Today's Measure Of Tomorrow's Leaders

There are three kinds of leaders in the new world we're entering. Only one kind will succeed.

In 2009, most corporate leaders have kept their focus on survival--shifting their product mixes, slashing costs, cutting inventory, downsizing. Now, as the economists declare that the economy is stabilizing, many leaders are gearing up for 2010 and trying to take a longer view. What they see looks very different from anything in the past. It's sinking in that this mess won't go away fast.

As Jeffrey Immelt, the chief executive officer of General Electric ( GE - news - people ), has been saying for months, we are not just riding out the difficult downside of a cyclical business fluctuation. We are facing a fundamental reset of the global economy.

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Corporate Culture Is Becoming A Science

And it's beginning to greatly benefit companies in their executive hiring.

It's all too common: An exciting new executive is appointed with great fanfare only to leave after a short and rocky tenure. Or the merger of two companies is pitched to investors as guaranteeing great synergies, and they never materialize. The cause of these failures often seems obvious. The executive had the right knowledge and experience but simply couldn't grasp the way things were done in the new organization. The combined balance sheets and product lines of the two merging companies looked great, but there was no way the highly collective one was going to blend well with the individualistic other. In other words, it was all the fault of "culture" and "cultural fit."

The problem with blaming culture for failures like those is that we've never been completely sure what culture means. The same is true when things go well. Chief executive officers--and the people who write books about them--are quick to celebrate corporate culture and its importance in times of success. But their stories, inspiring though they might be, are essentially anecdotal. When we talk about culture, we talk in generalities.

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El movimiento sindical considera la cumbre de Copenhague una cumbre fallida

UGT y CCOO, al igual que la Confederación sindical Internacional, consideramos que la cumbre de Copenhague ha resultado fallida por la falta de ambición en los objetivos y por no haber alcanzado un acuerdo legalmente vinculante que ofreciera al mundo la garantía de que se van a reducir las emisiones de manera que se evite un cambio climático catastrófico.

Los líderes políticos mundiales han incumplido el compromiso adquirido en Bali, hace dos años, de llegar en 2009 a un nuevo acuerdo multilateral legalmente vinculante con compromisos de reducción para los países desarrollados y objetivos de desviación que moderaran el crecimiento de las emisiones de los países emergentes.

No sólo no hay acuerdo vinculante, sino que además el texto adoptado, lejos de las indicaciones de la comunidad científica, que recomendaban una reducción de emisiones de entre el 25 y el 40% respecto a 1990 para los países desarrollados –apoyadas por la Confederación Sindical Internacional– no obliga a compromiso alguno y sólo recoge como referencia informativa los objetivos de reducción anunciados por los diferentes países, que están muy lejos de las tales recomendaciones: Estados Unidos, que es el principal emisor de los países desarrollados ha anunciado que para 2020 sólo reducirá sus emisiones entre un 14% y un 17% en relación a 2005 (lo que equivale a un 3% ó 3,5% en relación a 1990); la Unión Europea por su parte aparece en el texto con un rango de reducción de entre el 20 y el 30%. No será hasta el 1 de febrero de 2010 cuando los países dirán a qué reducciones voluntarias se comprometen. Con las actuales propuestas, la reducción estaría por debajo del 15%.

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EEF survey shows more carrot less stick is way forward to reduce carbon emissions

Britain 's manufacturers are improving their environmental performance and reducing emissions through clearer incentives and rewards, according to a major survey released today by EEF, the manufacturers' organisation.

According to its 2009 Environment Survey ‘Seizing the Initiative’ manufacturers are increasingly aware of and, taking action on climate change issues, with over half having taken action to reduce their carbon footprint. Even during the course of the recession companies had maintained this focus with only one in ten companies saying it had taken a lower priority.

Over a third of companies measure their carbon footprint despite there being no requirement to do so and three quarters of companies are already involved in or plant to engage in a supplier management programme. Furthermore, customer requirement (34%) and adhering to an environmental management system (51%), which is often itself a customer requirement, are important factors in improving environmental performance.

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How The SEC Just Changed Succession Planning: Part II

And what you need to do about it. A two-part series.

This is the second part of a two-part article that began here. In the first part, the authors discussed how the burden on boards to oversee comprehensive, effective succession planning is growing, and they identified and discussed the first two of four questions every board should be asking as they consider their succession planning program: What does our next CEO look like? And, Where is our next CEO now--and where are two more? Here, questions three and four.

Question No. 3: How do we begin to develop our next CEO?

