansion could therefore enhance the reputation of both the Party and its closely guarded commercial banking sector in one move.

The stage is set for a new type of pro-ducer-consumer interaction—one that aligns the goals of each party, and puts ICBC on a path toward engagement linked to healthy profit. Hundreds of millions of voices from western villages, towns, and cities chant in cadence for economic em-powerment through financial inclusion.

So the question remains: will ICBC answer the call for corporate action? v

JARED SCHULMANBusiness & Political Economy ‘16

My paper is just one of many that are beginning to assess the major trends that will continue to shape China over the next decade. The country is expe-riencing and will continue to experience tremendous change that will affect most aspects of citizens’ lives. By encouraging the country’s state owned commercial banks to move west in supplying services to a vast segment of the population that remains un-banked, the CCP can grow revenue while solving a pressing societal challenge.“

1 Acemoglu, Daron, and James A. Robinson. Why Nations Fail: The Origins of Power, Prosperity, and Poverty. New York: Crown, 2012. Print

2 “India.” Central Intelligence Agency. Central Intelligence Agency, 23 Feb. 2012. Web. 06 May 2013. <https://www.cia.gov/library/publications/the-world-factbook/geos/in.html>.

3 Ibid.4 “Consulate General of the United States Mumbai, India.” 2013 Press

Release. N.p., n.d. Web. 12 May 2013. <http://mumbai.usconsulate.gov/press_releases_2013.html>

5 Vogel, Ezra. “Deng Xiaoping and the Transformation of China [Hardcover].” Sun-Yat Sen Business School. N.p., n.d. Web. <http://bus.sysu.edu.cn/en/News/Content.aspx?typeid=647f157e-8fa0-4ea0-8aa3-75761f1b6513&newsid=0f2b5b8c-736d-4042-b58b-f91192a897dd>

6 Ibid.7 Rana, Shruti. “The Development of the New Chinese Banking System:

Domestic Modernization or Global Financial Manipulation.” Law MC. N.p., n.d. Web. <http://law.mc.edu/files/1513/3406/8607/Rana%20Clean.pdf>

8 “ICBC Raised 19 Billion In World’s Biggest IPO.” Washington Post. The Washington Post, 20 Oct. 2006. Web. 12 May 2013. <http://www.washingtonpost.com/wpdyn/content/article/2006/10/20/AR2006102000207.html>

9 Lewis, John Wilson. “Population Distribution.” Encyclopedia Britannica Online. Encyclopedia Britannica, n.d. Web. 12 May 2013. <http://www.britannica.com/EBchecked/topic/111803/China/70992/Population-distribution>.

10 OECD (2011), “Regional contribution to GDP growth,” in OECD Regions at a Glance 2011, OECD Publishing. < http://www.oecd.org/gov/regional-policy/48339015.pdf>

11 Ibid.12 Rapoza, Kenneth. “How Scary Is China’s Shadow Banking System?”

Forbes. Forbes Magazine, 02 Apr. 2013. Web. 12 May 2013. <http://www.forbes.com/sites/kenrapoza/2013/04/02/how-scary-is-chinas-shadow-banking-system/>

13 “Wooing the Chinese Consumer.” Harvard Business Review. N.p., n.d. Web. 12 May 2013. <https://hbr.org/2012/02/wooing-the-promiscuous-chinese>

14 Ibid.15 Sheng, Andrew. “Lending in the Dark.” Project Syndicate RSS.

N.p., n.d. Web. 12 May 2013. <http://www.project-syndicate.org/commentary/the-risk-profile-of-chinese-shadow-banking-by-andrew-sheng-and-geng-xiao>

16 “Shadow Loans Hard to Squelch in China City Hit by Suicide.”

Bloomberg. N.p., n.d. Web. 06 May 2013. < http://www.bloomberg.com/news/2013-03-26/shadow-loans-hard-to-squelch-in-china-city-hit-by-suicide.html>

17 Prasso, Sheridan. “Flourishing Shadow Banking Poses Risks to China and India’s Stability.” Asia Society. N.p., n.d. Web. 12 May 2013. <http://asiasociety.org/blog/asia/flourishing-shadow-banking-poses-risks-china-and-indias-stability>

18 Ibid.19 Wang, Aileen. “China Needs Faster Financial Reform to Curb

Shadow Banking Risks: Think Tank.”Reuters. Thomson Reuters, 22 Apr. 2013. Web. 12 Feb. 2013. <http://www.reuters.com/article/2013/04/22/us-china-banking-shadow-idUSBRE93L0MK20130422>.

20 Barboza, David. “In Cooling China, Loan Sharks Come Knocking.” The New York Times. The New York Times, 13 Oct. 2011. Web. 12 May 2013. <http://www.nytimes.com/2011/10/14/business/global/as-chinas-economy-cools-loan-sharks-come-knocking.html?pagewanted=all&_r=0>.

21 Wong, Lin. “People’s Republic of China and the IMF.” People’s Republic of China and the IMF. N.p., n.d. Web. 12 May 2013.

22 Ibid.23 “Industry, Value Added (% of GDP).” The World Bank. N.p., n.d. Web.

12 May 2013. <http://data.worldbank.org/indicator/NV.IND.TOTL.ZS>.

24 Ibid.25 “Shadow Bankers Vanishing Leave China Victims Seeing Scams.”

Bloomberg.com. Bloomberg, n.d. Web. 12 Sept. 2012. <http://www.bloomberg.com/news/2012-09-12/shadow-bankers-vanishing-leave-china-victims-seeing-scams.html>.

26 Ibid.27 “ICBC Raised 19 Billion In World’s Biggest IPO.” Washington Post.

The Washington Post, 20 Oct. 2006. Web. 12 May 2013. <http://www.washingtonpost.com/wpdyn/content/article/2006/10/20/AR2006102000207.html>

28 “Shadow Bankers Vanishing Leave China Victims Seeing Scams.” Bloomberg.com. Bloomberg, n.d. Web. 12 Sept. 2012. <http://www.bloomberg.com/news/2012-09-12/shadow-bankers-vanishing-leave-china-victims-seeing-scams.html>.

29 Schwab, Deborah “China’s Hidden Risks: Shadow Banking and US Delisting.” China’s Hidden Risks: Shadow Banking and US Delisting. N.p., n.d. Web. 06 May 2013. <http://www.cfainstitute.org/learning/products/publications/contributed/Pages/china_s_hidden_risks__shadow_banking_and_u.s._delisting.aspx?WPID=AlsoViewedProducts>

D Photos by Andy Fang, NYU Stern ‘17


GREEN PIZZA BOXTHE

ESSAY BY JULIE CHEN

18 / JULIE CHEN

The volume of pizza eaten in the United States is stunning. Author Julie Chen takes a look at a new packaging technology that offers a simple, feasible mechanism, which will allow delivery pizza places to reduce their environmental impact. She calls upon Dominos Pizza Inc. to step up and make a change.

ESSAY BY JULIE CHEN

THE GREEN PIZZA BOX / 19

IN THE U.S. PIZZA IS A $38.7 billion industry with expected future growth of 2% per year.1

Quick-service restaurants account for 67% of the total

industry revenue.2 “During the period from 2003 to 2013, the delivery segment declined from $11.1 billion to $9.6 billion,” however, “…the carry-out segment grew from $12.1 billion to $14.6 billion.”3 This is because more and more people are opting for carryout pizza to save on delivery and dine-in costs. On the whole, people prefer delivery and carryout from quick service restaurants because of their convenience. Every year, 3 billion pizzas are sold in the U.S., and the last time someone ate pizza from a restaurant, 7 in 10 used takeout de-livery.4 Assuming 70% of pizzas sold each year are takeout or delivery, that’s at least 2.1 billion pizza boxes used annually in the U.S. alone.

Over 2 billion pizza boxes is a signifi-cant amount – because as ubiquitous as pizza boxes are, they are unfortunately not environmentally friendly. Pizza box-es are made from corrugated cardboard, which is recyclable. However after being used, the leftover oil and grease renders them unrecyclable. “Since the paper is mixed with water in a large churner, the oil eventually separates from the paper fibers. The oil does not dissolve in the water; instead it mixes in with the paper.”5 This makes an entire recycling batch unusable and incurs costs for recycling companies.

An added layer of complexity is that different municipalities have different policies for recycling pizza boxes. For ex-ample, New York City deems them unre-cyclable, whereas San Francisco requests that residents compost pizza boxes.6 It is difficult for national pizza companies to communicate how to recycle in an envi-ronmentally friendly way given that ap-proaches vary depending on location.

Pizza companies can control what their boxes are made of however. Unfor-tunately, while pizza boxes may include some recycled material, they are typical-ly made of 70% virgin wood.7 Introducing the GreenBox, a pizza box made of 100%

post-consumer recycled content and graphic design created with water-based ink. The top of the box is perforated to break into four serving plates –saving water from washing dishes and prevent-ing the need for wasteful paper plates. The bottom of the box is convertible to a storage box, avoiding waste associated with storing leftovers such as aluminum foil and plastic wrap. Moreover, with the multiple perforations, it is easier to break down the box to recycle parts that are not soiled by food.

The GreenBox has been featured in Time magazine, on Rachael Ray, and on CBS, among other news outlets.8 In 2010, Business Insider dubbed it one of the “15 most brilliant new ideas we’ve seen this fall”, with 87.1% of readers calling it bril-liant.9 The GreenBox also received a Re-sponsible Packaging Award, “recognized as much because it incorporates 100% post-consumer recycled content as for its ingenious and intuitive design that increases functionality for the consumer and drastically reduces the waste tradi-tionally associated with pizza packag-ing.”10 The GreenBox is already being used by places such as Whole Foods and several smaller pizza stores. However, it has not been adopted by any of the major players in the pizza industry in the U.S.

“In 2014, IBISWorld estimates the top four industry companies to represent 39.6% of total industry revenue, which indicates a low level of concentration

among the industry’s largest players.”11 The last time they ate pizza from a restau-rant, 75% of consumers got it from a ma-jor pizza chain.12 If any of these compa-nies started using the GreenBox, it would make a major environmental impact.

Domino’s Pizza Incorporated holds the second largest market share at 9.7%. Domino’s store count has been growing moderately, while its sales per store are increasing at an impressive rate, thanks to their popular new menu.13 Unlike the leading company, Pizza Hut (with 15.3% market share), Domino’s main focus is on delivery and carry-out.14 Domino’s is the market share leader in the delivery segment with a 23.6% share based on reported consumer spending and holds the second largest market share in the carry-out segment.15 Most, if not all, of Domino’s transactions require the use of a pizza box. “Domino’s delivered over 400 million…pizzas last year. That’s just over one pizza for everyone in the U.S.,” total-ing over 400 million pizza boxes.16

The Quick Service Restaurant industry in which Domino’s operates is extremely competitive, and it is vital that Domino’s is able to maintain their competitive posi-tion across all aspects of its business. The 2013 annual report states the following:

If we are unable to maintain our compet-itive position, we could experience down-ward pressure on prices, lower demand for our products, reduced margins, the

20 / JULIE CHEN

inability to take advantage of new busi-ness opportunities and the loss of market share, all of which would have an adverse effect on our operating results and could cause our stock price to decline.17

By introducing the GreenBox to their U.S. stores, Domino’s can build on a com-petitive edge in a new way. Domino’s has always been innovative, pioneering insu-lated pizza bags as well as the 3-D car-top signs.18 “We believe this focus on inno-vation, when coupled with our scale and share leadership, will allow us to grow our position in both U.S. pizza delivery and carry-out.”19 The innovation of the GreenBox directly correlates with Domi-no’s mission to bring innovative products to their consumers.

Economist Michael Porter agrees with such product differentiation and stresses shared value as well. “Strategy theory holds that to be successful, a company must create a distinctive value proposi-tion that meets the needs of a chosen set of customers.”20 Domino’s has identified its brand as, “particularly strong among pizza consumers for whom a meal is a fair-ly spontaneous event.”21 The functionality of the GreenBox focuses on convenience

in the carryout and delivery space and aligns well with the needs of Domino’s main consumer group.

In terms of feasibility, Domino’s is one of the largest domestic volume purchas-ers of pizza boxes.22 They have the ability to leverage their purchasing power with third party suppliers to manufacture the GreenBox for them. Yet the GreenBox blog states that their product is already affordable. “A lot of green products are eco-friendly, and that’s great, but they also cost five to ten times more,” on the other hand, the GreenBox is “right in line with other pizza box costs, and a great way to be green and stay within reason as far as costs go.”23

Domino’s has some flexibility in terms of which partners they choose to supply pizza boxes. Referring to multiple third party suppliers, they state, “while we may incur additional costs if we are required to replace any of our supply partners, we do not believe that such additional costs would have a material adverse effect on our business.”24 Domino’s adoption of the GreenBox seems both timely and advantageous.

Domino’s current box is used at 4,986 domestic stores. Yet while a large-scale

JULIE CHENFinance & Management ‘17

As a student club meeting finished I noticed the trash pile was huge with bulky pizza boxes. Then it occurred to me how much pizza all of my high school and college clubs ordered, and how many boxes we tossed out. I researched how environmentally-friendly pizza boxes are and was shocked with what I found, leading to the conception of my essay.“

Assuming 70% of pizzas sold each year are takeout or delivery, that’s at least 2.1 billion pizza boxes used annually in the U.S. alone.“

redesign would require significant up-front costs, Domino’s could leverage the fact that its franchise operations are di-vided into four regions.25 Domino’s could implement the new box by region, there-fore spreading out the upfront costs.

While the initial costs are significant, they are worth the long-term benefits. Waste that is not recycled goes into land-fills. Further, the number of landfills to-day is rapidly increasing, leading to higher possibilities of groundwater contamina-tion.26 Community action group WeGreen USA states, “The amount of waste collect-ed in an average American household is far greater than that of any developed or developing country in the world today.”27

Of course, landfills are not filled with mostly pizza boxes, but a large chain like Domino’s still has the ability to make a difference and set a strong environmen-tal example. The GreenBox improves the utility of the box itself and reduces other waste associated with pizza. It further increases Domino’s value as a company by “redefining productivity in the value chain.”28 The box fits with Domino’s inno-vative mindset, increases convenience for consumers, and creates opportunity for profit. Moreover, the shared value creat-ed, “is not on the margin of what compa-nies do but at the center.”29

The GreenBox introduces a slew of marketing opportunities for Domino’s. As evidenced by the amount of media attention the box has garnered on its own, Domino’s has the ability to use it to their advantage. In the past five years, Domino’s has invested over $1.4 billion in advertising within the United States.30

THE GREEN PIZZA BOX / 21

Through their strength in advertising, major brand presence, and widespread store base, they can promote the new box along with their efforts to be environ-mentally conscious and set themselves apart from their competitors. With the GreenBox, Domino’s has the opportunity to further associate their brand with in-novation and convenience.

Within social media, Domino’s cur-rently falls behind Pizza Hut in online mentions by over six million, tracked over a six month period.31 In an effort to increase their presence on social me-dia and stimulate the carry out segment of their business, Domino’s can launch creative online campaigns. For example, within two weeks of posting a picture on social media of you enjoying the new fea-tures of Domino’s box (with a designated hashtag), you might present the post at your nearest Domino’s for a discount on your order.

1 Brennan, Andy. “Rising Dough: Pizza Innovation and Improved Incomes Will Drive Demand and Revenue.” Rep. no. OD4320. IBISWorld. Apr. 2014. Web. 10 May 2014. <http://www.ibisworld.com/industry/pizza-restaurants.html>

2 Ibid. 3 Domino’s Pizza, Inc. 2013 Annual Report. BamSEC. Web. 10 May 2014. <http://www.dominos.com.au/media/68298/dpe_2013_annual_

report_web.pdf>4 Morris, David. “The Pizza Market in the U.S.: Foodservice and Retail.”

Rep. 2nd ed. Rockville: Packaged Facts, 2012. MarketResearch.com. Packaged Facts, Sept. 2012. Web. 10 May 2014. <http://www.packagedfacts.com/>

5 “Frequently Asked Questions: Contamination.” Stanford Buildings & Grounds Maintenance. Stanford University. Web. 10 May 2014.

<http://bgm.stanford.edu/pssi_faq_contamination>.6 Recology SF. “Residential Recycling, Composting & Trash Services.”

Recology SF – Recycling, Composting & Trash. Recology. Web. 10 May 2014. <http://recologysf.com/index.php/for-homes/residential-recycling-compost-trash>.

