MONDAY KETCHUP: Lego bails on oil-free foot damage, EV's tire problem, child labor at Tyson and Purdue, and Altria's the BEST board of the week

Live from your CEO’s golden parachute, it’s yet another Manic Monday edition of Business Pants. Joined by Analyst-Hole Matt Moscardi. In today’s faulty wiring called September 25, 2023: The Arbiter of ‘How Much Should I Give a Shit!’ And Matt’s Best BMs of the week!

Our show today is being sponsored by Free Float Analytics, the only ESG data platform to measure real board influence

DAMION1

Rate the “How Much Should I Give a Shit” 1-10

1. Lego ditches oil-free brick in sustainability setback

1. World’s biggest toymaker says new material made from recycled bottles would have bigger carbon footprint

2. Lego has abandoned its highest-profile effort to ditch oil-based plastics from its bricks after finding that its new material led to higher carbon emissions, in a sign of the complex trade-offs companies face in their search for sustainability.

3. CEO Niels Christiansen said that using recycled polyethylene terephthalate (RPET) would have led to higher carbon emissions over the product’s lifetime as it would have required new equipment.

4. Lego has instead decided to try to improve the carbon footprint over time of ABS, which currently needs about 2kg of petroleum to make 1kg of plastic.

2. EVs are a climate solution with a pollution problem: Tire particles

1. The tiny fragments that tires release into the environment are yet another reason to reduce car use

2. Emissions Analytics found that a single car sheds almost nine pounds of tire weight per year, on average. Globally, that amounts to six million metric tons of tire pollution annually, with most of it coming from wealthier countries where personal car use is more prevalent.

3. The amount of tire pollution emitted per vehicle is increasing as more electric cars hit the road around the world — some 14 million of them this year, according to the International Energy Agency. EVs tend to be significantly heavier than gas-powered or hybrid cars due to their larger, heftier batteries.

4. Tire particulate is a toxic slurry of microplastics, volatile organic compounds, and other chemical additives that enter the air, soil, and water around trafficked areas. 

5.  A 2017 study estimated that tire wear is responsible for 5 to 10 percent of oceanic microplastic pollution, and 3 to 7 percent of airborne PM 2.5 pollution. 

3. Tyson and Perdue Are Facing Child Labor Investigations

1. The Labor Department has opened inquiries into whether migrant children were working inside slaughterhouses owned by the poultry-processing giants.

2. Tyson Foods and Perdue Farms, which together produce a third of the poultry sold in the United States, are under federal investigation into whether they relied on migrant children to clean slaughterhouses, some of the most dangerous work in the country.

3. The Labor Department opened the inquiries after an article in The New York Times Magazine, published this past week, found migrant children working overnight shifts for contractors in the companies’ plants on the Eastern Shore of Virginia. Children as young as 13 were using acid and pressure hoses to scour blood, grease and feathers from industrial machines.

4. The death of carbon neutrality?

1. Until a few months ago, chasing carbon neutrality was a demonstrably Good Thing for businesses committed to reaching net zero emissions by 2050.

2. Then things got messy. Fiercely contested allegations that the majority of nature-based carbon credits were less effective than they first seemed pushed prices and trading volumes down.

3. The tension has reached particular highs in the EU, which plans to ban “climate neutral” claims by 2026 unless companies can prove they can achieve this without the need for offsetting (where each tonne of carbon emitted is purportedly cancelled out with a tonne of carbon avoided or captured).

4. But elsewhere there are shoots of hope that the voluntary carbon markets could help direct much-needed funds to developing countries and incentivise forest protection.

5. BlackRock, State Street among money managers closing ESG funds

1. BlackRock Inc. and other money managers spent years rolling out sustainable funds, seeking to capitalize on surging interest in ESG investing. Now they’re abandoning an increasing number of those products in the United States amid political backlash and investor scrutiny.

2. State Street Corp., Columbia Threadneedle Investments, Janus Henderson Group, and Hartford Funds Management Group Inc., among others, unwound more than two dozen ESG funds this year, according to data from Morningstar Inc.

3. On Sept. 15, BlackRock told regulators it, too, intends to close a pair of sustainable emerging-market bond funds with total assets of about $55 million.

4. While the United States had 656 sustainable funds as of June 30, according to Morningstar data, the number of liquidations is increasing from prior years. More US sustainable funds have closed in 2023 than the prior three years combined, the data show. Investors pulled more money from the funds in the first half of the year than they put into them.

6. ‘Capitalism is dead. Now we have something much worse’: Yanis Varoufakis on the tyranny of big tech

1. In his new book, Technofeudalism, the maverick Greek economist says we are witnessing an epochal shift. At his island home of Aegina, he argues it’s no longer the global finance system that shapes us, but the ‘fiefdoms’ of tech firms

2. We’re now in servitude, Varoufakis argues, to the fiefdoms of our new global masters, Lord Zuckerberg of Facelandia and Sir Musk of the rotten borough of X.