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Repairing Your Company's Risk Management

An Accenture survey shows how widespread the need for fixing is, and suggests ways to go about it too.

The world has learned the hard way over the past year that most companies have done a bad job of managing risk. And not only banks and investment firms. Accenture's 2009 Global Risk Management Study has found that executives at business enterprises across a wide range of industries believe overwhelmingly that they need to overhaul their approach to risk management.

A snapshot of the results of the survey of 260 chief financial officers, chief risk officers and others responsible for corporate risk in 21 countries suggests just how much surgery may be needed to repair risk management. By huge margins, the respondents identified the following major problems:

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In China, Reputation Rules

The importance of saving face and not offending government higher-ups.

Last week a drunk and deranged man stabbed two people to death and injured 14 others in Beijing. A few days later, another disturbed man stabbed a foreigner. The police response was not only to arrest both miscreants but also to ban the selling of kitchen knives at large retailers, including Wal-Mart, until after Oct. 1, the National Day holiday. That might seem an ineffective overreaction to tragic but isolated events, but it says a lot about how the government works in China and how businessmen need to navigate it.

Oct. 1 will be the 60th anniversary of the founding of the People's Republic of China, a day when China's leadership to will celebrate how far the country has advanced. Thousands of performers will perform in a spectacle rivaling the pageantry of the opening of the Beijing Olympics.

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Audit Integrity: 'Socially Responsible' Companies Have Worse Accounting Practices Than Normal Ones

So-called socially responsible funds may actually be higher risk than their plain vanilla brethren. According to the firm Audit Integrity, if you take two socially responsible funds as an example it appears that their 'socially responsible' holdings contain companies who practice some pretty risky companies from an aggressive accounting or corporate governance perspective.

For the Domini Social Equity Fund and the FTSE KLD 400 Social Index, 50% of their holdings have been ranked as 'Very Aggressive' by Audit Integrity's metrics, as shown below.

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What to do with boardroom culture that can’t deliver the goods?

You might think that board members overseeing businesses that cratered in the credit crisis would be disqualified from serving as directors at other public companies.

You would be wrong.

Directors who were supposedly minding the store as disaster struck at companies like Countrywide Financial, Washington Mutual (WaMu) or Fannie Mae have not all been banished from other boardrooms. In many cases, directors just seem to skate away from company woes that occurred on their watch.

To some investors, this is an example of the refusal of those involved in the debacle to accept responsibility for it. Whether you are talking about top executives loading up on leverage, regulators who slept while companies took on titanic risks or mortgage lenders that made thousands of dubious loans, few in this crowd have acknowledged culpability.

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How The SEC Just Changed Succession Planning: Part I

And what you need to do about it. A two-part series.

Director One: I can't believe this news. Nick was such a tremendous guy. This is just terrible. Have you talked to his wife?
Director Two: Yes, this morning. As you can imagine, the family is devastated.
Director Three: What do we do now? We need to make some sort of announcement about who's going to lead the company--and we need to do it fast, to make sure things don't get unsettled.
Director Two: What choices do we have? This whole thing has been such a surprise. When we announced Nick as CEO last year we all figured we'd have more time before we had to go through all that again.

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Industry warns of carbon leakage as Copenhagen accord disappoints

EEF, the manufacturers' organisation has warned of the threat to production and investment in the UK on the back of a failure of the Copenhagen talks to reach a stronger agreement to place all coutries on a level footing with the same targets to reduce emissions.

In particular, EEF had hoped that a sectoral approach would be considered in Copenhagen. By targeting key sectors on a global basis, competitive concerns could have been addressed in a rational way, underpinning an effective agreement by helping to broaden participation in global emission reductions.

However, resistance by a small number of developing countries saw this proposal dropped in the last week of the talks. The European Commission is now due to review the EU Emissions Trading Scheme in light of the outcome of Copenhagen.

See full Press Release.