7 Wright, Jennifer. “Grads’ Backup Plans.” Bloomberg Businessweek. Bloomberg L.P., Web. 10 May 2014. <http://images.businessweek.com/ss/09/09/0903_grad_backup_plans/21.htm>.

8 “GreenBox Press.” GreenBox NY. GreenBox NY. Web. 10 May 2014. <http://greenboxny.com/PRESS.html>.9 Krueger, Alyson, and Eunju Lie. “The 15 Most Brilliant New Ideas

We’ve Seen This Fall.” Business Insider. Business Insider, Inc., 29 Nov. 2010. Web. 10 May 2014. <http://www.businessinsider.com/the-15-most-brilliant-new-ideas-weve-seen-this-fall-2010-11?op=1>.

10 “Now THAT’S How You Shift a Paradigm!!!” The GreenBox NY Blog.GreenBox NY., Web. 10 May 2014. <http://thegreenboxnyblog.blogspot.com/2010/10/now-thats-how-you-shift-paradigm.html>.

11 Ibid.12 Morris. 13 Brennan. 14 Domino’s Pizza, Inc. 2013 Annual Report.15 Ibid.16 “Pizza.” Domino’s. Domino’s. Web. 10 May 2014.17 Domino’s Pizza, Inc. 2013 Annual Report. 18 “Pizza.” Domino’s. 19 Domino’s Pizza, Inc. 2013 Annual Report. 20 Porter, E. Michael and Mark R. Kramer. “The Big Idea: Creating

Shared Value.” Business and Its Publics: Readings for Inquiry and Discourse. Vol. Spring 2014. McGraw Hill Education. pg 107-127. Print.

21 Domino’s Pizza, Inc. 2013 Annual Report. 22 Ibid. 23 “The GreenBox In The Carolinas: Wolfman Pizza Blazes The Trail!!!”

The GreenBox NY Blog. GreenBox NY. Web. 10 May 2014. <http://thegreenboxnyblog.blogspot.com/2010/09/greenbox-in-

carolinas-wolfman-pizza.html>.24 Domino’s Pizza, Inc. 2013 Annual Report. 25 Ibid. 26 “Landfill Problems.” WeGreen-USA. WeGreen-USA, Web. 10 May

2014. <http://www.wegreen-usa.org/landfill-problems.html>.27 Ibid. 28 Porter.29 Ibid. 30 Domino’s Pizza, Inc. 2013 Annual Report. 31 Martinez, Elizabeth. “Pizza Restaurants – US – November 2013 -

Social Media Overview.” Rep. Mintel. Nov. 2013. Web. 10 May 2014. <http://reports.mintel.com/display/637782/>.

32 Domino’s Pizza, Inc. 2013 Annual Report. D Photos courtesy of GreenBox

The GreenBox is a novel item that peo-ple would want to try for themselves and has a lot of potential to pique customer curiosity and drive sales. Domino’s oper-ates 10,886 stores internationally, includ-ing all 50 states and over 70 international markets.32 After successfully implement-ing the box through its stores in the U.S., Domino’s can further expand the Green-Box’s use across its international fran-chises to make a greater impact.

When corporations adopt the mindset of creating shared value, the corporation and society benefit in both direct and in-direct ways. In this instance, a business expert in consumer marketing and adver-tising may be more effective than govern-ment in raising awareness of an issue. By switching to the GreenBox, Domino’s has the ability to raise awareness about land-fills, waste, and recycling. Even if consum-ers are not ordering from Domino’s pri-marily for the environmental friendliness

of the box, they will likely become more aware of their own waste and recycling habits. Although reducing landfill waste may not be a priority for Domino’s, or the only reason for them to adopt the Green-Box, it is undoubtedly a societal issue that could benefit from the move.

Corporations are extremely powerful. They have the ability to spark changes in their competitors’ actions and the abil-ity to affect consumer mindsets. They can support the greater good, without compromising profitability. By bring-ing important issues into the spotlight through corporate action, even a small change such as switching pizza boxes can cause a domino effect. If all corpo-rations were to make decisions based on creating shared value, our society would benefit and improve over the long-term. And that’s powerful, too. v

22 / RIA SINGH

Ria Singh targets India’s “rape culture” with an essay that is both horrific and intriguing. The number of reported rapes in the world’s largest Democracy is more than unsettling, and the solution seems out of reach. Here, Ria calls for Bollywood’s largest film distributer to make a small change toward a large difference.

NEW DELHI, OLD MISOGYNY: THE INFLUENCE OF BOLLYWOOD / 23

The Influence of Bollywood

NEW DELHI,OLD MISOGYNY

ESSAY BY RIA SINGH

I WALKED THROUGH THE crowded market in the urban province of Munirka in New Delhi with my uncle in 2012. Even in my oversized tradi-

tional Indian kurti and my long pants, I could still sense men’s eyes ogling me, and a few even went as far as whistling and making lewd comments. Not six months after I returned to the U.S., a 23-year old woman coming from the movies in Mu-nirka with her male friend was attacked and gang raped on a bus in broad daylight. After receiving fatal wounds to her inter-nal organs, the young woman was thrown onto the busy street and left to die.

Today’s typical young woman in New Delhi is not unlike those in cities like London or New York. She buys her cloth-ing from shopping malls, texts, uses social media, and goes to coffee shops with her friends. However, unlike a young wom-an in other global cities, the New Delhi woman’s safety is in endless jeopardy. According to the National Crime Records Bureau, “a woman in India is raped every 20 minutes.”1 Rape culture in New Delhi has skyrocketed in recent years. Yet wom-en in New Delhi are not acting different-ly than women in London or New York; so why are rapes and gender violence so prevalent?

Society has begun to accuse the mam-moth Hindi film industry, Bollywood, and its negative portrayal of women in films for the increasing gender violence in New Delhi. While Bollywood generates about 1,000 films annually,2 very few feature notable lead actresses. These actresses or “item girls” portray wives, mothers, or

love interests and usually have roles that include over sexualized dance sequenc-es. In contrast, actors are the “heroes” in films and overshadow the actresses.

Although it is difficult to prove cau-sality, Bollywood undoubtedly reflects and perpetuates gender disparity and the views of a patriarchal society. Yash Raj Films is the main film production compa-ny in Bollywood releasing films with scan-dalous “item numbers” and love story plots. Yash Raj Films has the potential to change the portrayal of women on screen. By implementing a two-pronged plan, in-cluding releasing a new film with strong lead actresses and setting up community “think tanks,” Yash Raj Films can inspire change to combat rape culture and gender violence in New Delhi, India.

India is the world’s largest democracy, yet women in the capital city are alarm-ingly oppressed. The fear of being sexu-ally harassed or even raped at any given moment hovers over women’s heads. According to Sex Roles: A Journal of Re-search, over 25,000 cases of molestation and 12,000 rapes were reported in 1995 in New Delhi.3 As of 2013, the Nation-al Crime Records Bureau reported over 33,000 rape cases.4 Besides physical as-saults and violence, women in New Delhi face constant harassment in the form of “eve teasing.” The term itself is a euphe-mism in India and includes, “stares, com-ments or remarks, verbal abuse, [or] an unwelcome touch.”5

After the brutal bus gang rape in Mu-nirka, women’s rights demonstrations swept through the capital city; however, no solid progress has been reported and

countless horrific incidents continue.6

Rapes and violence against women in In-dia has, in fact, risen by 7.1% since 2010.7

According to The New York Times, “so-ciologists and experts say the attacks are the result of deeply entrenched, misogy-nistic attitudes and the rising visibility of women.”8 It is certainly difficult to prove that there is one main cause for gender violence in New Delhi; however, Bolly-wood is a potent source that perpetuates gender stereotypes in Indian culture and has reflected the values of the public for decades.

In the 1999 report, Making Sex Vi-olent: Love as a Force in Recent Hindi Films, Steve Derne analyzed 108 scenes from nine Hindi films.9 The scenes were rated using a coding scheme for presence of sexual violence, primary perpetrators and victims, gender, and severity of sex-ual violence.10 The study concluded that the films “conveyed the notion that force and physical aggression were legitimate means of expressing romantic love.”11

Various age groups watch Bollywood films and avoiding issues of sexuality at home is the cultural norm. Therefore, Indian films portray an “arena for the construction of sexuality for the common person, and serve as primary sources…about how men and women are to behave in sexual rela-tionships.”12 In a different study on sexual violence in India, the Journal of the Indian Academy of Applied Psychology published an in-depth study about eve teasing. Ac-cording to the study, out of 100 males in-terviewed, “76% think that the influence of cinema/satellite channels is responsi-ble for eve teasing in society”13 and “70%

24 / RIA SINGH

of the [100] female respondents said that they ignore the situation because they feel that they are alone and helpless.”14

The media, including Bollywood, is influential in shaping the culture of Hin-di-speaking regions of India. If the power of persuasion did not exist, then corpora-tions would not spend billions of dollars on advertising in films and on television.15 Although trying to measure the magni-

tude of Bollywood’s influence is difficult, the public’s perception of Bollywood shows that there is a fundamental link between India’s film industry and gender disparity. Take the new hit film Dhoom 3 by Yash Raj Films, for example. The main character, Sahir, played by Aamir Khan, runs an Indian-themed magic show in Chicago. In an early scene in the movie, Sahir is looking for an assistant and Aa-liya, played by actress Katrina Kaif, ap-pears in jeans, a trench coat, and glasses to the interview. Her audition scene also happens to be an “item number” song and dance, and she begins peeling off her layers of clothing until she bears a scanty, revealing outfit. During her scene, Sahir is sitting in a chair and enjoying the “audi-tion”, while Aaliya teases him. Through-out the rest of the film, Aaliya has no sub-stantial lines, no character development, and is a love interest for the “hero” in the final scenes of the film.

Song lyrics in item numbers are vul-gar and openly promote eve teasing and even acts of sexual aggression. The song “Sheila Ki Jawani,” from the movie Tees Maar Khan, for example, depicts Ka-trina Kaif provocatively dancing in an indecent outfit singing disturbing lyrics.

She is surrounded by a group of men and exclaims, “I know you want it but you’re never going to get it, tere haath kabhi na aani (I won’t ever come into your hands).”16 She further provokes the men by saying “I’m too sexy for you…silly boys. They follow me. They start softly whis-pering.”17 While women are presented as sexual teases and objects for the “heroes” to enjoy, they are also routinely chased

and harassed by men. The Times of In-dia, in describing the film, adds: “There could hardly be a more graphic message: if you harass a woman enough, no matter how often she says no, she will ultimate-ly say yes.”18 Such elements of Bollywood undoubtedly over-sexualize and exploit women. If Yash Raj Films continues to create the typical ‘love story’ films that promote gender disparity, the situation in New Delhi will not improve.

Film festivals presenting movies about India are expanding internation-ally. The Indian Film Festival of Los An-geles, for example, shows films made by independent Indian filmmakers, who are putting forth novel themes in their films compared to the typical Bollywoord fare.19 Sold is one of the films at the festi-val, and it is about a 13-year old girl sold into prostitution. The filmmaker, Jeffrey Brown, describes how he wanted the film to be a “call to action globally for people to take a stand against child prostitution and slavery.”20 The film explores serious social issues, but still has song and dance numbers, thus appealing to the same en-tertainment-driven audiences that Bolly-wood relies on. Foreign filmmakers high-lighting new and complex themes in their

films (which are made in and about India) threaten the legitimacy of traditional Bol-lywood features.

Furthermore, the global market for In-dian films has the potential to skyrocket, given the popularity of Indian entertain-ment around the world. Countries such as Bangladesh, Nepal, Sri Lanka, and even Japan, Germany, and Russia already have sizeable audiences for Bollywood films.21

By introducing new films about India with diverse, complex plots, the global market demand for Indian films could continue to grow, including in Hollywood. Slum-dog Millionaire is a clear example of a successful film about India not associat-ed with Bollywood. The film won “eight Oscars, including best picture, and made $377 million at the worldwide box of-fice.”22 Slumdog Millionaire included song and dance sequences, but it also exposed important social issues like poverty and prostitution. New kinds of Indian films and Indian film festivals in other coun-tries have the potential to overshadow Bollywood.

Yash Raj Films has the opportunity to make a significant impact on Bollywood and promote Indian culture in the glob-al market. Opponents of the idea that Bollywood over sexualizes women and contributes to rape culture claim that the industry is solely for entertainment. Yet if audiences were content with the way Bollywood creates movies, then why was Slumdog Millionaire so wildly success-ful on a global scale? By implementing a low budget two-pronged plan, Yash Raj Films can appeal to new markets while also building a reputation as a company

Yash Raj Films has enough power and influence to change the

portrayal of women on screen.“


that creates shared value, “which involves creating economic value in a way that also creates value for society by addressing its needs and challenges.”23

The first prong of the plan would be for Yash Raj Films to create a new, ground-breaking film to compete with those In-dian films like Slumdog Millionaire, ap-pearing around the world. Even within Bollywood, Yash Raj Films’ competitor Eros Entertainment recently released

an innovative film with a plot other than the typical ‘boy meets girl’. Zindagi Na Milegi Dobara (You Won’t Get Life a Sec-ond Time) is a film that features three male best friends going on an adventure to Spain before one of them gets married. While the film does have some referenc-es to love, it is ultimately a comedy and drama about friendship and living life to the fullest. According to IMDB, the film had a gross profit of $3,076,226 in the United States.24 Rather than releasing yet another film where an actress is por-trayed as a love interest dancing around in

revealing clothing, Yash Raj Films could create a revolutionary film starring strong actresses.

Films featuring strong female leads have recently had incredible success. Fro-zen, for example, is the highest grossing animated movie of all time.25 Rather than being a film about the princess finding her prince charming, it is a movie about sisters and female empowerment. A Bollywood movie inspired by Bridesmaids, Mean

Girls, or even Frozen could become a global blockbust-er. Although animated mov-ies and Bollywood movies exist in different realms, international audiences are craving movies with new themes like gender equality and female empowerment.

To further promote their new film, Yash Raj Films could release a television trailer that also includes messages from the actress-es about empowerment. Trailers for Bollywood films usually include clips from the “item numbers.” However, by airing a trailer with empowering messages, Yash Raj Films could reach the New Delhi community in a new way. Karan Johar, a film director, stated to BBC News that Bollywood’s cur-rent reach in cinema halls is, “limited to 45 million.”26 However, 76.7% of urban

households in India own televisions.27 Therefore, Yash Raj Films can advertise the new film to a wide audience while also sending a powerful message through the media.

One concern the company may have is the failure of the film. Yet audiences will likely be intrigued to see the film, pre-cisely because it is breaking barriers by introducing concepts new to Bollywood. Furthermore, if the media deems the film controversial, the public will want to see for themselves what exactly is so

controversial – thus generating more po-tential revenue for Yash Raj Films.

Changing the mindset of a country requires no less than a cultural tsunami, and an important step in creating social change is starting the conversation. The second point of the plan would be for Yash Raj Films to sponsor community “think tanks,” or public areas where the community can get together and discuss social problems to come up with new solutions. A model corporation that Yash Raj Films can follow is BMW and their Guggenheim Lab initiative. The BMW Guggenheim Lab travels to different cit-ies across the globe to set up temporary community spaces where citizens come together and discuss pressing social is-sues.28 One of the Lab sessions was held in Mumbai from December 9, 2012 through January 20, 2013. Throughout the Lab, BMW sponsored over 165 free programs including workshops, film screenings, talks, and community roundtable discus-sions where citizens could discuss press-ing social challenges with each other.29 Today, the physical structure where the Lab events were held serves as a perma-nent space where community members can still gather.

Yash Raj Films could sponsor a low-cost initiative like the BMW Lab to inspire conversation among communities in New Delhi, and even satellite spaces so more people can become involved. The “think tanks” will urge communities to take ac-tion against violence. Communities can set up neighborhood watch programs and decide how to implement safety mea-sures like distributing rape whistles and pepper spray. Yash Raj Films can also partner with other large corporations in the food industry, fashion industry, and automobile industry to continue to grow their efforts and attract a larger portion of the community. Of course, creating the events, speakers, and discussions would take time and careful planning, and the overall cost of the structure and adver-tising will require some funding. Yet the space that Yash Raj Films creates in New Delhi can be used as a center for its own New Delhi film festival and can showcase

26 / RIA SINGH

1 Tulshyan (2), Ruchika. “Rape Every 20 Minutes For The World’s Largest Democracy?” Forbes. Forbes Magazine, 02 Jan 2013. Web. 11 May 2014. <http://www.forbes.com/sites/worldviews/2013/01/02/rape-every-20-minutes-for-the-worlds-largest-democracy>.

