The Call for Corporate Action: NYU Stern Student Voices, Vol. 7 Spring 2020 by NYU Stern School of Business

EDITED BY

PROFESSOR JEFFREY J. YOUNGER, AMY DONG, AVERY FARM, ALAN XIA, AND JANE LIN WITH PROFESSOR SHELLY LONDON

HANNAH GOH

FOR CORPORATE ACTION

NYU STERN STUDENT VOICES

VOL. 7 / SPRING 2020

Front and back photo by Krithika Kommana, NYU Stern â&#x20AC;&#x2DC;20

PHOTOGRAPHY BY

KRITHIKA KOMMANA

contents Letter from the Dean

DEAN ROBERT WHITELAW

Black Hair: The New Definition of Professional

Introduction to Business and Society

PROFESSOR MATTHEW STATLER

Miracle Moringa: Saviour of the Indebted Indian Farmer?

How Water Chestnuts Can Save the Great Barrier Reef

Big Business and Dark Business: How Korea’s Largest Business Can Address Its Prostitution Problem

Streamlining the Container Shipping Industry: Getting Rid of Empty Weight

Water ATMs: An Innovative Solution to Water Scarcity in Rural Rwanda

Exxon and EVs

Creating a Recycling Industry in China Through the Lens of Alipay

Case Competitions: Resolving Gender Inequality in Finance While in College

Acknowledgements

CIRNDIE JOSEPH

Beyond the Five Rings: An OlympicSized Nightmare ALEX HU

ANVITI SURI

FERNANDO SAYEG

HANRAY LIU

JINNY KIM

RICARDO DAHIA AGUIAR

TALIA SHAPIRA

ABBY YANG

PROFESSOR JEFFREY J. YOUNGER

ALISHA HUANG

Photo by Krithika Kommana NYU Stern ‘20

CONTENTS / 03

LETTER FROM

THE DEAN

ROBERT WHITELAW Dean of the Undergraduate College Edward C. Johnson 3rd Professor of Entrepreneurial Finance NYU Stern School of Business

04 / LETTER FROM THE DEAN

I AM PLEASED TO SHARE THE seventh edition of The Call for Corporate Action. This has been another proud year for us at the NYU Stern Undergraduate College, as we continue to rank 5th on the US News & World Report’s list of Best Undergraduate Business Programs. We take pride in our well-rounded education and work hard to teach our students the values of honesty and integrity. As I complete the first year of my deanship, I am continually astonished at the students’ commitment to and creativity in solving the world’s most urgent problems. The NYU Stern Undergraduate Colleg e requires all students to participate in our unique Social Impact Curriculum, which allows them to explore issues of personal and professional ethics, corporate social responsibility, and the interconnections between business and our global society. Every day, business shapes and impacts

the world around us. We encourage our students to think critically about its role in society and their influence as future leaders. The Call f or Corporate Action showcases essays written by firstyear students in their Business and Society course that address issues facing corporations in terms of their impact on society. These students’ work demonstrates their eagerness to use business to create a positive impact—a responsibility they take seriously. We are so proud of these students as they embark on a bright path to change the world for the better. I hope you enjoy reading their inspiring work.

INTRODUCTION TO

BUSINESS AND SOCIETY THIS YEAR, NYU STERN celebrates 20 years of the Social Impact Core Curriculum. Back then, we were the first undergraduate business school to require all students to take four courses focused on the role of business in society, and today, we remain the only school with such a strong commitment to preparing students to deal with societal and environmental challenges on a global scale.

MATT STATLER Richman Family Director of Business Ethics and Social Impact Programming Clinical Associate Professor of Business and Society NYU Stern School of Business

The first course in this sequence is now called Business and Society, for which we use the United Nations Sustainable Development Goals (SDGs) as a thematic framework to understand the many ways that businesses can contribute positively to the future. In this regard, we are hardly alone—a recent study by PricewaterhouseCoopers found that 72 percent of companies mention the SDGs in their annual corporate or sustainability report. For many years, we have asked students to analyze

the various stakeholders—including employees, customers, partners, and financiers—who have an interest in business. So this year, when the Business Roundtable revised its position on the purpose of the corporation to include serving stakeholder interests, we took hope that twenty years of Stern graduates might be even better positioned to lead their organizations. In this magazine, we are thrilled to present some of the best student work from the Spring 2019 semester. In these essays, students creatively develop strategies that companies can employ to create economic, social, and environmental value and thereby make progress toward the Sustainable Development Goals. Please join me and my colleagues in celebrating their excellence and encouraging them to lead business and society toward a more sustainable and just future!

INTRODUCTION TO BUSINESS AND SOCIETY / 05

BLACK HAIR

THE NEW DEFINITION OF PROFESSIONAL

ESSAY BY

CIRNDIE JOSEPH

A u t h o r C i r n d i e J o s e p h c r a f t s a p a r t n e rs h i p between media and beauty products to address ra c i a l b i a s e s ro o te d i n s o c i e ta l n o r m s t h a t h u r t Bl a ck wo m e n i n t he wo rkplac e .

LACK HAIR, ACCORDING to the NYC Commission on Human Rights, includes “locs [sic], cornrows, twists, braids, Bantu knots, fades, [and] Afros.”1 These styles are often banned from grooming policies that define neatly trimmed hair as a key part of the professional image.2 As a result, there are several cases where African American women have been denied jobs because of their Black hairstyles, told to change their hairstyle or be terminated from their positions, or fired from their jobs altogether. Society must defeat this bias to end discrimination in grooming policies that cost Black women their careers. Otherwise, Black hair will never be considered professional, forcing Black women to suffer the consequences of their own hair. Destiny Tompkins, a former Banana R e publ ic e mpl oye e , s uffe re d the consequences of her hair when she was just 19 years old. In 2017, Tompkins was asked to either remove her boxbraids or be removed from shifts. Her manager reasoned that Tompkins was in violation of Banana Republic’s dress code because her hair was “a little too urban and unkempt for [the brand’s] look and image.”3 The use of the words “urban,” which is generally associated with Black people, and “unkempt” illustrate the stigma against Black hair that serves as a basis for exclusion and discrimination. By using these words, Tompkins’ manager expresses her anti-black belief that Black hair cannot represent professionalism. The exclusion of Black hair from the professional image is also apparent in the cases of Chastity Jones and Brittany Noble-Jones. Despite meeting all of the job requirements, Catastrophe Management Solutions denied Chastity Jones a position in 2014 simply because she refused to cut her dreads. The 11th U.S. Circuit Court of Appeals upheld the employer’s decision, which has been accepted as case law in that region (Alabama, Florida, and Georgia).4 Similarly, in 2017, Brittany Noble-Jones lost her job as a news anchor for WJTV after wearing her natural hair for the first

BLACK HAIR: THE NEW DEFINITION OF PROFESSIONAL / 07

“The use of the words “urban,” which is generally associated with black people, and “unkempt” illustrate the stigma against black har that serves as a basis for exclusion and discrimination.” time. Although both women were highly qualified for their positions, bias against Black hair sabotaged their careers.

WHAT IS THE GRAVITY OF THE SOCIAL ISSUE?

In addition to bias against Black hair jeopardizing Black women’s careers, Black women are set back economically through wage inequality. According to the National Partnership for Women and Families, a national, non-profit, non-partisan organization, full-time working women in the U.S. receive 80 cents for every dollar that men receive. 5 However, the wage gap is wider for Black women, who receive just 61 cents for every dollar paid to men.6 Additionally, although more Black mothers are employed than mothers of other races (78 percent versus 66 percent), more Black women work service jobs than any other demographic.7 This disparity contributes to the substantial pay gap that Black women face. In fact, although 80 percent of Black women are their families’ breadwinners, the average annual salary for Black women is still 21 percent lower than that of White women. 8 This gap proves that Black women are economically neglected in America’s workforce. Not only are Black women neglected economically, they are also excluded from workplace protections. The Economic Policy Institute states that “New Deal minimum wage, overtime pay, and collective bargaining legislation excluded the main sectors where black women worked—domestic service and farming.”9 One reason Black women mainly work in these sectors is the historical lack of cash assistance that has forced them to take on low-paying jobs with no health insurance or paid leave benefits. For instance, Black

08 / CIRNDIE JOSEPH

women were excluded from receiving cash assistance until the 1960s while white women have been receiving it since 1935.10 This situation reduces the number of Black women in higher paying jobs, leading to the lack of representation of Black women (and Black hair) in professional settings. As a result, Black hair is excluded from the professional image. This exclusion and lack of representation creates discrimination and bias against Black women. Consequently, if the federal government won’t protect Black women economically, then it can’t protect them from workplace discrimination.

PREVIOUS SOLUTIONS

With Congress silent on workplace protections for Black women, local governments have taken some initiative. I n Fe b r u a r y 2 01 9, t h e N e w Yo r k City Commission on Human Rights passed “Legal Enforcement on Race Discrimination on the Basis of Hair,” its own protection law. This law allows victims of workplace discrimination to file a complaint with the NYC Commission’s Law Enforcement Bureau and subjects offending employers to fines. In a more dramatic step towards preventing workplace discrimination, the State of California recently passed SB 188, which prohibits discrimination against, “traits historically associated with race, including but not limited to, hair texture and protective hairstyles.”11 The bill identified society’s “Eurocentric norms” as placing an undue burden on non-Europeans to alter their appearance in order to be deemed professional.12 The goal of these laws is to stop antiBlack racism present in policies that ban or demand the alteration of Black hair.

However, fines are not a strong enough incentive to stop discrimination from occurring. Even if enough people file complaints, the law itself can’t eliminate bias or shield the victims from the initial discrimination. It is only a means for the victims to gain justice after the discrimination has already occurred, and is only effective if the victims report to the Law Enforcement Bureau. The law also has other limitations. Most notably, the law only protects people in New York City. It does not protect people like Chastity Jones, who lost the case against Catastrophe Management Solutions in an Alabama Court; or Brittany NobleJones, whose complaints were ignored by the Equal Employment Opportunity Commission in Mississippi.

A FEASIBLE PLAN OF ACTION

To truly solve the issue of discrimination against Black hair, the initial bias needs to be eradicated rather than bandaged. In the words of the NYC Commission on Human Rights, the “fundamentally racist belief that Black hairstyles are not suited for formal settings, and may be unhygienic, messy, disruptive, or unkempt” must be debunked. According to political philosopher John Rawls in his text, A Theory of Justice, bias will continue to exist unless society implements a “veil of ignorance.”13 The veil of ignorance requires members of society to be ignorant to factors such as race, status, and class that are the basis of discrimination. However, implementing this veil of ignorance will be impossible as long as the members focus on differences such as skin color or, in this specific case, hair. Racism and classism are the foundations of the American social contract. The

U.S. was built on slavery and capitalism, institutions which thrive on distinctions between race, class, and status. Because of this social contract, discrimination against Black hair cannot be eliminated simply with John Rawls’s veil of ignorance. As an alternative, the psychological phenomenon known as mere-exposure effect might solve the issue. The mereexposure effect occurs when increased exposure to a stimulus causes someone to view that stimulus more positively. The belief that Black hairstyles are unprofessional stems from the lack of representation of Black hairstyles in professional settings. Spreading the image of African American women wearing Black hairstyles would help familiarize society with a new professional image. This new professional image, aided by the mereexposure effect, will be reflected in new grooming policies and reduced bias against Black hair. The most effective way to spread this new professional image would be through the news, media, and entertainment industry. Society holds news anchors to high professional beauty standards. And, since 97 percent of Americans watch TV, news anchors are the perfect tools for change.14 An increase in African American news anchors with natural hair would expose a new image of professionalism to just enough people to stir change. This change can be achieved through a partnership with Nexstar Media Group, a media company that owns 171 stations in 100 markets, and dominant players in the natural hair product market such as Cantu and Shea Moisture. This partnership will see Cantu and Shea Moisture run ads on Nexstar’s portfolio of media networks. Through this partnership, Nexstar, Cantu and Shea Moisture can profit while improving workplace conditions for Black women. Nexstar will profit by collecting advertising revenue from Cantu and Shea Moisture. These ads will spread awareness of natural Black hair to Nexstar’s audience and encourage African American news anchors on Nexstar’s stations to wear their

BLACK HAIR: THE NEWBEYOND DEFINITION THE CONCRETE OF PROFESSIONAL ROOTS // 09 09

natural hair on the air. Nexstar claims to be “the most trusted medium among viewers” and to “have the greatest influence on consumer purchasing,” which is why they are the ideal advertising platform for natural hair product companies whose goal is to increase sales.15 These advertisements will reach an audience of 43.6 million viewers, which is 38.9 percent of American households with TVs.16 In addition, the ads can be displayed on Nexstar’s websites, which received 219 million unique page views in 2017.17 This large audience will not only be exposed to these natural hair products, but also to this new image of professional hair. In reciprocal fashion, Cantu and Shea moisture will share images of these news anchors and TV hosts wearing their natural hair on their Instagram pages. An example of a successful implementation of this idea is Talk2Pops’ circulation of a 2019 collage showing Black female news anchors wearing their natural hair. The image received 4,900 likes on Talk2Pops’ Instagram page in just three hours and 18,675 likes on DollarCurlClub’s page in less than six hours. The comment sections under both posts were filled with people recommending others to the original news channels. Cantu has 297,000 followers with an average of 3,000 likes and 50200 comments per post. Similarly, Shea Moisture has 761,000 followers with up to 64,000 views and 40-500 comments per post. These powerful images will simultaneously direct thousands of new viewers to Nexstar’s stations to increase its revenue while exposing the Instagram audiences to the new image of professional hair. Posting these images on Cantu and Shea Moisture’s Instagram pages would be most effective at gathering new viewers. And as Nexstar stated in its 2017 Annual Report, it wishes to, “grow our revenue and operating income by increasing the audience.” 18 Nexstar can tap into an entirely new demographic and expand its audience rather than appealing to the audience it already has. In addition, Nexstar’s social media presence is weak compared to that of Cantu and Shea Moisture: WJTV

10 / CIRNDIE JOSEPH

has 18,400 followers, KTVU has 99,200 followers, WOTV 4 Women has 1,275 followers, and KHON has 46,000 followers. Each new page has an average of 300 likes per post (except for KTVU which receives up to 1,000). Nexstar’s audiences are also inactive as there are little to no comments or post interactions compared to the hundreds of comments under Cantu’s and Shea Moisture’s posts. Aside from expanding its audience by tapping into a new demographic, the success of previous partnerships offers another incentive for Nexstar to pursue the partnership with Cantu and Shea Moisture. In a recent partnership with Media General, Nexstar’s net revenue increased 120.4 percent while digital revenue increased 126.8 percent. 19 The news industry is highly competitive for audience, programming, and advertising, so Nexstar can tackle all three components and dominate the industry by partnering with Cantu and Shea Moisture. 20 It can expand its audience with a new demographic of Black women, add new programming geared towards the maintenance of natural hair, and earn ad revenue from Cantu and Shea Moisture, all at the same time. Nexstar has already signaled it is willing to expand to gain new viewers in its 2017 annual report, which stated that it would “[double] the size of [its] Washington D.C. News Bureau to create more content from the nation’s capital to serve growing consumer interest in our markets.” 21 Not only is Nexstar willing to create more content, but it is also willing to hire more people, which, through its partnership with Cantu and Shea Moisture, will include African American women with natural or Black hairstyles. The new influx of news anchors and TV hosts with natural hair along with the new professional image spreading across social media will see the perfect implementation of the mere-exposure effect. Society will become so familiarized with this new image that fewer African American women would be denied or fired from jobs on the basis of their hairstyle. Discrimination against black hair in grooming policies would cease as a result of the eradication

of the reason for the bias. Ultimately, the representation of Black hair in media will also have a lasting effect on future generations of African Americans, encouraging them to pursue professions that Black people would normally shy away from. The partnership between Nexstar, Cantu, and Shea Moisture can be the catalyst for a cycle of Black representation.

“Legal Enforcement Guidance on Race Discrimination on the Basis of Hair.” Hair Discrimination-Legal-Guidance, www1. nyc.gov/site/cchr/law/hair-discrimination-legal-guidance. page. 2 Perkins, Emily Jane. “Regulating Appearance in the Workplace: An Employer’s Guide to Avoid Employment Discrimination Lawsuits.” The National Law Review, National Law Review, www.natlawreview.com/article/ regulating-appearance-workplace-employer-s-guide-toavoid-employment-discrimination-. 3 Tfl. “New York City Enacts Ban on Racial Discrimination Based on Hair and Hair Styles.” The Fashion Law, The Fashion Law, 18 Feb. 2019, www.thefashionlaw.com/home/new-york-cityenacts-ban-on-racial-dissemination-based-on-hair-andhair-styles. 4 Pating, Camille Hamilton, and Yuki Cruse. “California Lawmakers Ban Workplace Discrimination Based on Hairstyle.” SHRM, 16 Aug. 2019, www.shrm.org/ resourcesandtools/legal-and-compliance/state-andlocal-updates/pages/california-law-will-ban-workplacediscrimination-based-on-hairstyle.aspx. 5 “Black Women and the Wage Gap.” National Partnership, Apr. 2019, www.nationalpartnership.org/our-work/resources/ workplace/fair-pay/african-american-women-wage-gap.pdf. 6 Ibid. 7 Ibid. 8 Banks, Nina. “Black Women’s Labor Market History Reveals Deep-Seated Race and Gender Discrimination.” Economic Policy Institute, 19 Feb. 2019, www.epi.org/blog/blackwomens-labor-market-history-reveals-deep-seated-raceand-gender-discrimination/. 9 Ibid. 1

Ibid. Pating, Camille Hamilton, and Yuki Cruse. 12 Ibid. 13 Rawls, John, 1921-2002. A Theory of Justice. Cambridge, Mass. : Belknap Press of Harvard University Press, 1971. 14 “Television, Capturing America’s Attention at Prime Time and beyond: Beyond the Numbers.” U.S. Bureau of Labor Statistics, U.S. Bureau of Labor Statistics, www.bls.gov/ opub/btn/volume-7/mobile/television-capturing-americasattention.htm?view_full. 15 “2017-Annual-Report.” Nexstar.tv, Nexstar, 2018, www. nexstar.tv/wp-content/uploads/2018/05/2017-annualreport.pdf. 16 “Television, Capturing America’s Attention at Prime Time and beyond: Beyond the Numbers.” U.S. Bureau of Labor Statistics, U.S. Bureau of Labor Statistics, www.bls.gov/ opub/btn/volume-7/mobile/television-capturing-americasattention.htm?view_full. 17 “2017-Annual-Report.” Nexstar.tv, Nexstar, 2018, www. nexstar.tv/wp-content/uploads/2018/05/2017-annualreport.pdf. 18 Ibid. 19 Ibid. 20 Ibid. 21 Ibid. 10 11

Photo Credits: Undercoveredlens/Pexels—page 6/7 Nappy/Pexels—page 9

DISCUSSION QUESTIONS 1. What other policies or stigmas may hurt certain groups in the workplace? 2. How quickly and/or completely can the mere-exposure effect address discrimination in the workplace? 3. After reading this article, what do you want to learn more about?

CIRNDIE JOSEPH

CLASS OF 2022, MANAGEMENT

“As a business student, intertwining business with the exploration of my identity seemed implausible. However, researching Black hair in business not only forced me to unravel an issue that Black women like me face in the field but also gave me hope for the future.”

BLACK HAIR: THE NEW DEFINITION OF PROFESSIONAL / 11

MIRACLE MORINGA ESSAY BY

MARY GAO

After realizing how important it is to have emergency funds, author Mary Gao wanted to explore what stops people from saving. Here she suggests that a new form of a “savings group” can connect historical practices with modern technology and empower local populations.

MIRACLE MORIN BY ANVITI SURI SAVIOUR OF THE INDEBTED INDIAN FARMER?

