The $1.6 billion fine handed down to Siemens in 2008 was much more than a record breaking fine, it was a lesson for other companies to learn from. Prior to the bribery scandal, Siemens had an ethics and compliance program in place, however, there was a missing link between leadership and the enforcement of the program. The company’s cooperation during the SEC investigation lead to a reduced penalty, but also gave way to a complete re-design of the company’s internal ethics and compliance controls. There are many lessons learned from the Siemens charges, the reaction to the investigation and the actions taken by Siemens to position the company as an ethics and compliance leader in the post-scandal era.

Bribery Investigation

An amnesty plan had been worked out with Siemens, as employees willing to come forward with information pertaining to the bribery scandal and identifying key players, would be free from prosecution. In a report from the Wall Street Journal, the amnesty program was offered to all Siemens employees (110 of which came forward with information), with the exception of the 300 employees who made up the company’s top executive team. One particular employee who provided inside information was indicted employee Reinhard Siekaczek. He reported that he managed an annual budget worth $40-50 million, which was considered to be a “bribery budget”. As reported in the New York Times article “At Siemens, Bribery Was Just a Line Item,” salepersons and managers within the company used this money- “slush fund”,  to maintain relations with corrupt government officials.

The level of cooperation in the investigation significantly reduced the cost of the settlement with the SEC. In comparison to other companies hit with scandals, Siemens responded quickly to put measures in place to detect and prevent future acts of bribery within the company. In the New York Times article “At Siemens, Bribery Was Just a Line Item,” they state Siemens was provided with additional leniency, only having to plead to accounting violations, “because pleading to bribery violations would have barred Siemens from bidding on government contracts in the United States.”

In the Ethisphere article “Prepared Remarks to Compliance Week 2010- 5th Annual Conference for Corporate Financial, Legal, Risk, Audit & Compliance Officers,” Assistant Attorney General Lanny A. Breuer states:

“In the end, the benefits Siemens received through its cooperation, even in the absence of a voluntary disclosure, were plain – the $450 million fine that was paid to the Justice Department, although quite substantial, was a far cry from the advisory range of $1.35 billion to $2.7 billion called for in the Sentencing Guidelines. Put another way, Siemens received a penalty that was 67 to 84% less than what it otherwise could have faced had it not provided extraordinary cooperation and carried out such extensive remediation.”

Ethical Recovery

An investigation was launched into the bribery scandal in 2006 and was completed in 2008. The cooperation exhibited by employees at Siemens allowed the investigation to be conducted in less time than originally predicted. Rather than replacing former executives with individuals from inside the company, Siemens filled the roles of major positions with outsiders- which was probably for the best. In 2007, Peter Solmssen was brought into to clean up the ethics and compliance disaster at Siemens.  Also in 2007, Siemens named Peter Löscher as the company’s new CEO.

Siemens has worked to improve their corporate reputation by ensuring that compliance is integrated into the furthest reaching corners of their business. Siemens hired Michael Hershman, of Transparency International, to help build a compliance and anti-corruption policy and training program. Similar to the actions taken by Ed Breen at Tyco, Löscher replaced many of the company’s top executives to start fresh. In most companies the ethics and compliance department remains fairly small, however, Siemens was determined to put their words into actions and created an ethics and compliance department consisting of 600 employees- one of the largest to date.

Since the Settlement, Siemens has divided the company into three divisions in order to clarify reporting lines and increase responsibility. In the New York Times article “Siemens’s Prosperity Doesn’t Obscure Bribery Scandal,” they discuss the reasoning behind the division:

“Mr. Löscher also put the leaders of those three sectors onto the central managing board in Munich. That puts an end to a system in which a leader of a major business, like power generating, had his own managing board and reported to Munich headquarters without being based there. Siemens officials say the old way allowed corruption to spread and inhibited accountability.”

Siemens has developed a training program, with employees at various levels receiving training in regards to issues faced based on employee role. The format and frequency of training also varies depending on level within the organization. On the Siemens corporate website, they communicate that training includes topics such as foreign laws and corruption risks. Employees are now required to sign a statement after reviewing the company’s code of conduct, in order to communicate their commitment and understanding of the code.

Here is a link to a slide deck I came across from a presentation prepared by Siemens titled “Compliance Program at Siemens,” presented at Strengthening Integrity In Private Sector Organized by UNDP, MENA-OECD. The slides contain specific information related to the ethics and compliance program currently in place at Siemens.

IBM is committed to developing solutions to improve the transfer of information and providing businesses with solutions to simplify their business processes. In 2004, IBM became one of the founding members of the Electronic Industry Citizenship Coalition (EICC). IBM abides by- and helped to develop, the framework established by the EICC as guidance for their supply chain social responsibility program. In one of our previous posts, “The Importance of Supply Chain Ethics and Compliance,” I wrote about the importance of an ethical supply chain. As product parts are manufactured all over the world, it’s important that companies take responsibility to ensure all members of their supply chain act in a socially responsible manner. Companies are encouraged to review and implement their ethics, compliance and social responsibility policies within companies involved in the supply chain.