2 Ghosh (1), Palash. “Bollywood At 100: How Big Is India’s Mammoth Film Industry?” International Business Times. 3 May 2013. Web. 11 May 2014. <http://www.ibtimes.com/bollywood-100-how-big-indias-mammoth-filmindustry-1236299>.

3 Ramasubramanian, Srividya, and Mary B. Oliver. “Portrayals of Sexual Violence in Popular Hindi Films, 1997–99.” Sex Roles: A Journal of Research 48.7-8: 327-36. Springer Link. Web. 4 May 2014.

4 PTI. “Statistics: 92 women raped in India every day, 4 in Delhi.” India Today. 24 Sept. 2014. Web. 24 Dec 2014. <http://indiatoday.intoday.in/story/indiarape-92-women-every-day-4-delhi-statistics/1/380956.html>.

5 Ghosh (2), Deepa. “Eve Teasing: Role of the Patriarchal System of the Society.”Journal of the Indian Academy of Applied Psychology 37 (2011): 100-07. Web. 4 May 2014.

6 Tulshyan (2).7 Tulshyan (1), Ruchika. “How Bollywood Is Failing The Women Of

India.”Forbes. Forbes Magazine, 19 Apr. 2014. Web. 11 May 2014. <http://www.forbes.com/sites/ruchikatulshyan/2014/04/19/how-bollywood-is-failing-the-women-of-india/>.

8 Timmons, Heather, and Sruthi Gottipati. “Indian Women March: ‘That Girl Could Have Been Any One of Us’.” The New York Times. The New York Times, 30 Dec. 2012. Web. 5 May 2014. <http://www.nytimes.com/2012/12/31/world/asia/rape-incites-women-to- fight-culture-in-india.html?pagewanted=all&_r=0>.

9 Derne, S. (1999). Making Sex Violent: Love as Force in Recent Hindi Films. Violence Against Women, 5, 548–575.

10 Ibid.11 Ibid.12 Ibid.13 Ibid.14 Ibid.

15 Bhasin, Kamla. “India: Republic Day Thoughts: For A Gender just World, be the Change.” Women’s Feature Service: 1. Jan 21 2012. ProQuest. Web. 11 May 2014. <http://www.countercurrents.org/bhasin230113.htm>.

16 “Sheila Ki Jawani.” - Bollywood Song Lyrics Translations. Web. 11 May 2014.

17 Ibid.18 Aiyar, SA. “Films Sanctify Pestering and Stalking of Women.” The

Times of India. Web. 11 May 2014.19 Sinha-Roy, Piya. “Move over Bollywood: U.S. Festival Spotlights

Independent Indian Films.” Reuters. 08 Apr. 2014. Web. 11 May 2014. <http://www.reuters.com/article/2014/04/08/us-indianfilmfestivalidUSBREA3729620140408>.

20 Ibid.21 Ghosh (1). 22 Sinha-Roy.23 Kramer, Mark R and Porter, Michael E. “The Big Idea: How to Create

Shared Value.” Business & Its Publics. New York, NY: Stern School of Business, New York U, 2014. 107-27. Print.

24 “Zindagi Na Milegi Dobara.” IMDb. IMDb.com. Web. 11 May 2014. 25 Gomez, Jeff. “Why ‘Frozen’ Became The Biggest Animated Movie Of

All Time.” Business Insider. Business Insider, Inc, 01 Apr. 2014. Web. 11 May 2014. <http://www.businessinsider.com/why-frozen-is-a-huge-success-2014-4>.

26 Ghosh (1).27 “Half of India’s Homes Have Cellphones, but Not Toilets.” The Hindu.

Web. 11 May 2014. <http://www.thehindu.com/news/national/half-of-indias-homes-have-cellphones-but-not-toilets/article2992061.ece>.

28 “Mumbai Lab Locations.” Mumbai Lab. Web. 11 May 2014. 29 Ibid.30 Novogratz, Jacqueline. “Business & Its Publics Plenary.” Paulson

Auditorium at the NYU Stern School of Business. March 10, 2014.D Photos by flickr.com/meanestindian

Indian films with meaningful messages like the ones shown at the Indian Film Festival of Los Angeles. The site can serve as an outdoor space for the premiere of the new, groundbreaking film Yash Raj Films releases. Not only would the film get publicity, but their corporate social responsibility initiatives would also re-ceive notice.

Jacqueline Novogratz, the CEO of the non-profit Acumen, described the funda-mental idea that “human dignity is more important to the spirit than wealth.”30 Hu-man dignity does not exist in the revolting rape culture spreading throughout New Delhi. I remember hearing about the hor-rifying gang rape that happened on De-cember 16, 2012 in Munirka. That young

woman could have been anyone. Had I not left India six months earlier than I did, it could have even been me on that bus. Yash Raj Films has enough power and influ-ence to change the portrayal of women on screen. While results would not be easy to measure, empowering women on screen and hosting community discussions are crucial steps to inciting social change. v


RIA SINGHFinance & Marketing ‘17

I was inspired to write about my topic because of my Indian heritage and my frequent visits to India. A lot of gender violence was happening right next door to my family’s home in New Delhi, and it felt personal to me, being so close to what was going on. I know there is no easy solution to gender violence like rape and other brutality, but I wanted to start uncovering some causes and potential solutions.“

28 / PATRICK LEE

Human trafficking takes a different turn with this essay, as Author Patrick Lee describes a nefarious system of bait-and-switch targeting young male African football players. Eager to become stars in Europe, boys are enticed to leave their home country and then abandoned with no financial means to return. Patrick recommends immediate action from NIKE, explaining how the corporation can change this practice from within the system.

ABOLISHING MODERN-DAY SLAVERY FROM FOOTBALL ESSAY BY PATRICK LEE

ABOLISHING MODERN-DAY SLAVERY FROM FOOTBALL / 29

30 / PATRICK LEE

ON JANUARY 2009, A 16-year-old boy named I b r a h i m Ka r a b o u r é was abandoned in a ho-tel in Paris more than

4,000 miles away from his home. Just about a month before, an agent who in-troduced himself as Jean-Michael ap-proached Ibrahim in Abidjan, Ivory Coast with a promise that he would make him a famous professional football player in Europe – all for a fee of 1 million West African CFA francs, or approximately USD 1,850. Blinded by his eager ambi-tion to become the next Didier Drogba,

an Ivorian national football hero with a glittering professional career in Europe, Ibrahim immediately borrowed money from his friends and followed Jean-Mi-chael who paid for his plane ticket and a fake passport with an older birthday. Ibrahim spent the next few weeks on tri-al runs, playing with a team from Dubai and other non-European football teams before being abandoned on his first night in Europe. Now Ibrahim plays for an eight-division team in Les Clayes-sous-Bois, France; most of the players on his team are high school students who play football only as a hobby.1

Ibrahim Karabouré’s story is a glimpse into a rather unrecognized form of hu-man trafficking that plagues the football community worldwide. However, the trafficking of young Africans players to Europe is neither an unusual nor a recent phenomenon. Back in 2005, Belgian Sen-ator Jean-Marie Dedecker, investigated and uncovered 442 cases of illegal trade of Nigerian footballers to Belgium alone; in 2012, a special report from a British sports channel approximated that “as many as 20,000 footballers have been il-legally shipped from Africa to Europe.”2,

3 This vicious cycle of human trafficking


continues to thrive and expand because the structure of trade has already been established between African and Europe.

The initial stage of the network begins at unlicensed “football factories” – camps without trainers or proper training fa-cilities that are spread out along rural African roadsides. As the name “factory” suggests, these unlicensed facilities view their students as commodities and in-vestments. This dangerous business-only mindset begins with a “hard-sell” that en-tices some children out of normal school-ing and into full-time football training. Moreover, since the academies are not

affiliated with any formal football club or federation, the players are not pro-tected by FIFA regulations. With a lack of education and protection, players find themselves vulnerable to exploitation. Foreign agents, both licensed and unli-censed, sign players from these facilities with intentionally ambiguous and tightly binding pre-contracts, which authorize the agents to sell players to European clubs. However few lucky players actually sign contracts with professional football clubs. Most of the players are abandoned by their agents and enter a life of prostitu-tion, drugs, and crime.4, 5

The issue of human trafficking of young footballers has attracted a lot of attention in recent years. Legendary Ital-ian football player and current president of the Union of European Football Asso-ciation (UEFA), Michel Platini, addressed this issue in 2007, remarking that “it’s necessary for European football to recov-er its humanity, to put an end to bogus

transfer of adolescents.”6 Consequently, UEFA banned international transfers of players younger than 18. Nevertheless, agents like Jean-Michael forge their play-er’s birthdates and other clubs often turn a blind eye to this age restriction.

With such ineffective regulation, NGOs take matters into their own hands. One group, Culture Foot Solidaire, is helping hundreds of stranded African youngsters return to their homes in Af-rica. Nevertheless, the founder of the or-ganization admitted, “more needs to be done to curb the problem,” because NGOs lack the preventive measures to tackle the

root of the issue.7

With both the state and the commu-nity sectors failing to stop trafficking, the responsibility of thwarting social injus-tice should fall into the hands of the mar-ket sector. From a market perspective, exporting players to foreign countries can be perceived as simple business op-erations and human trafficking as essen-tially a market failure. One might address this issue through purely philanthropic means. Yet another option remains. Por-ter and Kramer’s essay “The Big Idea: Cre-ating Shared Value,” offers a unique solu-tion of creating shared value. It describes ways in which corporations can advance social conditions by altering their oper-ating practices without having to devalue their assets.8 In fact, creating shared value is a very effective solution to this problem.

Corrupt football academies act as sup-pliers selling young players to foreign customers. In doing so, young players are considered commodities. From the

neocolonial perspective of football acad-emies and their agents, training and ex-porting players is fundamentally equiva-lent to “procurement, refinement, and export of natural resources.” 9 However, if external corporations enter the market and restructure the product, shifting a commodity view to one of educated play-er with professional potential, they can address the problem and gain economic benefit.

Eliminating this social injustice by creating shared value would be most ef-fective if Nike, Inc. takes charge. Domes-tically, Nike has already engaged in corpo-

rate social responsibility (CSR) activities involving football by launching programs such as NikeGO in Washington DC, an af-ter-school program that encourages phys-ical activities for children.10 Now would be a good time to expand their CSR outside of the United States, explore shared val-ue, and improve their corporate image internationally.

Nike is uniquely positioned to tackle this issue because it has prior experience in building football-training facilities. One such training center, the Nike Acade-my in England, already holds annual glob-al competitions in 55 countries in search of young football talent. Further, Nike has an established brand image already asso-ciated with football via endorsements. For 45 days prior to the 2014 Brazil World Cup, Nike initiated a campaign called “Risk Everything”. It included a 4-minute video starring football superstars such as Cristiano Ronaldo and was designed to increase the excitement and anticipation

With the failure of both the state and the community sectors to stop

trafficking, the responsibility of thwarting social injustice should fall into the hands of the market sector.“

32 / PATRICK LEE

for the World Cup worldwide.11 By acting on its strengths, Nike can attack social in-justice related to football, boost its brand image, and reinforce its position as the leading sports retailer.

The first step Nike needs to take is to design a system of football academies that not only targets football training, but also provides a proper education for its students. Current football factories are solely focused on developing pro football players rather than promoting well-rounded individuals; both approach-es are required. The importance of a com-plete education for developing athletes is well illustrated by La Masia, Barcelona’s youth football academy. La Masia is re-nowned for emphasizing a well-rounded education and for encouraging humanis-tic development as wholesome individu-als – individuals not exclusively defined by their athletic abilities.

Needless to say, La Masia is the top youth system in the world and has pro-duced a number of world class players.12

Nike could develop a similar arrange-ment. The students in a Nike football academy would attend regular school hours during the day followed by football

training in the afternoon. Aside from pro-ducing more skilled players, this system would be designed to improve the lives of students who are not able to make it to the professional level. When players like Ibrahim are not talented enough and lack education, they have few options; poverty is a likely outcome. Players with a richer education, however, would be in a position to explore different professional options.

Before building any structure of foot-ball academies, Nike would need to in-vestigate the new value chain. The most effective way for Nike to accomplish this is through a partnership with UEFA. This governmental organization, which oversees all of the 202 football clubs and 60 thousand registered professionals in Europe, can statistically analyze and pinpoint the best locations for construct-ing Nike academies throughout Africa to meet the demands of the youngsters that dream of becoming professional football players. In essence, the new Nike Foot-ball Academy would solve the problem by allowing sales and production to grow to meet market demand. Student play-ers will more likely enter Nike Football

Academy because it provides better train-ing and education. Agents will prospect in these legitimate and licensed facilities because the quality of players from Nike Academy will likely be higher than oth-er academies. Naturally, Nike academies will drive the “football factories” out of business.

In order for this plan to work however, market corruption will need to be elimi-nated. Hence, the UEFA should issue licenses to agents who want to use the facility to scout young players. In order to earn this license, agents would need to pass the required tests and complete an interview process. Moreover, UEFA should implement a system to oversee all graduates of these academies and li-censed agents to ensure that no young-sters are being exploited. The players and agents will be required to periodically update their progress electronically while agents help players sign with professional football teams. Throughout, players will be protected by existing UEFA and FIFA regulations.

The final step that Nike can take to maximize its shared value is to enable cluster development. The cluster can be seen in two different ways. First, the network of football academies, agents, players, and football clubs, is a cluster of market components. Nike and UEFA should create a virtual database in which Nike constantly updates the basic infor-mation and progress of each of its play-ers. In return, football clubs will update what type of players they are looking for in the next trials and any other relevant information. With a transparent flow of information, all of the stakeholders in the system will benefit. The second form of cluster development is local econom-ic stimulation around the Nike football academies. To enable this, Nike can hire proficient trainers and coaches around the community to draw them away from illegal football academies. Moreover, Nike needs to hire teachers and other neces-sary professionals to run their academies smoothly. These new facilities will not only deter child trafficking, but will also


PATRICK LEEFinance & Mathematics ‘17

As I was reading the accounts of the children who were abandoned in the streets of Europe, I was surprised how easily they were persuaded to follow strangers halfway around the globe, and how easily they could have prevent-ed their eventual fate if they had been smarter and more careful. I have been watching European football and the famous sports stars on TV since I was in middle school but never once considered the ‘losers’ of the whole system. I think these stories really bring out the dark side of the winner-takes-all society that we live in today.“

1 Biermann, Christoph, and Maik Grossekathöfer. “A New Slave Trade? Europe’s Thirst for Young African Footballers – Spiegel Online.” Spiegel Online. N.p., 4 June 2010. Web. 11 May 2014. <http://www.spiegel.deinternational/world/a-new-slave-trade-europe-s-thirst-for-young-african-footballers-a-698508-4.html>

2 Dey, Srinwantu. “The Soccer Slaves.” Goalden Times The Soccer Slaves Comments. N.p., n.d. Web. 19 Nov. 2014. <http://www.goaldentimes.org/2013/08/03/the-soccer-slaves/>.

3 “Footballs Slave Trade.” SkySports. 27 Mar. 2012. Web. 11 May 2014. <http://www1.skysports.com/football/news/20438/7620180/footballs-slave-trade>.

4 “Labour Migration, Human Trafficking and Multinational Corporations.” Google Books. Ed. Ato Quayson and Antonela Arhin. Routledge. Web. 11 May 2014. <http://books.google.com/books?id=4xNJlLwyrnQC>.

5 McDougall, Dan. “The Scandal of Africa’s Trafficked Players.” The Observer. Guardian News and Media, 06 Jan. 2008. Web. 11 May 2014. <http://www.theguardian.com/football/2008/jan/06/newsstory.sport4>.

6 Scherrens, Jonas. The Muscle Drain of African Football Players to Europe: Trade or Trafficking? Rep. Print.

7 Aarons, Ed. “African Trafficking ‘growing’” BBC Sport. 14 Oct. 2011. Web. 11 May 2014. <http://www.bbc.com/sport/0/football/15296412>.