HOWSTO INCREASE SAVINGS IN LATIN AMERICA AVING OUR PLANET, lifting people out of poverty, advancing economic growth...these are one and the same fight. Solutions to one problem must be solutions for all.” Ban Ki-moon. Agriculture is India’s life and breath – nearly 70 percent of its population depends on agriculture for a living. 1 However, for more than a decade, financial prospects have been bleak for the farming community. In 2013, the average Indian farming household had a debt to asset ratio 630 percent higher than ratios of households in 1992. 2 The financial burden has led to alarming farmer suicide rates in the country, as well as mental health issues and distress. Several policies, including loan waivers and subsidies, have been introduced by the government but

have failed to substantially decrease suicide rates.3

THE ROOT CAUSE OF THE PROBLEM

Farmers in India face a problem that has culminated in a life-threatening phenomenon. After commercialization and industrialization of agriculture in the 1960s, farmers undertook large loans during the Green Revolution to increase the quantity and quality of production and solve India’s food shortage problem. The loans financed new and expensive genetically modified seeds (GMOs), water pumps, pesticides, and tractors. A High Yielding Variety Seed Program (HVP) was introduced in an attempt to increase surplus food production.4 While the Green Revolution was wildly successful in some regions, in others it was

NGA

ESSAY BY

ANVITI SURI

The current situation of many farmers in I n d i a i s d i re a s m a ny h a ve ta ke n o n h e a v y d e b ts but only see low crop yield. Author Anviti Suri introduces the miracle of Moringa, and how IT C Limited and its online network can utilize the ne w crop to tra ns f orm the l ives of f a rmers .

quite fatal5– leading to serious interregional disparities. The inability of farmers to pay back huge loans, coupled with crop failure due to the unpredictability of weather, left many farmers in dire straits. Furthermore, due to the globalization of the Indian economy in the 1990s, there was increased pressure to perform; Indian farmers had to compete against international producers. The accumulation of these factors has led to the present, in which Indian farmers are defaulting on loans, facing extreme stress and mental health issues, and committing suicide in the face of a major financial crisis. However, Moringa, a plant native to India, has the potential to be the light at the end of this tunnel.

WHY MORINGA?

Moringa has several names across different cultures but ultimately all of them translate to “The Miracle Tree” or “The Tree of Life,” and this is no exaggeration. Recently, it has been coined a superfood, and it is one in every sense of the word. One serving of Moringa’s tiny leaves has seven times the amount of vitamin C of an orange, four times the calcium of milk, and four times the beta-carotene of carrots.5,6,7,8 The superfood industry is projected to be a $23 billion market by 2024, with North America being the largest market and Asia Pacific the fastest growing.9 In developed nations like the US, UK, and France, fitness and health food lifestyle trends are more popular than ever before. The demand for superfoods and concern for longevity of life has peaked, and Moringa fits perfectly into this narrative.10 However, Moringa only grows in hot subtropical areas, forcing healthconscious nations to turn to countries in Asia and Africa for its supply. Capitalizing on the growing global demand for this superfood, Moringa growers can provide

14 / ANVITI SURI

substantial relief to the Indian agricultural crisis. For decades, Indian farmers have been growing wheat, rice, sugarcane, and lentils. A sizable portion of the debt farmers carry includes money for water motors and digging wells to meet the exorbitant water requirement of GMO seeds, which are commonly used for their high-yielding properties. However, high yields come at a trade-off, as they require copious water consumption. Paddy, sugarcane, and wheat occupy about 40 percent of the gross cropped area of India but can generally require more than 80 percent of the irrigation water available.11 Moringa’s needs are the exact opposite of the current GMO crops grown by Indian farmers. During the summer, when conditions are harshest, commercial cultivation of Moringa requires only 12-16 litres of water daily per tree and half this rate during other seasons, which is significantly lower than the water requirement of paddy, sugarcane, and wheat. 12,13 Furthermore, since the production of Moringa doesn’t require pesticides, it is organic. As such, it helps prevent land and water pollution by eliminating the seepage of pesticides into the ground and groundwater table. As one of the fastest-growing trees in the world, Moringa grows up to 3m to 5m in its first year,14 produces its first yield within 4 to 6 months of plantation, and provides a commercial yield for up to ten years.15 With such a remarkably small gestation period, Moringa produce can be sold in six months of seed plantation. With such growing speeds, Moringa proves to be the ideal crop to switch to for both long-term and shortterm returns. Furthermore, Moringa seeds and cuttings are extremely easy to acquire, sometimes costing nothing since Moringa often grows in the wild. Cultivating Moringa is not only a step towards sustainability, but also progress,

as it can reduce the financial problems and debt burden of farmers. Its droughtresistance, low water requirements, lack of need for pesticides, fast growth, and ease of availability eliminates the need for huge investments in the form of water pumps, fertilizers, and expensive seeds. The socioeconomic benefits of growing Moringa provides enough incentive for farmers to switch crops.

THE CAPITALIZATION OF MORINGA

Lakshmanan, a 53-year-old farmer from Tamil Nadu, India, generated approximately $5,700 per acre by growing Moringa as compared to the average of approximately $2000 per acre of banana produce, which is considered a relatively profitable crop.16 Furthermore, Lakshmanan plans on adding value to his produce by processing it in the form of tablets, capsules, and powder. Since Moringa is native to India, its highly nutritious leaves and pods are incorporated in various Indian dishes that are a part of the populace’s regular nutrition. However, this is not the case for nations where Moringa was never grown, particularly the health-conscious nations lacking the right climate for its growth. This creates the need to consume Moringa as a daily supplement outside of one’s daily regular diet, which demands an easily consumable form that does not require any cooking.17 While farms produce raw, whole, and unprocessed Moringa, there is no global demand for Moringa that is not processed. However, processing units require investment and capital, both things that an average Indian farmer cannot afford. This is where big business comes into play.

ITC LIMITED

ITC Limited is a conglomerate in India whose agribusiness division is India’s second largest exporter of agricultural

products. 18 They have developed the e-Choupal online initiative, a project that links directly with rural farmers via the Internet so that they can procure agricultural and aquaculture products like soybeans, wheat, coffee, and prawns. The e-Choupal initiative tackles the challenges posed by Indian agriculture, characterized by fragmented farms, weak infrastructure, and the involvement of intermediaries.19 There is a Harvard case study for this unique model: computers with Internet access installed in rural areas of India offer farmers up-to-date marketing and agricultural information.20 Similar to this model, e-Choupal is replicated within an established network through which it buys produce ethically, ensuring that smallscale farmers get a fair price. There are 6,100 e-Choupals in operation in 35,000 villages in ten states, affecting around four million farmers.21,22 The existing e-Choupal network of farmers coupledwith the right technology is ITC’s winning ticket to a whole new business. While Moringa is not currently a part of e-Choupal’s initiative, it would be easy to incorporate it once the produce is available. ITC, with a turnover of $6.9 billion, is one of India’s largest sellers of branded foods with sales of over $600 million in 2012-2013.23 With its extensive packaging and printing facilities that service domestic and export markets, ITC has the necessary resources to set up processing units to convert Moringa into various products such as a powder to be mixed with food,

capsules for direct consumption, protein bars, tea, etc. Furthermore, the company has expertise in dealing with international markets, making it the ideal candidate to export Moringa products to other nations. By urging farmers to switch to the production of Moringa and providing the right tools to do so through existing routes of e-Choupal, ITC is solving a dual purpose. Working together, ITC and e-Choupal can ensure that the Moringa exported from India is ethically sourced and can transform the lives of India’s farmers. ITC largely depends on the Indian market for its revenues and it wouldn’t risk its reputation and good standing with its customers by mistreating farmers. The creation of e-Choupal was intended to better the lives of Indian farmers. By ITC’s control of the reins, the ethics of production and supply, and the good nature of intent ensure that the ultimate reaper of the reward is the farmer.

MORE THAN MEETS THE EYE: OTHER BENEFITS OF MORINGA

Apart from easing the financial burden of the farmers and making agriculture in India more sustainable, switching to Moringa solves another, different set of problems as well. For decades, India has been waging a battle against malnutrition;24 although several measures have been taken, it continues to be a persistent problem. Children and women are the majority of the malnourished population.

As mentioned, Moringa is a superfood packed with protein, essential amino acids, 27 vitamins, 46 antioxidants, and the ability to reverse and prevent malnourishment. Its benefits alone prove to be its best marketing tool. An increase in the production of Moringa, particularly through ITC and e-Choupal’s encouragement, would result in greater availability and abundance of Moringa in the markets, and newfound and widespread knowledge about its benefits. The e-Choupal network could not only encourage farmers to produce Moringa for financial reasons but also educate them on the nutritional benefits of its consumption. Interestingly, Moringa is also an extremely effective, low cost, and easy to use water purifier. 25 When mixed with water, Moringa seed powder can kill 90 to 99 percent of the bacteria in contaminated water. In regions facing a shortage in clean water supply, Moringa offers an ideal solution to purifying water, reducing the risk of waterborne diseases, and ensuring an adequate supply of drinking water. Increased production of Moringa not only solves financial problems but is also a step towards preventing malnutrition and increasing safe drinking water supply.

CHALLENGES

However, given the benefits and potential of Moringa, ITC would not be alone in the race to bring Moringa to international markets. Kuli Kuli is an American Moringa brand that sources

“Moringa is a superfood packed with protein, essential amino acids, 27 vitamins, 46 antioxidants, and the ability to reverse and prevent malnourishment.” MIRACLE MORINGA: SAVIOUR OF THE INDEBTED INDIAN FARMER? / 15

its Moringa from West Africa and works towards the empowerment of farmers, especially women, in the region.26 Kuli Kuli has the largest market share in the American market and sells similar products like powders, tea, bars, and capsules in partnerships with Whole Foods and Walmart. Unlike Kuli Kuli, which had to establish its network of farmers and supply chain from scratch, e-Choupal has been in business for years and has an established computerized system of regional Choupals, a network of farmers and supply chain, that has proven to be viable. However, since Kuli Kuli is an established American brand, it might be difficult for ITC, an Indian brand, to acquire a sizeable market share in the country. Instead, ITC can target other growing and emerging markets, and possibly partner with major supermarket brands like Marks and Spencer’s in the UK, Coop in Switzerland, and Carrefour in the Middle East, parts of Europe and Asia. By accessing untapped markets, ITC can save money on advertising and marketing, and benefit from first-mover advantage

in nations that cannot create their own supply. Another issue arises in that Indian farmers have been cultivating traditional crops like wheat and rice for hundreds of years and may find it difficult to see Moringa as a viable crop. Furthermore, educating the farmers about new inputs, new quantities of water, manure and new harvesting techniques may also be a challenge. While ITC is in the best position to undertake such a task, considering the population volumes and technological barriers in India, accomplishing this expansion would by no means be an easy feat.

MIRACLE MORINGA

Moringa is a superfood that has powers nothing short of super. ITC’s resources alongside e-Choupal’s model and network of farmers provide a one-stop solution. In time, e-Choupal can educate, encourage, and provide the necessary tools to its network of farmers to switch to Moringa and increase its production. ITC can process and sell this produce in

“FAO.org.” India at a Glance | FAO in India | Food and Agriculture Organization of the United Nations, www.fao. org/india/fao-in-india/india-at-a-glance/en/. 2 “To What Extent Are India’s Farmers Indebted?” The Wire, thewire.in/agriculture/dimensions-of-farmersindebtedness-the-extent-of-indebtedness. 3 Cso@ncrb.nic.in. “State/UT and Land Holding Status-Wise Distribution of Farmer/Cultivators Suicides during 2015.” Data.gov.in, 25 Jan. 2017, data.gov.in/resources/stateut-andland-holding-status-wise-distribution-farmercultivatorssuicides-during-2015. 4 Chakravarti, A. K. “Green Revolution in India.” Annals of the Association of American Geographers, vol. 63, no. 3, 1973, pp. 319–330. JSTOR, http://www.jstor.org/stable/2561997. 5 Roy, Tirthankar. “A Delayed Revolution: Environment and Agrarian Change in India.” Oxford Review of Economic Policy, vol. 23, no. 2, 2007, pp. 239–250. JSTOR, http://www. jstor.org/stable/23606614. 6 Philipose, Pamela. “Harvesters of Nutrition.” The Hindu, The Hindu, 27 Mar. 2012, www.thehindu.com/sci-tech/health/ harvesters-of-nutrition/article3250229.ece. 7 Schonwald, Josh. “Moringa Tree, Breadfruit, Prickly Pear Cactus: Future Superfoods.” Time, Time, 28 Oct. 2014, time. com/3544425/superfoods-moringa-tree-breadfruit-pricklypear-cactus/. 8 Gopalan, C. “Nutritive Value of Indian Foods Cornell.” Http:// 1

16 / ANVITI SURI

both domestic and international markets, using its expertise in the food industry and established supply chains and factories. Increased production of Moringa also works towards nine of the seventeen UN Sustainable Development Goals. ITC and e-Choupal have all the necessary resources and tools to make this proposal a reality. While there is no perfect solution to the major problems we face as citizens of the world, there are some solutions that have the potential to have a sizeable impact, and it is our responsibility to have a little hope and believe in these answers to make things better.

Www.eeb.cornell.edu/Biogeo/Nanc/Food_Feed/Table%20 1%20gopalan%20et%20al%201989.Pdf, National Institute of Nutrition, www.eeb.cornell.edu/biogeo/nanc/Food_ Feed/table%201%20gopalan%20et%20al%201989.pdf 9 “Superfoods Market | Growth | Trends | Forecast (2019 -2024).” Market Research - Consulting, Reports, Advisory, Sizing, www.mordorintelligence.com/industry-reports/ superfoods-market. 10 Singh, Maanvi. “My Mom Cooked Moringa Before It Was A Superfood.” NPR, NPR, 21 Sept. 2015, www.npr.org/ sections/goatsandsoda/2015/09/21/439509739/motherknows-best-when-it-comes-to-cooking-with-moringa. 11 NABARD. Water Productivity Mapping of Major Indian Crops. NABARD, www.nabard.org/auth/writereaddata/ tender/1806181128Water%20Productivity%20Mapping%20 of%20Major%20Indian%20Crops,%20Web%20 Version%20(Low%20Resolution%20PDF).pdf. 12 Drumstick Farming, Planting, Seed Rate, Harvesting Guide.” Agri Farming, 18 June 2019, www.agrifarming.in/drumstickfarming. 13 NABARD. Water Productivity Mapping of Major Indian Crops. NABARD, www.nabard.org/auth/writereaddata/ tender/1806181128Water%20Productivity%20Mapping%20 of%20Major%20Indian%20Crops,%20Web%20 Version%20(Low%20Resolution%20PDF).pdf. 14 Frost, Annette. “The Plant That Can Help Solve The

Sahel Hunger Crisis.” HuffPost, HuffPost, 2 Sept. 2012, www.huffpost.com/entry/moringa-the-tree-oflife_b_1645858?guccounter=1. 15 “Drumstick Farming, Planting, Seed Rate, Harvesting Guide.” Agri Farming, 18 June 2019, www.agrifarming.in/drumstickfarming. 16 Preetha, Soundariya. “Moringa Farmer Beats the Drum for Growing Drumstick.” The Hindu, The Hindu, 19 Aug. 2018, www.thehindu.com/business/agri-business/ moringa-farmer-beats-the-drum-for-growing-drumstick/ article24732055.ece. 17 Venugopal, Nikhita. “I Grew Up Eating This Common Indian Vegetable. Now It’s a ‘Superfood.’.” Bon Appétit, Bon Appétit, 13 May 2018, www.bonappetit.com/story/moringa-plantwellness-superfood. 18 ITC’s Agri Commodities and Rural Services, www.itcportal. com/businesses/agri-business/agri-commodities-and-ruralservices.aspx. 19 ITC e-Choupal - Rural India’s Largest Internet-Based Intervention, www.itcportal.com/businesses/agri-business/ e-choupal.aspx. 20 Wittenberg-Cox, Avivah, et al. “ITC EChoupal Initiative ^ 604016.” HBR Store, https://store.hbr.org/product/itcechoupal-initiative/604016 21 “Sustainability.” Embedding Sustainability in Business | Sustainable Development, www.itcportal.com/sustainability/ embedding-sustainability-in-business.aspx. 22 ITC e-Choupal - Rural India’s Largest Internet-Based Intervention, www.itcportal.com/businesses/agri-business/ e-choupal.aspx.

Abdull Razis, Ahmad Faizal, et al. “Health Benefits of Moringa Oleifera.” Asian Pacific Journal of Cancer Prevention: APJCP, U.S. National Library of Medicine, 2014, www.ncbi.nlm.nih. gov/pubmed/25374169. 24 “Pti. “Malnutrition behind 69 per Cent Deaths among Children below 5 Years in India: UNICEF Report.” The Economic Times, Economic Times, 16 Oct. 2019, economictimes.indiatimes.com/news/politics-andnation/malnutrition-behind-69-per-cent-deathsamong-children-below-5-years-in-india-unicef-report/ articleshow/71618288.cms. 25 Sahile1, Samuel, and Azamal Husen. “Water Purification and Antibacterial Efficacy of Moringa Oleifera Lam.” Agriculture & Food Security, BioMed Central, 25 Mar. 2018, agricultureandfoodsecurity.biomedcentral.com/ articles/10.1186/s40066-018-0177-1. 26 “Kuli Kuli.” Impact - Kuli Foods, www.kulikulifoods.com/ impact. 23

Photo Credits: Kelly Lacy/Pexels—page 12/13 Pok Rie/Pexels—page 14/15

DISCUSSION QUESTIONS 1. What other crops throughout history have turned out to be a boon to society? 2. What criteria make a crop a “superfood?” 3. After reading the article, what more do you want to learn?

ANVITI SURI

CLASS OF 2022, FINANCE & DATA SCIENCE

“I come from a state in India with the highest farmer suicide rates in the country. When we were asked to pick a social problem, my mind instantly went to the social issue closest to my heart. With my growing awareness about health food trends that stemmed from living in New York, I instantly drew a connection between the two worlds and how they can benefit from each other.”

MIRACLE MORINGA: SAVIOUR OF THE INDEBTED INDIAN FARMER? / 17

how water chestnuts can save the great barrier reef ESSAY BY

FERNANDO A. SAYEG

I n h i s e s s a y , a u t h o r Fe r n a n d o A . S a y e g c a l l s on Canegrowers, a not-for-profit company that helps mobilize sugarcane farmers in Queensland, to restore Australiaâ&#x20AC;&#x2122;s Great B a r r i e r R e e f b y e n c o u ra g i n g t h e c u l t i v a t i o n o f water ches tn uts .

MEGLIO

ANTONIO

HE GREAT BARRIER REEF is the world’s largest coral reef, consisting of 135,000 square miles of the largest living structure on the planet.1 It is also home to more than 6,650 different species of fish, mollusks, shrimp, and coral. Over the last century, the Great Barrier Reef has suffered tremendously because of anthropogenic activities along the coast of Queensland, Australia.2 The concentration of pollutants and nutrients that commercial landowners release into the hydrographic system of Queensland has created an unsuitable environment for coral growth. 3 Consequently, the resilience of coral species in the Great Barrier Reef has diminished significantly, threatening the survival of the ecosystem’s immense and valuable diversity.4 Due to the difficulty of constraining agricultural runoff, an alternative business solution— filtering water pollution in the Queensland wetlands by cultivating water chestnuts— should be considered to protect the profitability and productivity of farmers while preventing damage to the reef. The survival of the reef ecosystem is extremely important, not only to the environment and biodiversity of our planet, but also to the economy of Australia and other communities surrounding it. Through commercial fisheries and tourism, The Great Barrier Reef contributes more than $5.6 billion annually to the Australian economy and provides around 70,000 jobs. 5 Additionally, as the home to 10 major commercial fisheries, it is essential for commercial fishing.6 For these reasons, the government has enacted several projects and plans designed to decrease

the amount of water pollution entering the reef’s ecosystem, such as the Reef Water Quality Protection Plan and the Reef 2050 Long-Term Sustainability Plan.7 However, these plans rely mainly on voluntary action and have failed to create the impact they seek. Still, there is an opportunity for the private sector to effectively solve or at least ameliorate the issue, by using private initiatives to create shared value. The idea of cultivating water chestnuts to solve the pollution problem has been attempted on a small scale in Mungalla Station, a commercial property in north Queensland. Since 2013, the property has tried to restore the nearby coastal wetlands in order to treat the water that eventually ends up reaching the Great Barrier Reef. 8 According to Mungalla’s director Jacob Cassady, these wetlands can act as “kidneys” to the Great Barrier Reef by filtering the water pollution caused by runoffs from commercial activities like farming and grazing. Before Cassady’s intervention, human interference in the area had wiped out most of the native fauna and flora of the wetlands across the northeastern coast of Australia, diminishing the area’s effectiveness in cleaning the water. 9 However, by eliminating alien species from the wetlands and reintroducing native plants, Cassady’s team has significantly improved the water quality surrounding Mungalla Station. Among the most helpful native species is the water chestnut, or bulkuru, which can collect farm waste and bury it underground through its root system. If the rest of the wetlands were restored in a similar manner, sediment pollution can be decreased by up to 75 percent.10

“If the rest of the wetlands were restored...[by growing water chestnuts], sediment pollution can be decreased by up to 75 percent.”