IBM and the Environment

As companies focus on future resource scarcity, many are embarking on initiatives to reduce emissions, cut waste and develop other sustainable business practices. IBM has developed the IBM Supplier Conduct Principles: Guidelines, to provide suppliers with a better understanding of IBM’s Supplier Conduct Principles. The guidelines outline the evaluation criteria used to assess a suppliers ability to comply with IBM’s high standards for supplier conduct. The goal of this document is to ensure suppliers are compliant with IBM’s practices, but also to help companies improve their processes and reduce their environmental impact.

In previous posts, we’ve talked about ethics and compliance programs only being successful if they’re enforced and monitored- the same rule applies for socially responsible supplier relationships. Earlier this year, IBM announced plans to have all of their suppliers disclose information related to their sustainability efforts. In the Solve Climate article “IBM Orders 30,000+ Suppliers to Start Disclosing Their Environmental Impact,” they outline the specifics of the initiative launched by IBM:

“All of the company’s 30,000+ suppliers are now required to define a management system around three areas: energy conservation, greenhouse gas emissions, and waste management/recycling. Suppliers are expected to create a system, set goals, measure their performance and publicly disclose their progress toward their goals. They’re also expected to set similar requirements for their suppliers. While IBM can’t audit all of its suppliers every year, it will be checking up on them, particularly those in industries with the most troubled histories. As with its supplier code of conduct, if suppliers fail to meet the new requirements, they’ll get a warning and IBM will try to work with them. If that still fails, their future in IBM’s supply chain will be in jeopardy.”

Clearly IBM understands the impact supplier actions have on their own reputation and has put these measures in place to mitigate related risks. When selecting suppliers, companies are now under more pressure than ever before to ensure ethics and compliance throughout the chain.

IBM’s Supply Chain

In the New York Times article “I.B.M. Suppliers Must Track Environmental Data,” IBM’s Vice President of Global Supply and Chief Procurement Officer John Paterson stated:

“In the long term, as the Earth’s resources get consumed, prices are going to go up. We’ve already seen large price increases and problems with water. Ultimately, if a supplier cannot be compliant with requirements on the environment and sustainability, we’ll stop doing business with them.”

Companies must use their knowledge to help businesses in developing countries implement socially responsible practices and reduce their environmental impact. The NY Times article mentions that one of the largest challenges faced by IBM is working with suppliers in countries where sustainability isn’t much of a concern. The article talks about a recent success at IBM and the impact the company has had on one of its suppliers:

“In a recent success in China, I.B.M. helped one of its suppliers, a shipping company, redesign its own supply chain to reduce its carbon footprint by 15 percent. “

As a founding member of the EICC, IBM helped develop a unified standard for suppliers within the electronics industry. The code of conduct governing the EICC consists of 5 areas of supply chain social responsibility. The 5 areas include ethics, labour, health and safety, the environment and management systems. The vision of the EICC is outlined below:

“Through the application of high standards, member companies can create better social, economic, and environmental outcomes for all those involved in the supply chain.”

IBM has published a number of informative resources on their website to provide additional guidance for current and potential suppliers. The programs and documents available from IBM can be used as great benchmarking tools to establish a best practices supply chain social responsibility program.

Allstate uses their social responsibility report to tell the story of the company’s longstanding history serving the communities in which they operate. Allstate has been recognized as an industry leader, a great place to work and as a good corporate citizen. To communicate their message to the public, Allstate voluntarily uses metrics outlined by the Global Reporting Initiative (GRI). The GRI reporting method provides companies, including Allstate, with the necessary tools to increase transparency and report on sustainability initiatives.

A company’s ethics, compliance and sustainability initiatives are becoming increasingly important to both consumers and business leaders. Adopting best practices in reporting helps companies communicate their goals to the public, holding the company accountable for taking action to achieve their goals. Reporting on ethics, compliance and sustainability helps other business leaders benchmark their own practices. It also helps business leaders make important decisions when it comes to developing relationships, such as selecting suppliers, vendors and outsourcing partners.

Global Reporting Initiative

The Global Reporting Initiative (GRI) collaborates with the UN Environment Programme, as well as developed synergies with the UN global compact and the Earth Charter Initiative. The GRI has developed the G3 Guidelines, which is an evolving list of recommended guidelines to follow when preparing all types of annual reports. The GRI guidelines are continuously improved and expanded on as information pertaining to sustainability issues develops and better practices are established. The GRI guidelines have been developed in such a way that they can be used by any company, regardless of size, location or industry. As explained on the GRI website, the benefits of GRI reporting are:

“Sustainability reports based on the GRI framework can be used to benchmark organizational performance with respect to laws, norms, codes, performance standards and voluntary initiatives; demonstrate organizational commitment to sustainable development; and compare organizational performance over time. GRI promotes and develops this standardized approach to reporting to stimulate demand for sustainability information – which will benefit reporting organizations and those who use report information alike.”