La RSC todavía está descafeinada en los informes y memorias de las empresas españolas

El 48% de los informes remitidos al Pacto Mundial en España no incluyen objetivos definidos

El incremento del número de informes con respecto al año anteriore se debe al nuevo formato abreviado más que al interés por la RSC
Beatriz Lorenzo.- Ante la necesidad urgente de un cambio del modelo productivo motivado por la crisis económica y la transformación de los antiguos sistemas de valores hacia un escenario más sostenible, las empresas han comenzado a atender las expectativas sociales y medioambientales de sus grupos de interés presionadas por el aumento de las exigencias normativas, la modificación de las pautas de la demanda en los mercados de consumo y la corrección de los criterios de inversión en los mercados financieros. La RSC se ha convertido en una de las herramientas más nombradas y valoradas por las compañías, que le han concedido un puesto de honor en sus informes y memorias, elevándola desde el casi absoluto desconocimiento en el que llevaba años sumida. En España, los ímprobos esfuerzos en éste sentido han originado que las compañías españolas hayan ocupado durante el último año el primer puesto del ranking en cuanto al número de informes de progreso -con un incremento del 21% respecto a años anteriores- según daba a conocer a principios de este mes la Red Española del Pacto Mundial. Sin embargo, un análisis exhaustivo de los informes de RSC presentados por las compañías españolas, tanto las cotizadas como las pequeñas y medianas empresas, ha puesto de manifiesto que la Responsabilidad Social Corporativa como simple capa de barniz, desligada de contenido, está lejos de haber desaparecido del panorama empresarial español. El 48% de los informes de progreso elaborados por las entidades que forman la Red del Pacto Mundial de Naciones Unidas en España para promover la responsabilidad social no incluyen ningún objetivo en el marco de los principios que trata de promover, según se deduce del análisis de los informes correspondientes al ejercicio del pasado año.

Así, y a pesar de que el peso de España en la Red del Pacto Mundial es de un 10,9 por ciento -por delante de Francia y Estados Unidos-, mientras que la tasa de inactividad es de un 5,07 por ciento, el más bajo de todos los países participantes en el Pacto Mundial, los datos pueden considerarse engañosos al no recibir la RSC un trato completo en casi la mitad de esos informes, que no adoptan estrategias ni planes definidos y no toman como suyos los principios del Pacto Mundial de Naciones Unidas, las bases de todo plan de responsabilidad social que se precie. Además, el incremento del número de informes experimentado con respecto al año anterior puede ser debido, más que a un mayor interés acerca de la RSC, al nuevo formato abreviado que ha animado a las pequeñas y medianas empresas, por ser más fácil y accesible.

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Risk: Seeing Around The Corners

Risk-assessment processes typically expose only the most direct threats facing a company and neglect indirect ones that can have an equal or greater impact.
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More from McKinsey Quarterly

The financial crisis has reminded us of the valuable lesson that risks gone bad in one part of the economy can set off chain reactions in areas that may seem completely unrelated. In fact, risk managers and other executives fail to anticipate the effects, both negative and positive, of events that occur routinely throughout the business cycle. Their impact can be substantial--often, much more substantial than it seems initially.

At first glance, for instance, a thunderstorm in a distant place wouldn't seem like cause for alarm. Yet in 2000, when a lightning strike from such a storm set off a fire at a microchip plant in New Mexico, it damaged millions of chips slated for use in mobile phones from a number of manufacturers.

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Why American Corporate Governance Is a Bust

One of the many problems that defenders of America's free market system fail to address is the severe dysfunction at the top of the nation's big public companies. Cases in point include some of the biggest bankruptcies of the last decade: Lehman Brothers, General Motors, WorldCom, Enron and many more. And at the core of the problems that led to these bankruptcies is a failure of directors to act on behalf of shareholders -- at least in part because they have more of an incentive to work for the CEO than for public shareholders.

I was reminded of this again as I read a report in The New York Times on directors who glide from serving on the boards of failed enterprises to those of surviving ones.

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La influencia de los inversores institucionales en el gobierno corporativo es nula en las compañías españolas

Los Consejos de Gobierno de las compañías admiten que la RSC sigue siendo en ocasiones un elemento más cosmético que real

Los resultados para los accionistas suelen ser mayores si el Consejo está formado por miembros independientes o externos