8 Porter, Michael E., and Mark R. Kramer. “The Big Idea: Creating Shared Value: How the Reinvent Capitalism-and Unleash a Wave of

Innovation and Growth.” Harvard Business Review. Jan 2011. Web.9 Biermann, Christoph.10 “NikeGO and the United States Soccer Foundation Award Eight

$100,000 Grants to Communities Dedicated to Getting Kids Active through the Game of Soccer.” RSS. 27 May 2004. Web. 11 May 2014. <http://www.csrwire.com/press_releases/24936-NikeGO-and-the-United-States-Soccer-Foundation-Award-Eight-100-000-Grants-to-Communities-Dedicated-to-Getting-Kids-Active-Through-the-Game-of-Soccer>.

11 Calvillo, Jorge. “Cristiano Ronaldo, Neymar, Piqué and The Incredible Hulk Together in New Nike Ad for the Brazil World Cup [Video].” Latinos Post RSS. 29 Apr. 2014. Web. 11 May 2014. <http://www.latinospost.com/articles/36468/20140429/cristiano-ronaldo-neymar-piqu%25C3%25A9-and-the-incredible-hulk-together-in-new-nike-ad-for-the-brazil-world-cup-video.htm>.

12 Longman, Jeré. “Growing Players on Home Soil in Spain.” The New York Times. The New York Times, 26 May 2011. Web. 11 May 2014. <http://www.nytimes.com/2011/05/27/sports/soccer/la-masia-a-model-for-cultivating-soccer-players.html?pagewanted=1&_r=0>.

13 Frank, Robert H., and Philip J. Cook. The Winner-take-all Society: Why the Few at the Top Get so Much More than the Rest of Us. New York: Penguin, 1996. Print.

D Opening spread photo by flickr.com/joshjdss Dominant photo by flickr.com/103706303@N04 Secondary photo by flickr.com/gatesfoundation

help to improve the economy around the community as well.

With the expansion of Nike Football Academy across Africa, Nike can pursue additional projects that create shared value. For instance, customers in Amer-ica and Europe can bring in their old Nike football cleats and other football products to Nike stores to donate to chil-dren abroad who can’t afford cleats. In return, Nike might offer a small discount on their purchase. Through this market-ing strategy, Nike will encourage their current customers while also financially

benefitting both their customers and Af-rican children.

Of course, even with all these addition-al measures, the Nike Football Academy itself will be unable to accommodate all the children that want to be professional football players. From a societal stand-point, those who fail trying to become the greatest players in Europe are victims of today’s winner-take-all society. Not ev-eryone that graduates from Nike football academy will be able to strike it rich and be famous. Professors Frank and Cook men-tion that the intense competition for the

top level generates, “unproductive pat-terns of consumption and investment.”13

Therefore, the most important role of Nike Football Academy will be to focus the school not solely on football, but to also in-tegrate regular school curriculum as these children develop into adults. Moreover, as the Nike Football Academy expands, oth-er facilities will hopefully follow suit and start to develop their players in a simi-lar way. In the end, the overall quality of football in Africa will slowly increase and players will not necessarily have to turn to Europe to achieve their dreams. v

34 / STEPHEN KRAFCIK

AERIFORM GOLD:

Capturing Methane for Profit and Social Value

Author Stephen Krafcik sees “flaring” – long associated with natural gas operations – and wonders why valuable fuel is being leaked or burned off rather than collected. He cites innovative technologies that now make it possible to capture this wasted methane and notes that regulation is close behind. Combining foreign policy, environmental responsibility, and shared value, Stephen argues that Royal Dutch Shell should take its first steps in Majnoon, a major oil field in southern Iraq.

AERIFORM GOLD: CAPTURING METHANE FOR PROFIT AND SOCIAL VALUE / 35

AERIFORM GOLD:ESSAY BY STEPHEN KRAFCIK


TWENTY-FIVE YEARS ago, one of the worst oil spills in United States history took place in Prince William Sound on

the Gulf of Alaska; the supertanker Exx-on Valdez ran aground, spilling some 10.8 million gallons of oil.1 Public outrage and a flood of new regulations followed. Then in 2010, BP’s Deepwater Horizon drilling platform exploded, killing 11 workers and flooding the Gulf of Mexico with 4.9 mil-lion barrels of oil.2 It was by far the largest oil spill in world history, and a watershed moment for the oil and gas industry.

Since those spills and the emerging zeitgeist related to climate-change, oil and gas companies worldwide have been taking steps to better their public images by generating value for their stakehold-ers. Some companies have begun to invest in alternative energy; others have made efforts to promote STEM education; and many have taken a role in protecting and serving the communities in which they operate.3

With these socially responsible trends in mind, Royal Dutch Shell should look to become a leader in developing sus-tainable operations, creating shared val-ue, and curbing negative externalities. While there are many available options, the most profitable and influential move Shell could make now to establish itself as a clean, forward-thinking business is to begin capping methane emissions from operations worldwide. As a first step, Shell can start with the Majnoon oil field in Iraq.

THE PROBLEMMethane is the main component of

natural gas, which, when vented or leaked directly into the atmosphere, is far more dangerous than carbon dioxide – within 20 years of its emission, methane is 84 times more potent.4 The Environmen-tal Defense Fund’s Chief Scientist, Steve Hamburg, has said, “By emitting just a lit-tle methane we’re greatly accelerating the rate of climatic change.”5

From 2012 to 2013, Shell’s green-house gas emissions (GHG) increased

by 1 million tonnes on a CO2-equivalent basis. One reason for the increase, cites Shell management, is the restart of large-scale production at Majnoon in Iraq; and Majnoon is one of the few locations where Shell continuously vents and flares un-wanted natural gas.6 Venting, or simply releasing the excess natural gas into the atmosphere, is near equivalent to releas-ing pure methane, but is less common than flaring.

More commonly, oil and gas com-panies flare, or burn, excess natural gas which converts methane into CO2, a significant but less potent GHG than methane7 – but no flare is 100% efficient and some methane is inevitably emitted during flaring. Indeed, from 2011 to 2018, methane emissions in the U.S. from the oil and gas industry are expected to grow by 4.5 percent largely due to flaring, accord-ing to a report from the Environmental Defense Fund, which works with the in-dustry. 8

Shell does not release specific meth-ane emission numbers, but rather total emissions – which account for methane plus all other greenhouse gasses – on a CO2-base scale. Thus, it’s impossible to know exactly how much methane Shell is releasing. Nevertheless, Shell cites Majnoon, one their few global locations that still makes heavy use of flaring and venting, as a reason for the increase in their GHG emissions in 2012; and because flaring inevitably emits methane, it’s like-ly that a significant portion of those in-creased emissions consisted of methane, not to mention carbon dioxide, hydrocar-bons, and a host of other dangerous pol-lutants that flaring is known to release. 9

A SOLUTIONAs mentioned, flaring burns natural

gas, which releases methane along with high levels of carbon dioxide and other greenhouse gases into the atmosphere. Everything about flaring is inefficient. Ac-cording to World Bank’s Global Gas Flar-ing Reduction Partnership (GGFR), the gas burn-off process is untenable. “Every year,” they state, “billions of dollars worth of natural gas are wasted; burned or flared

at oil fields across the world. Such flaring produces some 400 million tons of green-house gas emissions.”10 Flaring is not only inefficient, but every billion cubic foot of methane flared or leaked instead of cap-tured and sold is money left on the table. Thus besides contributing to climate change, endangering workers, and gener-ating bad press, flaring hurts Shell’s bot-tom line.

Luckily, technology exists which, if implemented, can replace flaring and venting, and capture methane. The EPA’s natural gas STAR program and the O&G industry together have identified nearly 100 methane control options that are vi-able.11 However it is the recommendation of this essay that Shell start with the two most profitable and effective methods: re-duced emission completions (commonly called “green completions”) and plunger lift systems. By implementing both, Shell could reduce methane emissions by 40 percent.12

Green completions are used during the cleanup stage of drilling and effec-tively separate leftover gas from other material instead of letting it escape into the atmosphere. Essentially, after a well is completed, hydraulically fractured, or repaired, companies like Shell flow the well for a period to remove debris. This procedure is called “wellbore cleanup” and occurs before the well is connected to any permanent processing equipment. Historically, the methane released during wellbore cleanup was flared. Green com-pletions allow the methane to be captured and sold.13

Plunger lift systems are a second tool used to capture methane. When a well has been in production for a period of time, water and other liquids accumulate inside the wellbore, reducing the rate of flow. To clean the worn wellbore, companies have to open the well, which vents methane. Plunger lift systems are an alternative method to lift debris out of the well while capturing methane that would otherwise escape into the atmosphere.14


PRESENTING AN OPPORTUNITY

When it comes to flaring, pollution, inefficient operations, and general stake-holder neglect, few countries rival Iraq. As postwar Iraq – home to the fourth largest petroleum reserves in the world – plans to ramp up production, flaring and its asso-ciated problems are likely to increase.

Currently Iraq ranks among the world’s top 5 flaring countries accord-ing to the World Bank.15 The amount of gas flared in Iraq represents a loss of $5 million per day and would be sufficient enough to cover all of the country’s elec-tricity demand.16 Besides energy con-cerns, a reduction in flaring could im-prove the health of Iraqi citizens, improve local air quality, and improve vegetation and watersheds – crucial components of postwar rebuilding.17

It should be noted that current Sun-ni militant action is threatening Iraq. However, according to the Iraq Oil Min-istry, 90 percent of the country’s oil is safe from attacks, with 100,000 police tasked with protecting oil facilities.18 So while ISIS may complicate things on the ground, these obstacles don’t counter the nature of this proposal. Similarly, plung-ing oil prices do not remove the necessity of methane capture. The need to reduce flaring and venting remains vital.

Reducing methane emissions in the region presents an intriguing opportuni-ty for Shell to benefit various stakehold-ers, and serve the company’s bottom line by capturing and selling methane instead of flaring or venting it. For these reasons, Shell should seize the opportunity to gen-erate shared value by creating economic value in a way that also creates value for society.19

ENTER MAJNOONThe Majnoon field, located in south-

ern Iraq, is one of the largest oil fields in the world. Royal Dutch Shell is the oper-ator, developing the field together with partners Petronas and Iraq’s Missan Oil Company. Majnoon is one of Shell’s few facilities that continuously flares, and as Shell’s website states, “Flaring from the

Majnoon field in Iraq will continue to rise in future years as production increases.”20

But that doesn’t have to be the case. Shell could begin to install green com-pletions and plunger lift systems in Ma-jnoon to both reduce flaring and minimize methane emissions. Shell has already worked to reduce flaring and cap emis-sions in other parts of southern Iraq and could use this experience to do the same at Majnoon. These efforts are being con-ducted by Basra Gas Company, a joint venture established by Shell, Mitsubishi Corporation, and Iraq’s state-run South Gas Company, that is working to commer-cialize a portion of the large amount of Iraqi gas flared every day. Installing green completions and plunger lift systems in Majnoon would be a logical continuation of those efforts.

The first step in the process is buying and transporting the equipment (green completions and plunger lift systems); the second step is installing the equip-ment and training current employees to operate the new systems; and the last step is to measure emissions over a period of time to ensure that the green completions and plunger lift systems are effectively capping methane.

Based on British Petroleum (BP) and EPA reports, Shell could expect the total value of natural gas and condensate re-covered in Majnoon to be worth well over $100,000 per well per year.21, 22 Shell could expect to recover its initial investment in just 2 years – from then on all revenues gained from the methane capturing sys-tems will be profit.

The gas captured at Majnoon should first be sold to the local market; this

approach would give Shell an important role in providing a stable supply of energy to Iraq, and would further stimulate eco-nomic activity and development in the war-torn country. Once domestic demand in Iraq is met, and pending relevant per-mits from the Iraqi government obtained, the gas could then be exported to coun-tries such as Turkey and Jordan, whose leaders have expressed interest in gas im-ports.23, 24 While the price of oil is current-ly at an all-time low, prices will fluctuate and gas will always be marketable.

DRAWBACKS Installing green completions and

plunger lift systems in Majnoon will test Shell’s commitment to long-term sustain-ability. Not only will this equipment cut into short-term profits, but it will also ne-gate a main benefit Iraq currently offers: little to no regulation. Add onto this the precarious logistics of the operation, and one can see why Shell might be hesitant.

First, in terms of profit, capture sys-tems represent a significant capital in-vestment and will surely cut into short-term returns. Making matters worse, Shell is already being mandated by new U.S. regulation to install green comple-tions at all U.S. sites by 2015. Thus not only would Shell have to buy methane-captur-ing equipment for Majnoon, but also for all operations in the U.S. at around the same time. Taken together, the next cou-ple of years would see Shell substantially increase capital investment, something they may not be willing to do –especially if shareholders are seeking short-term value instead of long-term sustainability. This latter point is why the highly capital

Flaring is not only inefficient but every billion cubic foot of methane flared or leaked instead of captured and

sold is money left on the table.“

intensive oil & gas industry (O&G) usu-ally reserves upstream expenditures for investments which generate more short-term value for shareholders. Therefore, by going forward with the Majnoon plan as presented, Shell would be challenging prevailing industry norms as well as test-ing investors’ patience.

Second, Shell may be hesitant to cap methane in Majnoon because doing so would negate the benefit of lax regulation in Iraq. To put it simply, management may be reluctant to do something they don’t have to do, especially when it costs them money in the short run. Few O&G compa-nies operating in Iraq are concerned with GHG emissions –in fact, many likely came to Iraq in part because of minimal regula-tions, Shell included.

Finally, the logistics of transporting green completions and plunger lift sys-tems to Majnoon may prove to be tricky, and costly. Not only are there security concerns in the country, but also much of Iraq’s infrastructure has been degrad-ed since the war, and continues to be so amidst insurgent fighting. Shell may be reluctant to spend money on trucks, driv-ers, equipment, and security, when the payout is delayed – and when potential profits represent only a fraction of Shell’s yearly revenues.

TURNING NEGATIVES INTO POSITIVES

Certainly, these drawbacks are signifi-cant. And if Shell is solely concerned with increasing shareholder value in the short run, it’d be smart to table this proposed project. However, if Shell truly values the principles of shared value, long-term sus-tainability, and innovation – things any successful 21st century O&G company must value – then many of these negatives can be seen as positives.

While short-term profits will likely fall due to increased capital expenditures, in the long-run Shell may be far healthier in terms of sustainability and reputation than its rivals. This enhanced status is im-portant considering that Shell would like a long, fruitful relationship with the Iraqi state going forward, as well as positive public relations worldwide.

Furthermore, while Shell is being man-dated by the U.S. government to purchase green completions for all stateside opera-tions by 2015, they can purchase the nec-essary technology for both U.S. operations and Majnoon in bulk – thereby incurring a cheaper per-unit cost. Also, in light of the new U.S. regulation and increased de-mand, green completion systems are like-ly to decrease in price as entrepreneurs further develop the technology.

Finally, although Iraq’s infrastruc-ture has suffered since the war (and con-tinues to suffer as it combats ISIS), Shell could turn this negative into a positive by working with local contractors, commu-nities, and authority figures to build up in-frastructure, or at the very least point out where improvements could be made. In theory, the Iraqi citizens would be happy to collaborate since Shell is now consid-ering local interests in capping methane emissions. These strong, respectful rela-tionships among community, company, and the environment are the future of the 21st century O&G industry, and are at the heart of creating shared value.

CONCLUSIONBy moving forward with the Majnoon

methane cap plan, Shell would be usher-ing in this new shared value age. Though capping methane in one operation is ad-mittedly a small step, it’s just the first step. From here, Shell can look to cap methane – and other GHG emissions – worldwide, all the while paying attention to the vari-ous concerns of the many stakeholders of a 21st century O&G company. Once rela-tionships strengthen, and Shell’s image is renewed in a positive light, sharehold-ers will reap the profits of a healthy, sus-tainable, and forward-thinking company. This is the essence of shared value, and it’s what the Majnoon plan offers on a small scale.

What separates the Majnoon plan from promoting STEM education, invest-ing in alternative energy, and the many other sustainable activities of Shell, is that capping methane in Majnoon is in-tegral to Shell’s business. By taking this step, Shell is making a statement which education initiatives or alternative ener-gy investments never could: We recognize that petroleum is our core business, and will continue to be so for many decades to come. We’re committed to making changes within that core business to better serve our stakeholders.

That message should resonate with the hyper-aware younger generation and create forward drive, spurring more shared value type of thinking within the company as it evolves into the future.