The GRI reporting framework is explained in depth on their website, defining:

• Report content- The information required in a report in order for it to be complete.
• Report quality- Guidance for ensuring a balanced, clear, accurate, timely and reliable report.
• Report boundaries- Determine which entities will be represented in the report. This includes subsidiaries, as well as organizations the reporting company has control over or significant influence.
• Profile disclosures-Sets the tone for understanding the performance of the organization, such as strategy and analysis, organization profile and governance. This section lays out messages from top executives, risks and opportunities for the company, as well as other key factors and organizational information.

Each of the above sections is broken down into greater detail to target the specific information to include in the report. As mentioned in the 2009 Social Responsibility Report from Allstate:

“The GRI guidelines give us a more effective framework for organizing content, and take our reporting to the next level. The guidelines also suggest goals and priorities for the continuing development of our programs.”

Allstate’s Reports

Allstate has been reporting on social responsibility since 2003. In 2009, Allstate adopted the GRI guidelines for the first time when putting together the company’s annual social responsibility report. In the report, Allstate addresses the reasoning behind adopting the GRI guidelines:

“How corporations like Allstate affect the world at large matters to an increasing number of customers, shareholders, employees and others in the broader community. It’s important that businesses report shortcomings as well as successes, and that readers can compare results across different companies and countries.”

One of the elements of the Allstate Social Responsibility Report I find very useful is the GRI chart at the end of the report (beginning on page 73). Allstate has taken each of the required elements outlined by the GRI, placed them in a table and provided the reader with the page number each item can be located on. This seems simple, however it’s a great way to ensure each GRI component is included in the report.  For companies looking for tools and advice to guide annual reports, such as social responsibility and sustainability, the GRI reporting framework is a highly respected resource. At Allstate, they have factored in the GRI requirements, as well as additional information stakeholders requested to see in their report in order to create a best in class social responsibility report.

I frequently come across a number of articles related to the corporate culture at Zappos. After being acquired by Amazon, the online shoe and clothing retailer continues to maintain the values and culture that have been with the company since the beginning. New hires at Zappos receive 5 weeks of training in the areas of culture, core values, customer service and the company warehouse. The focus on culture is integrated into all departments, employee roles, performance reviews, mission, vision and goals at Zappos.

How Culture Survived an Acquisition

In July of 2009, Amazon announced they would acquire Zappos in a stock and cash deal, which ended up totaling $1.2 billion dollars when finalized. A Tech Crunch article, “Amazon Closes Zappos Deal, Ends Up Paying $1.2 Billion,” reported that “the Zappos management team will remain intact and the company will continue to operate as a wholly-owned subsidiary.” Zappos continues to operate separately from Amazon, providing CEO Tony Hsieh with the ability to manage the company the same as it was in the pre-acquisition days. The terms of the arrangement with Amazon has made it easier for Zappos to remain committed to the values and mission of the company that has been in place since day one.

Some of the interesting components that make the Zappos culture incredibly infectious include:

1. Culture and Business “Fit”

 Michael Sprouse, Chief Marketing Officer at Epic Advertising, said it well in his blog post “Zappos & the Importance of a Vibrant Corporate Culture“:

“Zappos’ culture is a little bit more casual, which is akin to the Internet marketing and e-commerce industries. This creates an environment of comfort for employees, so that they can focus on producing their best possible product.”

Sprouse’s point makes perfect sense. If it’s believed that employees will achieve success by being given freedom and focusing on culture and happiness rather than sales targets and financial goals, then go for it. While certain fundamental practices can be applied across industries, it’s important to remember that no company, or employee, is exactly the same. When creating a company’s mission and the desired corporate culture, think about the necessary elements for building a supportive environment that motivates employees to do their best work.

The interview process at Zappos is lengthy, but for a good reason. Zappos has benefited from their unwavering commitment to their culture. In a recent New Jersey Business article, “Zappos CEO Adds Happiness to Corporate Culture,” they interviewed Hsieh about finding employees that “fit” the Zappos culture:

“Our HR department does a separate set of interviews purely for a culture fit. We test for each and every one of the core values. One of the examples, which I guess is kind of hard to ask as a question, is core value No. 10: Be humble. A lot of candidates relocate, so we pick them up at the airport with the Zappos shuttle, drop them off at the office and they’ll go through the day. They’ll do a tour and their interviews. What most candidates don’t realize is that the interview started when they were picked up at the airport. That’s how we test their humility. The recruiting manager will circle back with the shuttle driver later and ask how they were treated when the candidate thought they were off the clock.”

2. The “Quitting Bonus”

Zappos will pay new hires $2000 to quit on their first day. To some, this idea may seem odd, however the justification of this practice from Hsieh makes sense. Hsieh feels that this practice helps weed out employees who may not be the right fit or have the passion required for the job. The article “Zappos: Can a Corporate Mission be Happiness?” by Nick Aster is based on Hsieh’s keynote speech at SXSW. In the article, Aster writes:

“Tony discussed the corporate culture itself, advising taking plenty of time to hire new employees, but wasting no time to fire those who do not contribute positively to the corporate culture. Barely 2% of new hires take the payout – ensuring that only people who see themselves as committed to meaningful work stay on.”