20 / FERNANDO A. SAYEG

The most important step to following Mungalla’s model and rebuilding the flourishing nature of the wetlands is to reintroduce native plants that have been displaced. Plants like the water chestnut are essential to ensuring the improvement of the water quality because they can effectively filter water pollution. Because rich flooded soil surrounds the plantations, forming the Queensland wetlands, farmers have access to land that is appropriate for the healthy cultivation of water chestnuts.11 They can invest in the growth of such weeds by planting them in the flooded portions of their land. Moreover, because water chestnuts are an edible plant in high demand for culinary needs, farmers can also use the water chestnuts they produce for commercial purposes. Plantations can yield more than seven tons per hectare, and according to wholesaler John Cuthbertson, one kilogram of the vegetable can sell for up to 48 dollars in northern Australia.12 At such high prices, the product is currently only accessible to those of higher socioeconomic status in the area. Therefore, by investing in the cultivation of water chestnuts, Queensland farmers will not only help clean the Great Barrier Reef waters, but also open themselves to a profitable business opportunity that can make water chestnuts more affordable and accessible as a culinary product. One of the biggest culprits of agricultural runoff affecting the reef is sugarcane production. Because they have the largest presence in the area, sugarcane farms are the ideal place to implement this project.13 Still, encouraging individual farmers to restore nearby wetlands will be difficult. Queensland Cane Growers Organization Ltd. (QCGO), also known as Canegrowers, can help farmers mobilize as a united group, making such a project much more efficient and feasible. As a not-for- profit company that provides “a professional and cohesive voice”14 to the sugarcane growing community of Queensland, Canegrowers can encourag e the restoration of Queensland wetlands while ensuring efficiency, profitability, and consciousness in the cane-growing industry. By utilizing the wetlands surrounding the entire

MEGLIO

ANTONIO

network of Queensland’s sugarcane farms in a similar manner as in Mungalla, Canegrowers can help significantly reduce the amount of farming waste reaching the reef. QCGO is the optimal business for helping restore the wetlands of Queensland because it has a very powerful presence in the farming industry. The influence the company has on sugarcane growers comes from its paid membership system, which allows farmers to benefit from Canegrowers’s leadership and resources. Some membership benefits include ease of access to sugar export markets, access to an international network, negotiated supply chain contracts, marketing resources, and sustainability programs. 15 Therefore, it is in farmers’ best interest to be part of such a large organization and its network, as suggested by the fact that around 72 percent of all sugar produced in Australia originates from QCGO members.16 Moreover, Canegrowers already has multiple sustainability plans that encourage environmentally friendly farming methods while boosting the corporate reputation of ecologically conscious members. 17 A community like Canegrowers, that provides easy communication and trust between parties, facilitates the effective governance of free-rider problems like pollution, in which polluters are unlikely to act individually.18 With QCGO’s level of power and influence over the sugarcane farming community, it can effectively and efficiently launch this initiative to protect the Great Barrier Reef from agricultural runoff by restoring the flora and fauna of the wetlands in Queensland. It is also important to consider the feasibility and actual implementation of this solution given the resources farmers and Canegrowers have available. One resource to consider is land. In 2013, Mr. and Mrs. Papale, producers of around 7.5 million tons of sugar, described how they sacrificed a small portion of their land (four hectares) in order to turn it into a wetland filtering system for their plantation waste.19 The couple stated that, in addition to building an effective wetland area on a relatively small plot of land, the project had “no negative impact on either productivity or profitability.”20 If the entire Canegrowers community made a similar

HOW WATER CHESTNUTS CAN SAVE THE GREAT BARRIER REEF / 21

sacrifice, there would be a large amount of land available for the cultivation of water chestnuts. Growers whose lands are not adjacent to coastal wetlands—and cannot cultivate the plant—can still make financial contributions to pay for the benefits they receive from the project. Canegrowers should make project participation mandatory for its members. Farmers have had to participate in previously successful sustainability efforts to maintain their membership status. This request is nothing new and will likely prove to be a similar success. Project Cane Changer, for instance, has been a welcome initiative among farmers since 2016 ever since it was created to recognize “Queensland’s sugarcane farmers for their positive farming practices and contribution to protecting the Great Barrier Reef.”21 Sugarcane growers have also proven willing to make significant financial contributions to QCGO –manag ed programs, having donated around $71 million to reef protection projects in the past.22 In addition to its membership fees, Canegrowers also receives large amounts of funding from multiple donors and partnerships that can help guarantee the financial feasibility of water chestnut cultivation.

The Australian government is another prominent stakeholder that can serve as a valuable resource for Canegrowers. The government has donated $140 million to be used for reef protection purposes.23 Other partnerships that Canegrowers can take advantage of include the Australian Cane Growers’ Council, Australian Sugar Industry Alliance, and Sugar Research Australia, all of which can provide valuable research and development resources.24 By accepting this proposition and reducing water pollution in the Great Barrier Reef through the restoration of Queensland wetlands, Canegrowers and its farmers can create significant social value through day-to-day operating activities. As proposed by Michael Porter and Mark Kramer, shared value capitalism is a “pragmatic way to better align business and societal interests.”25 This proposed solution does both by helping profit from water chestnut cultivation while providing society with environmental and culinary benefits. At first glance, the conflict between the Great Barrier Reef and the agricultural industry can seem like a zero-sum game in which one party must suffer to ensure the benefit of the other. However, farmers’ business success is intertwined with that of the larger Australian economy, which in

turn is strongly affected by reef-dependent businesses. In the bigger picture, the health of the Great Barrier Reef is essential to the agricultural economy. As such, businesses on both sides should work together to enable a value-creating scenario, in which both parties benefit from each other’s operational activities while remaining profitable. The Great Barrier Reef is an essential resource for both Australia and the world because of its economic value and environmental importance. While the sugar industry’s agricultural runoffs are harming the reef, attacking sugar farmers’ operations is implausible because the sugar industry is also extremely valuable for Australia’s economy. Instead of attempting to cut down on the water pollution from agricultural runoffs by restricting the sugar industry, Canegrowers can step in to create and share value between both parties through a collective effort launched by the farming community. If Canegrowers invests in cultivating water chestnuts along the wetlands of Australia, it will benefit sugarcane growers by broadening their production potential and simultaneously clean the water that reaches the Great Barrier Reef, avoiding the environmental damages caused by agricultural runoff.

DISCUSSION QUESTIONS 1. What other agribusiness or aquaculture approaches, such as algae farms or oyster reefs, can be used to create products, strengthen ecosystems, and generate value? 2. Despite its brilliance, what still might be difficult about enacting this plan? 3. After reading this article, what more do you want to learn?

22 / FERNANDO A. SAYEG

“Dive into the Vibrant Waters of the Great Barrier Reef.” National Geographic, National Geographic, 20 June 2018, https://www.nationalgeographic.com/travel/worldheritage/great-barrier-reef/. 2 Devlin, M.j., et al. “Mapping the Pollutants in Surface Riverine Flood Plume Waters in the Great Barrier Reef, Australia.” Marine Pollution Bulletin, vol. 65, no. 4-9, 1 Apr. 2012, pp. 224–235., doi:10.1016/j.marpolbul.2012.03.001. 3 “Land-Based Run-Off.” Great Barrier Reef Marine Park Authority, GBRMPA, 2018, http://www.gbrmpa.gov.au/ourwork/threats-to-the-reef/declining-water-quality. 4 “Reef Health.” Great Barrier Reef Marine Park Authority, GBRMPA, 2018, http://www.gbrmpa.gov.au/the-reef/reefhealth. 5 “Reef Facts.” Great Barrier Reef Marine Park Authority, GBRMPA, http://www.gbrmpa.gov.au/the-reef/reef-facts. 6 “Land-Based Run-Off.” 7 “Reef 2050 Water Quality Improvement Plan.” Reef 2050 Water Quality Improvement Plan, Queensland Government, 30 Aug. 2019, https://www.reefplan.qld.gov.au/. 8 Klein, Alice. “Plan to Save Great Barrier Reef from Encroaching Farm Pollution.” New Scientist, New Scientist, 22 Sept. 2017, https://www.newscientist.com/ article/2148247-plan-to-save-great-barrier-reef-fromencroaching-farm-pollution/. 9 Ibid. 10 Ibid. 11 Moore, Alanna. “Water Chestnuts.” Permaculture Research Institute, Permaculture Research Institute, 21 Sept. 2016, https://permaculturenews.org/2008/11/29/waterchestnuts/. 12 Brann, Matt. “Water Chestnuts from Darwin Surprising the Markets.” ABC News, Australian Broadcasting Corporation, 17 Aug. 2015, https://www.abc.net.au/news/ rural/2015-08-17/water-chestnuts-from-darwin-surprisesydney-markets/6702022. 1

Brodie, JE, et al. “Terrestrial Pollutant Runoff to the Great Barrier Reef: An Update of Issues, Priorities and Management Responses.” Marine Pollution Bulletin, vol. 65, no. 4-9, 12 Jan. 2012, pp. 81–100. National Center for Biotechnology Information Search Database, doi:10.1016/j. marpolbul.2011.12.012. 14 “About.” Canegrowers, http://www.canegrowers.com.au/page/ about. 15 Ibid. 16 “Annual Report 2017/18.” Canegrowers, 2018, http://www. canegrowers.com.au/page/about/publications. 17 “About.” Canegrowers. 18 Dietz, T., et al. “The Struggle to Govern the Commons.” Science, vol. 302, no. 5652, 12 Dec. 2003, pp. 1907–1912. doi:10.1126/science.1091015. 19 Lewis, Pete. “Cane Farmers Reducing Run-off into Barrier Reef.” ABC News, Australian Broadcasting Corporation, 14 June 2013, https://www.abc.net.au/news/2013-06-14/sugarcane-north-queensland-water-run-off/4754822. 20 Ibid. 21 “About.” Canegrowers. 22 Ibid. 23 Ibid. 24 “Annual Report 2017/18.” 25 Mackey, John, et al. Conscious Capitalism, With a New Preface by the Authors: Liberating the Heroic Spirit of Business. Harvard Business Review Press, 2014. 13

Photo Credits: Belle Co/Pexels—page 18/19 U.S. Fish and Wildlife Service/flickr—page 21

FERNANDO A. SAYEG CLASS OF 2022, FINANCE & OPERATIONS “When we come across environmental issues, we often immediately think of ways of restricting businesses that we believe cause the problems. However, the most surprising part of my research was realizing how many businesses around the world are already devoted to helping the environment. If we gave these businesses more emphasis, we would be more optimistic about the future of our planet.”

HOW WATER CHESTNUTS CAN SAVE THE GREAT BARRIER REEF / 23

PRESERVING THE

FIVE RINGS AN OLYMPIC SIZED NIGHTMARE

ESSAY BY

ALEX HU

In his essay, author Alex Hu calls for the International O l y m p i c Co m m i t t e e t o s a v e t h e O l y m p i c G a m e s b y h o s t i n g the m in f o u r perma n en t l oca ti ons a roun d th e worl d .

OSTING THE OLYMPIC Games has long been a dream for any up-andcoming city. The Games represent a once-ina-lifetime opportunity for cities to put themselves on the map and achieve worldwide recognition. But the reality is that the Olympics almost always ends up being an economic and environmental nightmare for the host cities. Every Olympics in the modern era, save for the 1984 Los Angeles Olympics, has turned a negative net operating profit. 1 As a result, host cities are often left with enormous debt and unnecessary billion-dollar stadiums. The majority of the 2016 Rio Olympic stadiums, for example, have been abandoned, ruining the surrounding environment, while Rio has had to cut into its healthcare budget to pay off its current $113 million debt from the Games.2 At the same time, the International Olympic Committee (IOC) has generated billions of dollars in profit. This fact suggests that the IOC follows Milton Friedman’s philosophy of managing for shareholders and exists solely to generate returns for its investors.3 However, like many shareholdercentric organizations described in Michael

26 / ALEX 26 / ZACH HU ASATO

Porter’s report “Creating Shared Value,” the IOC’s prioritization of “short-term financial performance” has caused it to ignore the “broader influences that determine their longer-term success.”4 Specifically, the IOC’s economic and environmental exploitation of host cities has tarnished its brand image, as cities and sponsors alike consider shunning future Olympic Games. To regain the trust of potential host cities, the IOC needs to prioritize its economic and environmental sustainability. As a solution, the IOC should consider hosting the Games in four permanent locations across the world to cut down costs, reduce its carbon footprint, and create shared value for the host cities and itself. Otherwise, we could very well be witnessing the death of the Olympic Games.

THE DEATH OF THE OLYMPICS?

The IOC has long flown under the radar with its excessive needs, lack of transparency, and monopolistic rule over the Games. But, cities are finally catching on to the IOC’s gambit and are becoming much more wary. Notably, 12 cities bid for the 2004 Olympics.5 That figure was down to two for the 2022 Olympics. 6 Then for the 2024 Olympics, three out of five cities

withdrew their bids and the IOC decided to award the remaining two cities, Paris and Los Angeles, the 2024 and 2028 Games respectively in an unprecedented move. 7 The fact that the IOC broke its age-old tradition of announcing cities one at a time to secure the Games’ short-term stability reveals the unstable climate surrounding the IOC and the Games. At the current rate of Olympic bid withdrawals, it is unclear whether any city would want to host future games—a reality that the IOC has finally recognized. The Olympics’ tarnished brand image has started to hurt the IOC’s bottom line. The Games have traditionally been a symbol of peace and sportsmanship, as they bring people from around the world together, regardless of race, nationality, or gender. By aligning themselves with these values, the Olympics have historically generated some of the most lucrative sponsorship deals in sports. Over the past few years however, the IOC’s corruption, greed, and human rights violations have started to come to light. For instance, vote bribery allegations surrounding the 2002, 2016, and 2020 host city bids have made headlines around the globe. 8 Scandals such as these, along with the continued

economic and environmental destruction of host cities, have all contributed to the Olympics’ new image of greed. Nancy Armour from USA Today says that there is an undeniable “stench of corruption that permeates the IOC.” 9 Consequently, it is no surprise that sponsors, who generally make up around 30 to 40 percent of the Games’ revenue, have stopped associating themselves with the Olympics.10 Since the 2016 Games in Rio, major sponsors such as AT&T, Citibank, Hilton, Budweiser, TD Bank, and McDonald’s have all terminated long-term billion dollar sponsorship contracts with the IOC.11 To make matters worse, TV viewership has declined. The 2018 PyeongChang Games had the lowest Olympic TV and online streaming viewership on record. The decline of the Olympic Games follows a trend outlined by the Boston Consulting Group, in which customers and governments are pressuring companies to play a greater role in supporting the economy and environment by boycotting their current operations.12 NYU professor Jacqueline Jacquet holds similar opinions. She says that “it’s not a one-way street” because shareholders—in this case, the host cities and sponsors—“also influence companies.”13 The IOC’s current business model has wreaked havoc on host cities for long enough, and its unsustainable practices are finally coming back to bite.

CONSTRUCTION AS THE ROOT CAUSE

The root cause of the Olympics’ unsustainability starts with the creation of new stadiums for all Games that are held. The billion-dollar construction costs for building world-class stadiums are what make up most of the debt left behind for host cities. While they are impressive structures, there are few opportunities to use multiple 80,000-seat stadiums after the Games take place, rendering them practically purposeless in the aftermath. These stadiums are either maintained at high fees for the few people who still do use them or abandoned altogether, both of which result in steep financial losses, severe environmental harm, and decreased property values for the city.14

“While they are impressive structures, there are few opportunities to use multiple 80,000-person stadiums after the Games take place...”

Constructing Olympic stadiums also takes enormous amounts of machinery and transportation. From a purely environmental standpoint, machinery from construction contributes to noise pollution, and since the machines are largely fueled by fossil fuels, Olympics-related construction and transportation often leave behind a huge carbon footprint.15

A PERMANENT HOME?

The most logical solution to high stadium costs would simply be to host the Games in one permanent location. This solution would allow Olympic stadiums to be reused, creating natural economies of scale as additional value would be generated each time the city hosts the Games without the upfront costs needed to build new stadiums. Also, any potential costs associated with upgrading or renovating stadiums would be significantly less than constructing new stadiums. From an environmental perspective, a permanent host would also greatly decrease the Olympics’ carbon footprint because fewer resources would be wasted in constructing barely used stadiums. This solution would also follow Edward Freeman’s philosophy where businesses create sustainable value for all stakeholders—not just investors—a business model that would help the IOC rebuild its brand image and share economic gains with both the chosen host city and its citizens.16 Part of what makes the Olympics special is that the Games are held in a new city every two years, a tradition that promotes diversity, makes each Games unique, and

fosters the spirit of global competition and inclusion simultaneously. Breaking this tradition might alienate fans and reduce camaraderie between competing countries’ teams—both of which could decrease the intrigue of each successive Olympics, hurting ticket and merchandise sales.

AN OPTIMAL SOLUTION

While hosting the Games in one permanent location is the most sustainable solution, maintaining the global spirit of the Games is also a valid concern. A revised solution would be to host the Games in four permanent locations—two winter Olympic locations and two summer Olympic locations—and have the Olympics rotate through these four cities. This solution would help the IOC maintain many of the benefits of hosting the Games in one permanent location while also preserving the diversity and traditional spirit of the Games. The cities would ideally be chosen based on a set of criteria centered on global relevance, appropriate weather conditions, existing infrastructure, and ability to re-use stadiums between Games.

GLOBAL RELEVANCE

The four locations under the new model would be spread across the globe in developed world-class cities. This is important in preserving the international diversity and the uniqueness of each Olympics. Since North America, Europe, and Asia are generally seen as the three powerhouses of sports and are also the most developed continents, it would make sense

OCEANIC PLASTIC POLLUTION PRESERVING SOLVED: THE FIVE COLLECTION, RINGS: AN OLYMPIC-SIZED RECYCLING, REPURPOSING NIGHTMARE// 27 27

to spread the locations across these three continents. Placing the Games permanently in four cities would force the IOC to choose only the cities best suited to host the Games long-term. As such, there would be no more controversial selections like Beijing, Sochi and Rio, three cities that each struggled with human rights violations and political instability before seeing their issues amplified by the cost of hosting the Olympics.17 Having the cities rotate through different continents also would help preserve the cultural diversity of each Olympics. Furthermore, since each city would host every eight years, each would have ample time to make upgrades to make each Games unique. The fourcity model would more than adequately maintain the global relevance of the Olympics and generate fan interest in the Games.

emissions.19 Putting fake snow into an area that normally does not have snow would also impact nearby residents and animals that may not be used to cold-climates.20 Choosing two winter Olympic sites that have consistent snowfall will help the IOC ensure environmental and financial sustainability going forward.

WEATHER

ABILITY FOR RE-USE

Specifically for Winter Olympics, the IOC should choose locations with adequate snowfall to reduce both the financial and environmental cost of having to produce artificial snow. PyeongChang, for example, an area that does not receive snow, spent $6 million producing fake snow for the 2018 Games.18 Producing fake snow is extremely energy intensive since it requires a multitude of water pipes, compressors, trucks, and snow cannons, which all contribute to high carbon

INFRASTRUCTURE

In terms of existing infrastructure, the locations that are chosen would ideally be places that already have many of the stadiums or facilities needed. One way to achieve this would be to look at cities that previously hosted the Games, as they would not only have most of the facilities needed, but would also have prior hosting experience. These cities would get a low-risk opportunity to build upon their previous Olympic legacy and generate further revenue at a much-reduced cost.

Since this solution would mean that each city hosts the Olympics every eight years, the IOC should choose those cities that would continue to use their Olympic facilities between the Games. Historically, the most successful cases of cities reusing their Olympic stadiums have been cities with professional sports teams or college sports teams in close proximity. The Los Angeles Memorial Coliseum from the 1932 and 1984 Games, for example, is still used today as the home of the University

of Southern Californiaâ&#x20AC;&#x2122;s football team and the Los Angeles Rams of the National Football League. It is also scheduled to be renovated for the 2028 Olympics.21 The IOC could pick out those select locations with relative ease and generate shared profits with themâ&#x20AC;&#x201D;a much more strategic alternative than its current model, in which the IOC selects whichever city bids the most money in the shortterm without much consideration for the factors mentioned above.