R. Edward Freeman wrote in Manag-ing for Stakeholders, “The fuel for capi-talism is our desire to create something of value, and to create it for ourselves and others.”25 That has to be, in essence, Shell’s 21st century business model. As corpora-tions, especially O&G corporations, with their wide-ranging networks and massive investments, grow to represent the most powerful institutions in the world, share-holders and stakeholders demand value. To respect only the former and ignore the latter would be a tragic mistake. Capping methane in Majnoon is the first step Shell can take to avoid such mistakes. v



STEPHEN KRAFCIKBusiness & Political Economy ‘17

While researching I was inspired by the oil industry’s capacity to do good. More than most other industries, oil is thrust in the middle of international relations and therefore plays a role on a supranational scale. It also trans-forms, and therefore plays a role in, local communities and individual coun-tries. These dual macro and micro roles place the oil industry in a unique position to help stakeholders from the bottom up, or from the top down -- a luxury and responsibility few other industries have.“

1 “Final Report, Alaska Oil Spill Commission.” Oil Spill Facts. The State of Alaska, Feb. 1990. Web. 05 Jan. 2015. <http://www.evostc.state.ak.us/index.cfm?FA=facts.details>.

2 The Ocean Portal Team. “Gulf Oil Spill.” Smithsonian Ocean Portal. N.p., n.d. Web. 06 Jan. 2015. <http://ocean.si.edu/gulf-oil-spill>.

3 Coe, Sarah. “3 American Oil Companies That Give Back in BIG Ways.” Drillinginfo. N.p., 20 May 2013. Web. 11 Jan. 2015.

4 Hamburg, Steve. “Methane: The Other Important Greenhouse Gas.” Environmental Defense Fund. Web. 9 May 2014. <http://www.edf.org/climate/methane>.

5 Ibid.6 “Royal Dutch Shell Sustainability Report 2013 – Flaring.” Royal Dutch

Shell Sustainability Report 2013. Rep. Royal Dutch Shell, Web. 10 May 2014. <http://reports.shell.com/sustainability-report/2013/our-performance/environmental/flaring.html>.

7 Editorial Board. “The High Cost of Flaring Methane Gas.” San Antonio Express-News. N.p., 30 Sept. 2014. Web. 11 Jan. 2015. <http://www.mysanantonio.com/opinion/article/The-high-cost-of-flaring-methane-gas-5791878.php>.

8ICF International. “Economic Analysis of Methane Emission Reduction Opportunities in the U.S. Onshore Oil and Natural Gas Industries.” (n.d.): 2-3. EDF. Environmental Defense Fund, Mar. 2014. Web. 8 Jan. 2014. <https://www.edf.org/sites/default/files/methane_cost_curve_report.pdf>.

9 “Royal Dutch Shell Sustainability Report 2013.”10 “Global Gas Flaring Reduction Partnership.” Global Gas Flaring

Reduction. The World Bank Group, n.d. Web. 06 Jan. 2015. <http://go.worldbank.org/425VOGDYS0>.

11 “Recommended Technologies and Practices.” Environmental Protection Agency. Environmental Protection Agency, Web. 10 May 2014. <http://www.epa.gov/gasstar/tools/recommended.html#content>.

12 Harvey, Susan, Vignesh Gowrishankar, and Thomas Singer. “Leaking Profits.” Rep. National Resources Defense Council. Natural Resources Defense Council, March/April 2012. Figure 3. Web. 10 May 2014. <http://www.nrdc.org/energy/files/Leaking-Profits-Report.pdf>.

13 Bunzey, Rachel. “Natural Gas and Green Completion in a Nut Shell.” Energy in Depth. Energy in Depth, 26 November 2012. Web. 10 May 2014. <http://energyindepth.org/marcellus/natural-gas-and-green-

completion-in-a-nut-shell>.14 “Plunger Lift.” Petrowiki. Society of Petroleum Engineers. Web. 10

May 2014. <http://petrowiki.org/Plunger_lift.>.15 “World Bank Sees Warning Sign in Gas Flaring Increase.” The World

Bank. The World Bank, 3 July 2012. Web. 10 May 2014. <http://www.worldbank.org/en/news/press-release/2012/07/03/world-bank-sees-warning-sign-gas-flaring-increase>.

16 Berdikeeva, Saltanat. “As Iraq’s Oil Boom Progresses, So Does Gas Flaring.” National Geographic. National Geographic, 25 September 2012. Web. 10 May 2014. <http://energyblog.nationalgeographic.com/2012/09/25/as-iraqs-oil-boom-progresses-so-does-gas-flaring/>.

17 Ibid. 18 “Iraq Exodus? Oil Majors Withdraw Staff as Terror Threat Rises.”

RT Business. TV-Novosti, 19 June 2014. Web. 06 Jan. 2015. <http://rt.com/business/167004-foreign-oil-evacuate-iraq/>.

19 Porter, Michael E., Mark R. Kramer. “Creating Shared Value.” Harvard Business Review. Business. Jan-Feb 2011. Web. 11 May 2014. <https://hbr.org/2011/01/the-big-idea-creating-shared-value/ar/1>.

20 “Royal Dutch Shell Sustainability Report 2013.”21 Harvey. 22 “U.S. EPA and Devon Energy, Reduced Emissions Completions

(Green Completions), Natural Gas STAR Producers Technology Transfer Workshop, Casper, Wyoming.” PowerPoint. Environmental Protection Agency. Environmental Protection Agency, 30 August 2005. Web. 10 May 2014. <http://www.epa.gov/gasstar/workshops/techtransfer/2005/casper.html>.

23 Carlisle, Tamsin. “Turkey Seeks Gas from Iraq to Diversify Supplies: Officials.” Platts. McGraw Hill Financial, 21 May 2012. Web. 10 May 2014. <http://www.platts.com/latest-news/natural-gas/erbil/turkey-seeks-gas-from-iraq-to-diversify-supplies-6313786>.

24 Tayseer, Mohammad. “Jordan Begins Study on Importing Gas From Iraq, Al Rai Reports.” Bloomberg BusinessWeek. Bloomberg L.P., 9 April 2012. Web. 10 May 2014. <http://www.bloomberg.com/news/2012-04-09/jordan-begins-study-on-importing-gas-from-iraq-al-rai-reports.html>.

25 Edward R. Freeman. “Managing for Stakeholders.” Web. 11 May 2011. <http://redwardfreeman.com/stakeholder-management/>.

D Opening spread photo by flickr.com/deepwaterhorizonresponse Dominant photo by flickr.com/pmeimon

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SOLVING JELLYFISH OVERPOPULATION

ESSAY BY WYMAN LI

The jellyfish population is exploding –clogging intake pipes and over consuming valuable ocean nutrients. Author Wyman Li looks for a solution by exploring an unusual opportunity in consumer-packaged goods. If jellyfish tissues can be reworked into superabsorbent paper products, as innovators at Cine’al Ltd. claim, then a new market may solve several problems at once.

SOLVING JELLYFISH OVERPOPULATION / 41

ENGINEERS AT SWE -den’s Oskarshamn nu-clear power plant, one of the largest nuclear power plants in the world, had

to take emergency action when swarms of jellyfishes clogged up the pipes responsi-ble for providing water to cool the plant’s turbines. Workers labored for two days to unblock the cooling pipe before the reactor could be restarted.1 Jellyfish re-lated incidents like this are beginning to occur more frequently. Jellyfish have dis-rupted power generation in coastal pow-er plants all over the world. Things are even worse in the fishing business, where jellyfish wiped out billions of dollars in earnings over the last few decades.2 All these incidents are the direct result of an overabundance of jellyfish in the ocean. Over the last decade, the jellyfish popu-lation spiked dramatically; from 2002 to 2011, the number of jellyfish in the ocean increased six fold.3 If jellyfish continue to reproduce at such a rapid pace, their impact on society will be much grimmer than economic losses alone.

JELLYFISH OVERPOPULATION IS HARMING THE OCEAN

The most devastating effect of jelly-fish overpopulation is its damage to the marine ecosystem. In the past 10 years, populations of several jellyfish species increased at the expense of their main competitor, fish. In the past, the intricate lattice of ocean life has kept the jellyfish population in check. Predators like leath-erback turtles, salmon, and sharks dine on jellyfish, while jellyfish compete with other fish for fish eggs and plankton.4 Natural predators and competitors were able to keep jellyfish at a sustainable lev-el. However, due to overfishing of jellyfish predators and competitors, this delicate balance has been disrupted.5 By removing the curb on the jellyfish population, they were able to flourish and overtake their ecosystem.

To make matters worse, global warm-ing has created a more desirable condi-tion for jellyfish to accelerate their rates of reproduction. They thrive in the more

acidic and warmer oceans that are killing other fish.6 According to Sun Song, the director of the Institute of Oceanology in Qingdao, China, “when an ecosystem becomes dominated by jellyfish, fish will mostly disappear.”7 “Once that happens,” he warns, “there is almost no method to deal with it.”8 If nothing is done and the jellyfish population continues to rise, the ocean’s biodiversity and marine life will be devastated. If trends continue, the ocean may one day reach a tipping point at which jellyfish supplant all other fish.

MANY SOLUTIONS HAVE BEEN ATTEMPTED; HOWEVER FEW CAN ACTUALLY WORK

Although scientists are desperate to solve this crisis, many of their potential solutions have not been viable. A team at the Korean Advanced Institute of Science and Technology, for instance, invested in jellyfish killing robots. They developed the “Jellyfish Elimination Robotic Swarm” or JEROS, a team of automated robots that are able to shred 1,985 pounds of jellyfish per hour.9 Unfortunately, JEROS is not a viable solution on an ocean-wide scale. Developing and maintaining enough ro-bots throughout the vast volume of water in the world is not economically feasible.10 At Piraino’s lab in Italy, researchers are looking into how to make jellyfish more palatable to humans.11 They are looking to expand the demand for jellyfish beyond just Asian countries by turning jellyfish into a more desirable cuisine. However there is a problem; of the 85 species of jellyfish, only 12 are edible.12 Even if the researchers were successful, they would not be able to impact the majority of the species of jellyfish.

CINE’AL’S SOLUTIONFortunately, Cine’al Ltd., an Israe-

li nanotechnology company, may have found a feasible solution. Researchers at Cine’al aimed to reduce jellyfish pop-ulation by turning them into a highly demanded commodity. They saw that, through evolution, jellyfish have de-signed a layer of potent superabsorbent flesh. That design, as it turns out, has

many features modern human engineers still cannot match.13 A typical jellyfish is composed of over 90% water. Unlike any other creatures, jellyfish do not keep this large quantity of water content locked in a system of tubes, running through a circulatory system. Instead, they hold all their water in their body tissues, like water in a sponge.14 The fact that jellyfish are able to retain so much water with-out decomposing is impressive. Cine’al believes that if they could incorporate jellyfish’s super-absorbent tissue into consumer products, they could create an international demand for jellyfish.15 From a simple beverage spill to a complicated oil spill, absorptive ability is important to virtually every level of life. Its application in society is vast.

Inspired by this, Cine’al Ltd. devel-oped Hydromash, an absorptive material derived from jellyfish. By breaking down the jellyfish into its base tissues and then combining the desirable tissues with special nanoparticles, Cine’al was able to develop a dry, flexible, and strong raw material. The resultant raw material can be further developed and incorporated into various products like paper towels, diapers, toilet paper and more.16 If Cine’al were able to successfully introduce their technology into the market, there would be a powerful financial incentive to con-trol the population of an increasingly dangerous pest species. Jellyfish would become a highly demanded commodity, encouraging fisheries to catch jellyfish and reducing the jellyfish population. History has shown that market demand is a powerful source in reducing population. Consider the beaver trade in the 1800s for instance. The market demand for beaver fur was so powerful that it led to a massive decline in beaver population.17 If a similar economic demand for Hydromash exist-ed, simply buying diapers and paper tow-els made from jellyfish would solve the overpopulation crisis.

ONLY WITH SUPPORT FROM A LARGER CONSUMER COMPANY CAN CINE’AL HOPE TO SUCCEED

Unfortunately, Cine’al may not be in the position to introduce its own lines of absorptive products. Currently, Cine’al is just a small start up company com-posed mostly of engineers and scien-tists.18 It does not have any expertise in manufacturing, marketing, and selling consumer products. Without financial support, manufacturing infrastructure, and brand recognition, it would be dif-ficult for them to be successful. Even if

Cine’al were able to introduce their own products they would have a lot of trouble competing with other well-established brands. Their products would likely only attract niche groups of consumers. The impact that Cine’al set out to make on the environment would be insignificant. Therefore, it would be in Cine’al’s best interest to instead license their technol-ogy to a larger company, like Proctor and

Gamble, that can more effectively sell Hydromash-based products to the gen-eral public.

Proctor and Gamble is in the perfect position to support Cine’al and absorb Cine’al’s technology into Proctor and Gamble’s various consumer goods. Proc-tor and Gamble’s “Global Baby and Fam-ily Care” product lines consist mostly of synthetic superabsorbent polymers. Their various brands such as Pampers di-

apers, Bounty paper towels, and Charmin toilet paper are sold in over 80 coun-tries and produced revenue of 22 billion dollars in 2013.19 If Proctor and Gamble replaces these synthetic polymers with Hydromash, Cine’al would be able to bring their technology to a large number of consumers. Further, with their global popularity, Proctor and Gamble holds tremendous sway in the market. If P&G

decides to adopt Hydromash, suppliers would likely manufacture Hydromash in large quantities.20

SHARED VALUE FOR PROCTOR AND GAMBLE IN ADOPTING HYDROMASH

As the world’s largest consumer products company with an estimated 4.4 billion people using their products

everyday, Proctor and Gamble, has the responsibility and the opportunity to create change in the environment.21 The company is currently focused on three key environmental issue areas in its corporate social responsibility initiative. It hopes to conserve resources by using less energy, water, and materials; it has plans to increase the use of renewable resources by implementing renewable

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Unlike any other creatures, jellyfish do not keep this large quantity of water content locked in a system of tubes, running through a circulatory

system. Instead they hold all their water in their body tissues like water in a sponge.“

materials and renewable energy into their products; and finally, P&G is looking to reduce waste by focusing on recyclable and reusable products overall.22 Hydromash fits perfectly under Proctor and Gamble’s current initiatives.

Besides reducing the population of jellyfish, widespread adoption of Hydro-mash can also assist in Proctor and Gam-ble’s third initiative, to reduce waste. Each year, 27.4 billion disposable diapers are used in the U.S., creating more than 3.4 million tons of waste.23 The synthetic superabsorbent polymers in each diaper take hundreds of years to decompose. As the top selling brand of diapers, P&G can dramatically reduce waste by adopting Hydromash. Since Hydromash is created from organic tissue, it is able to decom-pose in just 30 days.

In supporting Cine’al, Proctor and Gamble can potentially benefit financial-ly as well. Through this partnership they have access to a new technological inno-vation that can give them an edge over competing brands. According to Cine’al’s president, Ofer Du-Nour, lab tests have shown that Hydromash is twice as ab-sorbent as most synthetic polymers in the market today.24 In Proctor and Gam-ble’s paper towel, toilet paper, and dia-per brands, absorbency is a vital selling point. They pride themself on their prod-uct’s superior absorbency versus that of their competitors. By implementing Hy-dromash technology, the company can

further improve the absorbency of their products. This increase in quality could potentially lead to an increase in market share and revenue.

THE ISSUES BEHIND THIS PARTNERSHIP

There is, however, concern about the viability of the development of Hydro-mash on a large scale. Due to Hydro-mash’s early stages of development, the cost to mass-produce Hydromash, has not yet been determined. Although the production technologies used to create Hydromash have existed in the medical and engineering fields for several years, mass production costs might vary wide-ly.25 Further, if the jellyfish population does in fact begin to decrease in the long term, Hydromash’s price would inevitably increase. If the cost far exceeds the price of synthetic polymers, Hydromash would not be financially feasible. Therefore, although Hydromash can provide great potential benefit, there is a large risk in-volved for Proctor and Gamble to replace their current proven synthetic material.