3. Customer-Centric Approach

The Zappos culture focuses on being the leader in customer service. The goal of every Zappos employee is to make customers happy. In the Bloomberg Businessweek article ”Zappos Retails Its Culture,” they talk about the attempts made by employees to satisfy customers. In the article, they spoke with a customer service representative from Zappos, as well as Hsieh, who stated:

“More than 95% of Zappos’ transactions take place over the Web, so each actual phone call is a special opportunity. ‘They may only call once in their life, but that is our chance to wow them,’ Hsieh says.”

4. Office Tours

Anyone can take a tour of the Zappos office in Nevada. In the article, “Zappos CEO Adds Happiness to Corporate Culture,” Hsieh discussed the reactions from those who have taken a tour of the Zappos office:

“For several years now, we’ve given tours to the public. I usually ask people what surprised them the most at the end of the tour. The top response I get is that Zappos employees are friendly and say ‘hi’ to them and hold the door open for them while they wander around the office. Those in the tour groups say that in their own offices, when they pass an employee they don’t know, the person doesn’t even make eye contact.”

5. The Culture Book

The culture book was created as an outlet to allow the employees at Zappos catch a glimpse of their passion for their work. The book is available to the public to purchase from Zappos.com. Included in the book is a series of short essays written by Zappos employees and their vendors, explaining the elements that make the Zappos company culture special and successful. Providing employees with the opportunity to contribute to these types of projects is empowering.

Here’s a video from the Zappos YouTube channel, where Zappos employees discuss what the Culture Book means to them: 

Over the past three years, the number of workplace retaliation charges has significantly increased. The EEOC reported 22,555 retaliation related charges in 2006, jumping all the way to 33,613 charges in 2009. Most organizations include a statement of non-retaliation in their corporate policies and outline a zero tolerance rule towards discrimination, harassment and other misconduct in the workplace. However, I’ve always wondered what measures companies use to protect those who have reported workplace misconduct from retaliation. Do companies expect employees to come forward when they feel retaliated against? Are organizations taking action themselves and developing programs to detect possible issues of retaliation?

For many companies, developing a plan to deal with retaliation is still a work in progress. At KPMG, they have developed an industry leading program to address retaliation in the workplace.

KPMG’s Proactive Approach

 This week I attended a very informative webinar hosted by the Society of Corporate Compliance and Ethics (SCCE). The webinar was titled “Monitoring for Retaliation: An Essential Part of Your Compliance and Ethics Program,” and was presented by Vicki Sweeney, Principal at KPMG and Carrie Penman, V.P. at the Ethical Leadership Group. Vicki Sweeney provided insight into a proactive approach deployed at KPMG for monitoring retaliation against those who are known to have raised an issue requiring further investigation.

Sweeney stated that at KPMG, they monitor past cases to better identify issues of retaliation. When an employee reports workplace misconduct to a supervisor or through a hotline system, the risk of retaliation increases as the employee is no longer reporting the issue anonymously. Retaliation can come from peers in the workplace, as well as supervisors. At KPMG, they encourage employees to report issues involving all forms of workplace misconduct. By asking this of employees, KPMG acknowledges the vulnerable state this leaves employees in when it comes to the possibility of facing retaliation. The retaliation monitoring program at KPMG tracks those who raise issues by evaluating and analyzing data related to the investigation and the nature of the complainant’s job in order to determine the likelihood of retaliation.

Signs and Symptoms

In the webinar, Sweeney mentioned the typical monitoring period is a minimum of one year and can continue on for 2 or more years if necessary. A key factor to the success of the program at KPMG is the direct access to HR systems containing employee information. Access to these systems is critical for receiving information when it is needed, as well as reducing the number of information requests sent to the company’s HR department. Some examples of job related data to gather for review that Sweeney mentioned consists of:

• Employee Performance- Review employee performance appraisals conducted before and after an investigation. If an employee consistently scored high on their reviews and is now receiving negative feedback, find out the root cause. Has the employee’s performance actually decreased or is a resentful supervisor attempting to have the employee demoted or located to another department? Understanding reporting relationships is extremely important in identifying potential sources of retaliation.
• Termination- It’s important to understand why an employee is leaving their position. Sweeney mentioned that with the effects of the recession, new jobs can be difficult to come by. If an employee suddenly gives their two weeks notice, it’s best to find out if they are moving on to bigger and better things, or do they find the existing workplace intolerable due to acts of retaliation?
• Improvement Plans- Find out the reasoning behind placing an employee on additional training or an improvement plan. Does the employee actually lack some of the skills and competencies for completing the tasks associated with their job or are they being placed on training as a form of retaliation?
• Job/ Task Assignments- Is the employee receiving tasks and assignments that are at the same level they were prior to the investigation?
• Personal Observation- Remain on the lookout for changes in the complainant’s behaviour. Sweeney mentioned that changes in social patterns, attitude, attendance and other factors usually signal that something isn’t right.
• Interviews or Meetings- Chances are, it’s going to be difficult for an employee to reach out and report retaliation once they have already com forward with a previous issue. It’s advised that the department handling investigations and reports reach out to the employees they are monitoring for potential retaliation. Sweeney recommends meeting at a time and place convenient for the employee, as discussing the issue may be difficult to do in the workplace. Removing them from the environment allows them to speak more openly and they may likely respond better to questions related to retaliation.