A SUSTAINABLE OLYMPIC VISION

Using the aforementioned criteria, there are numerous cities that would fit the bill and conceivably benefit from joining the IOC in this four-city model. Cities like Los Angeles, Paris, Vancouver, Tokyo, Italy, London, and Nagano are all major developed cities that have recently hosted the Games (or will soon) and were relatively successful in reusing their stadiums. This new model certainly represents a stark change, but for the IOC, this is the type of action it needs to take to rebuild its brand image, save the spirit of the Olympic Games, and preserve the Games themselves. By instituting this model, the IOC can create shared value for host cities and for itself, bringing the world closer to an economically and environmentally sustainable Olympics.

DISCUSSION QUESTIONS 1. How might this controversial plan be received by the world at large? 2. How might you reorganize this plan to include host cities from all continents? 3. After reading, what else would you like to learn more about?

28 / ALEX HU

McBride, James. “The Economics of Hosting the Olympic Games.” Council on Foreign Relations, Council on Foreign Relations, 19 Jan. 2018, www.cfr.org/backgrounder/ economics-hosting-olympic-games. 2 Zirin, Dave, and Jules Boykoff. “The International Olympic Committee Builds a New Headquarters After Leaving Rio Crippled by Debt.” The Nation, 3 Apr. 2019, www.thenation. com/article/the-international-olympic-committee-buildsnew-headquarters-after-leaving-rio-crippled-by-debt/. 3 Friedman, Milton. “The Social Responsibility of Business Is to Increase Its Profits.” The New York Times Magazine, 13 Sept. 1970. 4 Porter, Michael, and Mark Kramer. “Harvard Business Review.” Feb. 2011. 5 Haldevang, Max de. “The Olympics Are Facing a Slow Death, but There Are Ways to Save Them.” Quartz, Quartz, 24 Oct. 2016. qz.com/813874/death-of-the-olympic-games/. 6 Ibid. 7 Slotkin, Jason. “Dual Olympic Bids Approved For Paris And Los Angeles.” NPR, NPR, 13 Sept. 2017. www.npr. org/sections/thetwo-way/2017/09/13/550750891/dualolympic-bids-approved-for-paris-and-los-angeles. 8 Ingle, Sean. “Tokyo Olympic Games Corruption Claims Bring Scandal Back to the IOC | Sean Ingle.” The Guardian, Guardian News and Media, 11 May 2016. www.theguardian. com/sport/2016/may/11/tokyo-olympic-games-2020-iocinternational-olympic-committee-corruption-bid-scandal. 9 Armour, Nancy. “International Olympic Committee Must Make a Choice between Greed and Good.” USA Today, Gannett Satellite Information Network, 14 Sept. 2017. www.usatoday.com/story/sports/columnist/nancyarmour/2017/09/14/international-olympic-committeemust-make-choice-between-greed-and-good/668090001/. 10 Grohmann, Karolos. “FACTBOX: Key Facts on Olympic Revenues for IOC.” Reuters, Thomson Reuters, 9 May 2008. www.reuters.com/article/us-olympics-revenuefactbox/factbox-key-facts-on-olympic-revenues-for-iocidUSL0864358320080509. 11 Garcia, Ahiza. “Why Sponsors Are Breaking up with the 1

Olympics.” CNN Business, Cable News Network, 17 Feb. 2018. money.cnn.com/2018/02/17/news/companies/ olympic-sponsors-mcdonalds-budweiser/index.html. 12 Beal, Douglas, et al. “Total Societal Impact: A New Lens for Strategy.” BCG, The Boston Consulting Group, Oct. 2017. https://www.bcg.com/en-us/publications/2017/totalsocietal-impact-new-lens-strategy.aspx. 13 Jacquet, Jacqueline. “Week #7 Plenary: Jacqueline Jacquet.” NYU Stern BAS. 11 Mar. 2019, New York. 14 McBride, James. 15 Mabee, Warren. “In a World Striving To Cut Carbon Emissions, Do the Olympics Make Sense?” Smithsonian. com, Smithsonian Institution, 16 Feb. 2018. www. smithsonianmag.com/innovation/world-striving-cutcarbon-emissions-do-olympics-make-sense-180968181/. 16 Freeman, R. Edward. “Managing for Stakeholders.” January 2007. 17 “Olympics: Host City Contract Requires Human Rights.” Human Rights Watch, 28 Feb. 2017. www.hrw.org/ news/2017/02/28/olympics-host-city-contract-requireshuman-rights. 18 Raphelson, Samantha. “Despite Frigid Weather, The Snow In Pyeongchang Is Fake.” NPR, NPR, 23 Feb. 2018. www.npr. org/sections/thetorch/2018/02/23/588308424/despitefrigid-weather-the-snow-in-pyeongchang-is-fake. 19 MacDonald, James. “The Real Problem with Artificial Snow.” Jstor Daily, Jstor, 2 Mar. 2018. daily.jstor.org/the-realproblem-with-artificial-snow/. 20 Ibid. 21 Medzerian, David. “USC Kicks off $270 Million Renovation of Coliseum.” USC News, 29 Jan. 2018. news.usc. edu/135433/usc-kicks-off-270-million-renovation-ofcoliseum/. Photo Credits: wgbieber/Pixabay—page 24/25 PeskyMesky/flickr—page 26 Michael Li/flickr—page 28

ALEX HU CLASS OF 2022, FINANCE & DATA SCIENCE, MINOR IN COMPUTER SCIENCE “I’m a huge fan of sports and growing up, the Olympics were the event that always left the biggest emotional imprint on me. However, with the financial and environmental destruction of host cities, the International Olympics Committee has gotten to a point where no one wants to host the Games anymore, which is why I wanted to explore a fundamental shift in how it approaches its currently unsustainable business model.”

PRESERVING THE FIVE RINGS: AN OLYMPIC-SIZED NIGHTMARE/ 29

“What the hell she’s passed out” “Yeah she’s passed out what do you want me to do” “I want to see her alive in the video” “I was able to use flash because she was unconscious” “You raped her LOL” 1

n March 2019, investigators discovered a private chat room involving more than six highprofile male celebrities while investigating assault allegations at a celebrity-owned nightclub in Seoul. In the chat room, the celebrities joked about drugging, raping, and secretly filming sexual encounters with women.2 The “Burning Sun Scandal,” as it has been coined by the media, is the latest event to force a societal reckoning of the collusive ties between business, power, sex, and gender rights in Korea. In 2013, South Korean businesses spent more than $1 billion on sexual entertainment using corporate accounts, underscoring how deeply intertwined sex and business culture are.3 Even though prostitution has been criminalized there

are still over 90 million cases annually within a massive $13 billion industry.4 Nearly 50 percent of men ages 30–40 have confessed to buying sex at least once.5 Despite societal stigma against prostitution, little has been done to aid the actual victims of the industry—the women themselves. Government surveys estimate 290,000 women ages 20-34 (1 out of every 25) work in the sex industry, and the Korea Women’s Development Institute estimates the number to range from .5 to 1.2 million women after accounting for minors.6,7 Minors, especially runaways, are frequently exploited by the industry, as half of all female runaways resort to prostitution as a means of economic survival and more than 80 percent of all minors in the industry are runaways.8

BIG BUSINESS AND DARK BUSINESS

HOW KOREAâ&#x20AC;&#x2122;S LARGEST BUSINESS CAN ADDRESS ITS PROSTITUTION PROBLEM ESSAY BY

JINNY KIM

Wi t h a n e y e t o w a r d j u s t i c e a n d s h a r e d v a l u e , author Jinny Kim constructs a low-cost initiative to tackle prostitution and sex trafficking in So u th Ko re a a n d p oss i bl y beyon d .

“Despite societal stigma against prostitution, little has been done to aid the actual victims of the industry—the women themselves.” Businesses themselves have been large consumers of the prostitution industry contributing to the exploitation of many women. Yet, businesses can also be the driving force in helping women leave or avoid the sex industry entirely.

EFFORTS MADE, BUT WITH UNINTENDED CONSEQUENCES

In 2004, the South Korean government announced a crackdown on the purchasing of sex services by passing an anti-prostitution law outlining strict punishments for both prostitutes and clients. The new law also criminalized the purchase of sex services abroad – Korean citizens caught buying sex services abroad could have their passports confiscated.9 The government also began to target one of the largest consumer groups of prostitution: businesses and corporations. A heavily male-dominated corporate culture has consistently been a driving factor facilitating—even normalizing—the procurement of sex services. In business environments, drinking is viewed as a fundamental step in establishing trust and facilitating business deals. Employees are expected to take part in ‘after hours camaraderie,’ which consists of dining, karaoke, and heavy drinking, which are the common precursors to prostitution and other sex services. 10 In addition, companies often subsidize prostitution for their employees and clients, filing them under “Entertainment Services.”11 Jeopdae, a form of entertainment involving wining, dining, and often employing prostitutes, is so common it was cited by South Korea’s Constitutional Court in 2016 as one of the reasons for upholding the ban on the sex trade.12 Legislative efforts, such as the passage of the Improper Solicitation and Graft Act,

32 / JINNY KIM

have limited the amount businesses can spend on food and drinks. The legislation has led to a reduction in late-night dinners and drinks among colleagues, which has subsequently reduced consumption of prostitution and other sex services.13 However, some believe that the criminalization of prostitution has actually worsened working conditions for women in the industry. Prostitutes themselves argue that to maintain their only means for survival, the industry must be legalized so that it can be regulated. The 2016 Constitution Court case that ultimately upheld the ban on the sex industry came from appeals from prostitutes arguing for the legalization of the industry. As Kim Jeong-mi, a 43-yearold prostitute in Seoul, said, “Don’t you think we dream of doing something else, leaving this place one day? But those who try always end back here. I want what I do to be recognized as a job... This is better than stealing for a living, isn’t it?”14 Although the ban was upheld, three of the nine justices dissented. They believed the criminalization of prostitution was a “government crackdown on women driven to prostitution by desperate circumstances.”15 One of the justices wrote in his dissent, “The majority view insists that prostitution should not be protected by law because it harms human dignity. But nothing harms human dignity more than a threat to survival.” 16 The judge continues, “These women are struggling to make a living despite a social stigma. Should we drive them to death by branding them again as criminals?”17

OUTSIZE CORPORATIONS, OUTSIZE IMPACT

Many large corporations in Korea, known as chaebol, wield immense

influence over a variety of stakeholders, enabling them to actualize change and provide socio-economic opportunities to women that are especially vulnerable and at-risk. Chaebols, typically family-owned conglomerates, are notable for their numerous subsidiaries across diverse industries. 18 As of 2018, Korea’s Fair Trade Commission identified 45 different chaebol. The top 10 chaebols hold more than 27 percent of all business assets in South Korea.19 Samsung Group, the nation’s largest a n d m o st - p ow e r f u l c h a e b o l , h a s subsidiaries in electronics, insurance, luxury hotels, hospitals, ships, and an affiliated university.20 Samsung is said to have an outsized influence on Korea’s economic development, and by extension, its society. Some Koreans jokingly (or, in many cases, ironically) call the nation “The Republic of Samsung.”21 “You can even say the Samsung chairman is more powerful than the South Korean president,” said the host of a popular economics podcast.22 Work at major corporations, especially Samsung, is admired and well-respected. In fact, there is a decades-old term called a “Samsung Man,” which refers to the prestige associated with a job at Samsung.23 It is acknowledged that the company is a leader of technological innovation domestically and internationally, and is vital to the nation’s GDP.24 Because of its societal influence, Samsung is uniquely positioned to address the root causes underlying and sustaining prostitution. It can provide opportunities to at-risk women by forging technical education partnerships through its numerous subsidiaries. By redefining what it means to work at Samsung—and what it values— Samsung can lead Korea’s efforts in

eradicating prostitution as a livelihood for women.

PROVIDING TECHNICAL EDUCATION TO WOMEN’S SHELTERS

Samsung can create greater opportunities for women who would otherwise go into prostitution by expanding its preexisting programs. In 2010, Samsung Electronics created the Samsung Employee Volunteer Program, which provides opportunities for its 200,000 employees to go on volunteer missions abroad. Through this program, Samsung Electronics employees have built IT classrooms and provided IT education to local communities in Southeast Asia, Africa, and South America.25 For example, in 2013, program volunteers went to Ethiopia and taught students Photoshop and video editing skills. Upon return, two of the students were employed as wedding photographers and videographers, utilizing the skills they had learned.26 There are currently 11 organizations, nine of them based in Seoul, that provide shelter and protection for teen runaways and women escaping the sex trade, and 69 women’s shelters overall in Seoul. 27 Samsung can expand the Employee Volunteer Program to these domestic shelters to provide these women IT education. Giving the women in these shelters IT education, similar to opportunities offered in foreign communities, will provide local women with marketable skills. In addition, the Employee Volunteer Program can be adopted by different Samsung subsidiaries, not just Samsung Electronics. Samsung owns subsidiaries in various industries such as hospitality and operates factories for its electronics and heavy industries sectors. 28 Current labor market conditions nationwide would favor an increased number of trade and hospitality workers, in particular for manual-labor and labor-intensive jobs, especially in regions outside of Seoul.29 There is a current lack of supply for these jobs; but, by creating technical education programs to train women in hospitality and manufacturing fields, it can create BIG BUSINESS AND DARK BUSINESS: HOW KOREA’S LARGEST BUSINESS CAN ADDRESS ITS PROSTITUTION PROBLEM / 33

supply for these industries, for itself and other companies. The Employee Volunteer Program addresses one of the primary reasons women enter prostitution in the first place—because they feel they have no other viable source of income. The prostitutes who argued for the legalization of the industry in 2016 did so not because they liked their jobs, but because they viewed them as their sole means of survival. 30 Many of them, having run away from home at a young age, have neither the skills nor educational background required by most employers.31

CHANGES TO CULTURE

Not only does the company already have all the resources available to initiate these partnerships but reaching out would strengthen its corporate social responsibility efforts. Engaging in corporate social responsibility can result in increased shareholder and consumer confidence.32 Having its employees volunteer to help victims of the sex industry would likely lead to indirect changes in business culture. Korean business culture has been largely shaped by men, due to the lack of women in

34 / JINNY KIM

top executive positions.33 Therefore, past initiatives designed to address rampant sexism and problematic after-work practices have made little impact. Many men do not consider buying sex services as morally compromising or unethical. Half of married men have had extramarital sex; 40 percent of married men do not consider buying sex as cheating.34 Going to women’s shelters and interacting with the women gives employees exposure and knowledge of the underside of sex work. This new awareness would act as a form of soft power, altering employees’ views on obtaining sex services. The reason many continue to buy sex services is because they do not view this practice as a moral hazard. Therefore, it is clear that moral perceptions must be changed. Greater exposure and concern must be given to the victims. By creating outreach efforts on behalf of victims, Samsung can change corporate culture from within.

CONCLUSION

Samsung has the most stakeholder influence in the entire nation, and it is uniquely positioned to empower women

to leave or avoid the sex industry entirely through its size and reputation. This proposal offers a low-cost corporate social responsibility initiative that would facilitate a change in corporate moral values. Samsung can create shared value while addressing the societal failure in providing resources to sex workers. Expanding its current social outreach program by partnering with women’s shelters and organizations shows the company’s commitment to creating shared value, while creating economic benefit. Samsung is just a single company. But given its economic and societal presence, its actions in helping the victims of Korea’s intractable sex industry will provide an impetus for other companies to examine their corporate values and business practices.

Dong Sun-hwa, “[FULL TEXT] Dirty Talks among K-Pop Stars Reconstructed.” Koreatimes, 14 Mar. 2019. 2 “Jung Joon-Young: K-Pop Star Quits over Secret Sex Videos.” BBC News, 13 Mar. 2019. 3 Lee Tae-hoon “Korean Firms Spend over $1 Billion on Sexual Entertainment.” The Korea Observer, 18 Aug. 2014. 4 FACTS.” SAVE MY SEOUL, Jubilee Media. 5 Ibid. 6 “Korea’s Sex Industry Is Major Money Earner.” Korea JoongAng Daily. 7 FACTS.” SAVE MY SEOUL, Jubilee Media. 8 Ibid. 9 “South Korea Gets Tough on Sex Tourism.” The Sydney Morning Herald. 20 Sept. 2007. 10 Ramirez, Lee. “The ‘Escort Bars’ That Uber Execs Reportedly Visited Are A Regular Affair In South Korea.” Forbes, Forbes Magazine, 28 Mar. 2017. 11 Tae-hoon, Lee. “Korean Firms Spend over $1 Billion on Sexual Entertainment.” The Korea Observer, 18 Aug. 2014. 12 Sang-hun, Choe. “South Korean Court Upholds Ban on Prostitution.” The New York Times. 31 Mar. 2016. 13 Kim, Eun-jung. “(News Focus) Anti-Graft Law Changes Dining Scene, Gift Culture.” Yonhap News Agency, 26 Oct. 2016. 14 Sang-hun, Choe. “Suit Has South Korea Looking Anew at Its Hard Line on Prostitution.” The New York Times. 20 June 2015. 15 Ibid. 16 Ibid. 17 Ibid. 18 “South Korea’s Chaebol Challenge.” Council on Foreign Relations. 19 “Quick Take: Samsung.” Bloomberg. 20 “South Korea’s Chaebol Challenge.” Council on Foreign 1

Relations. Harlan, Chico. “In S. Korea, the Republic of Samsung.” The Washington Post . 9 Dec. 2012. 22 Ibid. 23 Cain, Geoffrey. “Passing Samsung SAT Is Ticket to South Korea Good Life.” USA Today. 26 Jan. 2015. 24 Ullah, Zahra. “How Samsung Dominates South Korea’s Economy.” CNNMoney, Cable News Network, 17 Feb. 2017, money.cnn.com/2017/02/17/technology/samsung-southkorea-daily-life/index.html. 25 “Samsung Employee Volunteer Program Marks 6 Years of Meaningful Contributions.” Samsung Global Newsroom. 26 Ibid. 27 FACTS.” SAVE MY SEOUL, Jubilee Media. 28 “Quick Take: Samsung.” Bloomberg. 29 Fackler, Martin. “Jobless Koreans Turn to Manual Labor, Quietly.” The New York Times. 6 July 2009. 30 Sang-hun, Choe. “Suit Has South Korea Looking Anew at Its Hard Line on Prostitution.” The New York Times. 20 June 2015. 31 Ibid. 32 Murphy, Chris B. “Why Is Social Responsibility Important to a Business?” Investopedia. 12 Mar. 2019. 33 “No Girls Allowed: South Korea’s Rampant Workplace Sexism Comes under Fire.” South China Morning Post. 16 Nov. 2018. 34 Ramirez, Lee. “The ‘Escort Bars’ that Uber Execs Reportedly Visited are a Regular Affair in South Korea.” Forbes, Forbes Magazine, 28 Mar. 2017. 21

Photo Credits: cottonbro/Pexels—page 30/31 Omar Markhieh/Pexels—page 33 Tero Vesalainen/Pixabay—page 34

DISCUSSION QUESTIONS 1. How might corporations in Korea and worldwide respond to Samsung's actions? 2. After reading the article what more do you want to learn?

JINNY KIM

CLASS OF 2022, ECONOMETRICS & HISTORY

“I was in Korea when the #MeToo movement began to unfold. I noticed, however, that many people I respected would talk about the movement derisively, or even deny the deep problems facing women in society. By writing about this issue, I hoped to draw attention to the legitimacy of the recent attention regarding gender equality, and why it’s become such an entrenched problem.”

BIG BUSINESS AND DARK BUSINESS: HOW KOREA’S LARGEST BUSINESS CAN ADDRESS ITS PROSTITUTION PROBLEM / 35

ESSAY BY

HANRAY LIU

A u th o r H a n ray Liu lays the f o und a tion f or a two-s ta ge p a rtn ers hi p b etwe e n M a e rsk , Blo c kshipping , a nd M a rriott to red uce , reus e , a n d up cy c l e i d le s h i p p i n g c o ntaine rs.

ILLIONS OF CARGO containers cross the worldâ&#x20AC;&#x2122;s oceans at any given time, but most of them are empty, and there are millions more sitting idle at port. For a logistics-centered industry like shipping, this inefficient supply chain not only harms business, but also harms the environment and society. A market-based solution that creates shared value may

36 / HANRAY LIU

offer the best course of action because it incorporates incentive for stakeholders. Toward this end, a consortium consisting of logistics technology firm Blockshipping, shipping line Maersk, and hotelier Marriott ought to be established to address overcapacity in the container shipping industry. A two-part plan can significantly reduce the glut of shipping containers by first revolutionizing how containers are managed and then by upcycling excess

supply using containerized modular designs for hotels.

