Top of Mind

What is a corporation for?

In the Financial Times, Martin Wolf writes: “Almost nothing in economics is more important than thinking through how companies should be managed and for what ends. Unfortunately, we have made a mess of this. That mess has a name: it is ‘shareholder value maximization.’” Suggesting that companies are tools for sustaining long-term commitments, he says that the short-termism often associated with maximizing value is undermining their purpose.

Yale Insights talked with Lynn Stout about the shaky legal basis for the primacy of shareholder value and the evidence that inordinate focus on shareholder value actually hurts returns.

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A sustainable military?

Focusing on cost savings and building resilience in the face of uncertainty, the military has made significant progress in preparing for climate change. Bloomberg looks at what this apolitical approach has accomplished and what lessons can be drawn.

Yale Insights talked with Deputy Assistant Secretary of the Army Richard Kidd ’93 about helping organizations see sustainability as critical to the mission.
 

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Benefits of the benefit corporation

In an op-ed in the New York Times, Yale’s Robert Shiller suggests that benefit corporations—hybrid organizations that build both profit motive and social impact into their corporate DNA—may “inspire loyalty, cooperation and real purpose, which helps create profits, too.”

For a deeper look at this new organizational model, see Yale Insights’ video interview with Andrew Kassoy of the B Lab, on the potential for B Corps to change business.
 

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World Cup Marketing

Billions of fans following the World Cup make for a marketing frenzy. Even the official soccer ball, designed by Adidas, has 1.6 million Twitter followers.

Visa’s CMO spoke with Yale Insights about how the company tries to leverage major global events.

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What’s the value of eco-services?

How can we say how much fresh water, healthy soil, and clean air are worth? Disruptions related to climate change are making clear how expensive the loss of these services can be. A paper published in Nature in 1997 argued the externalities represented by eco-services are actually larger than the measured economy. An update of the paper puts the numbers at $125 trillion in annual eco-services compared to a global economy of roughly $75 trillion.

For background, see the Yale Insights interview with lead author Robert Costanza on the concept of ecological economics.

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Shadow banking?

Since the financial crisis, banks have taken a smaller role in the financial system. At the same time, the shadow banking system, which many blame for the crisis, has grown significantly. The Economist does a deep dive on how lending, investing, payments, and other key components of the financial universe may be headed for a dramatically different future. 

Yale professor Gary Gorton talked with Yale Insights about the challenges of designing a crash-proof system and the importance of taking a historical view.

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Sustainable Fisheries

Nearly a third of the seafood sold in the U.S. may be illegally caught. Pirate fishing operations hurt the fishermen who do follow the rules by driving down prices, and they also make it all but impossible to accurately gauge fisheries' harvest levels. These issues make the already complex challenge of sustainably managing a global resource that much more difficult. 

Yale Environment 360 describes efforts to develop international standards that account for ecological and social sustainability and have a chance for effective implementation. 

Triple Pundit offers a look at how a barcoding system that one fisheries producer implemented to improve supply chain management from sea to plate might be turned into an audit trail for certifying their products.

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Energy, economy, and politics

The ever-present interplay between energy, economy, and politics has recently gotten particularly tangled in several places around the world.

The Fukushima disaster has rippled far beyond Japan, with nuclear power falling off significantly around the world. Clean Technica reproduces some telling charts from the World Nuclear Industry status report that show renewables gaining as nuclear power fades in the European Union.  

Gas-powered electricity generation is growing even faster than renewables in the EU, a trend that factors into the faceoff with Russia over Ukraine. Econmonitor wonders if Russia, which gets 70% of its export revenue from oil and gas, might be overplaying its hand by repeatedly using gas shutoffs or price increases as leverage.

The odds on Russia's gamble may be altered further by the liquefied natural gas producers, in the U.S. and elsewhere, that are working to be the next supplier for Europe, according to the New York Times.

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Nuclear Japan?

Before the 2011 earthquake and tsunami, Japan got 30% of its energy from nuclear power plants. After the Fukushima Daiichi disaster, then-prime minister Yoshihiko Noda promised to phase out nuclear power by 2030. But in the last month, plant operators have requested permission to restart 17 reactors, after a new draft energy policy reopened the door to nuclear energy. MIT Technology Review offers a few numbers that may explain the reversal.

The turn back toward nuclear power is happening even as the cleanup of Fukushima has faced numerous setbacks and criticism that the workers on the ground are undertrained and recruited from the destitute and desperate, according to the New York Times.

Naomi Hirose ’83, the CEO of Tokyo Electric Power Company, Fukushima Daiichi’s operator, talked to Yale Insights in 2013 about leading the company through the aftermath of the disaster.

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Mature Companies

A startup’s exponential growth can’t continue forever, and it can be difficult to mature gracefully. Successful companies inevitably face a “what’s next” moment. Apple is the world’s largest company by market capitalization, but questions about its ability to maintain market share and profit margins have prompted some to ask if it is inexorably moving from “great to good.”

Costco’s no-frills warehouses attracts remarkably loyal and affluent customers, but Millennials aren’t coming on board. Fortune looks at how the company’s tentative attempts to adapt without losing the magic they have.

James Chanos presented data showing that stock buybacks net less than return on assets, prompting Forbes to examine whether the popularity of buybacks among top tech firms suggests a lack of innovative ideas.

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