Beatriz Lorenzo.- Una vez que el tornado financiero ha refrenado su ímpetu para convertirse en un simple -aunque igualmente molesto- vendaval, todos los ojos están puestos en el epicentro crítico del nuevo sistema productivo que pugna por erigirse tras las ruinas: las cúpulas del gobierno corporativo de las compañías, más orientadas hacia una estructura firme y sostenible a largo plazo en detrimento de los anteriores afanes cortoplacistas que jugaron un desafortunado papel en la crisis económica. La creciente preocupación por todo aspecto vinculado con el gobierno corporativo a nivel regulatorio, público e institucional contrasta fuertemente con el escaso nivel de influencia que tienen los inversores institucionales a la hora de participar en el Gobierno de las empresas, ya sea directa o indirectamente, tal y como revela una reciente investigación capitaneada por el profesor del IESE Pascual Berrote y Russell Reynolds Associates, tras contrastar el punto de vista de inversores institucionales acerca de la forma de estructurar los Consejos de Administración de las compañías -pertenecientes al Ibex 35 y al mercado continuo español- en lo que a representación, independencia, idoneidad de perfiles, composición, rendimiento y sistemas de retribución se refiere. De ese modo, y a pesar de que la estructura de Gobierno de las empresas es un factor clave para los Inversores Institucionales a la hora de decidir en qué empresa invertir, no existe consenso entre éstos a la hora de decidir quién representa sus intereses como accionistas en los órganos de Gobierno, y pese a que un 55% de los encuestados señala a éste respecto el Consejo de Administración, un 40% indica que son representados por otras personas incluyendo el equipo directivo, otro accionista de referencia o sus propios Consejeros .

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Strong Climate Change Agreement Would Unleash Tremendous Growth Opportunities, According to Experts

A meaningful global agreement on climate change would unleash a wave of innovation and investment in renewable energy and low carbon products and services, according to a new global poll of sustainability experts conducted in August 2009 Findings from The Sustainability Survey Poll on Climate Change, conducted by GlobeScan and SustainAbility, show that thought leaders across the world believe that the achievement of a strong international agreement at the UN conference in Copenhagen in December would lead to tremendous growth opportunities in the areas of renewable energy and low carbon products and services.

Further, the survey of 1,400 influential thought leaders from companies, governments, NGOs, and academia from over 80 countries also predicts that a meaningful deal in Copenhagen would increase government regulations of emissions, raise public awareness, and result in greater leadership from global companies to limit emissions, compared to what would occur if no meaningful agreement is reached.

See full Press Release, in pdf format.

Global Voices partners with Google on freedom of expression award

Nominations open today (December 29, 2009) for the Breaking Borders Award, a new prize created by Google and Global Voices to honor outstanding web projects initiated by individuals or groups that demonstrate courage, energy and resourcefulness in using the Internet to promote freedom of expression. The award is also supported by Thomson Reuters.

The Breaking Borders Award builds upon the values articulated in the Global Voices Manifesto, the document co-written on a wiki in 2004 to articulate the guiding principles of the organization and community that would come to be known as Global Voices. The Manifesto opens with the words:

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The Biodiversity Challenge for Business

2010 is International Year on Biodiversity, but what might it mean for business?

Biodiversity has been the Cinderella among environmental issues, with the CEOs of even some of the world‟s biggest corporations comfortably confident that it has little—if anything—to do with their day-to-day preoccupations. Except, of course, where their operations directly impact rainforests, temperate wetlands or coral reefs, as in the case of a food company using palm oil whose production has involved the clearance of virgin forest. Most business leaders assume that the protection of species and genetic diversity is a matter for governments. And they are not wrong in making that assumption. But as the evidence of biodiversity erosion mounts and the sense of government failure in many parts of the world begin to press in, the risk grows that business will be back in the spotlight.

Attention will focus both on corporations and their supply chains as agents in biodiversity destruction but also, perhaps more importantly long term, as one of the few agents of change with the capacity to come up with innovative new solutions to a challenge that has undermined so many past civilizations.

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China Proposes To Clean-up Websites

The Internet Society of China has published a proposal calling on Internet service providers and users alike to take actions against vulgar and pornographic online information.

ISC has raised five suggestions, which include abiding by relevant rules and regulations to promote the building of civilized network and provide good online environment for teenagers with advanced online cultural products and services; taking technical measures to restrain the spreading of vulgar and pornographic content via the Internet; not making, publishing or transmitting unhealthy content; voluntarily fulfilling the self-discipline compact of the Internet industry and being willing to accept the public's supervision; and focusing on having Internet users use the Internet services in a civilized manner and voluntarily restricting vulgar content.

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Guangxi Works With Bank To Promote Green Loans

The Guangxi Environment Department has signed an agreement with Guangxi Beibu Gulf Bank Company on green credit services.

According to the agreement, the parties will jointly establish a work mechanism and set up a work team to promote green credit service in Guangxi. The bank will only support loans to companies whose projects have passed an environmental review by the local environment department. Meanwhile, the bank will not offer additional loans to companies or business undertakings that violate the environmental rules and will gradually recall loans from those enterprises that have violated the environmental rules and failed to correct the violation within a given deadline.