EXCESS CONTAINER MOVEMENTS NEEDLESSLY DAMAGE ENVIRONMENT AND SOCIETY

Without strict regulation, commercial vessels on the open ocean may burn unrefined, impurity-laden fuels as they carry heavy cargo containers. Containers have a tare (empty) weight of 2,300

STREAMLINING THE CONTAINER SHIPPING INDUSTRY

kilograms and a payload of up to 25,000 kilograms. 1 In moving this weight, merchant marine enterprises produce up to 10 percent of annual nitrogen emissions and 31 percent of annual sulfur oxide emissions. 2 To put these numbers into perspective, the fifteen largest ships are responsible for more nitrogen and sulfur oxide emissions than all the world’s cars.3 Further, even though emissions are produced hundreds of miles offshore,

trade winds and jet streams bring airborne pollutants to inland communities. Nature reports that, “ship-related health impacts include about 400,000 premature deaths from lung cancer and cardiovascular disease and around 14 million childhood asthma cases annually.”4 According to The World Bank, air pollution caused a loss of $5.11 trillion in welfare and productivity in 2013.5 The data show that merchant marine

pollution is not only an environmental issue, but also a socio-economic one.

LEGISLATION PROVIDES LIMITED RELIEF FOR ENVIRONMENT AND COMMUNITIES

The International Maritime Organization (IMO), a division of the United Nations, is a supranational institution that regulates maritime industries. To mitigate the issue, the

STREAMLINING THE SHIPPING CONTAINER INDUSTRY / 37

IMO recently mandated that all ships use cleaner fuel with a maximum sulfur content of 0.5 percent by 2020. Currently, fuel with as much as 3.5 percent sulfur is being used.6 In response to the IMO mandate, shipping lines have turned toward more expensive liquefied natural gas which, like all fossil fuels, remains a limited resource.7 While the IMO’s plan reduces noxious oxide emissions in the short term, it is a reactive measure that does not target the problem at its source. A preferred outcome: a decreased need for fuel, would naturally lend itself to reduced consumption and reduced emissions.

THE CURRENT CONTAINER SYSTEM IS UNSUSTAINABLE

Shipping lines own and lease more containers than they need because of their dependence on antiquated logistics systems that cause energy and operational inefficiencies. Academics calculate that a container is filled with cargo for only a third of its total useable life. 8 In the last container census of 2013, there were an estimated 34 million containers worldwide, only six million of which were actively transporting cargo. 9 Shipping lines move empty containers because the opportunity cost of lost cargo due to a container shortage is greater than the additional expense of hauling empty containers. The empty container crisis stems from two major sources: inadequate accounting methods and the global import-export imbalance. As far as accounting methods, shipping lines have no way of knowing the exact location of individual containers. While all containers are registered with a serial code, they are only scanned coming into and out of ports, where they are

then carried onward by truck or train.10 Additionally, many countries export more than they import or vice versa. This is the case with the United States, China, and Australia.11 Rarely are the same volume of goods sent as were received. In light of these two factors, it is no surprise that the merchant marine sends ships with wasteful overcapacity.

BLOCKSHIPPING-MAERSK PARTNERSHIP CREATES SHARED VALUE

My proposed market-based solution promotes shared value within the relationship between business and society. In the article “Creating Shared Value,” Harvard Professor Michael Porter presents shared value as a collection of corporate policies that both strengthen profitability and improve social conditions.12 While complex and ambitious, the potential benefits of the following plan are worth the investment. Blockshipping, a new technology firm, features new Global Shared Container Platform technology (GSCP) aimed to relieve the merchant marine system of unnecessary containers. Within four years, Blockshipping plans to install robust yet lightweight tracking systems on at least 16 million container units (TEU) and record the location data of containers onto a blockchain. 13 Using these data, the company envisions a future where a shared digital global ledger expedites communication between shippers and their customers by matching inventories and market demand.14 Each transaction performed on the system will incur a surcharge from which Blockshipping obtains its revenue stream.15 The company expects 6 million dollars in revenue by

“Of an estimated 34 million shipping containers worldwide, only 6 million are actively transporting cargo.”

38 / HANRAY LIU

2022 if at least 12 million TEU are logged onto its system.16 In turn, the benefits of Blockshipping technology for shipping lines are substantial: conservative estimates show the technology will shrink expenses by $5.7 billion and reduce emissions by 4.6 million tons annually.17 While the exact number of containers deemed unnecessary will depend on market conditions, Blockshipping estimates a 15 to 20 percent reduction in the global container fleet.18 Blockshipping’s valuable system allows shippers to better gauge precisely how many containers are required for a voyage. There is strong reason to believe that Blockshipping and global shipping company, Maersk will develop an effective relationship. Maersk is dedicated to minimizing its ecological footprint. The company’s sustainability report indicates that they expect to reduce emissions 60 percent by 2030 and have net-zero emissions by 2050. 19 Maersk’s devotion to sustainability is also apparent in its investment in renewable energy technology like the rotor sail from Norsepower, which has already been mounted on a Maersk vessel. 20 By integrating Blockshipping technology throughout its container fleet, Maersk can achieve its sustainability initiatives and reduce operational costs.

WHAT HAPPENS TO THE EMPTY CONTAINERS? THE ANSWER LIES WITH MARRIOTT

As the largest shareholder of the global hotel market, Marriott leads industrywide trends like modular construction. In modular construction, entire rooms or groups of rooms are constructed and furnished into modules at offsite facilities.21 According to auditor KPMG, firms benefit from a 33 percent time savings and a seven percent net financial savings per project using modular construction in place of traditional methods.22 Modular construction is most cost-effective in population dense areas that would be most affected by onsite assembly externalities such as noise and particulate matter pollution. Marriott

recently announced that its AC Hotels subsidiary will complete the world’s tallest modular hotel in New York City by 2020, and is already planning similar projects in Oklahoma City, Louisville, and Chapel Hill. 23 As disclosed in the company’s statements, Marriott’s demand for modular construction—a more economical and sustainable solution—is strong and steady. This plan introduces the concept of containerized modular construction, which builds on the modular construction concept. Marriott benefits from this method, which is more cost-efficient, sustainable, and appealing to consumers. Containers at the end of their seaworthy lifespan, cast aside after Blockshipping implementation, would be raw material for modules. This approach will create even more cost savings because containers already fit the general structure of the module; the alternative, which is melting down containers, would expend 8000 kilowatt hours (kWh). Renovation would only use 400 kWh.24 The Crowne Plaza at Singapore Changi Airport, the first and only containerized modular chain hotel, proves the feasibility of containerized modular construction.25 Using 252 containers with a total project cost of $12.8 million, the 10-floor hotel was assembled onsite in only 26 days, whereas traditional construction would have taken months to complete. 26 I

propose that Marriott take advantage of containerized modular construction on a large-scale basis to maximize cost savings and environmental impact.

SYNTHESIS OF THREE PARTIES LEADS SOCIAL ACCOUNTABILITY OF PROPOSAL

This plan relies on the combined effort of the three parties to secure social good. Marriott will source containers for modular construction from Maersk after excess containers are identified by the Blockshipping implementation. Since Maersk will no longer need these containers, it can sell them at a discount to Marriott. In turn, Marriott will profit from containerized modular construction methodology, which remains more costeffective than traditional construction. The social good will be furthered by installation of LEED-certified appliances, furnishings, and utilities. Environmental good results when no new containers need to be manufactured.27 Through this synthesis, the three entities contribute shared value components.

SHIFTING PREFERENCES IN THE HOTEL INDUSTRY INCENTIVIZE MARRIOTT TO RENEW STRATEGY

The plan will first assess consumer responses to containerized modular hotels in a stable small to medium-sized market. Miami, Florida was chosen

because of the city’s status as a major port, and its proximity to the Caribbean Ocean, an area rich in biodiversity. From an environmental standpoint, higher biodiversity equates to greater ecological value. Miami is also good for the hotel business. The city ’s average room occupancy is an impressive 87.9 percent, one of the highest in the United States.28 The enthusiasm for “eco-chic” hotels also appeals to progressive millennial consumers, who constitute the next generation of consumers.29 By catering to the shifting preferences of consumers, Marriott maintains a relevant role in the hospitality industry in the long-term. Marriott can take advantage of containerized modular construction to compete with rival home-sharing services as well. On April 30, 2019, Marriott launched its Homes and Villas program to compete with Airbnb.30 The versatility of shipping containers means that they can be used not only to construct multi-level hotel complexes in urban areas, but also for one family units. Also, because of their high mobility, containers can be placed in cities and suburbs as well as in remote locations such as the Alps or tropical islands.

RISKS FOR SUPPLIERS OF CONTAINERS AND MEGASHIPS

A formidable downside to this proposal is the loss that suppliers of containers will

STREAMLINING THE SHIPPING CONTAINER INDUSTRY / 39

bear. Yet companies that construct and supply containers, most of which are in China, will still need to produce containers. Subject to the elements, containers have a limited seaworthy life and must be retired every ten years regardless of the quantity of cargo carried.31 The demand for containers, however, is projected to decrease due to increased efficiency under this plan. Another risk is the recent fleet expansion of shipping lines. Anticipating the volatility of global trade, shipping lines including Maersk have been purchasing increasingly larger vessels to accommodate empty containers.32 These large vessels are called megaships, and can carry more than 18,000 TEU.33 Megaships are more efficient than smaller vessels assuming that they are operating at a certain capacity: an

18,000 TEU ship would have to meet a 91 percent load factor to be as efficient as a fully loaded 14,000 TEU vessel.34 This proposal, however, invalidates megaships because far fewer containers will be utilized overall. As a solution, the additional space of existing megaships can be used for fuel-saving technologies such as rotor sails from Norsepower and solar panel technology from Energysail, which reduce operational costs.35, 36 A successful implementation of Blockshipping will likely see shipping lines cancel their orders for future megaships.

A CONSORTIUM FOR A BETTER FUTURE

future. Harnessing the power of blockchain to streamline container operations will save millions of tons of carbon emissions and ultimately prevent thousands of premature deaths. The plan then captures shared value by upcycling unnecessary containers into modular construction materials for hotels in a way that is cheaper, more sustainable, and more appealing to consumers than traditional construction. Reconciling the social benefits with the losses to container suppliers and existing megaships’ obsolescence, the value of reduced pollution and saved lives outweighs the drawbacks.

The proposed joint venture between Blockshipping, Maersk, and Marriott lays the foundation for a more sustainable

DISCUSSION QUESTIONS 1. The author mentions the use of blockchain in advancing shipping logistics. What are some other uses or potential uses of shared blockchain-based general ledgers? 2. Would you stay inside of a Marriot “containerized” hotel room while on vacation? What are some setbacks this partnership might encounter with its end consumer? 3. After reading this article, what more do you want to learn?

“Dry Containers.” DSV, http://www.dsv.com/sea-freight/sea-container-description/dry-container, 1. 2 Olaf Merk. “Shipping Emissions in Ports.” International Transport Forum, Organisation for Economic Co-operation and Development, December 2014. https://www.itf-oecd.org/sites/default/ files/docs/dp201420.pdf, 5. 3 “Light at the End of the Funnel: Green Finance for Dirty Ships.” The Economist, 11 Mar. 2017, https://www.economist.com/finance-and-economics/2017/03/11/green-finance-for-dirty-ships, 1. 4 Mikhail Sofiev et. al. “Cleaner Fuels for Ships Provide Public Health Benefits With Climate Tradeoffs.” Nature, 6. Feb. 2018, https:// www.nature.com/articles/s41467-017-02774-9.pdf, 2. 5 Institute for Health Metrics and Evaluation. “The Cost of Air Pollution.” The World Bank, 2016, http://documents.worldbank.org/curated/en/781521473177013155/pdf/108141-REVISED-Cost-of-PollutionWebCORRECTEDfile.pdf, 78. 6 Sandra Laville. “Thousands of Ships Could Dump Pollutants at Sea to Avoid Dirty Fuel Ban.” The Guardian, 29 Oct. 2018, https:// www.theguardian.com/environment/2018/oct/29/thousands-ofships-could-dump-pollutants-at-sea-to-avoid-dirty-fuel-ban?CMP=share_btn_tw&fbclid=IwAR22Oi97y3EwuIVwUVuEoRBviDt6CDCFgGp3vJAc40toCd3VpogvcWQZDao. 3. 1

40 / HANRAY LIU

“A Wave of New Environmental Laws is Scaring Shipowners.” The Economist, 21 June 2018, https://www.economist.com/business/2018/06/21/a-wave-of-new-environmental-laws-is-scaring-shipowners, 1. 8 Andrew Boyd. “No. 2879: Empty Shipping Containers.” University of Houston, 2 May 2013, https://www.uh.edu/engines/epi2879. htm, 2. 9 “Containers.” World Shipping Council, http://www.worldshipping. org/about-the-industry/containers, 1. 10 “The GSCP ICO White Paper by Blockshipping.” Blockshipping, May 2018, https://www.blockshipping.io/wp-content/uploads/2018/02/Blockshipping_GSCP_ICO_White_Paper_public. pdf, 10. 11 Gwynn Guilford. “A Sign of the Huge Trade Imbalance for Global Commodities: 45% of Ships Travel Empty.” Quartz, 30 Nov. 2017, https://qz.com/1031020/heres-a-sign-of-our-massive-globaltrade-imbalance-right-now-45-of-ships-are-traveling-withoutcargo/, 3. 12 Michael E. Porter and Mark R. Kramer. “Creating Shared Value.” Harvard Business Review, 25 Aug. 2015, hbr.org/2011/01/the-bigidea-creating-shared-value, 1. 13 “GSCP ICO White Paper,” 5. 14 Ibid. 7

“GSCP ICO White Paper,” 19. “GSCP ICO White Paper,” 32. 17 “Blockshipping CEO: Empty Containers Having an Environmental Impact.” CNBC, 19 June 2018, https://www.cnbc.com/ video/2018/06/19/blockshipping-ceo-empty-containers-having-an-environmental-impact.html, 1. 18 “GSCP ICO White Paper,” 6. 19 “2018 Sustainability Report.” Maersk, 2018, https://www.maersk. com/-/media/ml/about/sustainability/sustainability-new/files/ apmm_sustainability_report_2018_a3_190228.pdf, 12. 20 Andrew Moseman. “Cargo Ships Are Turning Back to Wind Power—But Don’t Expect Big Triangular Sails.” Popular Mechanics, 31 Aug. 2018, https://www.popularmechanics.com/technology/ infrastructure/a22887463/cargo-ships-maersk-rotors-magnuseffect/, 2. 21 Barbara Delollis. “Marriott International Expands Modular Construction Initiative.” Marriott International, 1 May 2017, https://news.marriott.com/2017/05/marriott-international-expands-modular-construction-initiative, 1. 22 Joshua Southern. “Smart Construction: How Offsite Manufacturing Can Transform Our Industry.” KPMG, April 2016, https:// assets.kpmg/content/dam/kpmg/pdf/2016/04/SmartConstructionReport.pdf, 11. 23 “World’s Tallest Modular Hotel Set to Rise In New York City This Fall, Highlighting Marriott International’s Vision to Disrupt the Way Buildings Get Built.” Marriott International, 18 Apr. 2019, https://news.marriott.com/2019/04/worlds-tallest-modular-hotel-set-to-rise-in-new-york-city-this-fall-highlightingmarriott-internationals-vision-to-disrupt-the-way-buildingsget-built/, 1. 24 Annie Wang. “Non-Profits to Use Shipping Containers for Showers for the Homeless.” The Epoch Times, 18 Sep. 2018, https:// www.theepochtimes.com/non-profits-to-use-shipping-containers-for-showers-for-the-homeless_2663142.html, 3. 25 “Crowne Plaza Prefab Hotel.” ArchiExpo, 2016, http://trends. archiexpo.com/union-living/project-148572-233503.html, 1. 26 Ibid. 27 Deemed environmentally friendly by a standard set by the Leadership in Energy and Environmental Design program of the 15

HANRAY LIU

U.S. Green Building Council and leads to long-term energy cost savings. 28 Nicole Martinez. “How Two New Florida Hotel Concepts Are Competing with Airbnb, Marriott.” Urbanland, 2 July 2018, https://urbanland.uli.org/development-business/two-new-florida-hotel-concepts-competing-airbnb-marriott/, 1. 29 Kate Silver. “Six Ways Hotels are Targeting the Millennial Market.” The Washington Post, 29 Jun. 2017, https://www. washingtonpost.com/lifestyle/travel/six-ways-hotelsare-targeting-the-millennial-market-and-benefiting-usall/2017/06/29/244c0646-5852-11e7-a204-ad706461fa4f_story. html?noredirect=on&utm_term=.42b2b6a6d8d0, 1. 30 Taylor Telford. “Marriott Dives into Home-Rental Market to Keep an Edge on Airbnb.” The Washington Post, 30 Apr. 2019, https://www.washingtonpost.com/business/2019/04/30/marriott-dives-into-home-rental-keep-an-edge-airbnb/?noredirect=on&utm_term=.503c27ea6ee7, 1. 31 Mark Barry. “The Lifecycle of a Shipping Container.” Aberdeen, 26 Oct. 2016, https://www.aberdeen.com/opspro-essentials/ life-cycle-shipping-container/, 1. 32 John Kemp. “Megaships are Worsening Overcapacity in the Container Market.” Reuters, 23 Sep. 2015, https://www.reuters.com/ article/us-shipping-megaships-kemp/megaships-are-worsening-overcapacity-in-the-container-market-idUSKCN0RM2AS20150923, 2. 33 “The Impact of Mega-Ships.” International Transport Forum, Organisation for Economic Co-operation and Development, 2015, https://www.itf-oecd.org/sites/default/files/docs/15cspa_mega-ships.pdf, 18. 34 Ibid, 28. 35 Moseman, 2. 36 “EnergySail.” Eco Marine Power, https://www.ecomarinepower. com/en/energysail, 1.

Photo Credits: Pixabay/Pixabay—page 36/37 Tom Fisk/Pixabay—page 39

CLASS OF 2022, BUSINESS AND POLITICAL ECONOMY

“I am involved in the Homes of Living Hope Foundation, which refurbishes shipping containers into modular units for construction in developing countries like Uganda. I also directed the interior renovation and outer mural design to transform containers into a more humane living space. I’ve seen from my work how extraordinary final products can be created from ordinary objects.”

STREAMLINING THE SHIPPING CONTAINER INDUSTRY / 41

WATER ATMS: AN INNOVATIVE SOLUTION TO WATER SCARCITY ESSAY BY

TALIA SHAPIRA

I n h e r e s s a y, a u t h o r Ta l i a S h a p i ra e x p l o r e s h o w one entrepreneurial firm, Jibu, can profitably and sustainably increase Rwandan communitiesâ&#x20AC;&#x2122; access to c l e a n w a t e r b y s h i f t i n g i t s c u r re n t f ra n c h i s e e n e tw o rk t o au to m ate d wate r ma chi nes .

HE RAPIDLY EXPANDING population of Rwanda’s capital Kigali has intensified water scarcity among its residents, especially in rural districts where access to clean water comes with hefty costs.1 While there are current efforts to renovate piped water systems and build new infrastructure, rural districts are often underserved because their pipelines are too costly to maintain. Discrepancies in affordability and availability of clean water as well as ineffective flat water tariffs have also heightened the socioeconomic divide between urban and rural districts, making it difficult for private investment and independent operators to step in.2 To improve the country’s clean water supply, the Rwandan government should provide better access to sanitation, particularly for rural populations, which have been marginalized by governmental entities like the Water and Sanitation Corporation (WASAC), rural water service operators, and private companies. In order to overcome the high cost of water services, the Rwandan government should look to decentralized water providers, such as small water enterprises, to extend water provision beyond the reach of current utilities. Jibu, a low-profit limited liability corporation, is already supplying a million residents of urban and peri-urban areas with access to clean water. With its micro-franchising strategy, it has the potential to reach rural areas as well.3 By using technology to its advantage, Jibu can expand in rural areas through water “ATMs” that can pump, filter, and dispense clean affordable water without compromising profitability. Rwanda is the most densely populated country in Africa, with 80 percent of its population living in rural areas and 60 percent living below the poverty-line.4 Rural areas are served by private water contractors who run more than 1,000 water supply facilities through publicprivate partnerships. 5 Many of these facilities are comprised of decadesold water networks plagued with low production and high water losses. 6

WATER ATMS: AN INNOVATIVE SOLUTION TO WATER SCARCITY / 43

“Water ‘ATMs’…can pump, filter, and dispense clean affordable water without compromising profitability.” Cyprien Sebikwekwe, chairperson of the Forum of Private Rural Water Operators, points out that only 10 percent of rural residents currently seeking to have water piped can be connected.7 However, striving for a sustainable solution has proven ineffective for the government. For reference, the rural district of Kamonyi would need upwards of $600,000 to rehabilitate all of its water systems to meet demand.8 In addition, the country has abundant rainfall, typically exceeding 1,200 mm a year, but lacks the necessary storage, collection, and catchment systems to process and use this resource.9 Without external funding and improved affordability, the majority of rural low-income residents will never reap the benefits of water reform.