JAPANESE GOVERNMENT CAN SUBSIDIZE THE INCREASED COSTS

If the cost of Hydromash becomes much more expensive than synthetic polymers, it would be in the Japanese government’s best interest to subsidize the extra costs. Currently, jellyfish are

causing millions of dollars in damage to Japanese fisheries every year. In a study by The Japanese Society of Fisheries Sciences, researchers determined that since the population explosion of jelly-fish, catches of fish by Japanese fisheries decreased between 6.5% and 33.7%. The annual damage caused to fisheries by jel-lyfish was estimated to be between USD $68.2 million and $204.6 million.26 To reduce the impact of the declining fish population due to both overfishing and jellyfish overpopulation, the Japanese government is providing large subsidies to local fisheries. Currently Japan is the largest subsidizer of the fishing industry, giving away 5.3 billion dollars a year.27

Unfortunately, subsidizing fisheries is not a sustainable solution. In subsidizing fisheries, Japan is ignoring the negative external cost of overfishing and encour-aging fisheries to capture more fish than the ocean can replace. As a result, there has been increasing international con-cern regarding Japanese subsidies. If Hy-dromash were widely adopted however, Japanese fisheries may be encouraged to catch more jellyfish than fish. The popula-tion of jellyfish in Japanese waters would then decrease and the population of fish stocks would have an opportunity to re-bound. Japan could then reduce subsidies to fisheries, and hopefully silence the in-ternational criticism it currently receives.

Further, Japan can reduce the risk of the Hydromash’s potentially higher costs


42 / WYMAN LI44 / WYMAN LI

and encourage production. If the cost of mass-production of Hydromash is greater than expected, the Japanese government can place a price ceiling on supplies to P&G. To make up for losses that the sup-pliers would experience by selling below market price, the Japanese government can provide direct subsidies to the sup-pliers. In this way, the government can ensure a low and stable price for the Hy-dromash supplies, and encourage Procter and Gamble to implement this new inven-tion within their products.

THE PARTNERSHIP THAT CAN SAVE THE ENVIRONMENT

With the combination of Cine’al’s new technology, Proctor and Gamble’s popular consumer brands, and Japanese government’s monetary support, the three organizations are in a position to produce an international demand for Hy-dromash-based products. With enough popularity, human demand for absorp-tive products can drive down the jellyfish population. Although the solution is not an easy one, the cost of ignoring the ris-ing population of jellyfish is too high. This partnership is one of the few potential opportunities for all parties to gain value while also offering an environmentally sustainable solution to one of the world’s most dire environmental issues. v


WYMAN LIFinance & Accounting ‘17

As I was researching, perhaps the most interesting thing I discovered is that the solution to jellyfish overpopulation is already in our hands. Unlike other environmental issues, to solve jellyfish overpopulation we do not need to invest in alternative energy or dramatically change our lifestyle. Our fishing industries already have the means to dramatically reduce the jellyfish popu-lation simply by fishing them. Therefore, the solution is to simply discover a method to turn jellyfish into a demanded commodity.“

1 Davidson, Helen. “Jellyfish Clog Pipes of Swedish Nuclear Reactor Forcing Plant Shutdown.” Theguardian.com. Guardian News and Media, 02 Oct. 2013. Web. 12 May 2014. <http://www.theguardian.com/world/2013/oct/01/jellyfish-clog-swedish-nuclear-reactor-shutdown>.

2 Subbaraman, Nidhi. “The Jellyfish Are Coming! Experts Tangle with Exploding Population - NBC News.” NBC News. Web. 12 May 2014. <http://www.nbcnews.com/science/environment/jellyfish-are-coming-experts-tangle-exploding-population-f8C11352067>.

3 Ibid.4 McVeigh, Tracy. “Explosion in Jellyfish Numbers May Lead to

Ecological Disaster, Warn Scientists.” The Observer. Guardian News and Media, 12 June 2011. Web. 12 May 2014. <http://www.theguardian.com/environment/2011/jun/12/jellyfish-plankton-ocean-acid>.

5 Ibid.6 Davidson.7 McVeigh.8 Ibid.9 Bagdore, Margot. “Do We Need Jellyfish-killing Robots? (Video).”

TreeHugger. 07 Oct. 2013. Web. 12 May 2014. <http://www.treehugger.com/ocean-conservation/jellyfish-killing-robots.html>.

10 Ibid.11 Gray, Louis “Jellyfish on the Menu as Edible Fish Stocks Become

Extinct.” The Telegraph. Telegraph Media Group, 28 Apr. 0015. Web. 12 May 2014. <http://www.telegraph.co.uk/earth/3776788/Jellyfish-on-the-menu-as-edible-fish-stocks-become-extinct.html>.

12 Ibid.13 Visser, Nick. “Diapers Made From Jellyfish May Be The

Next Big Thing In Green Parenting.” The Huffington Post. TheHuffingtonPost.com, 17 Apr. 2014. Web. 12 May 2014. <http://

www.huffingtonpost.com/2014/04/17/jellyfish-diapers_n_5162755 html>.

14 Cortes, Amber. “Diapers and Tampons Could Soon Be Made from Jellyfish.” Grist. Web. 12 May 2014. <http://grist.org/list/diapers-and-tampons-could-soon-be-made-from-jellyfish/>.

15 Visser.16 Cortes.17 Ibid.18 “History.” History. Web. 12 May 2014. <http://people.

westminstercollege.edu/faculty/tharrison/citycreek/Beaver/history.htm>.

19 “Procter & Gamble.” PG.com Investor / Shareholder Relations: Current Events, Latest News. Web. 12 May 2014. <http://www.pginvestor.com/GenPage.aspx?IID=4004124&GKP=1073748359>.

20 “Nippon Shokubai.” Nippon Shokubai. Web. 12 May 2014. <http://www.shokubai.co.jp/en/news/news0081.html>.

21 “Procter & Gamble.” PG.com Environmental Sustainability: Sustainable Packaging, Sustainable Operations. Web. 12 May 2014. <http://www.pg.com/en_US/sustainability/environmental_sustainability/index.shtml>.

22 Ibid.23 Ibid.24 Visser, Nick.25 Ibid.26 “Japan to Oppose Fishing Subsidies Ban in TPP Trade Negotiations.”

Japan Times RSS. Web. 12 May 2014. <http://www.japantimes.co.jp/news/2013/06/09/business/japan-to-oppose-fishing-subsidies-ban-in-tpp-trade-negotiations/>.

27 Ibid.D Opening spread photo by flickr.com/r_kim Secondary photo by flickr.com/robinhughes

46 / MICHAEL FRENKEL

ONLINE PRIVACY: FAIR COMPENSATION FOR PERSONAL INFORMATION / 47

ONLINE PRIVACYFair Compensation for Personal Information

ESSAY BY MICHAEL FRENKEL

Author Michael Frenkel sees a unique opportunity in illuminating the shadowy practice of online personal data collection. Noting that private consumer information is often extracted without compensation or permission, Michael proposes an interesting scheme that both rewards Internet users and builds value for Google.


IMAGINE FOR A SECOND that you own one of the world’s most valuable commodities, and every day you are giving it away for free. As technology

has advanced, new methods of data col-lection have become available to compa-nies and entrepreneurs. Known as “big data”, this ability to analyze vast amounts of information allows companies to find relationships that humans could not pre-viously detect. And with the advent of the Internet, big data has found a prime target for its collection methods: the aver-age Internet user. Further, while numer-ous websites have the ability to collect personal information from an Internet browser, or place tracking programs di-rectly onto a home computer, many users are in the dark about whether any of this is happening.

There is a wide array of benefits from big data analysis, ranging from custom-ized online advertising and product rec-ommendations, to enhanced methods of preserving national security (as seen by the NSA’s recent revelations). A study conducted by the Wall Street Journal revealed that the United States’ top 50 websites installed an average 64 pieces of tracking technology onto an individ-ual’s computer, often without warning.1

Further, the size of the big data indus-try continues to grow, with estimates in 2013 reporting four zettabytes generated worldwide (one zettabyte is equal to 323 trillion copies of Leo Tolstoy’s War and Peace).2 As companies continue to aggre-gate more data, the average user has seen little to no direct compensation for their private information, and according to a recent report by White House technology experts, online privacy represents a mar-ket failure.3

Previous attempts to solve this issue have failed due to the fast-paced innova-tion of Silicon Valley. Further, attempts to regulate the industry may also fall by the wayside because of a lack of technical knowledge in Washington D.C. Solutions involving programs designed to keep us-ers’ information private either work poor-ly or simply fail to deliver on what they promise. However Google is in the unique position to solve this problem by making use of its existing Google Shopping infra-structure. Google can develop a privacy tool that both informs users of websites’ data tracking and offers discounts for vol-unteering data. This solution would bal-ance the market for online data.

One of big data’s most popular uses is to provide customized advertising for Internet users. With more data, Internet

advertisers are no longer limited to adver-tising products across specific websites, but can use tracking and display technol-ogy to serve the same ads on websites the targeted user visits. However, a large per-centage of users actually block Internet advertising. The most popular add-on to the Internet’s most widely used browser, Google Chrome, is Ad-Block.4 Over 20 million individuals block an average of 22.7% of the Internet’s advertisements.5

These users do not receive the benefits of big data collection, yet are still giving away their information free of charge.

A common solution to the privacy problem is “Do Not Track” (DNT) pro-grams. One of the most popular of these is Microsoft’s Do Not Track option built directly into the Internet Explorer brows-er. Oftentimes, these programs do not accomplish what they are intended to do. The DNT signals sent to advertising companies only indicate that the user prefers not to have their data or browsing habits tracked. Because there are no uni-fied rules as to how these services should be treated, websites can simply choose to ignore the DNT signals and continue to track users’ behavior. The DNT programs are guilty of the same crime as big data trackers: misleading the Internet con-sumer. Companies make privacy rules difficult to comprehend or purposely misleading in order to continue collect-ing data without providing fair compensa-tion. Businesses cannot expect a person to read a “terms and conditions” section or understand the privacy settings of every website they visit. Google however, has the advantage of using its own big data collection strategies to create a program that informs users whether websites are tracking their information. This is the first step in shifting the power in a heavily one-sided market.

According to attorney and privacy advocate Sarah Downey, data collection websites and trackers believe there is nothing wrong with ignoring DNT signals and continually collecting personal infor-mation against a user’s will.6 The Interac-tive Advertising Bureau and the Digital Advertising Alliance, who represent 90%


of advertisers (developing industry stan-dards and offering legal support), have claimed that while DNT signals prompt advertisers to stop serving targeted ads, they still allow them to collect, store, and monetize data.7

Without government regulation, col-lecting data is a legal act. Further, when viewed through the lens of utilitarian-ism, it is justified based on the enhanced services companies can deliver to web surfers. The ends justify the means. How-ever, in a society where businesses hold an increasing amount of influence over people’s lives, even more so than some government organizations, corporations must conform to a new sense of ethics

focused on providing fair services to each individual.

By applying deontological ethics, web-sites can no longer marginalize users who do not view ads. Deontological eth-ics dictates that some actions cannot be justified, regardless of the consequences, and that businesses treat each customer with respect. The duty of online big data is to provide customized products for their site visitors. When those visitors choose to ignore those products or adver-tisements because they do not see value in them, websites should compensate users for contributing to the online data market. A solution would pressure busi-nesses to improve the services they offer in exchange for web data, not simply force them to transfer the value they receive to Internet users.

The companies who track data are difficult to manage in this scenario. How can one incentivize a business to pay for a vital resource that it had previously re-ceived for free? The solution lies in giving the consumer an advantage in avoiding data collection if desired, and compen-sation for volunteering data in a way that does not derive value from online adver-tisers and websites. Government regula-tion is unlikely, since the Obama admin-istration is pursuing how companies may use data to discriminate against certain users rather than how they collect it.8 In the online privacy market, the real seller is the Internet user, and in order to create shared value, a corporation must step up

and reconceive the product Internet visi-tors are selling, their private information.

Google’s ability to conduct searches and store information makes it one of the most powerful Internet companies. It has the opportunity to create shared value by offering Google Chrome users an Internet privacy tool that informs the user of web-site tracking and empowers them to sell their personal information wisely. Similar to the code used by anti-virus programs that warn users of websites that poten-tially send malicious software to their computers, the privacy tool would let users know which websites are involved in data trafficking. Currently, users do not have the time to read the “terms and conditions” sections of websites or check whether a website is storing “cookies”, small pieces of data sent from a website and stored on a user’s computer. However,

Google’s privacy tool would be able to ana-lyze this information quickly and present users a message about whether the site tracks their personal information, and to what degree they are being monitored.

The user can then decide whether to continue on to the site and allow compa-nies to track and store their information, in exchange for a discount redeemable through the Google Shopping exchange. The promise of giving away value for ac-tions that Internet surfers were previ-ously performing for free would cause the program to grow quickly in popularity. As more web surfers use the Google privacy tool, the value of private information will resemble that of a free market and will

fairly value the private information of Internet users. Discounts will represent the value users receive for previously for-feited personal information. The millions of users who block ads will have a more balanced stake in the market of online privacy.

Google should be willing to create this tool because the infrastructure of an exchange system is already in place through Google Shopping. Google Shop-ping operates by allowing businesses to advertise their products on Google’s site. Google promises clients lower costs for advertising and a large client base. In re-turn, Google charges its clients for every additional click that their advertisements generate. Clients can also lower the costs of advertising on Google Shopping by lim-iting the number of their advertisements.9 Google should reinvent their service in

As companies continue to aggregate more data, the average Internet user

has seen little to no direct compensation for their private information...“


order to make it possible for customers to purchase products directly from Google Shopping, allowing them to exchange the discounts received by giving data to web-sites. The discounts would incentivize us-ers to purchase through Google Shopping and generate both more traffic for online retailers and direct profits for Google. The profits Google Shopping creates would cover the costs of the discounts that Goo-gle is paying for. Clients of Google Shop-ping would benefit as well since Google is incentivizing consumers to buy from their advertisements.

By offering a discount in exchange for having a user volunteer their personal data, Google creates an ecosystem that turns private information into a true commodity. As Google continues to grow and diversify across various industries, incorporating this program into their overall business model would grant the company a significant stake in the online

retail industry. With its recent acquisi-tions of Nest Labs, a home automation company, and development of its own mobile and laptop devices, Google has already shown an interest in expanding from a services-oriented company to a seller of goods. The company has also demonstrated interest in launching its own retail stores.10 By increasing its pop-ularity with online retailers and its fa-miliarity with Internet shoppers, Google can learn how to improve its own product sales in the long term and further diversi-fy its business.

The challenge for a successful pro-gram is the mistrust some users may feel towards Google. Although their corporate motto is, “Don’t Be Evil,” the company has developed a reputation for being invasive regarding users’ privacy, which does not bode well for attracting a large user base. However, this challenge is also anoth-er reason why Google should attempt to

solve the issue of online privacy. In the short-term, Google has the opportunity to improve its public image.

Google ranks among one of the top data trackers on the Internet; a majority of its services track both users’ personal information and their contact lists. As the most visited website according to Alexa,11 and as a search portal to many different webpages, Google has a responsibility to inform users about the nature of where they are going throughout the web. This solution gives Google the opportunity to create a fair market in online priva-cy. According to Sally Blount, fairness in markets has “more to do with procedur-al fairness than with outcome or process fairness.”12 The transactional nature of the service Google would provide creates a market that is free of bias and fair for all stakeholders involved.

While Google generates value for itself and its online retail partners, Internet


MICHAEL FRENKELFinance & Statistics ‘17

I first became interested in the flaws in data collection after Edward Snowden’s revelations about the NSA. The utilization of big data is something that many politicians in Washington D.C. have stated must be regulated to avoid corporations having more power over consumers. Shifting power back to consumers through compensation is just the first step in creating a free market for personal information.“

1 DAngwin, Julia. “The Web’s New Gold Mine: Your Secrets.” The Wall Street Journal. Dow Jones & Company. 30 July 2010. Web. 11 May 2014. <http://online.wsj.com/articles/SB10001424052748703940904575395073512989404>.

2 Podesta, John, Penny Pritzker, Ernest J. Moniz, John Holdren, and Jeffrey Zients. “Big Data: Seizing Opportunities, Preserving Values.” Rep. (2014). 01 May 2014. Web. 11 May 2014. <http://www.whitehouse.gov/sites/default/files/docs/big_data_privacy_report_may_1_2014.pdf>.

3 Lohr, Steve. “White House Tech Advisers: Online Privacy Is a ‘Market Failure” The New York Times. The New York Times, 05 May 2014. Web. 11 May 2014. <http://bits.blogs.nytimes.com/2014/05/05/white-house-tech-advisers-online-privacy-is-a-market-failure/>.

4 Google Chrome Appstore, <https://chrome.google.com/webstore/category/apps>. Web. 11 May 2014.

5 PageFair. The Rise of Adblocking. Rep. N.p., Aug. 2013. Web. 11 May 2014. <http://downloads.pagefair.com/reports/the_rise_of_adblocking.pdf>.