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Enhancing Stakeholder Engagement Through Web 2.0

SustainAbility takes a look at the future of stakeholder engagement through the use of web 2.0 technologies

Like the rest of the world, we have watched over the last year as social media and web 2.0 technologies have transformed the way society engages on a daily basis and in particular changed expectations of—and styles of engagement with—the corporate world. With nearly eighty percent of Fortune 500 companies employing at least one type of web 2.0 technology, it's clear companies are catching on. As this shift occurs, however, many of our clients question "What is the real value?" and "Why use it?" To put it bluntly, "What is the business case?"

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Effective Corporate Compliance Programs

We are living in an era of increased regulation and renewed enforcement efforts, especially for public companies as well as private companies in industries associated with the 2008 meltdown. Governmental regulation and enforcement is typically reactionary in nature rather than proactive.

Could you imagine where we would be today if the mortgage origination industry and mortgage-backed securities had been regulated this decade?

Obviously there are costs associated with regulatory compliance and I am not suggesting that everything needs to be regulated to a high degree. What I am suggesting is that it is in every organization’s best interest to take seriously the need for a robust corporate compliance program.

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SOA adoption: The human face of governance

Human and organizational factors such as politics, information silos, and change management generally underlie IT success and failure.

During a recent conversation, IT analyst and fellow ZDNet blogger, Dana Gardner, affirmed the extent to which this view applies to service-oriented architecture (SOA) projects.

I asked Dana to elaborate on the importance of organizational dynamics with respect to SOA governance and adoption:

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Dow Jones Survey: Confusion About Anti-Corruption Laws Leads Companies to Abandon Expansion Initiatives

Fearing Noncompliance, 40% of Companies Avoid Emerging Markets;

34% Have Lost Business to an Unethical Competitor

A survey by Dow Jones has found that more than half of companies are delaying or abandoning key business initiatives as executives struggle to both interpret a patch-work of anti-corruption regulations and collect the information they need to confidently assess corruption risk. The survey results were released on the United Nations’ International Anti-Corruption Day, December 9, 2009.

According to the Dow Jones State of Anti-Corruption Compliance Survey, which included responses from 182 company executives worldwide, 51% of companies delayed key business plans such as new business partnerships and entry into new or developing markets and another 14% abandoned them completely because of legal questions arising from unclear anti-corruption regulations. In addition, 59% delayed and 11% abandoned key initiatives because they could not get the information they needed to adequately assess the corruption risk.

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Abusos corporativos

En general, se atribuye a "la avaricia de los banqueros" la responsabilidad por la grave crisis económica y financiera que ha atravesado el mundo y cuyas secuelas todavía se hacen sentir. Las remuneraciones de algunos banqueros han sido francamente obscenas y se considera que la expansión de sofisticados productos financieros ha sido consecuencia de la necesidad de atender el pago de esos gravosos incentivos. Por consiguiente, la limitación de los sueldos y bonus de los altos directivos es un primer paso imprescindible pero insuficiente, y debiera dar lugar a la profundización de medidas dirigidas a evitar los escandalosos abusos corporativos.

Según cifras del Institute for Policy Studies, institución privada de EE. UU. experta en desigualdades sociales, en el 2007, las retribuciones de los ejecutivos de las firmas estadounidenses eran 275 veces superiores al salario de sus trabajadores. Sin embargo, las estadísticas señalan promedios que ocultan situaciones excepcionales. Por ejemplo, el presidente del BBVA, Francisco González, tuvo en el 2008 una retribución de 20 millones de euros incluidos el salario, el bonus y la aportación al fondo de pensiones. Esta cifra viene a representar más de 1.400 veces lo que cobra un empleado de su banco que recién se incorpora.

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Jornadas Regionales de Gobierno Corporativo 2009

La Superintendencia de Sociedades, Confecámaras y las Cámaras de Comercio le invitan a participar en las Jornadas Regionales de Gobierno Corporativo.

Conozca la importancia, problemas típicos y estrategias para garantizar la continuidad de su empresa, así como la forma de prevenir suceso de irregularidad en el funcionamiento de Juntas de Socios, o Asambleas de Accionistas.

Participe en este seminario y conviértase en un actor clave que contribuye al fortalecimiento de una cultura apropiada y eficiente de buen Gobierno en su organización y visualice el horizonte que tiene su empresa para acceder a nuevas fuentes de financiación y desarrollo.

