It used to be that turning a profit and increasing share price were the only things a company had to worry about. Those days are long gone, however, and companies are increasingly being asked to act as good corporate citizens as well. As the trend has developed over the past few years, so too have disclosure requirements. In the US, many companies are now required to disclose environmental risk factors that are likely to have an impact on their business. In most other case...
ESG Archive
Charles Handy, co-founder of the London Business School and a respected social philosopher, uses an analogy about corporations and profits: a profit to corporations is like breathing oxygen to humans. You can’t live without it, but you don’t live for it.
If corporations are to become sustainable, in that they outlive a generation, they need to focus on more than the bottom line. This does not mean the bottom line is not important. But if corporate leaders...
Capitalism is, in part, a system, approach or game we play in the US to reward those who develop the best product, service or price. As in the game of football, capitalism has rules and referees, without which the game would fail. It is also a system that is designed to reward those who work the hardest, and those who think of new ideas. Some countries don’t use this system and, as a result, new ideas and hard work are not always protected or rewarded. In some coun...
It was the stuff of a general counsel’s nightmares. An employee was making unsubstantiated, serious allegations about company outsiders, and the outsiders were involved in a lawsuit with the company. What made the situation truly unsavory was that the action took place in the relatively untested world of informal, online communications.
In this case, the cyber-battleground was a website known as ‘Patent troll blog’. Writing anonymously, attorney Richard Frenke...
To borrow a phrase from the Bard of Avon, ‘Now is the winter of our discontent.’ That phrase was uttered at the very beginning of King Richard III by the title character himself. He goes on to lay out his detailed plans to the audience – plans involving murder, lies, seduction and the stealing of the throne of England itself. As Richard says, ‘I am determined to prove a villain.’
But that kind of planning and plotting is hardly useful to most...
The Public Company Accounting Oversight Board (PCAOB) born out of the Sarbanes-Oxley Act is set to depend more on non-US auditing firms and oversight structures in monitoring public companies. As far back as 2005, it had predicted international auditing standards would greatly improve. Under Rule 4012, the board gave itself room to ‘adjust its reliance’ on the inspections of foreign auditors as it gained confidence in the level of independence and rigor of those ...
Would you measure your sales effectiveness by looking at whether or not you had a sales force in place and whether or not they were trained? Would you measure the effectiveness of your logistics by simply analyzing the design and operation of current processes? Would you measure the effectiveness of your manufacturing by inspecting the machines that created the products that you sell?
Of course not. You measure effectiveness (really performance) by analyzing t...
Early in my career, I was working at the Mayo Clinic in Rochester, Minnesota. I was being trained in to a new department by a fellow I will call Bob. Bob and I met with a physician who listened to Bob describe his work on a billing form. Apparently this was not their first discussion about this form. The form was intended to reduce billing fraud. I noticed the physician was starting to shake. His face was turning a very unnatural color of red. I wasn’t quite sure w...
Last year, companies could still dismiss the idea of reporting about climate change and other more speculative environmental risks as something too insubstantial to bring to investors’ attention. This reporting season, the conversation has shifted dramatically. Not only are companies expected to address how their business affects the environment, but the best are committing to concrete action and reporting on these commitments publicly.
American Electric Power (AE...
As corporations across the United States and around the world are coming to terms with new compliance and governance realities, the role of executives in these fields has risen from being viewed as a necessary evil to among the top strategic positions. As many companies can attest, any failure, real or perceived, in compliance or regulatory matters has a serious effect on share price, morale and reputation. Sometimes, even something as minor as missing a rou...