6 Bott, Ed. “Why Do Not Track Is Worse than a Miserable Failure.” ZDNet. ZDNet, 21 Sept. 2012. Web. 11 May 2014. <http://www.zdnet.

com/why-do-not-track-is-worse-than-a-miserable-failure- 7000004634/>.7 Ibid.8 Podesta. 9 Weinstein, Mary. “Google Shopping Feed, Cost, and PPC Best

Practices.” Web blog post. The YouMoz Blog. Moz. 17 Apr. 2013. Web. 11 May 2014. <http://moz.com/ugc/google-shopping-feed-cost-and-ppc-best-practices-16918>.

10 Efrati, Amir. “Google Works on Launching Retail Stores.” The Wall Street Journal. Dow Jones & Company, 18 Feb. 2013. Web. 11 May 2014. <http://online.wsj.com/articles/SB10001424127887323764804578312530021763450>.

11 “Top Sites.” Alex Top 500 Global Sites. Web. 11 May 2014. <http://www.alexa.com/topsites>

12 Blount, Sally. “Grand Illusion.” Business & Its Publics. New York: McGraw-Hill Education, 2011. 35 – 38. Print.

D Opening spread photo by perspecsys.com Secondary photo by flickr.com/donkeyhotey Tertiary photo by flickr.com/khalidalbaih

users will become more informed of which websites and companies track their information. Users can pressure compa-nies that collect data to provide better services. If users deem a site’s content inadequate for the voluntary sacrifice of data, the site will suffer from reduced traf-fic. Online privacy will begin to resemble a free market rather than a false hope. This will cause an industry wide shift in how online data traffickers conduct busi-ness. Instead of being satisfied with pro-viding services to those users who view

advertisements while taking value from the entire population of the Internet, web businesses will have to learn to provide the same amount of value to each individ-ual or face a loss of profit. Observers can measure the success of Google’s privacy tool by its market penetration. The more product purchases through Google Shop-ping, the more value users receive from their personal information. Websites who reform their services would also add value to the new ecosystem created by Google’s privacy tool.

A Google privacy tool can create shared value by adding economic benefits to Goo-gle, Internet users, and online retailers, while also pressuring the rest of the Inter-net to provide better privacy policies. The societal benefits of this tool will help users protect their information and avoid mis-leading privacy rules from data traffickers. As the industry for big data continues to grow, we must solve this pressing societal problem in order to create a balanced In-ternet, both socially and economically. v

52 / ANNELIEKE DOMPELING

For victims of domestic abuse, a mobile phone may provide a critical lifeline. Yet for women below the poverty line, a phone may be unaffordable. In this essay, author Annelieke Dompeling suggests that Verizon explore a program of refurbished phones and discounted minutes to build a campaign of “shared value” – one that battles domestic violence while promoting company value.

THE DOMESTIC WAR ON WOMEN / 53

THE WAR ON WOMEN

ESSAY BY ANNELIEKE DOMPELING


WHAT STRIKES ONE in every four Amer-i c a n w o m e n a n d claims a life every six

hours in the United States?

Domestic violence. Let’s put things in perspective: the

number of U.S. troops killed in Afghan-istan and Iraq since 2006 is 6,614. The number of women in that same period who were killed as a result of domestic vi-olence was nearly double.1 Further, in the

time it takes you to read this, 24 people, most of whom are women, will be violent-ly assaulted by their intimate partners in the U.S.2

This scourge is the single greatest cause of injury to women aged 15 to 44,3 and demands more attention and re-sources. A 2012 survey from The Mary Kay Foundation found that 8 out of every 10 domestic violence shelters nation-wide reported a 78% increase in women seeking help over the past four years.4 The need to help women suffering from abusive relationships presents business-es with a marketable opportunity to pro-vide small-scale solutions that may not

eradicate the social problem completely, but can definitely make a positive impact.

DOMESTIC ABUSE: DON’T ISOLATE THE PROBLEM

Geographical isolation is one of the most dominant themes surrounding do-mestic violence in America.5 While rare-ly discussed, 15.1% of Americans, or 39.3 million, live below the poverty line, with rural counties having the highest overall poverty rates in the country.6 The impact of rural isolation is great because victims of abuse are unable to connect to social networks, allowing abusers to maintain power and control over their partners.


Research shows that women residing in rural areas are usually 100 miles from the nearest shelter and several miles from the nearest paved road.7 The limited access to transportation and communication resources makes it difficult for women to alert authorities and seek emotional sup-port, and ultimately, to leave their abusive partners.

MCDOWELL COUNTY: CRISIS-MODE

McDowell County, the poorest county in West Virginia, has been emblematic of American poverty for the last 50 years. An area where paved roads give way to dirt and forested hollows, the county once boasted a community of 100,000 residents and a booming mining industry that set coal production records. But the heavy dependence on coal mining proved problematic over time. The introduction of mining mechanization eroded jobs, eventually leaving 50.3% of the popula-tion below the poverty line by the 1990s.8

The county’s population has dramat-ically fallen to 21,3009 and today, Mc-Dowell is a community where residents describe never seeing neighbors and only interacting with people while grocery shopping.10 According to a report by Al Ja-zeera America, the lack of forward prog-ress and poor career opportunities have driven many residents toward alcohol and prescription pill abuse.11 This situation has furthered abusive relationships and affected family stability; 46% of children in the county do not live with a biological parent.12

“I grew up in poverty,” said Florisha McGuire, principal of Southside K-8 School in McDowell County. “Neither one of my parents had a high school ed-ucation… My dad was a profound alco-holic. There was domestic violence in my home.”13 According to reports, male abus-ers in the county isolate their partners by disabling telephone networks, which pre-vents women from calling to seek help or emotional support.14 McDowell County needs to improve these communication networks to help address the complex nature of rural battering.

A CASE FOR VERIZON: IT’S VIABLE

The need to alleviate domestic abuse in McDowell County presents an op-portunity for creating shared value. The concept of shared value, introduced by economists Michael Porter and Mark Kramer, describes a business strategy that enhances the competitiveness of a company, while simultaneously improv-ing the social conditions of the communi-ty in which it operates.15

Since 2000, Verizon has focused its corporate social responsibility efforts on domestic violence prevention. This CSR has included giving grants totaling over $65 million to domestic-violence shel-ters16 and creating the Domestic Violence Entrepreneurship Grant program –which awards up to $5,000 in donations to help women survivors start their entrepre-neurial dreams.17 Verizon’s knowledge of and interest in domestic abuse in America provides a solid foundation for the com-pany to effectively help domestic abuse victims in McDowell County.

This proposition recommends that Verizon partner with McDowell County’s Department of Social Services, its main local abuse shelter system, to earn real bottom-line profits. Verizon’s network is available to more than 97% of the U.S. population and covers over 306 million people, including rural areas of Ameri-ca.18 In addition there is a rising demand for victim support, which is not being supplied effectively by shelters. Despite this need, a survey reported that 87% of shelters believe that funding, services,

and prevention efforts will be down in up-coming years.19

Verizon can address this discrepancy by collecting and recycling phones donat-ed from customers, rather than allowing those phones to waste away in national landfills. More than 55 million wireless phones are discarded each year in the United States.20 Following this plan, Veri-zon will refurbish the donated phones, and act as an intermediary between the donor and the shelter in McDowell County.

Why would customers put in the effort to bring in their old phones? The answer may be simple: Verizon can offer a sales promotion ranging from 10 to 20% on next phone purchases to those who do-nate old phones. This incentive will build brand loyalty as future phone purchases from Verizon allow customers to feel good about participating in a positive cause. This will motivate customers to purchase phones at Verizon and potentially in-crease sales. If Verizon receives sufficient phone donations, there may be numerous expansion possibilities.

LEARNING FROM OTHERSThe ultimate goal is to help victims feel

safer and less isolated by constructing a reliable communication network where they can access immediate emergency support. If this program works effectively in McDowell County, it can scale to other areas in the United States. Potential ex-pansion strategies can be adapted from what other companies, similar to Verizon, have accomplished.

Verizon connects millions of people together and has the opportunity to

break the cycle of abuse for women in this unfortunate situation by incorporating

a new paradigm of shared value.“


For instance, Vodafone introduced its own line of mobile phones, TecSOS,21 which is specifically adapted for domestic abuse victims. This phone enables users to have immediate contact with emergency services through the touch of the central button. The design is such that the emer-gency contact learns the location of the victim from the handset and records all activity in the vicinity of the device. This program has had great success, with a user base of 31,700 women across Europe, and a reported 5,957 victims who claimed that the service directly saved their lives.22

An anonymous user of the phone de-scribes the success of this program as follows, “My message to Vodafone is a massive thank you, and I hope that you can give TecSOS handsets to more wom-en to help them. It really does give your life back.”23

Unlike TecSOS’s market however, Verizon will need to keep in mind that most women in McDowell County live below the poverty line and cannot af-ford excessive telephone bills.24 To over-come this obstacle, Verizon can learn from the success of another program. In 1995, Pacific Bell Wireless and Motorola partnered with a nationwide campaign called “Call to Protect” that also utilized

wireless phones to help fight domestic violence. The entire operation donated free airtime to victims of domestic vio-lence, which facilitated more than 84,000 emergency calls from wireless phones.25 Once Verizon receives enough phones for this program to be scalable, the next step is to equip phones with free airtime and texting capabilities routed to the shelter in McDowell County. In this way the ser-vice can be both practical and accessible.

ASSESSING THE SUCCESS OF A LASTING IMPACT

In order to determine the success of the program, results from the corporation and the community need to be analyzed. For Verizon, an analysis of the number of phones donated and sales data before and after the sales promotion will help de-termine success. If significant sales were made as a direct result of the proposed sales discount on next phone purchases, the campaign will have proved success-ful. The additional revenue from the pro-gram should be weighed against the costs, such as refurbishing and transporting the phones.

For McDowell County, the level of interaction between the victims and the shelter should be analyzed. This includes

the number of calls made since the incep-tion of the program, and the personal im-provement in women’s lives; direct effects can be determined through interviews.

IT’S A SMALL HURDLE IN A MUCH LARGER RACE

For every business endeavor, there will be barriers that may reduce a corpo-ration’s willingness to invest. For Verizon those barriers might include absorbing the additional expense of the program, such as refurbishing the phones and any transportation costs. Yet with stag-gering profits of $3.7 billion from the fourth-quarter of 2013 alone,26 these costs are trivial compared with the big picture.

In “Managing for Stakeholders”, R. Edward Freeman says, “Capitalism is our desire to create something of value, and to create it for ourselves and others…with the spirit of accomplishing great tasks in collaboration with others.”27 Verizon connects millions of people together and has the opportunity to break the cycle of abuse for women in this unfortunate situ-ation by incorporating a new paradigm of shared value. While this proposition will not eradicate domestic violence entirely, Verizon is poised to take a major step in the right direction. v


ANNELIEKE DOMPELINGFinance & Marketing ‘17

I hope that my essay really opens some eyes on the difficulty some women have in getting out of the vicious cycle that is domestic violence, and that people try to help those in need. I chose to focus on domestic violence main-ly because of its underestimated significance, in comparison to other issues in the United States, especially in poverty driven areas.“

1 “Faces of the Fallen.” The Washington Post. The Washington Post, n.d. Web. 07 May 2014. <http://apps.washingtonpost.com/national/fallen/>.

2 Centers for Disease Control and Prevention. Centers for Disease Control and Prevention, 24 Feb. 2014. Web. 07 May 2014. <http://www.cdc.gov/women/>.

3 Truth About Abuse Survey Report 2012. Mary Kay Foundation, 2012. Web. 7 May 2014. <http://content2.marykayintouch.com/Public/MKACF/Documents/2012survey.pdf>.

4 Ibid. 5 Rhodes, Britt E. “Rural Domestic Violence: An Interdisciplinary

Model for Rural Practice.” Contemporary Rural Social Work. Volume 4. (2012):101-09. Web. 11 May 2014. < http://journal.und.edu/crsw/article/view/444>.

6 “National Poverty Center, Frequently Asked Questions.” University of Michigan Gerald R. Ford School of Public Policy. Regents of the University of Michigan. RSS. Web. 10 May 2014. <http://npc.umich.edu/poverty/>.

7 Rhodes. 8 Johnson, Kimberly. “As Coal Fades in West Virginia, Drugs Fill Void.”

Al Jazeera America. Al Jazeera America, 26 March 2014. Web. 07 May 2014. <http://america.aljazeera.com/features/2014/3/as-coal-fades-inwestvirginiadrugsfillthevoid.html>.

9 Gabriel, Trip. “50 Years Into the War on Poverty, Hardship Hits Back.” The New York Times. The New York Times, 20 Apr. 2014. Web. 07 May 2014. < http://www.nytimes.com/2014/01/05/business/50-years-later-war-on-poverty-is-a-mixed-bag.html>.

10 Ibid. 11 Johnson.12 Gabriel. 13 Johnson. 14 Chang, Alice F. and Pamela L. Mulder. “Domestic Violence in Rural

Communities.” Mulder & Chang. N.p., n.d. Web. 07 May 2014. <http://www.marshall.edu/jrcp/vole1/vol_e1_1/Mulder_Chang.

html>.15 Porter, Michael E., Mark R. Kramer. “Creating Shared Value.”

Harvard Business Review. Business. Jan-Feb 2011. Web. 11 May 2014. <https://hbr.org/2011/01/the-big-idea-creating-shared-value/ar/1>.

16 “Community Service and Philanthropy in 2013.” Verizon Corporate Responsibility. N.p., n.d. Web. 06 May 2014. <http://vz-cr-dev.com/community-service-and-philanthropy/2013>.

17 Ibid. 18 “About Verizon Wireless.” Network. N.p., n.d. Web. 06 May 2014.19 “Good Citizenship.” Good Citizenship. NAPSA, n.d. Web. 7 May 2014.20 Truth about Abuse Survey Report 2012. 21 “TecSOS.” Vodafone. N.p., n.d. Web. 06 May 2014. <http://www.

vodafone.com/content/index/about/foundation/mobiles_for_good/tecsos.html>.

22 Ibid.23 Ibid. 24 “McDowell County QuickFacts from the US Census Bureau.”

Quickfacts Census. N.p. 2013. Web. 06 May 2014. <http://quickfacts.census.gov/qfd/states/37/37111.html>.

25 “AT&T Press Release Headlines & News from AT&T.” AT&T. N.p., n.d. Web. 06 May 2014. <http://www.att.com/gen/press-room?pid=4800>.

26 “Verizon Caps Strong Record of Success in 2013 With Fourth Consecutive Quarter of Double-Digit Earnings Growth.” Verizon News. Verizon, 2013. Web. 06 May 2014.

27 Freeman, R. Edward. “Managing for Stakeholders.” Business & Its Publics. McGraw Hill. 13-25. Print.

D Opening spread by photo flickr.com/scobleizer Dominant photo by flickr.com/jonjon_2k8 Secondary photo by flickr.com/ario

58 / HALEY SAN GIACOMO

PUREST WATER ON EARTH

Fiji Water has strategically built itself into one of the world’s most popular bottled water brands, yet ironically (and tragically) not all Fijians have enough clean water to drink. While water may be plentiful in Fiji, proper sanitation is lacking and waterless toilets may hold the key. Author Haley San Giacomo investigates the situation and uncovers some interesting facts.

ESSAY BY HALEY SAN GIACOMO

PUREST WATER ON EARTH / 59

TO OUTSIDERS, FIJI IS thought of as an island of paradise with beautiful beaches and crystal clear waters. Preserved in its

“virgin ecosystem” is the “purest water on earth”, enjoyed by the most elite. Fiji is a place of purity –or at least that is what America’s most popular water brand, FIJI, proclaims.1 The truth is, the “reality of Fiji, the country, has been eclipsed by the glistening brand of Fiji, the water.”2

Clean drinking water is actually a rare commodity for the people of Fiji. In fact, only 47% of Fijians have access to clean drinking water. With long drought sea-sons and few resources from which to obtain clean water, half of the country almost always relies on emergency water supplies. Even hospitals are left without clean water, making patients cart their own if they hope to avoid the risk of fur-ther infection and disease. For any travel-ers visiting the beautiful island, drinking bottled water is a must as typhoid and parasitic infections run rampant.3

In the town of Rakiraki, families ex-perience “the full range of Fiji’s water problems”.4 Crumbling pipes, lack of ad-equate wells, dysfunctional or flooded water treatment plants, and droughts, leave 6,000 families with little to drink. With little support from the government, months go by without emergency sup-plies reaching Rakiraki. Fiji has some of the highest rates of typhoid and diarrhea, which have both increased in the past de-cade due directly to contaminated drink-ing water. In March 2010 alone, 110 cases of typhoid were reported.5 The issue in Fiji is worsening as the amount of clean drinking water becomes scarce.