This anti-retaliation best practices example exercised at KPMG strongly raises the bar for other companies when it comes to protecting employees from retaliation. In many companies, they might focus on protecting the complainant while an investigation is taking place, however, many of the risks of retaliation remain the same for the complainant once the investigation has concluded. If there is a chance an employee will face retaliation for bringing an issue forward, monitoring programs are one of the best defenses for detecting and putting a stop to retaliation.

Writing globally accepted ethics policies is a challenging task for any business. Varying in culture, ethics, laws and employee expectations, no country conducts business in the exact same way. At United Parcel Service (UPS), the global presence of the company meant establishing international standards for all of the company’s employees. The successful integration of the UPS code of conduct into global operations demonstrates how understanding cultural differences and employee needs helps management develop policies that are easily understood by all- regardless of the country the employee operates out of.

International Code of Conduct

In a press release on the company’s website, former Chairman and CEO of UPS, Mike Eskew states:

“We care as much about how we get results as we do about getting the results. Getting results at the cost of violations of laws or through unscrupulous dealings do more than violate our standards – they challenge our ability to grow our business and undermine our reputation.”

UPS offers employees the opportunity to suggest changes or “better wording” of sections in the company code of conduct. The code includes a form employees can fill out with the section number they wish to see changed, suggested wording to be used, comments/ reasoning for the change and the instructions regarding where to send the completed form. In 2009, UPS included a human rights statement in the company code of conduct. In the code of conduct they write, “as a global company, UPS recognizes that it plays a role in acknowledging basic human rights in accordance with our high standards for the treatment of our people.”

Cultural Differences

In the beginning, when UPS developed their first international code of business conduct, they had a lot of work to do. Their team held focus groups at a number of global offices to create a relatable and easy to understand code. Benchmarking was also used in order to compare the code with those developed by other companies known as international ethics leaders. In the Ethikos article, “United Parcel Service Translates and Transports an Ethics Code Overseas,” written by Andrew W. Singer, he writes:

“The US code of conduct became the centerpiece of employee focus group sessions that were conducted around the world—16 in Europe, 10 in Asia, 4 in Canada, and 5 in the Americas. What did employees like about the code? What did they not like? In the course of these sessions, training gaps were revealed. An Irish employee, for example, asked, “What is the Foreign Corrupt Practices Act?” (Even though it is a U.S. statute, the FCPA applies to UPS’s foreign employees.) Above all they found that employees wanted the code translated into their own language.

Focus group sessions revealed some problems with the company hotline, initially called the ‘Conduct-line.’ In Asia they discovered: ‘It’s not something we would do,’ that is, report on another employee. ‘That would be like taking someone’s life.’ There was also resistance in other places, like Germany, where totalitarian memories (e.g., neighbors encouraged to ‘report’ on neighbors) were still alive. The ‘Conduct-line’ name was a problem, the foreign employees suggested. If it were renamed the ‘Help-line,’ overseas employees might be more inclined to use it. The latter suggests guidance. ‘Conduct-line,’ by contrast, suggests ‘snitching’ on somebody.”

The conflicts explained in the above excerpt are common for many companies establishing an internationally adopted code of conduct. Tone, wording, sensitivity to certain issues and translation matters are all common when developing global policies. It’s important to address these matters in the development process rather than go back and make amendments later. Employees in other countries respond better to policies that make sense to them and relate to cultural familiarities. The development process helps the company’s compliance department learn more about their overseas counterparts. This makes it easier for both groups to understand and become aware of the cultural differences between each group.

Today, the UPS Code of Business Conduct is available in 12 languages to employees around the world. The UPS Help Line is available in significantly more languages to provide guidance to all employees 24/7. As mentioned above in the excerpt from the Ethikos article, UPS went beyond simply translating the US version of the code. The company’s compliance department took the time to meet with employees from a variety of positions and countries within the company in order to create policies that, when translated, remained meaningful and related to local norms.

Code of Conduct Training

UPS outlines the training process managers and other employees are required to complete upon entering the company, as well as refresher courses for managers remaining with the company. As stated on the company website, the training process includes:

- UPS managers must complete Business Conduct and Compliance training sessions upon becoming a member of the management team.

- A refresher course must be completed by all managers every two years.