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Managing Human Capital Risk: Ingraining Risk Management Into Corporate Culture

The following Q&A was contributed to CCI by one of our preferred partners, Deloitte Consulting, and features the thoughts and expertise of Timothy Lupfer and Mike Fuchs.
Manging Human Capital Risk

Making Risk Management an Essential Part of Corporate Culture

Premise: People pose both the greatest risks and the greatest rewards for organizations. Especially during uncertain times, an organization must develop the knowledge, capabilities, and motivation of its people to align them with the organizational objectives of effective governance and risk management.

Q. At a time when organizations are experiencing heightened scrutiny from lawmakers, regulators, and shareholders, what role – if any – is there for talent management in an organization’s risk and compliance efforts?

My response to this question is along two dimensions.

See full Article.

La banca ética se consolida en Europa a pasos agigantados

Las entidades éticas tratan de conjugar el beneficio económico con las actividades de impacto social positivo

Ha pasado, desde sus orígenes como mero instrumento de transacciones financieras, a ser un constructor de realidades capaz de elevar o destruir imperios económicos y de moverse virtualmente a gran velocidad por todo el planeta. El dinero contante y sonante, o más bien los intentos de extraerle el máximo rendimiento a toda costa, han protagonizado de forma desafortunada los debates en torno a los motivos de la crisis económica que asola al mundo desde el año 2007. La parálisis del consumo, la debacle del mundo financiero, las alarmantes cotas de desempleo provocan la imperiosa necesidad de un modelo productivo nuevo, mucho menos voraz y con vocación de permanecer en el tiempo y centrarse en los objetivos a largo plazo, generando beneficios económicos sin descuidar los objetivos sociales, la preservación medioambiental, los derechos humanos y laborales y el resto de premisas de la Responsabilidad Social Corporativa. La banca ética, que ha comenzado en los últimos tiempos a extender sus brazos a lo largo y ancho del mundo financiero, da respuesta a las necesidades del recién nacido escenario productivo, y en la Unión Europea proliferan a gran velocidad este tipo de iniciativas. En España, tras los pasos del pionero Triodos Bank, ha nacido recientemente la iniciativa Banca Cívica formada por Caja Canarias y Caja Navarra, a las que se unirán Caja Burgos y Sa Nostra.

La banca ética representa una nueva concepción del mundo financiero en el que las entidades se basan en criterios negativos o positivos para llevar a cabo su modelo de negocio. Los primeros se abstienen de invertir en actividades o empresas que vulneren los criterios definidos por la entidad. Algunas actividades que habitualmente se excluyen son la producción de armamento, las que llevan implícita la explotación laboral y el trabajo infantil, la destrucción del medio ambiente, la producción de tabaco y de alcohol o el comercio de drogas. A su vez, los bancos éticos que se rigen por criterios positivos financian única y exclusivamente inversiones de alto rendimiento social, con criterios prefijados por la entidad tales como mejoras medioambientales, comercio justo, promoción del entorno social, y similares.

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Will Increasing Proxy Access for Shareholders Lead to Chaos?

The Wall Street Journal has an interesting article from Clark Judge and Richard Torrenzano regarding the likely effect of the expected 2010 vote by the SEC to grant additional proxy access to shareholders.

The article states that, on the one hand, theoretically, granting more proxy access to shareholders will deliver “shareholder democracy” and create an environment in which execs will feel more compelled to explain and defend their decisions.

However, in practice, more proxy access for shareholders will more than likely create a level of chaos that Wall Street must be prepared to deal with.

The following are all among the factors contributing to what the article says could be a very new environment for board oversight and voting moving forward:

See full Article.

Report: Bank of China Calls for Corporate Governance Reform

A report by Richard Kilner at Banking Times says that The Bank of China is calling for corporate governance reforms in the Chinese banking sector:

"Although the rising superpower’s financial sector did not show the defects of the West, nor suffer the same degree of loss, in the recent financial crisis, the Bank of China has called for reformation.

Chinese banks have essentially copied the Western model of corporate governance, but in the wake of the financial crisis, where big name institutions that were formerly considered beacons of excellence imploded, there are now calls for a change."

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Deloitte Poll: Securities Litigation Fears Escalate As Compliance, Internal Audit Professional Ranks Decrease

In a recent Deloitte online poll of business professionals across various industries, 37.5 percent say they are at least as concerned and 18.2 percent say they are more concerned about their company becoming a target of securities litigation as they were two years ago. Fueling this fear may be the fact that 27.4 percent of respondents report losing headcount in the compliance and internal audit function over the past 18 months.