PREVIOUS EFFORTS

Water reforms in urban and rural Kigali are strained due to economic and governmental barriers that make funding, policy change, and affordability difficult to achieve. First, despite governmental programs to improve water systems and revise tariffs, the majority of rural low-income residents still cannot afford

44 / TALIA SHAPIRA

water because the government’s flat tariff system, “subsidizes the rich to the detriment of the poor.”10 Although lowincome residents consume less water, government-run WASAC is dissuaded from progressive tariffs because of the high costs of operating rural water systems.11 The socioeconomic divide also restricts private investment. Even with funding from government, donors, and households, there is an annual financing gap exceeding $27 million to pump water in rural areas.12 Public-private partnerships have tried securing microfinance loans to cover infrastructure expenses, but lenders systematically neglect rural areas because of their high energy costs.13 Lastly, largescale water treatment plants, such as the $61 million plant due for 2020 in Kigali, put rural agricultural communities at risk, as aggressive tapping from inland lakes threatens “ecotourism, food security, and water reserves.”14, 15

JIBU’S CURRENT SUCCESS

To effectively serve low-income communities, Jibu should expand its micro-enterprise strategy using automation and install water ATMs

instead of bricks-and-mortar stores to cut labor costs and increase productivity. With its franchising business model and hybrid form of incorporation, Jibu has already left its mark on urban Kigali, using advanced solar-powered filtration equipment to purify local water and simultaneously earn a small profit to ensure sustainability and attract additional investment.16 However, Jibu franchises have suffered in rural areas, as they need to sell five times the amount needed in the city to break even due to “low population densities, small disposable incomes, intermittent utility supply, and low capacity to maintain infrastructure or supply chains.”17, 18 Even though some of the rural systems have high demand--many serve more than 120,000 residents in villages several miles apart—investors are still discouraged by challenges including poor cost recovery, limited private sector participation, and high investment costs for construction.19 NGOs fare no better, and they only offer assistance in digging and construction as opposed to replication and maintenance.20, 21 However, by shifting its franchisee network to automated machines, Jibu can offer a profitable and sustainable

alternative to stakeholders by reaching more consumers and increasing access to clean water.

WATER ATMS IN RURAL INDIA

Utilizing the latest technology, water ATMs access rural areas through decentralized water-filtration plants, which provide purified water at an affordable price and generate profit by cutting excess operational costs. This concept has already been implemented in rural India by Piramal Sarvajal, a social enterprise founded in 2008. It utilizes solar-powered, cloud-connected water ATMs, each with its own filtration system, to provide water to both rural villages and urban slums.22 Centralized systems of water treatment are often costly and ineffective for dispersed populations. Sarvajal’s water ATMs, on the other hand, distribute water from filtration centers operated by local franchisees in larger urban villages.23 Beyond Jibu’s current capabilities, Sarvajal also reaches communities that are not currently connected to the municipal water supply through a technology called Soochak, a patented remote monitoring device that tracks the plants’ functional status, water quality, liters produced and sold, as well as overall health of the machine.24, 25 Sensors transmit real-time data regarding the filtration centers’ operations to stakeholders and also enable engineers to design preventive maintenance schedules for the centers themselves. 26 With its advanced water ATMs, Sarvajal has managed to provide water to 4.3 million rural residents daily. It has also grown to receive funding from international benefactors including Nestle, Mercedes Benz, and HSBC.27

PROFITABLE WATER KIOSKS IN RURAL RWANDA

A recent study of small water enterprises has proven that Sarvajal’s strategy can also work in rural Rwanda to satisfy demand, earn revenue, and recover operational expenses.28 In the study, water kiosks were placed in rural healthcare

facilities for a year and analyzed for the extent to which they were a competitive alternative to other water sources. Strong financial results and positive community reception demonstrated the effectiveness of this model. For example, water kiosks generated an average revenue of $1.51/m3 per month in comparison to production costs of $1/m3, and four kiosks out of the six had a 45 to 75 percent increase in profit margin.29 Although profits may have been higher in heavily-populated settings, the kiosks were still a less costly alternative to large-scale plants, and their strategic placement in the healthcare facilities helped them generate a small profit despite low rural consumer demand. If Jibu were to build on its current strategy by combining its kiosk method with Sarvajal’s technology, it could retrieve more accurate, real-time statistics on water consumption metrics, and increase its productivity along with profitability and sustainability.

JIBU’S POTENTIAL RISKS

Although water ATMs have the potential to succeed in rural Rwanda as they have in rural India, Jibu still has several risks to consider, including lack of brand alignment, poorly chosen kiosk locations, high tariffs, and lack of a natural water supply. Jibu’s mission is to empower local entrepreneurs through their franchises, which serve as a means to spur job and wealth creation. 30 In rural areas, this mission is difficult to achieve due to skill gaps among Rwandans and the lack of resources needed to run a franchise. 31 While water ATMs provide a cost-effective solution to affordable clean water, they eliminate the need for physical stores and the labor needed to run them. Another risk involves the location of the water ATMs, as it affects demand as well as pricing. The greatest consumer demand for the kiosks is in communities where well-developed piped water sources already exist.32 Proximity to the water source is the most influential factor from the consumer’s perspective, so the

ideal location for the ATMs is where populations are sufficiently large to offset costs.33 However, these ATMs are most needed in rural areas, where populations are more dispersed.34 Safe Water Network, a non-profit resource for local water management, has found that the financial sustainability of kiosks in rural India depends not only on competitive pricing but also on the volume of water sold due to economies of scale.35 However, higher tariffs are often charged for greater consumption levels, which presents a major barrier to kiosk use. In the Rwandan case study, facilities that distributed more than 100 m 3 per month were subjected to a 75 percent tax, a 14 percent increase from those that consumed between 50 and 100 m3.36 Yet, water shortages are also to blame. While decoupling drilling supplies can reduce water tariffs--as piping accounts for 90 percent of production costs--Rwanda’s limited water supply requires the use of such tools.37

OVERCOMING THE RISKS

To mitigate these risks and grow to serve vast regions of rural Rwanda, Jibu can gradually reframe its mission and mindset, transition its business model to incorporate some of Sarvajal’s strategies, and take advantage of Rwanda’s natural resources--all without compromising on profitability. For instance, while implementing water ATMs may reduce its number of employees, Jibu can use the kiosks to indirectly empower Rwandan women and children, who disproportionately bear the burden of water collection and often walk several miles to collect water from contaminated sources.38 Jibu’s rural water ATMs can free up time for children to attend schools and women to tend to their families and work. They can also lower the risk of contracting water-borne diseases. Particularly for women, these ATMs can also reduce the risk of sexual assault women sometimes face during the water collection process.39

WATER ATMS: AN INNOVATIVE SOLUTION TO WATER SCARCITY / 45

Regarding the risk of poor kiosk locations, Jibu can operate its water ATMs through satellite retail vendors that are willing to expand into water delivery services.40 Like Sarvajal, Jibu can penetrate local markets by allowing franchisees to pre-pay for the filtering technology and then sell it locally.41 Lastly, to counter the effects of water shortages, Jibu can take advantage of Rwanda’s abundant rainfall and integrate it into the ATMs’ water supply, which has already been proven successful. Of the

nine kiosks implemented in the Rwandan case study, the six that integrated rainwater increased their overall water supply between 7 to 41 percent.42 By shifting its current business strategy to rural water ATMs and adopting Jarvajal’s technology, Jibu can establish a new channel of profitability, bring affordable clean water to rural communities in Rwanda and help fight climate change by reducing its causes, such as limiting the amount of coal and wood burned to purify contaminated

water sources.43 Although changing Jibu’s urban-focused franchise model to a rurally-based system of decentralized ATMs has its risks, the new business model, if properly implemented, will help build a more interconnected and healthy Rwandan society while ensuring future profitability via new investments and sustainable partnerships.

DISCUSSION QUESTIONS 1. What other utility might benefit by local community management? 2. After reading the article what more do you want to learn?

“Kigali Experiencing Intense Water Shortage.” UrbanAfrica. Net, 26 Mar. 2014, www.urbanafrica.net/news/kigaliexperiencing-intense-water-shortage/. 2 “Rwanda Natural Capital Accounts for Water.” Waves Partnership, National Institute of Statistics of Rwanda, Mar. 2019, https://www.wavespartnership.org/sites/waves/files/ kc/18_Mar_2019_RW NCA Water Account__Final.pdf. 3 Coates, Jessie. “How Local Entrepreneurship Can Solve East Africa’s Water Crisis.” EY – Global, EY, 26 Apr. 2018, www.ey.com/en_gl/purpose/innovation-and-localentrepreneurship-solving-east-africa-s-wate. 4 Huttinger, Alexandra, Robert Dreibelbis, Felix Kayigamba, Fidel Ngabo, Leodomir Mfura, Brittney Merryweather, Cardon Merryweather, et al. “Water, Sanitation and Hygiene Infrastructure and Quality in Rural Healthcare Facilities in Rwanda.” BMC Health Services Research, vol. 17, no. 1, 2017, doi:10.1186/s12913-017-2460-4. 5 Kanamugire, Johnson. “Water Still a Pipe Dream for Residents Kigali’s Rural Districts.” The East African, 2 July 2017, www.theeastafrican.co.ke/rwanda/Business/Kigali-watershortage/1433224-3995934-1p9ulz/index.html. 6 Ibid. 7 Ibid. 8 Ibid. 9 Huttinger. 10 Kanamugire, Johnson. “Users in Rural Rwanda Pay More for Water Provision.” The East African, 3 Sept. 2016, www. theeastafrican.co.ke/rwanda/Business/Users-in-ruralRwanda-pay-more-for-water-provision--/14332243367690-klyvf2z/index.html. 11 Ibid. 12 “Water Supply and Sanitation in Rwanda: Turning Finance into Services for 2015 and Beyond.” Water and Sanitation 1

42 / TALIA 46 WYMAN SHAPIRA LI

Program–Africa Region, www.wsp.org/sites/wsp/files/ publications/CSO-rwanda.pdf. 13 Ibid. 14 Cattaneo, Emilio. “Kigali Water: Lessons from One of SubSaharan Africa’s First Water PPPs.” Ppps, 30 Apr. 2018, blogs. worldbank.org/ppps/kigali-water-lessons-one-sub-saharanafrica-s-first-Water-ppps. 15 “Kigali Experiencing Intense Water Shortage.” 16 Coates. 17 Ibid. 18 Huttinger. 19 Mitchell, Carl, and Heather Skilling. “RWANDA Water and Sanitation Profile .” U.S. Agency for International Development, Mar. 2010, www.washplus.org/sites/default/ files/rwanda.pdf. 20 “Jibu Clean Drinking Water Franchises, Uganda, Rwanda and Kenya.” University of New Hampshire, 28 Aug. 2017, www. unh.edu/social-innovation/ssfi/lcsa/jibu. 21 “How Business Is Bringing Clean Water to Nairobi, Kenya.” WorldVenture, 7 Mar. 2018, www.worldventure.com/howbusiness-is-bringing-clean-water-to-nairobi-kenya/. 22 Goldapple, Lisa. “Piramal Sarvajal: Water ATMs Making a Splash in India.” Project Breakthrough, 30 July 2018, breakthrough.unglobalcompact.org/briefs/piramal-sarvajalwater-atms-making-a-splash-in-india/. 23 “Sarvajal Builds Clean Water ATMs in India.” Missions Box, 6 Mar. 2018, missionsbox.org/news/sarvajal-builds-cleanwater-atms-india/. 24 Goldapple. 25 Rawat, D.S. “Safe Drinking Water Solutions.” Piramal Water Private Limited, ASSOCHAM Foundation, www.sarvajal. com/pdf/. 26 Woody, Todd. “How High Tech Is Helping Bring Clean Water

to India.” Yale E360, 5 Sept. 2013, e360.yale.edu/features/ anand_shah_clean_water_india. 27 “Sarvajal Builds Clean Water ATMs in India.” 28 Huttinger. 29 Ibid. 30 Coates. 31 “Jibu Clean Drinking Water Franchises, Uganda, Rwanda and Kenya.” 32 Huttinger. 33 Ibid. 34 Herbert, Ryan, et al. “SAFE WATER DISTRIBUTION IN INDIA.” Safe Water Network, Sept. 2013. 35 Huttinger. 36 Ibid. 37 Ibid. 38 Today, Rwanda. “EDITORIAL: Clean Water, Sanitation Is a Basic Right, Ensure All.” The East African, The East African,

TALIA SHAPIRA

14 Aug. 2015, www.theeastafrican.co.ke/rwanda/Opinion/ Clean-water--sanitation-is-a-basic-right-/14332462833108-taqmwuz/index.html. 39 Ibid. 40 Ibid. 41 Goldapple. 42 Huttinger. 43 “How Business Is Bringing Clean Water to Nairobi, Kenya.” Photo Credits: Make the Planet Great Again—page 42/43 Make the Planet Great Again—page 44

CLASS OF 2022, FINANCE WITH A MINOR IN STUDIO ART

“Rwanda is one of the most motivated and governmentally sound countries in Africa. Yet, while it has made progress on issues like women’s empowerment and environmental sustainability, its efforts to combat water scarcity are only taking place in urban and peri-urban areas. In my paper, I am trying to show that urban initiatives like Jibu can use technology to reach rural areas while remaining profitable.”

WATER ATMS: AN INNOVATIVE SOLUTION TO WATER SCARCITY / 47

ExxonMobile I

magine filling two entire football fields, from one goal post to the other, with a giant balloon of carbon dioxide (CO2). 1 That balloon would contain 20 metric tons of CO2, nearly the equivalent of an average Americanâ&#x20AC;&#x2122;s annual carbon footprint.2 Among the many activities that burn fossil fuels, the single greatest source of pollution is transportation, accounting for more than 29 percent of all CO2 emissions.3 Although it may seem contradictory to their business models, big oil companies have the potential to profit by transitioning away from oil, while simultaneously diminishing the leading cause of pollution. Through the development and addition of electric

vehicle (EV) charging stations at its gas stations, ExxonMobil can generate both profit and shared societal benefit by incentivizing a reduction in gasreliant automobiles.

THE COST OF CONVENIENCE

Fossil fuels are inexpensive, relatively easy to extract, and bountiful. This great facility in using fossil fuel energy, however, comes at a severe price. Burning non-renewables releases particles that pollute the air, land, and sea, causing human illness as well as harming animal and plant life. The constant CO2 emissions from burning fossil fuels aggravate the greenhouse effect, increasing temperatures across the world more

and EVs ESSAY BY

Author Ricardo Dahia Aguiar ExxonMobil leading the shift to the widespread installation of sta ti o n s .

RICARDO AGUIAR

explores the possibility of electric vehicles through charging stations at its gas

significantly every year. In fact, by 2050, most northern U.S. cities are expected to see average summer temperatures increase by five or six degrees Fahrenheit.4 Moreover, the process underlying fossil fuel production also causes significant harm to humans and the environment. Drilling and transportation pose a continued risk of oil spill, while highpressure “fracking” for natural gas relies on at least 88 chemicals that can cause cancer and other mutations.5, 6 Still, the negative externalities are often set aside in the face of the inexpensive costs of oil and gas, making the problem challenging to address, as even greenminded people burn more fuels when they cost less. While registered vehicles reached a record 272.5 million in 2017, the number of EVs on the road only recently surpassed one million.7, 8 The massive volume of gaspowered automobiles provides further incentive for big oil companies to keep drilling and selling their “black gold.”

EXXONMOBIL

ExxonMobil, the ninth largest company on the Global Forbes 500 with more than $279 billion in annual revenue, is likely one of the biggest individual corporate contributors to the global warming crisis through its fossil-fuel extraction and distribution.9 However, the oil and gas titan also invests heavily in research and development with a specific commitment to reduce carbon emissions.10 Each year, ExxonMobil invests approximately one billion dollars into innovative, cleaner energy solutions, including research in algae and biofuel, fuel cell technology, carbon recapturing, and natural gas utilization. In 2009, ExxonMobil was recognized as the “Green Company of the Year” by Forbes for its dedication to the research and development of cleaner energy, particularly for its work with biofuels.11 Although the award may seem ironic given the disastrous environmental impact of the company’s main product, it stands as a testament to ExxonMobil’s awareness and efforts to realistically mitigate the effects while remaining profitable. To continue

50 / RICARDO AGUIAR

the crusade, ExxonMobil could lead the way for electric vehicle charging stations.

EVS AND CHARGING STATIONS

Between 2017 and 2018, annual sales of plug-in electric vehicles in the U.S. increased by 76 percent with 158,000 new purchases.12 With gasoline prices up so sharply over the past few years, far from the lows of $1.64 per gallon in early 2016, and more consumers becoming aware of the looming threats to the environment, EVs offer an alluring alternative as one of the sleekest and best performing new cars on the market.13 And they are becoming cheaper. What was once a luxury good with EV’s starting at $80,000, is now more affordable with a plethora of options – from the Nissan LEAF, to the Chevrolet Bolt, to the Kia Soul EV – all costing less than $37,000. ExxonMobil should capitalize on the shift towards EV ownership in the U.S. by installing EV charging stations at its gas stations and moving away from nonrenewable fossil fuels. The focus on EVs and their owners would establish ExxonMobil as the first big oil company to move into this market. Although profitable, fossil fuels are a depleting resource. While estimates vary widely, oil and gas deposits will eventually run out -- perhaps even over the next century at current consumption rates. ExxonMobil is cognizant of this, as evidenced by its heavy investments in products that improve fuel economy, such as the “high-performance lubricant” that lowers the amount of disposed oil in cars and turbines.14 In shifting its focus towards EVs, ExxonMobil will leap toward nondepletable, sustainable energy rather than prolonging the limited amount of oil and gas remaining. If the implementation of charging stations were to become commonplace at gas stations, Exxon Mobil could develop a dominant position as the first to enter.

A NEW REVENUE STREAM

Additionally, EV charging stations would provide ExxonMobil a new revenue stream. Charging a plug-in car is inexpensive. It costs about $0.03 per mile

in electricity costs to charge an EV, which is only one-fifth of the gasoline cost necessary to power a conventional car with a 20 mpg fuel economy.15 ExxonMobil could charge three times the cost of the electricity ($.09 per mile), generating a sizable profit per customer, and consumers would still be paying significantly less than if they had gas-guzzling vehicles. According to the U.S. Energy Information Administration, drilling and refining crude oil accounts for about 70 percent of the price of gasoline, which currently amounts to roughly $0.10 per mile for a 20 mpg conventional car.16 Ultimately, EV charging offers an equal or potentially greater source of profit per mile for ExxonMobil stations. Offering EV charging stations would also motivate many consumers, who may be on the fence about buying an electric car. Currently, EV drivers need to worry about finding a charging station before their batteries run out. In fact, in a survey conducted by AAA, 58 percent of those surveyed who said that they would not buy an EV listed “running out of charge while driving” and “lack of public charging stations” as two of the reasons. 17 With 11,000 Exxon and Mobil service stations nationwide, this one company could suddenly make EV charging far more accessible and convenient.18 Not only would ExxonMobil gain revenue from consumers, but it could seek partnerships with car companies. The installation of charging stations would lead to an increase in EV purchases as well as a potential decrease in costs for high-end car companies like BMW. The German automaker’s all-electric car, the i3, only has a battery range of 120 miles. To mitigate the distance limitation, the car company offers a loaner program, through which i3

owners may temporarily exchange their EVs at a dealership for a non-electric car for road trips or longer travels. With the advent of charging stations, this program would no longer be necessary, saving BMW time and money on the cars it loans to its customers. ExxonMobil could work with BMW for an early focus on specific routes and destinations, helping BMW more quickly discontinue its program while increasing the usage of ExxonMobil’s charging stations.