- Within 90 days of hire or promotion, employees must also complete additional job related training sessions, including:

• Anti-Corruption
• Antitrust
• Insider Trading
• Information Use and Security Compliance
• Government Contracts
• Canada Employee Privacy
• Business Conduct and Compliance Program
• Records Management

Thomson Reuters is responsible for delivering current, accurate information to global decisions makers. Thomson Reuters is consistently recognized for commitments to ethics and social responsibility. Through securing spots on Ethisphere’s World’s Most Ethical Companies, Fortune’s World’s Most Admired Companies and Corporate Knight’s Best Corporate Citizens listings, Thomson Reuters demonstrates a commitment to developing innovative ways to improve business process through the use of information. Thomson Reuters brings information into emerging markets, helping breakdown social barriers.

Reuters Market Light

Thomson Reuters developed a set of “Trust Principles” during WWII. The Principles were created to guide the way the company conducts business- upholding integrity, maintaining independence and remaining free of bias, in order to relay news in a professional manner. Thomson Reuters has developed new ways to deliver media and information to rural communities to advance social needs and encourage better business. In 2007, Reuters Market Light (RML) was introduced to the farming community in India. In a press release from Thomson Reuters, they write:

“Since its launch in 2007, over 200,000 farmers in 15,000 villages across 10 states in India have subscribed to RML. It provides localized and personalized information via SMS text messages on weather, market prices, local and international agriculture and commodity news, and crop advisory tips enabling farmers to make informed decisions, reduce waste and maximize their profits.”

Previously, access to information in these remote areas was almost nonexistent. This makes it challenging for farmers to achieve success in their business. The information farmers are able to receive since the introduction of Reuters Market Light creates a fairer playing field for competitors, as it offers information about a variety of crops. RML increases transparency within the Indian agricultural community, mirroring the global shift towards transparency within businesses and their operations. Thomson Reuters also reports RML helps the agricultural industry in India save billions of dollars annually as:

“Before RML, farmers had very limited information on current and local market prices for their crops or timely information that would help them decide the best time to harvest their crops. This hindered market efficiency, reduced yields, increased wastage and could severely impact upon a farmer’s earnings and livelihood.”

Thomson Reuters Acquires ASSET4

Near the end of 2009, Thomson Reuters acquired ASSET4, a provider of environmental, social responsibility and governance information and tools for professional investors and corporate executives. Poor decision making impacts the state of the economy, the environment and overall image of a company. Providing businesses with information to help them make better decisions helps mitigate a number of risks faced by companies in the increasingly global business environment.

The CSR Press Release, “Thomson Reuters Invests in Environmental, Social Responsibility and Governance Content Through the Acquisition of ASSET4,” states:

“The global credit crisis, climate change, new regulation and other issues have highlighted the need for financial firms to assess the environmental, social responsibility, governance and reputational risks attached to the firms in which they invest. Through the acquisition of ASSET4’s leading ESG information and tools, Thomson Reuters clients worldwide will benefit from having direct access to this increasingly important information as part of their investment process.”

The importance of this acquisition is that the company can now deliver an extremely comprehensive database of consistent and transparent environmental, social responsibility and governance information to their clients. Thomson Reuters will also be able to provide clients with a wide range of analysis tools, helping them make improved, more informed decisions each day. According to the CSR Press Release,  as regulations, consumers and fellow organizations continue to require greater levels of transparency from companies, these tools:

“Allow investors to engage companies, improve investment performance, reduce risk and lower research costs, while corporate executives can reduce risk, enhance corporate governance and increase accountability, transparency and trust.”

FTSE4Good Index

Focusing on compliance with strict environmental and social criteria, companies can be added and removed from this list based on their actions. Thomson Reuters has met the criteria outlined to become listed on the FTSE4Good Index. The index is frequently used as a benchmarking tool, focusing on elements of good corporate citizenship. Companies fulfilling the FTSE4Good Index requirements are considered to be the companies to look to when developing responsible business practices.

Patagonia is a Ventura, California-based outdoor equipment and clothing company involved in a variety of environmental initiatives. Patagonia has been able to maintain their unique corporate culture throughout periods of rapid expansion. Focusing on accountability and transparency, Patagonia is an accredited member for the Fair Labour Association, committing to International Labour Standards and social responsibility.

Many companies can learn a lot by examining the culture, labour practices and environmental commitments that shape Patagonia.

Patagonia’s Culture

Patagonia began as a company operating out of a tin shed. In the mid 80’s, Patagonia had undergone significant growth and was one of very few companies in the US offering on-site day care services. Employees are passionate about the company, as well as the sports the company dresses and equips athletes for. Surfing, running, paddling, skiing, rock climbing and many other “quiet” outdoor sports are practiced by Patagonia employees. One of the things I find the most intriguing about the culture at Patagonia is the commitment to the preservation of the original company values and mission. When reading the company’s history on their website, they write:

“We have never had to make a ‘break’ from the traditional corporate culture that makes businesses hidebound and inhibits creativity. For the most part, we simply made the effort to hold to our own values and traditions. We can’t bring ourselves to knowingly make a mediocre product. And we cannot avert our eyes from the harm done, by all of us, to our one and only home.”