Despite the reported decrease in the number of compliance and internal audit personnel, 49.7 percent of respondents believe their compliance and business ethics programs are strong and an additional 36 percent say they are adequate.

“With reduced headcount levels within compliance and internal audit, many organizations won’t realize that they are not implementing sufficient fraud prevention programs until it is too late,” said Kerry Francis, leader of the Corporate Investigations practice for Deloitte Financial Advisory Services LLP.

See full Article.

GRC Event: Global Ethics Summit by Dow Jones and Ethisphere

The Global Ethics Summit leverages the collective expertise of Dow Jones and Ethisphere to provide a conference program featuring an unmatched agenda, editorially driven content and roster of compliance experts.

In just two days, you’ll gain a clear understanding of the rulings and legislation shaping corporate compliance as well as best practices for navigating today’s complex and daunting global legal landscape.

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Is There a Double Standard in Anti-Bribery Treatment of Foreign Officials and U.S. Officials?

A government official (and his wife) tour a foreign vineyard and castle and spend an afternoon at a ski resort in the Alps. A company can’t foot the bill directly, so it funds a group that then picks up the tab.

Another government official is flown across the world to help close a business deal for a large corporate financial backer (and friend).

Sounds like some potential FCPA issues, right?

Wrong.

Why?

See full Article.

'Green' energy alarm sounds

SOME of the greenest technologies of our time - from electric cars to efficient light bulbs to large wind turbines - are made possible by a group of unusual elements called rare earths. The world's dependence on these substances is rising fast.

Just one problem - these elements come almost entirely from some of China's most environmentally damaging mines, in an industry dominated by criminal gangs.

Western capitals are suddenly worried about China's near monopoly, which gives it a potential stranglehold on technologies of the future.

See full Article.

Cambio climático golpea al café

Las variaciones en el clima provocaron que nueve países de América Latina redujeran sus exportaciones de café fino, lo cual puede prolongar la crisis económica en la región, afirmaron fuentes empresariales.

De acuerdo con la Asociación Nacional del Café de Guatemala (Anacafé), en noviembre pasado la producción en conjunto de esas naciones bajó 39% en comparación con el mismo mes del año anterior.

Los países afectados son, además de Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica, México, República Dominicana y Perú, señaló la Anacafé.

Detrás de la caída está el cambio climático, le dijo a BBC Mundo Ricardo Villanueva, presidente de la Asociación.

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Shareholder revolt against FTSE 100 exec pay

A fifth of shareholders vote against exec pay in 2009

A fifth of FTSE businesses faced strong shareholder revolt over executives' remuneration.

PwC's report into executive remuneration found that for one in five FTSE 100 companies, more than 20% of shareholders withheld support for their directors' remuneration packages.
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"Although the focus of remuneration reform has so far been on the banking sector, we are already seeing spill-over to other sectors. In particular, the requirements to strengthen governance around pay and make proper allowance for risk in measuring performance will touch all companies," said PwC reward partner Tom Gosling.

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London v New York in carbon trading

The US has signalled its intention to join the carbon trading markets which could take the title from London, warns PwC partner

A PricewaterhouseCoopers partner has warned that New York could challenge the UK for its title as carbon trading capital.

Carbon trading markets are worth an estimated £75bn since the launch of the EU Emissions Trading Scheme (ETS) in 2005.
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Richard Gledhill, head of carbon markets and global leader of climate change at PwC, told the Daily Telegraph: "The big question now for the City is whether London will lose its leadership in carbon markets to the US."

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FRC opens consultation on work plan

FRC to look to at whether it needs to continue work on extending audit market

The UK financial reporting watchdog will consider whether it needs to continue work on developing a broader audit market for big companies, according to the Financial Reporting Council (FRC) plan of work for 2010-2011.

The FRC's new chief executive Stephen Haddrill recently told Accountancy Age he did not believe there was a need to work towards extending the Big Four firm to a Big Five.
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The FRC’s reporting experts will also review 300 sets of accounts from target industries including media, advertising, commercial property and IT.

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Poll says convergence not a top priority

International standards should be focused on being more relevant for investors

Convergence between international accounting standards and US standards is less important than ensuring the accounting rules work are relevant to investment decision, a survey has found.

A poll by the CFA Institute, the professional body for investors, found that 75% of those who answered believed convergence was as important or more important than simplifying standards or converging with US standards.
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The news was revealed in this morning’s Financial Times but earlier this month Accountancy Age reported that the UK’s new chief financial reporting regulator has placed convergence low down his agenda.