WHY CONSUMERS SHOULD MAKE THE SWITCH

BMWs, however, are not the most common cars in the U.S. In 2018, the most purchased automobile in America was Ford’s F-series pick-up truck.19 Second and third were also pickups (the Silverado and Ram respectively).20 The Ford F-150 averages 21 mpg, making it one of the least fuel-efficient car models released in 2018, a potential signal that for the average American, CO2 emissions are not necessarily a primary concern when buying a new car. This lack of concern not only presents a challenge to incentivizing EV purchases (despite the addition of charging stations), but also, even more important, a challenge to the problem of climate change in general. Many drivers are not compelled to change their habits or feel that the market does not offer a convenient, clean, reliable alternative to suit their lifestyle choices. In the case of Ford F-150 buyers, the issues are addressable. Pickup truck drivers should be cognizant that their inefficient fuel-economy purchases cost them thousands of dollars in the long run. The fuel cost, as computed by the U.S. Department of Energy, for an F-150 in ten

“It costs about $0.03 per mile in electricity costs to charge an EV, which is only one-fifth of the gasoline cost necessary to power a conventional car...” EXXONMOBILE AND EVS / 51

years averages over $20,000, whereas the BMW i3, or other all-electric plug-ins, cost just over $5,000.21 In addition to monetary savings, those who enjoy the size, comfort, and build of a pickup can consider the Workhorse W-15, the first ever plug-in pickup truck on the market22 or perhaps the recently announced Tesla Cybertruck.

CHALLENGES

Some studies question whether EVs actually create less environmental impact than regular cars. On average, an EV requires twice the amount of energy to produce than a gas-powered car, and the lithium ion battery requires the extraction of numerous raw materials.23 Also, the electricity used to charge EVs comes from the nation’s power plants, which rely on fossil fuels to generate nearly two-thirds of the nation’s power.24 On the production end, EV makers will have to continue to find cleaner ways to produce the vehicles. In the meantime, long term use of an EV by its owner can outweigh the negative impacts of its manufacture. Additionally, as EV’s become more commonplace, battery recycling will become much more efficient, helping to reduce the environmental impact of extracting raw materials.25 A major challenge lies in the charging speed of an electric car. Typically, EV owners get home and immediately plug in their car so that the car is charged in time to leave the following morning. However, there exist much faster alternatives. Blink,

a U.S.-based charging station provider, offers public charging locations, including the DC Fast Charger model that can refill an EV in 30 minutes. 26 If ExxonMobil installed fast charging stations (which take up no more space than a parking meter), owners could fill their car with energy in about 16 percent of the time it would take at home. Another reasonable concern revolves around the cost of charging stations. Installing the most high-end DCFC model, which has the fastest charging capacity at up to 90kW (90 miles charged in 20 minutes), could cost ExxonMobil up to $40,000 for the unit and an average of $23,662 to install (depending on the region).27 Installation of charging stations at all 11,000 ExxonMobil service stations may be rather expensive. But for such a large quantity, the company could negotiate a better price. In addition, the high-end model offers one of the fastest EV charging speeds as well as the capacity to simultaneously charge two cars.28 For most service stations, ExxonMobil could initially install only one Blink unit, making the cost of the unit and installation more easily recoupable through the new revenue stream. And in their partnership with car companies, ExxonMobil can first focus on service stations in specific areas.

the company as a source of profit, market leadership, and innovation, and promote a cleaner alternative to the greatest source of CO2 emissions. Currently, the average passenger vehicle in the U.S. emits nearly 4.6 million metric tons of CO2 annually, constituting almost 25 percent of an average person’s yearly carbon footprint.29 Although the transition to EVs may remain a slow process and may play only a small part in slowing global warming, greater access to electric charging stations will help chip away at the damage caused by the U.S. fleet of automobiles. The value created goes beyond the environment, benefiting electric vehicle owners, automakers, the government (which can spend less on incentivizing better fuel economy from companies in the auto industry), and local communities that suffer from the negative externalities of pollution. Although the idea of charging stations is not new, ExxonMobil can be the first oil company to enter the EV charging business and use its more than 11,000 service stations to rule the market and change it for the better.

EXXONMOBIL AND EVS

The addition of EV charging services to ExxonMobil gas stations would benefit

RICARDO AGUIAR CLASS OF 2022, FINANCE AND DATA SCIENCE “Electric vehicles in particular were always intriguing to me – after my family purchased one, I realized the limitations were in the range of the battery. Thinking from both a profit and renewability standpoint, I believed that ExxonMobil adding EV charging stations would be an interesting topic to research.”

52 / RICARDO AGUIAR

DISCUSSION QUESTIONS 1. What other locations might be ideal for charging stations? 2. How can we better address the un-environmental process of EV production and battery production? 3. After reading this article what do you want to learn more about? Chameides, Bill. “Picturing a Ton of CO2.” Climate 411, 22 Apr. 2008, blogs.edf.org/climate411/2007/02/20/picturing-aton-of-co2/. 2 Massachusetts Institute of Technology. “Carbon Footprint Of Best Conserving Americans Is Still Double Global Average.” ScienceDaily. ScienceDaily, 29 April 2008. <www. sciencedaily.com/releases/2008/04/080428120658.htm>. 3 EPA, Environmental Protection Agency, www3.epa.gov/ climatechange/ghgemissions/inventoryexplorer/. 4 Irfan, Umair, et al. “America Is Warming Fast. See How Your City’s Weather Will Be Different by 2050.” Vox.com, Vox, 30 Apr. 2019, www.vox.com/a/weather-climate-change-uscities-global-warming. 5 “What Is Fracking and Why Is It Controversial?” BBC News, BBC, 15 Oct. 2018, www.bbc.com/news/uk-14432401. 6 “The Hidden Costs of Fossil Fuels.” Union of Concerned Scientists, 3 Aug. 2016, www.ucsusa.org/clean-energy/coaland-other-fossil-fuels/hidden-cost-of-fossils. 7 “Number of U.S. Aircraft, Vehicles, Vessels, and Other Conveyances.” Number of U.S. Aircraft, Vehicles, Vessels, and Other Conveyances | Bureau of Transportation Statistics, www.bts.gov/content/number-us-aircraft-vehicles-vesselsand-other-conveyances. 8 “EEI Celebrates 1 Million Electric Vehicles on U.S. Roads.” EEI, 30 Nov. 2018, www.eei.org/resourcesandmedia/ newsroom/Pages/Press%20Releases/EEI%20 Celebrates%201%20Million%20Electric%20Vehicles%20 on%20U-S-%20Roads.aspx. 9 “Exxon Mobil.” Fortune, fortune.com/global500/exxonmobil/. 10 “Innovating Energy Solutions.” ExxonMobil, corporate. exxonmobil.com/en/Research-and-innovation/Researchand-development-highlights#researchAndDevelopmentH ighlights. 11 Helman, Christopher. “ExxonMobil: Green Company of the Year.” Forbes, Forbes Magazine, 16 July 2012, www.forbes. com/forbes/2009/0824/energy-oil-exxonmobil-greencompany-of-year.html#791dbb392fd2. 12 “Global EV Sales for 2018 – Final Results.” EV, www. ev-volumes.com/country/total-world-plug-in-vehiclevolumes/. 13 “Gasoline and Diesel Fuel Update - Energy Information Administration.” U.S. Energy Information Administration - EIA - Independent Statistics and Analysis, www.eia.gov/ petroleum/gasdiesel/. 14 “Innovating Energy Solutions.” ExxonMobil, corporate. exxonmobil.com/en/Research-and-innovation/Researchand-development-highlights#researchAndDevelopmentH ighlights. 15 “Save Money.” Www.fueleconomy.gov - the Official Government Source for Fuel Economy Information, www. 1

fueleconomy.gov/feg/savemoney.jsp. “Gasoline and Diesel Fuel Update - Energy Information Administration.” 17 Barry, Keith. “More American Drivers Want Electric Cars, AAA Survey Says.” Consumer Reports, www. consumerreports.org/hybrids-evs/more-american-driverswant-electric-cars-aaa-survey-says/. 18 “Exxon and Mobil Station Locations.” Exxon and Mobil Fuels, www.exxon.com/en/gas-stations. 19 Pascus, Brian. “These Are the 20 Best-Selling Cars and Trucks in America in 2018.” Business Insider, Business Insider, 20 Aug. 2018, www.businessinsider.com/bestselling-cars-and-trucks-in-america-in-2018-2018-8#4nissan-rogue-215202-100-17. 20 Ibid. 21 “Save Money.” 22 “Electric Trucks, Drones, and Aircraft.” Workhorse, workhorse.com/pickup/. 23 Eckart, Jonathan. “Batteries Can Be Part of the Fight against Climate Change - If We Do These Five Things.” World Economic Forum, www.weforum.org/agenda/2017/11/ battery-batteries-electric-cars- carbon-sustainablepower-energy/. 24 “What Is U.S. Electricity Generation by Energy Source? FAQ - U.S. Energy Information Administration (EIA).” U.S. Energy Information Administration - EIA -Independent Statistics and Analysis, www.eia.gov/tools/faqs/faq. php?id=427&t=3. 25 Ellsmoor, James. “Are Electric Vehicles Really Better For The Environment?” Forbes, Forbes Magazine, 21 May 2019, www.forbes.com/sites/jamesellsmoor/2019/05/20/ are-electric-vehicles-really-better-for-theenvironment/#54acab2376d2. 26 “DC Fast Charger.” Blink, www.blinknetwork.com/chargerscommercial-dc-fast.html. 27 “Costs Associated With Non-Residential Electric Vehicle Supply Equipment.” US Department of Energy, Nov. 2015, afdc.energy.gov/files/u/publication/evse_cost_report_2015. pdf. 28 “DC Fast Charger.” 29 “Greenhouse Gas Emissions from a Typical Passenger Vehicle.” EPA, Environmental Protection Agency, 10 May 2018, www.epa.gov/greenvehicles/greenhouse-gasemissions-typical-passenger-vehicle. 16

Photo Credits: Mike/Pexels—page 48/49 Andreas160578/Pixabay—page 50/51

EXXONMOBILE AND EVS / 53

CREATING A RECYCLING INDUSTRY IN CHINA THROUGH THE LENS OF ALIPAY ESSAY BY

ABBY YANG

A u t h o r A b b y Ya n g e x p l o r e s a three-way partnership between C h i n a â&#x20AC;&#x2122;s g o v e r n m e n t , i t s p e o p l e , a n d Al i b a b a t o i m p rov e d o m e s t i c re cy c l i n g within China.

.oday, China has become the world’s largest trash generator, producing more than 260 million tons a year. 1 Under the mask of booming economic growth, China faces tremendous difficulties dealing with domestic recycling. Recycling in China has been extremely difficult to implement because of unique national conditions that can be broken down into two facets: disincentives to recycle and the lack of a sense of civic obligation to recycle.

LACK OF RECYCLING INFRASTRUCTURE AND EXISTING POVERTY IN CHINA

China’s overemphasis on growth disincentivizes individuals to recycle. Throughout the modern history of China, the primary goal has revolved around increasing GDP. In 2012, Xi Jinping, the president of China, depicted the Chinese dream as “building a moderately prosperous society.” 2 This included

“doubling 2010 per-capita GDP to $10,000 by 2021.”3 The government believes that GDP is the most direct reflection of a country’s economic growth. This mindset causes the country to allocate most of its available resources to encourage production and consumption, key factors of GDP. Though the annual GDP growth averaged at 9.52 percent for 30 years, installation of domestic recycling infrastructure such as trashcans, has failed to keep up with the rising consumption.4 In Shanghai alone, “the amount of waste transported and collected [peaked] in 2015 at 7.09 million tons.”5 Although recycling infrastructure desperately needs to be improved, the government still chooses to funnel resources to encourage production and consumption. As a result, China’s recycling condition worsens and individuals face tremendous disincentives to recycle. Furthermore, in China’s developing economy, “there are still an estimated 373.1 million people below the ‘upper

middle income’ international poverty line of $5.50 a day.”6 Many citizens still struggle with basic necessities, including food and education. Because recycling is not necessary for survival, people at the poverty level do not have the energy or resources to participate.

FAILURE TO TREAT RECYCLING AS A CIVIC OBLIGATION

While some individuals lack incentive due to poverty, others lack a sense of civic obligation. Concepts underlying the Chinese dream create a stigma associated with recycling. As Xi’s Chinese dream focuses mostly on GDP growth, it insinuates that recycling is not a national priority and perpetuates the idea that recycling is not a civic obligation. In addition, people are unwilling to join the recycling industry itself, because of the negative connotation associated with jobs dealing with trash. In ancient China, punishment for felony offenses included collecting trash on the streets – a sentence intended to humiliate. Still today, Chinese society perceives jobs like trash collection negatively. Currently, the only people who recycle in cities are the ones who come from rural areas and struggle to make a living. They collect scraps on the street and sell them to private recycling stations, which then process the trash and resell it to manufacturers. These stations only give the slightest amount of profit to the trash collectors as they might buy, “a stack of old magazines for 62 cents, and a burnedout computer cord for a nickel.”7 Even resellers lack incentive to recycle.

THE SOLUTION—A REWARD SYSTEM WITHIN ALIPAY

To resolve the lack of recycling in China, the government should aim at increasing incentives to recycle by deconstructing the social norm that no one recycles in China. My proposal is to use green digital finance to connect individuals’ self-interest with recycling. 8 More specifically, Alibaba should cooperate with the government to create a reward system for recycling

56 / ABBY YANG

“China’s overemphasis on GDP growth disincentivizes individuals to recycle." within its own app, Alipay, China’s largest online payment platform.9 Through a reward system, Alibaba could build recycling stations around the perimeters of select apartment complexes where Alipay users can recycle goods and receive credits in their Alipay accounts, depending on the weight of the recycled products. Users can redeem rewards, such as discounts at restaurants or free movie tickets, using recycling credits. Users can also compete with their friends online to see who has a higher recycling credit. For stations to function properly, Alibaba would hire trash collectors as station supervisors. Then, Alibaba would process the recycled goods for sale to the government. The government can then either put the materials back into manufacturing or use them to improve public infrastructure. In general, this reward system will incentivize more individuals to recycle, help Alibaba both financially and socially, and ease the government’s burden.

INCENTIVIZE MORE PEOPLE TO RECYCLE

The most immediate outcome of Alibaba’s reward system is that more people will recycle. The reward system will work as a principle of positive reinforcement as explained by author and educator, Kendra Cherry: “when a favorable outcome, event, or reward occurs after an action, that particular response or behavior will be strengthened.”10 Because this reward system attaches tangible rewards to recycling, it motivates users to recycle. More importantly, this reward system awards users on a spiritual level. The credit numbers shown on users’ Alipay accounts reinforces the action of recycling by reminding users how much recycling they have done. At the same

time, because the reward system allows users to compete with each other to see who recycles more, it may create a positive competition mechanism for the recycling industry. The idea of both a monetary reward and a sense of achievement is the key to incentivize more people to recycle.

FINANCIAL BENEFIT AND BETTER SOCIAL IMAGE FOR ALIBABA

In Tom Szaky’s plenary speech, he discusses how Pampers benefits from recycling dirty diapers in Germany. People can drop any brand into diaper recycling bins that Pampers installs. In return, they receive discounts for future purchases of Pamper diapers. The primary goal of this strategy is not to reduce its production cost by recycling, but to shift customers from other brands to Pampers. Tom Szaky said that even, “1 percent market share shift makes a huge difference.”11 The same principle applies to Alibaba. First, Alibaba can earn additional revenue by processing recycled trash and selling it to the government. In the US, the recycling industry “generates more than 13.2 billion US-Dollar in federal, state, and local tax revenue annually.”12 Since China barely has a formal recycling industry, the potential profit Alibaba can gain from having a first-mover advantage is tremendous. In addition to economic profit, Alibaba can also benefit from a better overall social reputation. Because the concept of green digital finance is still new in China, the creation of this reward system can make Alibaba the leading force of sustainability in the country. Consequently, more users will be driven to join Alipay, which increases its user bases and eventually its profit. Essentially, this reward system connects Alibaba’s social image with its profit. Similar to the Pampers’ case, Alibaba will

primarily benefit by gaining a better social reputation and getting more users.

active recycling industry desired by the government.

LESS BURDEN ON THE GOVERNMENT

FEASIBILITY OF GREEN DIGITAL FINANCE

This reward system also helps the government by reducing the costs involved with building a functioning recycling industry. With Alibaba leading the recycling industry, the government can save resources in the recycling process and allocate them elsewhere, specifically on technology to transform trash into usable products. The government can consider using Terracycle’s technology, which turns recycled trash into public infrastructure and promotes recycling as a lifestyle.13 Additionally, hiring trash collectors will help the government address its unemployment issue, since many of these collectors already have the technical knowledge required for sorting trash. Finally, as a global corporation with more than 700 million active users, Alibaba’s participation in the recycling industry can help erase the negative connotation associated with recycling.14 More people will regard recycling as a proper job, which helps to create the

Currently, Alibaba has already introduced a market product of green digital finance on Alipay—Ant Forest. By performing actions that reduce their carbon footprint, such as using public transportation, users of Ant Forest can claim carbon points and use these points to grow their own virtual trees within Ant Forest. When their virtual tree is mature, Ant Forest will actually plant a tree somewhere in the world and users will be able to monitor the growth of their tree by satellite online. According to Pandaily, in less than two years, “over 300 million people…participated in the Ant Forest project, with a daily carbon emission reduction of 8 thousand tons.”15 The success of Ant Forest demonstrates the feasibility of the recycling reward system. From Alibaba’s perspective, the reward system not only encourages more users to start using Alipay but also portrays Alibaba as a socially responsible corporation. From the users’ perspective,

they are willing to use Alipay because they feel rewarded for recycling. In the Ant Forest case, though the growth of virtual and actual trees is not directly correlated with users’ self-interest, it still successfully incentivizes users to make environmentally friendly decisions; they simply feel accomplishment by participating. As an extension of Ant Forest’s existing user base, users will be even more incentivized to recycle since it will produce monetary rewards in addition to a sense of achievement. The core of both Ant Forest and the recycling reward system counters the social attitude that making environmentally friendly decisions is irrelevant to people’s lives.

POTENTIAL RISK AND CORRESPONDING SOLUTIONS

Some risks of this solution include cheating within the system and lack of access to smartphones. People may cheat the system through corrupt methods such as bribing trash collectors in order to gain more rewards. To avoid this situation, Alibaba should limit the value of rewards so that people are still incentivized to

CREATING A RECYCLING INDUSTRY IN CHINA THROUGH THE LENS OF ALIPAY / 57

recycle but not incentivized to cheat for minimal rewards. A second risk involves a lack of smartphones. In China, nearly 50 percent of the population still does not have access to smartphones, so they can’t use Alipay.16 Though poverty remains an obstacle for the application of the reward system, this solution can offer a first step toward institutionalizing recycling in China.

CONCLUSION

Tom Szaky says that, “recycling is all about mining waste and taking what is good.”17 This reward system within Alipay gives its users, Alibaba, and the government an opportunity to gain benefits from recycling. Users receive both monetary rewards and a sense of achievement. For Alibaba, the reward system can attract additional users and promote the company as a socially responsible corporation. For the government, the program can save costs on recycling and create a functioning recycling industry under Alibaba’s brand influence. Finally, this solution is truly a triple win for all three stakeholders and a promising starting point for transforming China’s environment issues.

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Makinen, Julie. “The Greening of the Mooncake.” Los Angeles Times, Los Angeles Times, 29 Sept. 2012, www.latimes. com/world/la-xpm-2012-sep-29-la-fg-china-mooncakes20120930-story.html. 2 Omoruyi, Ehizuelen Michael Mitchell. “China’s March towards a Moderately Well-off Society.” China Daily, China Daily, 16 Mar. 2018, www.chinadaily.com.cn/a/201803/16/ WS5aab21d6a3106e7dcc142020.html. 3 Ibid. 4 “China GDP Annual Growth Rate.” National Bureau of Statistics of China, 2019, tradingeconomics.com/china/ gdp-growth-annual. 5 “Annual Report.” Shanghai City Appearance and Greening Bureau, 2015. 6 “The World Bank in China.” World Bank, The World Bank Group, 8 Apr. 2019, www.worldbank.org/en/country/china/ overview. 7 Hays, Jeffrey. “Garbage and Recycling in China.” Facts and Details, Jan. 2014, factsanddetails.com/china/cat10/sub66/ item1111.html. 8 Green digital finance refers to financing activities that generate profit and provide environmental benefits at the same time 9 Alipay is established and owned by the Alibaba group. It allows people to do almost everything they need during their daily lives, including paying bills, buying plane or movie tickets, and easily transferring money between friends. 10 Cherry, Kendra. “Positive Reinforcement Can Help Favorable Behaviors.” Verywell Mind, Verywellmind, 6 May 2019, www.verywellmind.com/what-is-positivereinforcement-2795412. 1

Szaky, Tom. “Business and Society Plenary.” 29 Apr. 2019. Kurth, O. “USA: Recycling Generates 117 Billion US-Dollar per Year.” Global Recycling, Global Recycling, 13 Aug. 2018, global-recycling.info/archives/2172. 13 Szaky, Tom. 14 Pymnts. “Alipay Has 700M Active Users.” PYMNTS.com, PYMNTS, 18 Sept. 2018, www.pymnts.com/news/mobilepayments/2018/alipay-users-ant-financial-blockchain-aiiot/. 15 Geng, Geng. “A Green Movement with 300 Million Participants and 13 Million Trees.” Pandaily, Pandaily, 27 Apr. 2018, pandaily.com/ant-forest-allowed-more-thana-quarter-of-chinese-netizens-to-participate-in-charityprograms-through-the-mobile-internet/. 16 Sonmez, Felicia. “More Than Half of China’s Population Is Online - And Most Use Smartphones.” The Wall Street Journal, Dow Jones & Company, 25 Jan. 2016, blogs.wsj. com/chinarealtime/2016/01/26/more-than-half-of-chinaspopulation-is-online-and-most-use-smartphones/. 17 Szaky, Tom. 11

Photo Credits: Tom Fisk/Pexels—page 54/55 Adrianna Calvo/Pexels—page 57 Zhang Kaiyv/Pexels—page 58

DISCUSSION QUESTIONS 1. What next steps would be required for Alibaba to become one of the first companies in China to embrace sustainability? 2. How might other companies in China respond to Alibaba’s actions, whether the company is successful or not?