The problem is not the lack of water in Fiji. Ironically, hidden several hun-dred feet under the surface of Fiji, there is an aquifer more than 17 miles long. This unique “virgin ecosystem” holds a surplus of water, which is filtered down through volcanic rock, attracting natural minerals and silica on the way. The water is certainly there, but the infrastructure to access the water is not. Clean drinking

water is right under the natives’ feet, yet they have no means to reach it.

While the people of Fiji have no means to access this pure water, many people around the world enjoy it without re-striction. American couple Lynda and Stewart Resnick saw the “virgin aquifer” as a business opportunity and jumped on it. They created the company FIJI Wa-ter, selling square bottles of the “purest water” all over the world. The company, which is located only 30 minutes from the town of Rakiraki, has been tapping the aquifer since 1996. It produces over 3.5 million liters of water a month.6 The brand has gained extreme popularity in the United States and the couple became millionaires. Yet, the people of Fiji don’t share the same sentiment regarding FIJI Water. The land that the company is tap-ping from is “sacred and central” to the “existence and identity” of Fiji.7 The Fi-jian citizens believe that they are being cheated and that the company knows they have the upper hand. FIJI Water is still 86 years away from the end of its 99-year lease granting it rights to the land. Senior Vice President of FIJI Water, Thomas Mooney, even stated in a recent interview that without the FIJI Water Company, “Fiji is kind of screwed.”8

In the past 25 years, the government of Fiji has seen four coups, and the most recent junta has been declared unconsti-tutional. In response, the military regime has “abolished the judiciary, banned un-authorized public gatherings, delayed elections until 2014, and clamped down on the media.”9 Such acts have bred cor-ruption and paranoia. The military re-gime actually backs FIJI Water, and has even taken action against those who talk negatively about the company. One of these individuals includes Anna Lenzer, a New York journalist who wrote, “Fiji Wa-ter: Spin the Bottle.” This article uncovers many true characteristics of the FIJI Wa-ter Company and offers a major critique of the issues that Fiji faces today.

Anna Lenzer prefaces the article by communicating her own experience with the military regime of Fiji. Lenzer de-scribes a day at an Internet café, when

she was writing emails to her friends, filling them in on her “visit to the Fiji Wa-ter bottling plant,” and also “forwarding a story about foreign journalists being kicked off the island.”10 As she was writ-ing emails, the Internet connection died. A few moments later, a police officer en-tered the café, approached her, and said, “We’re going to take you in for question-ing about the emails you’ve been writ-ing.”11 She was ultimately arrested for the content of her intercepted emails. Lenzer was continuously questioned as the gov-ernment was “worried that [her] report-ing would taint the Fiji Water brand.”12 Questions like, “Who do you work for, another water company?” and “It would be good to come here and try to take away Fiji Water’s business, wouldn’t it?” were just a few.13 The regime is completely be-hind the company and continues to stop people like Lenzer from giving the brand negative press.

It is not completely unwarranted for the military regime to support the compa-ny. FIJI Water has, in fact, increased visi-tors to the island; Fiji’s tourism has risen 24% from 2009 to 2011.14 Meanwhile tour-ism in the Cook’s Islands, a comparable group of islands in terms of location and exotic appeal, has risen only 12% within the same time period.15 The FIJI Water Company has given around 400 jobs to the locals, as well as created the FIJI Wa-ter Foundation in an attempt to give back.

As part of its main project, the FIJI Water Foundation has teamed up with the organization, 1% of the Planet, to maintain the environment and ecosys-tem of Fiji. The contributions made are mainly toward the preservation of Fiji’s last “ancient rainforest”.16 However, not fully explained is the fact that this rainfor-est is the exact location of the FIJI Water facility. This rainforest is the first step in the production of the drinking water, as it collects the rainwater to deliver to the aquifer right below.17

Another big component of the FIJI brand is its sustainability practice. At the top of its marketing campaigns are its FijiGreen contributions and its asser-tion that it is “carbon-negative” -a claim

60 / HALEY SAN GIACOMO

that was pulled after a class action law-suit in 2010.18 The brand has its highest proportion of consumers in California and, according to journalist Anna Lenzer, Fiji water was named as one of the “Top 10 Things Young Hollywood Can’t Get Through the Day Without”.19

This popularity is backed up by true sustainability practices; working with hydro geologists, FIJI Water ensures that production rates are consistent and sus-tainable. In the Water Management sec-tion of its website, the company states: “[the aquifer] is constantly replenished by rainfall, far faster than we could ever bottle the water”.20 With this prime re-plenishing source, exclusive rights, and apparent need all around, it seems unfair that the company is keeping the water all to itself.

In response to the need for clean wa-ter, the most pressing issue in Fiji, the foundation has helped around 200 villag-es build wells so that water is accessible.21 But this doesn’t seem to be solving the is-sue. These wells are dug close to the sur-face, and as soon as cyclone season hits, a 6-month long period, these wells become frequently flooded and end up contami-nated. This again leaves the people of Fiji without water. With so much effort meant to sustain the rainforest and create the brand of the purest water on earth, it is ironic that the people of Fiji cannot enjoy their own natural supply of pure water. The issue of clean drinking water seems to pass under the radar, as it is shadowed by the company’s efforts to maintain a green, eco-friendly name. Disease is still prevalent, and water is only potable half the time. One major problem: sanita-tion is overlooked. While the Ministry of Health has made great strides in Fiji,

some villagers are still defecating openly and their water supply can become con-taminated with fecal matter as soon as flooding occurs. 22

The FIJI Water Foundation has over-looked a possible partnership with orga-nizations like The Bill and Melinda Gates Foundation. This foundation is very aware of the water supply issue. In its attempts to improve living conditions and access to clean water, it began by supplying a clean sanitation system. Clean water and hy-giene are obvious issues in developing and underdeveloped countries, and sanitation itself, often neglected, is at the core of the whole problem.23 A key aspect of the Bill and Melinda Gates Foundation is its “Re-invent the Toilet Challenge.” This initia-tive includes “funding research to devel-op waterless, hygienic toilets that do not require a sewer connection or electricity and cost less than five cents per user per day.”24 After all, the toilet was named the best medical advancement in the past 200 years. When the sewage system and toilet were developed and implemented in the 19th century in Europe, child mor-tality rates dropped more than they had in history: from 20-35% to less than 5%. Disease became less frequent, and water supplies stayed clean. Toilets seem like the perfect solution for the people of Fiji.

But it’s not just about the implemen-tation of latrines and toilets to local vil-lages in Fiji; it’s also about educating the people. The locals don’t understand the danger of raw sewage on the streets, and they need to be shown that this is a prob-lem. In a recent Ted Talk, Rose George “plunged” deep into this sanitation issue in her discussion “Let’s talk crap. Seri-ously.” 25 She explained that the solution is not merely to give everyone a toilet. In

Clean drinking water is actually a rare commodity for the people of Fiji.“

some developing countries, where gov-ernments have gone in and given out free latrines, they return a few years later to find that villagers have “lots of new goat sheds or temples or spare rooms” as they themselves “happily walk past them and go over to the open defecation grounds.”26 There is a real need to “manipulate hu-man emotion”—to explain that open def-ecation is the cause of disease and high child mortality rates.27

The Fiji Water Company under-stands marketing and has great success in spreading a lifestyle. With the help of DevComm (Development Communica-tions), the company can utilize its skills, combined with the talents of others, to create a strategic plan for communica-tion. DevComm can help create a plan to bypass the military regime and truly edu-cate the people of Fiji. The company can even use one of Rose George’s most pow-erful approaches: putting out a plate of feces and a plate of food. As locals sat and watched flies move from one plate to the next, “[p]eople who’d been thinking that what they were doing was not disgusting all suddenly thought, ‘Oops.’” 28 They real-ized they were ingesting other neighbor’s feces and that’s what triggered a change in their thinking.

The FIJI Water Company seems to have all the resources within its grasp. All it needs to do is reach out to a few orga-nizations to catalyze improvements. The company already has its brand and is ac-knowledged for its green efforts, but if it improves the wellbeing of the Fijians, it will truly be giving back. v

PUREST WATER ON EARTH / 61

HALEY SAN GIACOMOEconomics & Minor in Computer Science ‘16

I was fortunate enough to be able to travel to Fiji and I was able to speak with some locals. It was extremely eye-opening to see an authentic image of Fiji, not the image that FIJI Water portrays. Because of this mix of emotion I was having, I really wanted to find out what the locals thought about the brand. After receiving mostly negative feedback, I began to understand how brands have the ability to market themselves.“

1 Schwartz, Ariel. “Fiji Water Playing Chicken With Fiji [Updated].” Fast Company. N.p., 29 11 2010. Web. 4 Apr 2013. <http://www.fastcompany.com/1706114/fiji-water-playing-chicken-fiji-updated>.

2 Lenzer, Anna. “Fiji Water: Spin the Bottle.” Mother Jones. N.p., 12 08 2009. Web. 4 Apr 2013. <http://www.motherjones.com/politics/2009/09/fiji-spin-bottle>.

3 Ibid.4 Ibid.5 Rina, Samantha. “Typhoid rates in Fiji High.” Fiji Times. N.p.,

27 11 2010. Web. 7 Apr 2013. <http://www.fijitimes.com/story.aspx?id=160722>.

6 Schwartz, Ariel.7 Judkis, Maura. “Fiji Water Chimes In on Bottled Versus Tap.” U.S.

News. N.p., 15 07 2008. Web. 4 Apr 2013. <http://money.usnews.com/money/blogs/fresh-greens/2008/07/15/fiji-water-chimes-in-on-bottled-versus-tap>.

8 Ibid.9 Lenzer, Anna.10 Ibid.11 Ibid.12 Ibid.13 Ibid.14 “Visitor Arrival Statistics.” Fiji Islands Bureau of Statistics. Fiji

Department of Immigration, n.d. Web. 12 May 2013. <http://www.spc.int/prism/country/fj/stats/Tourism/Visitor_Arrivals.htm>.

15 GOVERNMENT OF THE COOK ISLANDS. MINISTRY OF FINANCE AND ECONOMIC MANAGEMENT. Print. <http://www.

mfem.gov.ck/docs/Stats/2013/Tourism/Monthly/Mig March 2013.pdf>.

16 FIJI Water. N.p.. Web. 4 Apr 2013. <http://www.fijiwater.com/>.17 Ibid.18 “FIJI Water’s Carbon-Negative Claims Land It in Hot Water.” - Green

Retail Decisions. N.p., 6 Jan. 2011. Web. 26 Dec. 2014. <http://www.greenretaildecisions.com/news/2011/01/06/fiji-waters-carbon-negative-claims-land-it-in-hot-water>.

19 Lenzer, Anna.20 “Water Management | FIJI Water.” FIJI Water. N.p., n.d. Web. 27 Dec.

2014. <http://fijiwater.co.uk/giving-back/environment/sustainable-practices/water-management/>.

21 FIJI Water.22 “WHO/UNICEF Water Supply Statistics, 2014 - Knoema.com.”

Knoema. N.p., n.d. Web. 27 Dec. 2014. <http://knoema.com/WHOWSS2014/who-unicef-water-supply-statistics-2014>.

23 “Visitor Arrival Statistics.”24 “Water, Sanitation & Hygiene.” Bill & Melinda Gates Foundation. N.p..

Web. 12 May 2013. <http://www.gatesfoundation.org/What-We-Do/Global-Development/Water-Sanitation-and-Hygiene>.

25 George, Rose, perf. “Let’s talk crap. Seriously.” TEDTalks. N.p., 15 04 2013. web. 12 May 2013.

26 Ibid.27 Ibid.28 Ibid.D Opening spread photo by flickr.com/magpie372 Secondary photo by flickr.com/thegaffneys

Jacqueline AllenSENIOR Editor

Anna MancusiSenior Editor

Liz IaconisASSISTANT Editor

Tiffany LiEXECUTIVE Designer

Linda ZhangDEPUTY Designer

Jing HaoPhotographY EDITOR

THE CALL FOR CORPORATE ACTION

ABOVE: Anna Mancusi, Jacqueline Allen, Tiffany Li, Jing Hao, Professor Jeffrey J. YoungerLEFT: Linda Zhang

62 / ACKNOWLEDGEMENTS

ACKNOWLEDGEMENTS / 63

ACKNOWLEDGEMENTSTHANK YOU AND CONGRATULATIONS!This third edition of The Call is culled

from ~1000 student essays written in the 2013 and 2014 semesters. We selected these final ten essays based on the quality of the critical thinking, the caliber of the writing, and the uniqueness of the content. We were looking for a breadth of social issues and well delivered logical arguments, but we were also seeking a certain “wow” factor –a topic that made us stop and think. Congratulations to the finalists and kudos to all who took part.

This publication was written, assembled, selected and edited by NYU students. Thanks to our selection committee including Senior Editors, Anna Mancusi and Jacqueline Allen. They had help from Jane Ward, Lori Berenberg, Sydney Stein, and Rachel Crumpler. The editorial team included Anna Mancusi and Jacqueline Allen with help from Liz Iaconis.

Also crucial to the process were our talented art designers, Linda Zhang and Tiffany Li as well our lead photographer, Jing Hao. Other skilled student photographers include Andy Fang and Vincent Chen –it is his stunning photo of NYC that graces our cover. Together, their work is present on every page and the dramatic results speak for themselves.

Thank you to NYU Stern Undergraduate Dean Geeta Menon for her gracious opening letter and to Professor Batia Wiesenfeld for her introduction to the BiP course. Thank you all!

Overall, I owe gratitude to the many dedicated instructors who manage the weekly discussions, critical thinking, and critical writing sessions that make up Business and Its Publics: Inquiry and Discourse. Their hard work is evident within these essays. The plenary and inquiry discussion sections are overseen by Batia Wiesenfeld. The administration of the class-wide student course is handled ably by Kristy McCadden and Teaching Fellows Anna

Mancusi, Ashley Taylor, Stan Berus, Karen Wong, Cassidy Morris, and Ayush Jain.

NYU Stern’s professional faculty lead the smaller class “inquiry” discussions and thanks are due to all: Ingo Walter, Jenny Carpenter, Ken Bigel, Sam Preston, Arun Sundararajan, Barbara Holt, Batia Wiesenfeld, Bruce Buchanan, George Smith, Jeff Carr, Joe Foudy, Larry White, Leigh-Anne Walker, Maria Patterson, Mark Brennan, Matt Statler, Natalie Holder-Winfield, Paul Wachtel, R. Kabaliswaran, Richard Sylla, Roy Smith, Sam Craig, Scott Stimpfel, Shelly London, and Steve Marlowe.

Discourse instructors lead the critical writing portion of the class and, without their dedication, you would not be reading this publication. Management Communication Chair Irv Schenkler and Professor Robert Lyon formulate much of the discourse curriculum and numerous colleagues put the plans into play. Thank you to the following: Bruce Meyerson, Irv Schenkler, Matt Powers, Solon Barocas, Tim Doocey, Aya Tanaka, Bob Tanner, Brian Hanssen, Carol Newell, Claudia Caruana, Eileen Gilmartin, Ellen Pluta, Jane Ward, Jen Telesca, Josh Stager, Larry Menna, Laura Noren, Ofelia Magnen, Paul Melton, Rachel Crumpler, Rob Lyon, and Robert Wosnitzer.

Finally I would like to thank our own Management Communication Program for their support throughout this project. Thanks to Aline Wolff, Susan Stehlik, Irv Schenkler, Robert Lyon, Dave Purdy, Diane Lennard, Yu Shi—and a special thank you to MC Administrator, Janeece Lewis.

Most importantly, I thank all the hundreds of student essayists for their hard work. These writers are the ultimate inspiration for this magazine. It is my hope that the high caliber of prose and challenging ideas contained here inspire our current and future student writers.

JEFFREY J. YOUNGERClinical Assistant Professor

Management Communication

Leonard N. Stern School of Business

New York University

the call for corporate action: nyu stern student voices: vol. 3 / spring 2015

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