7. Elon Musk's grandfather belonged to a political party that believed the world should be governed by technology.

1. Newspapers at the time described it as having 'the tone of an incipient Fascist movement.'

2. According to a deep dive from the Atlantic on the life of Joshua Haldeman, the Canadian chiropractor was a "radical conspiracy theorist" who spent the beginning of his career as part of a group known as "Technocracy Incorporated."

3. Haldeman was convicted in Canada for his involvement in a technocratic political movement. 

4. The movement believed an authoritarian group of tech-savvy overlords could solve the world's problems.

1. The movement had a bizarre set of principles: They believed that the world should be run by a totalitarian regime of engineers and scientists based in North America; that these tech overlords would solve all of society's problems; and that people only had to work 20 years before retiring.

5. The party, founded in the 1920s, gained popularity during the Great Depression and at one point had more than half a million members in California.

6. The organization also referred to people as numbers (apparently, Musk's grandfather was 10450-1) and sometimes added Xs to their names. Followers donned identical gray clothing and cars and greeted each other with special salutes, the Atlantic found. A newspaper cited by the magazine said the group gave off "the tone of an incipient Fascist movement."

7. Following his political stint, Haldeman began passionately supporting the cause of apartheid and moved to South Africa. According to the Atlantic, he once wrote, "South Africa will become the leader of white civilization in the world."

8. Haldeman also railed against "anti-White forces" that would seek to displace his position. He continued writing in pro-apartheid South African newspapers, as well as in his self-published book, about international conspiracies of world domination from a group of elites, per the magazine.

8. Meta to Push for Younger Users With New AI Chatbot Characters

1. Meta is planning to develop dozens of these AI personality chatbots. The company has also worked on a product that would allow celebrities and creators to use their own AI chatbots to interact with fans and followers, according to people familiar with the matter. 

2. Among the bots in the works is one called “Bob the robot,” a self-described sassmaster general with “superior intellect, sharp wit, and biting sarcasm,” according to internal company documents viewed by The Wall Street Journal. 

9. Elon Musk Weighs In On CEO Pay Again — Now, Takes Aim At GM's Mary Barra's Salary

1. Responding to “She has created zero value for $GM shareholders over her entire tenure as CEO. Why is she worth over $20M/yr? If she’s worth >$20M/yr, no shit the blue collars want more money.”

1. “Corporate compensation should be proportionate to success, just like it is for pro sports”

10. Lachlan Murdoch backs Fox board role for former Australian PM Tony Abbott who called climate change science 'absolute crap'

1. The nomination came just a day after Lachlan Murdoch took the reins of the Fox media empire.

2. One of his first moves was backing the nomination of two additions to the Fox board: former Australian prime minister Tony Abbott; and Peggy Johnson, CEO of AR tech company Magic Leap. 

1. Johnson is a former Microsoft executive who took the helm of Magic Leap in 2020.  

MATT1

BM of the Week - or in this case, B of the Week

Assemble Avengers version

Criteria for this team:

• Positive gender power gap (women have equal or more power than representation)

• Less than 33% of the board are insiders

• Less than 33% of the board connected inside two phone calls

• Not a dual class dictatorship

• EBITDA and TSR director average >.600

I’m as stunned as you are - it’s a tobacco company, Altria, that came out on top:

Here’s what the team evaluation looks like:

• Demographics: 

• Airport authority exec, consumer credit card exec, ex-Dow chemical, mutual fund partner, wine and beer exec, railroad exec, ex-Treasury department official, P&G exec, gambling exec, medtech exec, energy exec

• Basically EVERY SIN: excess travel, excess credit, chemicals, gambling, alcohol, and oil!

• 71% PhD or elite schools

• 64% of the influence is on… THE AUDIT COMMITTEE

• Insider influence only 17%

• +15% diversity gap, +12% gender power gap

• But they’re super effective:

• 6 of 12 directors’ EBITDA> .900!

• 2 of 12 TSR>.600

• 100% carbon >.500, 33%>.700

• Less than half the group interconnected

• Perfect rookie to veteran balance (15% vets, 15% rookies)

• This is the Miami Heat of boards - you might hate how they win, but they just keep winning.  BM highlight:

• Debra Kelly-Ennis

• Beer & wine exec at Diageo (Bailey’s, Captain Morgan, Guinness, Johnnie Walker, Ketel One

• MBA, named Top 100 most powerful women in Canada 2009-2012

• .803 EBITDA, .519 TSR, .708 carbon intensity, .456 controversies

• Not overboarded (2 boards), plenty of XP (4 boards in last 10 years)

• Cumulative tenure 14 years, 9 on Altria

• 8% influence, Nom committee, ESG committee, Audit committee