ABBY YANG

CLASS OF 2022, FINANCE & DATA SCIENCE

“In China, recycling has always been a hassle for me. Even though I want to recycle, no one is willing to take the recycling. I later found out that despite people knowing the importance and benefits of recycling, they have no incentive to recycle. I want to create a value chain that includes the government and individuals so that the solution can be feasible given China’s unique national condition.”

CREATING A RECYCLING INDUSTRY IN CHINA THROUGH THE LENS OF ALIPAY / 59

CASE COMPETITION: RESOLVING GENDER ESSAY BY

JUDY KAM

B e i j i n g , C h i n a i s s u f f e r i n g f ro m a n a i r p o l l u t i o n crisis, yet much of the population is unaware of its associated health implications. That is why Judy Kam is arguing for the creation of the Beijing Energy Park, a self-sustaining center for community recreation and environmental education. With its innovative design, this park could be the future of all “smart parks.”

INEQUALITY IN FINANCE WHILE IN COLLEGE ESSAY BY

ALISHA HUANG

Author Alisha Huang tackles the issue of gender inequality within the financial services indu stry by us i ng col l ege ca s e comp etiti ons .

XITHIN THE United States financial services industry, there is a long-standing history of gender inequality driven by implicit biases due to female underrepresentation in executive level managerial positions. Current solutions, such as diversity tracks and gender quotas, only address the issue from a quantitative perspective, failing to address the underlying, self-perpetuating inherent causes of the problem. To rewire deep-seated subconscious biases against women in the financial field, cross-sex cooperation must be instilled at a young, pre-career stage -- before employees enter firms. One solution for financial institutions facing disproportionate gender composition is to address the issue at its roots and spark the conversation of gender equality prior to the next generation of candidates entering the workforce. By partnering with colleges to implement case competitions where gender-balanced teams explore a prompt that focuses on gender inequality issues, financial institutions can raise awareness for this issue by speaking out to students early in their professional careers.

A HISTORICAL BACKGROUND OF BIAS

Implicit biases against women in finance are historically rooted and perpetuated in present-day institutions. Muriel Siebert, the “first woman of finance,” didn’t own a seat on the New York Stock Exchange (NYSE) until 1967, nearly two centuries after trading commenced in 1792.1 The historical absence of women in financial institutions bred the belief that women do not belong in financial services, and this belief is mostly unchanged in modern times. In leading institutions such as J.P. Morgan Chase and Goldman Sachs, women comprise merely 25 percent and 21 percent of their respective executive boards.2 In 2018, the Bloomberg Financial Services Gender-Equality Index (BFGEI) highlighted a disproportionate number of women in the C-suite. Of 104 financial

62 / ALISHA HUANG

institutions, women comprised only 26 percent of senior leadership positions and 19 percent of executive officer roles.3 In her book Lean In, Sheryl Sandberg, CFO of Facebook, described the effects of this marginalization through her experience working at Google while pregnant. Suffering severe morning sickness as one of Google’s only senior women, she demanded pregnanc y parking. However, Google founders confessed that they never considered such accommodation as it was irrelevant from a male perspective.4 Sandberg concluded that, despite there being other pregnant women at Google, without a high-up female voice the board never identified the issue. 5 Lacking the voice of female executives, the C- Suite can sleep on critical gender-related issues and continue making decisions and policies without consideration for women. The continued absence of women creates a ‘glass ceiling’ – an invisible barrier within institutions that hinders career advancement and sustains the cycle of gender inequality.6 Although women like Stacey Cunningham, the first female president of the NYSE, have challenged gender norms in the industry, NYU Professor Dolly Chugh noted that the success of these individuals

serves only as an illusion of improvement.7 In reality, inherent beliefs dominate our decision-making judgments, indicating that a considerable proportion of critical day-to-day workplace interactions, like evaluating employee worth, occur through subconscious associations.8 Present-day gender inequality is a symptom of the historic implicit biases against women.

WHY PREVIOUS SOLUTIONS AREN’T ENOUGH

In response to gender-imbalance, institutions have constructed diversity programs aimed at recruiting more women and meeting a gender quota. Although these programs have helped equalize gender disparity in entrylevel positions, disparities still exist in managerial and upper-level positions. A cclaimed institutions, including Goldman Sachs and J.P. Morgan Chase, have implemented variations of women’s inclusion programs, resulting in women comprising 51 percent of entry-level financial sector employees.9,10 However, for every 100 men promoted to managerial roles, only 79 women are given the same opportunity.11 This discrepancy indicates that despite diversity pathways and quotas increasing

female representation initially, these purely quantitative approaches fail to address the implicit prejudices impacting employee evaluation and promotion. Executives tend to subconsciously set a higher standard for women to ‘qualify’ for the same promotion as their male counterparts, and due to social stereotypes, when a man asks for a promotion, he is more likely recognized as ‘ambitious’ or ‘determined’ whereas a woman is more likely labeled ‘pushy’ or ‘manipulative.’12 These qualitative, subconscious doublestandards highlight why quantitative approaches are ineffective beyond shortterm female representation. Nonprofit organizations, aimed at creating a pipeline of successful women for the finance industry, have also failed to address long-term gender disparity in the financial services industry. Programs such as ‘Girls Who Invest’ (GWI), a 4-week summer intensive followed by a 6-week internship placement at a leading financial institution, is designed to increase the number of women in investment management and executive leadership in the financial industry.13 While GWI is a great stepping stone for women to gain industry knowledge and apply to top

financial institutions, its effects taper off rapidly once hired into the firm. At Goldman Sachs, women comprise 36 percent of general analyst employees. At the first-line manager level, this number falls to just 24 percent and tapers to 21 percent at the executive level.14 This falloff illustrates that merely increasing female applicants does not resolve the inherent associations held against them. Gender inequality requires joint male-female cooperation. Programs empowering women without incorporating men are ineffective in the long-term as institutions continue to evaluate promotions and raises with subconscious biases at play.

USING COOPERATION AS A LONGTERM CATALYST FOR A SOLUTION

A solution towards achieving gender equality within the finance sector lies in leveraging institutioncolleg e partnerships to construct case competitions that introduce the topic of gender inequality to students at a pre-career level. While many financial institutions currently run case competitions with various business schools centered around financial transactions or business models, the proposed solution includes a prompt focused on the lack of gender equality, particularly at executive level positions, with an additional requirement of genderbalanced teams. By giving students more opportunities to work in gender-balanced environments and exposing students to the issue of gender inequality at an earlier age, the next generation of employees will enter the workforce educated on the social issue. Financial institutions are incentivized to run a gender-equality case competition as recruiting gender-diverse employee classes directly increases profitability. According to Jessica Alsford, a manager at Morgan Stanley, companies with greater gender-diversity have 0.7 percent higher forward one-year return on equity (ROE) on average than regional competitors and 1.1 percent higher ROE than those with low female representation. 15 By offering these competitions to students,

institutions connect with prospective employees. Demonstrating a focus on achieving gender equality within the institution will appeal to more female candidates, effectively increasing the gender-diversity of incoming employee classes. Furthermore, by facilitating a more diverse pool of candidates, financial institutions can directly benefit from increased monetary returns. From an academic perspective, colleges and students are incentivized to participate in case competitions due to the connections and opportunities they provide. In the competitive financial services industry, students are motivated to participate in extracurricular activities in exchange for valuable experiences. Case competitions offer not only hands-on business experience that gives students an edge in interviews, but also the opportunity to network with industry professionals, and apply classroom learning to real-life scenarios.16 Given the benefits, students have significant incentive to participate in gender-equality case competitions. With the benefits to financial institutions, colleges, and students, a gender-diversity case competition is a feasible solution as personal motives incentivize all parties. Through the case competition, institutions can spark a gender equality discussion that can subconsciously rewire inherent beliefs held against women in the finance sector by encouraging students to cooperate with the opposite gender. In a lecture covering Contact Hypothesis, NYU Professor Jay Van Bavel highlighted three requisites for overcoming implicit bias: positive contact, intrinsic motivation, and sharing collective identity.17 If all three criteria are satisfied, neutralization of implicit prejudices can occur over time. Positive contact is defined as contact of equal status in a personal setting while sharing a common goal.18 A genderequality case competition provides this platform for men and women to work personally and collaboratively as teammates. Students would also be of equal status, satisfying the requirements of positive contact. Previous proposals address gender-inequality in an explicit

CASE COMPETITION: RESOLVING GENDER INEQUALITY IN FINANCE WHILE IN COLLEGE / 63

“…three requisites for overcoming implicit bias: positive contact, intrinsic motivation, and sharing collective identity.” manner that is insufficient in motivating people to act in an egalitarian way and are therefore ineffective at combating inherent prejudices.19 Unlike diversity quotas and women’s programs, which only target the empowerment of women and omit men from the equation, students share the common goal of working to propose a solution for the case prompt. Case competition team members are motivated intrinsically, since participation in the competition is purely voluntary. Given that a case competition satisfies all three psychological elements required to combat subconscious biases, it enables students to address the prejudices against women in finance from a pre-career stage. A case competition addresses not only implicit biases from a psychological standpoint, but normalizes male-female cooperation and promotes the financial services industry to more women. According to author Tara Mohr, women don’t apply for jobs unless they feel 100 percent qualified, greatly contrasting that of men applying at just a 60 percent confidence level, suggesting that while women may have opportunities to enter the finance sector, they opt out unless they are certain they possess the appropriate a b i l i t i e s. 2 0 By e n r o l l i n g i n a c a s e competition, women can obtain business expertise as a student, develop greater confidence in their abilities, and increase their probability of pursuing a career track in finance. Additionally, male-female cooperation f r o m a st u d e n t a g e ove r r i d e s t h e misconception that men and women can’t work together due to potentially opposing viewpoints.21 This involvement promotes future employee classes at financial institutions more willing to work with colleagues of the opposite gender. Over time, this collaboration will eliminate the

64 / ALISHA HUANG

common reflex to question the expertise of female employees in finance.22 Ultimately, a gender-equality case competition addresses both male implicit biases and the innate tendency of women to opt themselves out of the financial services industry, effectively reducing gender inequality within the finance industry.

THE POTENTIAL RISKS OF A GENDER EQUALITY-CENTRIC CASE COMPETITION

Despite incentivizing critical stakeholder groups, the solution poses risks in its voluntary participation criteria. If participation were mandatory, the competition would fail the requirements to alter implicit biases. Therefore, the success of the case competition in addressing biases and encouraging more women to enter financial institutions is reliant upon student participation. If students do not actively engage in the competition offered, the effects cannot propagate among the next generation of employees. However, given the experience, networking, and practical opportunity heavily incentivizing students, it is unlikely the competition would remain unrecognized. It is also possible that with only partial student body participation the competition’s effects might only reach a select population. This possibility can be mitigated by further incentivizing participation with prizes for winners or internship opportunities. At the least, the case competitions will begin the gender inequality conversation avoided for generations. Over time, with increased promotion, the case competition popularity will grow and increase awareness of gender equality among future generations of employees in financial services. Despite deep-rooted inherent biases against women in the financial

services industry, offering students a case competition with gender inequality as the issue prompt can be a catalyst in rewiring implicit attitudes. By partnering with colleges, financial institutions can address the issue at a pre-career stage and increase the gender diversity of future incoming employee classes. A gender equality case competition not only starts the conversation at a younger age but normalizes male-female cooperation and reduces the tendency for women to deselect themselves out of roles in the finance sector. Despite risks of low student participation, a case competition at the very least sparks a critical discussion overlooked for generations. Through rewiring implicit biases and encouraging more women to pursue a career in finance, a gender equality case competition effectively tackles the pressing issue of gender inequality in the United States financial services industry.

Nemy, Enid. “Muriel Siebert, a Determined Trailblazer for Women on Wall Street, Dies at 84.” The New York Times, The New York Times Company, 25 Aug. 2013, https://www. nytimes.com/2013/08/26/business/muriel-siebert-firstwoman-to-own-a-seat-on-wall-st-dies-at-80.html 2 Crowe, Portia, and Andy Kiersz. “These Charts Show Just How White and Male Wall Street Really Is.” Business Insider Australia, 25 Aug. 2015, www.businessinsider.com.au/wallstreet-bank-diversity-2015-8. 3 Bloomberg GEI. 2018 Bloomberg Gender-Equality Index. Bloomberg L.P, 2018,https://data.bloomberglp.com/ professional/sites/10/May-2018-GEI_Index_Booklet.pdf 4 Sandberg, Sheryl, and Nell Scovell. Lean In: Women, Work, and the Will to Lead. Alfred A. Knopf, 2013. 5 Ibid. 6 Cloney, Emily. “Women in Finance: Beyond the Glass Ceiling.” London Business School. www.london.edu/lbsr/women-infinance-beyond-the-glass-ceiling. 7 Chugh, Dolly. “Implicit Biases and Bounded Rationality.” Business & Society, 25 Mar. 2019, New York, New York University. 8 Ibid. 9 10X EBITDA. “List of 2019 Investment Banking Diversity Programs, Women Programs and Early Programs (North America).” 10X EBITDA, 24 Jan. 2019. 10 Statista. “Employment Level in Banking and Consumer Finance Sector in North America in 2017, by Gender and Ethnicity.” Statista, 2017. 11 LeanIn, and McKinsey & Company. “Women Are Doing Their Part. Now Companies Need to Do Their Part, Too.” Women in the Workplace Study, LeanIn.org, 2018. 1

Babcock, Linda, and Sara Laschever. Women Don’t Ask: Negotiation and the Gender Divide. Princeton University Press, 2007. 13 “Girls Who Invest.” Girls Who Invest, www.girlswhoinvest. org/. 14 Crowe, Portia, and Andy Kiersz. “These Charts Show Just How White and Male Wall Street Really Is.” Business Insider Australia, Business Insider Australia, 25 Aug. 2015, www. businessinsider.com.au/wall-street-bank-diversity-2015-8. 15 Alsford, Jessica. “Why It Pays to Invest in Gender Diversity.” The Atlantic, Morgan Stanley Wealth Management, 2016. 16 Weybrecht, Giselle. “Eight Ways Case Competitions Can Enhance Your Business Degree.” Best Business Schools, AACSB, 18 Jan. 2016. 17 Van Bavel, Jay. “Introduction to Psychology: Groups.” 14 Nov. 2018, New York, New York University. 18 Ibid. 19 Chugh, Dolly. 20 Mohr, Tara Sophia. “Why Women Don’t Apply for Jobs Unless They’re 100% Qualified.” Harvard Business Review, 2 Mar. 2018. 21 Gates, Wyatt Edward. “How Men Constantly and Casually Drive Women out of the Workplace.” Medium, 12 July 2018, medium.com/@wyattegates/how-men-constantly-andcasually-drive-women-out-of-the-workplace-6d66d61d3adc. 22 Ibid. 12

Photo Credits: mentatdgt/Pexels—page 60/61 Christina Morillo/Pexels—page 62/63

DISCUSSION QUESTIONS 1. What benefits would a gender-balanced work environment bring to the financial services industry or to other industries? 2. After balancing the workforce, how long might it take for implicit bias in the financial services to finally be erased? 3. What does this article make you want to learn more about?

ALISHA HUANG

CLASS OF 2022, FINANCE & MARKETING

“Although many financial institutions have diversity and equal representation explicitly listed as part of their mission statement, there is a vast underrepresentation of women within firms, especially in higher managerial and C-suite positions. This contrast between values and reality led me to question whether there were more profound, inherent biases driving gender inequality and, most importantly, what we, as the rising workforce, could do to minimize these biases.”

CASE COMPETITION: RESOLVING GENDER INEQUALITY IN FINANCE WHILE IN COLLEGE / 65

THE CALL FOR

CORPORATE ACTION

Amy Dong senior editor

Avery Farm senior editor

Alan Xia senior editor

Jane Lin senior editor

AMY

AVERY

ALAN

JANE

KRITHIKA

HANNAH

Krithika Kommana photography editor

Hannah Goh design editor

Shelly London faculty advisor

SHELLY

66 / THE CALL FOR CORPORATE ACTION

ACKNOWLEDGEMENTS CONGRATULATIONS TO OUR published authors and a warm thank you to the contributors to this seventh edition of The Call. Thank you for your hard work and dedication. We collected over 600 student essays from Business and Society 2019, and these student writers are the ultimate inspiration for this magazine. We hope that current and future writers are moved by the high caliber of the prose and challenging ideas included here. We selected the winning essays based on a number of criteria. We sought compelling content, fluid composition, and evidence of critical thinking. We looked for specific “calls for corporate action” that were realistic, creative, passionate, and unique. Ultimately, we wanted to present a mix of current student thinking across a complementary collection of topics. And finally, to demonstrate the complexity of societal connections, we looked for interesting insights into the interrelations between business, society, and government. This publication was written, assembled, and edited by NYU students - most notably by our four student readers and editors: Amy Dong, Jane Lin, Alan Xia, and Avery Farm – all past contributors to The Call. Together, we would like to thank Professor Shelly London for her guidance, presence, and superb editorial help along the way. Thank you. We received additional editorial help from Professor Reima Shakeir and our office assistants, Christine Yen and Olivia Price. Thank you, all. We could not have completed this publication without our talented art designer and graphic artist, Hannah Goh, and photographer, Krithika Kommana. Hannah’s beautiful design work is on every page, and Krithika’s photography graces our cover and all the portraits throughout. See more of her photos on her website, www.krithikakommana.com.

Thank you to NYU Stern Undergraduate Dean Robert Whitelaw for his supportive opening letter and to Professor Matt Statler for his introduction to the current Business and Society course. Thank you also to the dedicated instructors who facilitate the weekly discussions, critical thinking, and writing sessions that make up Business and Society. Their instruction is evident within all these essays. Without their dedication, this publication would not have been possible. Thanks are due to all: Aya Tanaka, Bob DiYanni, Brian Hanssen, Bruce Meyerson, Carol Newell, Claudia Caruana, Eileen Gilmartin, Ellen Pluta, Irv Schenkler, JanaLee Cherneski, Jessy Hsieh, Jorge Fontanez, Larry Menna, Maria Patterson, Mark Brennan, Matt Statler, Mira Dewji, Paul Melton, Reima Shakeir, Rob Lyon, Robb Shoaf, Robert Wosnitzer, Shelly London, Sophie Rifkin, Tim Gilman, and Tim Glencross. Finally, for all their support and guidance, I would like to separately thank Bruce Buchanan, C.W. Nichols Professor of Business Ethics and past Director of the Business and Society Program; Batia Wiesenfeld, the Andre J.L. Koo Professor of Management and current Director of the Business and Society Program; Susan Stehlik, Director of the Management Communication Program; Matt Statler, Richman Family Director of Business Ethics and Social Impact Programming; Mara van Loggerenberg, Associate Director of Social Impact Programming; and of course, Mrs. Janeece Lewis, Senior Administrator of Management Communication.

JEFFREY J. YOUNGER Senior Editor, The Call Clinical Associate Professor, Management Communication NYU Stern School Of Business

Thank you, one and all.

ACKNOWLEDGEMENTS / 67

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