Category Archives: AQPQ

Embracing This Milestone 500th Blog Post As An Opportunity For Transformation

Do you recall the zeitgeist of our society in January 2009? The global economy was collapsing, a Second Great Depression was threatening, and the first African American President in the history of the United States swept into office on the rhythms of Yes We Can.

At that moment, I realized that a business educator and management consultant with complementary Academic Qualifications (AQ) and Professional Qualifications (PQ) might be able to find something interesting to editorialize about on a weekly basis. And thus I launched the blog

Now, roughly 500 weeks later, I’ve achieved this 500th milestone post. How am I celebrating?

By deciding that it’s time for transformation.

Why? Because the world itself has been transformed during the past decade. A global economy in utter ruin in 2009 is, by and large, in fairly robust shape today.

But what of the health of our society and natural environment? Sadly, they appear to be evolving in the opposite direction.

In the meantime, the structure of the internet has been transformed too. Consider, for instance, the world’s most popular web site platform WordPress. When I launched AQPQ in 2009, I selected it because of its singular focus on blog hosting.

But today, WordPress’ home page invites potential customers to “Build your beautiful site today. Everything you need for a website that works for you.” It barely mentions the word “blog.”

So I’ve decided to embrace this 500th post as an opportunity for transformation. I will conclude my utilization of the blog format to express my editorial views, and will shift my commentary to alternative publishing venues.

To be sure, I’ll continue to utilize this web site to describe my professional activities. Nevertheless, I’m ready to embrace an indisputable truth: a structure that provided a strong foundation for my editorial expression a decade ago may no longer represent an ideal venue for me today.

500 iterations of any endeavor is a good run. After 500 blog posts across a decade of global transformation, it’s the right time to embrace the future.

Who Is Actually Managing The Dow Jones Sustainability Indices?

Dow Jones, a bedrock institution of Wall Street, has been providing financial information and data analysis to the investment markets in the United States for more than 130 years. Many American investors naturally assume that they can depend on the Dow Jones Sustainability Indices (DJSI) to identify corporations with superior sustainability track records.

But when they do so, are they actually relying on Dow Jones’ expertise? According to a 20 year old Swiss organization named RobecoSAM, it (and not Dow Jones) is the firm that “assesses the world’s largest companies via its Corporate Sustainability Assessment (CSA), which uses a consistent, rules-based methodology to convert an average of 600 data points per company into one overall score. This score determines inclusion in the DJSI.”

Hmm. According to this information, American investors who depend on the DJSI are really relying on the expertise of RobecoSAM. So, if they trust the analytical capabilities of RobecoSAM’s analysts, they can presumably depend on the DJSI. Can’t they?

Perhaps not. According to a different 20 year old Swiss organization named RepRisk, it (and not Dow Jones or RobecoSAM) produces data that “is used for the Media and Stakeholder Analysis component of the assessment. RepRisk’s ESG risk screening, identification, and analysis complements the detailed industry-specific questionnaire and extensive documentation that companies provide as part of the annual CSA for the DJSI.”

Yikes! So American investors who depend on the DJSI are really relying on the expertise of RobecoSAM and of RepRisk. Those two firms are performing the analytical work on the indices. Dow Jones, meanwhile, is simply adding its brand name to the product.

Is that a concern? To be fair to RobecoSAM and RepRisk, perhaps not. After all, their analysts may be skilled and objective professionals.

And yet there is a reason why the DJSI isn’t named the RobecoSAM and RepRisk Sustainability Indices. American investors would clearly prefer to rely on the Dow Jones Sustainability Indices. But do those investors truly understand who is actually managing the DJSI?

Libor Chickens

Are you familiar with the Libor scandal? Sixteen global banks have been accused of (and many have paid massive fines for) manipulating the London InterBank Offered Rate. The Libor index is utilized to determine the interest rates that establish payments on a very large number of variable rate loans around the world.

If you happen to have a credit card, a personal home mortgage, or an automobile lease with an interest rate that varies with “market conditions,” the odds are high that your rate varies with Libor’s daily fluctuations. Indeed, it’s possible that you have been influenced by the Libor manipulation scandal without even knowing it.

Such illicit price manipulation activities are not simply a banking phenomenon. Would you believe, for instance, that poultry producers are now accused of utilizing a Libor type price manipulation conspiracy for chickens?

Given that few of us are experts in poultry pricing, it may be helpful to explain this conspiracy by defining a metric called the Georgia Dock Chicken Index. Each week, the Georgia Department of Agriculture estimates the cost of producing a pound of chicken. It then distributes this cost estimate (or “Index”) throughout the industry, and firms utilize it to determine the prices of chicken purchase transactions across the United States.

So how is this Index allegedly manipulated? Well, it is calculated by taking an average of the individual cost estimates that are provided by eight to eleven chicken producers. And if those producers intentionally overstate their individual cost estimates, the Index is inflated as well, and the prices for selling chickens are likewise overstated. Naturally, higher chicken prices inevitably mean more revenue for chicken producers.

Can the situation be rectified? Well, no; at the moment, it cannot. Apparently, the Director of the Dock Chicken Index at the Georgia Department of Agriculture says that he is frustrated because “I was told I could not make any changes without clearing them with the Advisory Board.”

So who sits on this Advisory Board? Representatives of the chicken producers!

My goodness. Is there anything that we consumers can do, or anywhere we can go, to escape the type of Libor price manipulation scheme that is allegedly being employed in the meat production industry?

Hey, perhaps we can avoid meat entirely and simply eat fruit. Fruit producers aren’t manipulating their prices … are they?

Well, actually … they are indeed doing so. Apparently, there is a “banana cartel” that is engaging in price fixing schemes across Europe. It seems as if there may not be a single sector in the entire global economy that is free of price manipulation.