At Patagonia, many of the decisions are made as a team.  In regards to offering flexible work hours, Patagonia founder Yvon Chouinard told Inc. Magazine:

“Our approach to flexible work hours also came out of discussions with employees. Blurring the lines between work and play worked for us, because it was part of the core reasons we came to work every day. I honestly can’t remember ever having a problem with an employee taking advantage of our flexible hours. When your employees care about the mission of the company, they work harder.”

Fair Labour Association Member

In 2001, Patagonia decided to become a member of the Fair Labour Association (FLA). In 2008, the company was granted FLA accreditation for fulfilling all of the necessary requirements. Patagonia joined the FLA to increase transparency and accountability with their commitment to social responsibility. Becoming a member means Patagonia has committed to the FLA Workplace Code of Conduct. The Code addresses issues including forced labour, child labour, harassment/abuse, nondiscrimination, health & safety, freedom of association and collective bargaining, wages, benefits, hours of work and overtime compensation. On Patagonia’s website, they have posted a list of all of the manufacturing facilities used to make their products. They have also posted responses to a number of social responsibility questions regarding factory selection and working with factories to improve conditions for employees.

Patagonia also has to adhere to the Principles of Monitoring- Obligations of Companies. Company obligations include

• Establishing clear standards
• Creating an informed workplace
• Develop an information database
• Establish a program to train company monitors
• Conduct periodic visits and audits
• Provide employees with opportunity to report noncompliance
• Establish relationships with labour, human rights, religious or other local institutions
• Establish mean of remediation

The FLA strives to improve working conditions through the promotion of international labour standards. The FLA uses a process of independent monitoring to ensure member companies adhere to the FLA Code of Conduct. The information collected during the monitoring process is then passed along to shareholders and members of the public, allowing them to make responsible purchase decisions. As outlined on the FLA website, joining the initiative adds value to companies by providing:

A collaborative process that allows industry, civil society organizations, and colleges and universities to sit around the same table and discuss matters of common interest.

A system to perform due diligence on companies’ internal compliance programs through unannounced independent external monitoring and verification.

Innovative and sustainable strategies for improving compliance with labor standards.

Public access to all independent external monitoring reports via the FLA Web site.

A mechanism to address the most serious labor rights violations through our Third Party Complaint process.

Environmental Contributions

At Patagonia, they recognize that there’s no need for their product if there’s no land, rocks or water for people to explore. This understanding is the basis for the sustainability and environmental initiatives taken on by Patagonia. Environmental ethics have been engrained in the company’s culture from a very early stage. As the company grew, they continually worked to reduce any damage done to the environment through the creation of their products. Whether it’s modifications to distribution centers or selecting organic materials for clothing, Patagonia has remained on the cutting edge of environmentally friendly manufacturing.

1% for the Planet is an organization Patagonia founder Yvon Chouinard launched in 2001 with Craig Matthews. Participating companies are asked to contribute 1%of their sales to the organization, which then distributes the contributions to 2080 environmental groups around the globe. Patagonia has been contributing 1% of their revenues to environmental causes since 1985, which has equated to over $34 million in donations to grassroots groups.

Last week one of our i-Sight clients, Dell, received recognition for their FCPA Compliance Program from the Open Compliance and Ethics Group (OCEG). Dell was granted GRC Capability Design Certification for meeting standards outlined in the OCEG’s “Red Book.” The GRC Capability Certification was designed to recognize company programs addressing areas of risk, including anti-corruption, employment compliance and government contracts. The GRC Capability Certification is administered to companies by the OCEG based on the findings in a qualified third-party report, adhering to the procedures outlined by the OCEG.

In the OCEG press release announcing the award, Gracie Renbarger, Chief Ethics and Compliance Officer for Dell was quoted, stating:

“We are delighted to receive the OCEG certification as it recognizes our most recent efforts, and our overarching goal has been and continues to be centered on ways to most effectively operationalize Dell’s longstanding and unwavering commitment to act legally and ethically in all we do.”

Carole Switzer, President of OCEG stated:

“While not a point in time certification of FCPA compliance, the certification is an acknowledgement that Dell has taken significant, proactive steps to design a program that will enhance its ability to appropriately prevent, detect and react to non-compliance.”

FCPA Compliance at Dell

As a company, Dell strives to be a good corporate citizen. Focusing on environmental responsibility, corporate accountability and social responsibility, Dell recognizes the impact each of these issues have on attaining financial goals, maintaining a positive reputation and the company’s long-term success.

There are 8 components outlined by the OCEG companies must comply with to gain recognition for their risk management programs. As stated in the Red Book, the 8 components include:

• Culture and Context- understand the culture and environment in order to address current issues and prepare for the future.
• Organize and Oversee- make sure the GRC program is integrated into all areas of the business. Assign responsibilities to management, such as decision making authority and accountability to achieve the goals of the program.
• Assess and Align- evaluate risks and opportunities to implement activities to further mitigate identified risks.
• Prevent and Promote- set an example. Use a variety of tactics and rewards to promote and encourage favourable actions from employees.
• Detect and Discern- identify current and potential opportunities for misconduct and GRC failures.
• Respond and Resolve- address, respond and resolve issues of noncompliance and unethical conduct. Handle each issue on an incoming basis in order to address and resolve each matter immediately. Also, strive to prevent the same issues from occurring again in the future.
• Monitor and Measure- continually measure and modify compliance systems to ensure the system remains effective in preventing unethical and noncompliant events.
• Inform and Integrate- record and manage compliance system information in order for it to flow properly throughout the organization.

The “Red Book”

The OCEG Red Book was developed to help companies develop workplace policies and programs to encourage compliance and reduce risks. The 8 components listed above are suggestions from OCEG members and business leaders, outlining what it it takes to establish effective risk mitigation initiatives.

OCEG’S goals in creating the GRC Capability Assessment and Certification program are to:

“Help organizations evaluate the design and operating effectiveness of their GRC systems.

Reduce the cost of such evaluations by eliminating the time and expense of creating custom review procedures.

Raise the overall level of maturity and quality of organizational GRC globally by helping individual organizations create their prioritized improvement plans.

Provide external judgment and recognition of sound practices.”

At Timberland, they bring a new meaning to “walking the walk”. Timberland is a company known for its incredible corporate culture and commitment to corporate social responsibility. Timberland is one of only 20 companies to land a spot on the Fortune 100 Best Companies To Work For List since its inception. Timberland has also been included in Ethisphere’s 2010 list of the World’s Most Ethical Companies. At Timberland, they understand the value employees bring to the company.

Engaging in volunteer initiatives helps Timberland employees develop skills they can apply in the workplace, while contributing to a good cause and making a difference in the communities they operate in.

Making a Difference

At Timberland, CEO Jeffrey Swartz emphasizes the need for people to be good citizens—both in and out of the company. Timberland employees can receive up to 40 hours of paid leave each year to pursue volunteer projects and give back to the community. In the Fast Company article “Walking the Walk,” they write:

“What Swartz is really trying to do is to use the resources, energy, and profits of a publicly traded footwear-and-apparel company to combat social ills, help the environment, and improve conditions for laborers around the globe. And rather than using his company as a charity, he’s using the hard financial metrics of profit, return on investment, and shareholder return, to try to prove that doing good and doing well are actually self-reinforcing notions. The idea of helping others, Swartz believes, is a vision around which he is creating a more productive, efficient, loyal, and committed employee base, which in turn helps produce real results.”

These events are not only good for the community, but they also benefit Timberland’s employees. Taking part in events such as Serv-a-palooza and other volunteer initiatives enrich the culture at Timberland by brining employees together in an experience they may not receive elsewhere. Building and reinforcing relationships with co-workers is one of the many benefits gained by Timberland employees when attending these annual events. Timberland’s employees appreciate the actions taken by the company to follow through with their commitment to sustainability and corporate citizenship. It’s important to note these events take place in every country Timberland operates in.

In “Sustainability: sprucing up corporate social responsibility with Timberland,” a Personneltoday interview with Helen Whinfrey, Timberland’s senior manager for European HR, she stated:

“We have a philosophy about our employees doing well and doing good,’ she says. ‘People perform better in their job if they have a connection with their work that isn’t just about pay. It also means the local community knows who we are – we don’t want to be a faceless business with no connection to where we work and trade. Of course we’re a commercial enterprise, but we believe the way we generate profit, treat our people and work with the local community puts that profit in different light.”

Fair, Safe and Non-Discriminatory Workplaces

One of the four core values at Timberland is a commitment to life in the workplace. The company has developed a Code of Conduct Team comprised of 15 individuals responsible for developing the decisions, actions, choices, program design, and strategy at Timberland.

Here are the key areas of workplace improvement as identified by Timberland executives. The list can be found on their corporate website under ‘CSR Strategy’ in the ‘About Us’ section:

Track relevant Supply Chain indicators that influence global human rights

• Measure the average initial assessment score for new factories and set targets for improvement.
• Measure the percent of production in “High Priority” factories and set targets for improvement.

Use the assessment process to highlight issues and prioritize factories in our value chain

• Reduce “High Priority” factories to 20% of supply chain by 2015.
• Reduce working hours violations to 30% of supply chain by 2010.

Through remediation, work with factory management to enact sustainable change by focusing on the root cause(s) of issues

• Increase the percentage of continued business factories with an improved assessment score to 70% by 2015.
• Increase the percentage of continued business factories with an improved health and safety score to 70% by 2010.

Create a sustainable living environment for our workers.

Develop a better understanding of life skills, child care, access to capital, health and nutrition, housing and transportation through the assessment process.

Striving to better understand working conditions in every country of operation demonstrates the emphasis placed on supporting employees at Timberland. The unique culture at Timberland helps the company attract highly qualified individuals who share similar values and are passionate about their work.  Living conditions and the way of life are different across all borders, therefore, a single solution isn’t the answer—and Timberland executive get it. The volunteer projects and events taken on by Timberland employees helps achieve the goal of creating sustainable living environments for all employees. Understanding diversity and the benefits it brings to the company makes Timberland an employer of choice for many individuals.