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Women Executives on Work/Life Balance: Flexibility, Networks, Outside Interests

The oft-used term "work/life balance" can mean different things to different people -- and different things to the same person at various points in her career, according to a panel of Wall Street executives at the recent Wharton Women in Business Conference.

The five women on the panel -- which was titled, "For the Long Haul: Wall Street Women on Balancing Life and Work after VP" -- all acknowledged that striking a perfect balance between work and personal life is rarely possible for a first-year associate on Wall Street, but they also agreed that balance is possible with time.

"It's very hard coming right out of business school to achieve work/life balance," said Carol A. Schafer, a managing director in Wachovia Securities' Equity Capital Markets group who also spent 17 years at JP Morgan. "You want to be able to work for an organization that sets you up for work/life balance in the future, one that respects personal life, personal time, has a good mentoring organization -- a good women's organization."

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Rising Sun: India's Solar Power Initiatives Are Shining Brighter

Farooq Abdullah, India's Union minister for new and renewable energy, is a busy man these days. Over the past few months, as the Copenhagen climate summit neared, he has been speaking at seminar after seminar on renewable energy which, most of the time, have been on solar energy. He has also been inaugurating projects, from the launch of a new solar lantern to the commissioning of a solar steam system at a temple kitchen to cook food for 20,000 pilgrims each day. All over India, solar power has found its day in the sun.

On November 23, Abdullah was again in action in Parliament unveiling the Jawaharlal Nehru National Solar Mission. When Prime Minister Manmohan Singh launched India's National Action Plan on Climate Change on June 30, 2008, he had highlighted the contribution of solar power. "In this strategy, the sun occupies center stage, as it should, being literally the original source of all energy," he said. The action plan envisaged eight missions -- for Solar Energy, Enhanced Energy Efficiency, Sustainable Habitat, Water, Sustaining the Himalayan Ecosystem, Green India, Sustainable Agriculture and Strategic Knowledge for Climate Change. Appropriately, the Solar Mission has been the first one off the ground.

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Global Benefits Governance for Multinational Corporations

When Sarbanes-Oxley passed in 2002, the global benefits management landscape in the United States altered dramatically. So much so that the vernacular changed. Before Sarbanes-Oxley or SOX, multinational corporations (MNCs) talked about global benefits management. Since then, MNCs have been concerned with global benefits governance.

Some might consider “governance” to be roughly equivalent to “management,” but the difference is important. Management is an act — supervising, watching and directing. Governance, on the other hand, is a process involving strategy, organizational structure and the distribution of power. It takes into consideration institutions, laws and culture.

Quite simply, governance is much more complex and difficult than management. And as the markets tumbled during the recent economic crisis, and significant inherent risks in benefit plans were once again exposed, many companies saw a need to re-examine their global governance structures.

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Too Big to Get Wrong: Balancing Regulatory Reform of Financial Services with Steps to Ensure Robust Economic Recovery

The Whitehead Lecture

When: Wednesday 9 December 2009 17:30 to 18:30
Where: Chatham House, London, UK

Participants

Robert E Diamond Jr, President, Barclays plc
Chairs: Sir Paul Judge, Senior Adviser, Chatham House
Dr Robin Niblett, Director, Chatham House

The purpose of this annual lecture is to provide a forum for prominent and distinguished speakers to address the members of Chatham House on the subject of Anglo-American relations. It honours Mr John C Whitehead for the many contributions he has made to Anglo- American relations in the public and private sectors. He was US Deputy Secretary of State to George Shultz and was awarded the Presidential Citizens Medal by President Reagan. He is a Chairman Emeritus of the Brookings Institution and currently serves as chairman of the Lower Manhattan Development Corporation, the organization responsible for rebuilding and rejuvenating New York following the 2001 terrorist attacks.

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Why might some employees sabotage their companies?

There are people who reject policies and norms in manners that can harm the organisations in which they work. Such people may resort to the abuse of office resources, lie to colleagues, participate in blackmail or distribute sensitive, confidential data without authorisation. They may also pull malicious pranks or communicate offensively to stir outrage intentionally.

Such counter-normative behaviours in the workplace, referred to as workplace deviance, can cripple an organisation’s well-being. Though deviants may constitute a minority, their impact on productivity, performance, staff morale and workplace culture can be colossal. Lance Ferris, an organisational behaviour and human resources professor at Singapore Management University (SMU), notes, “Deviant behaviours, or behaviours initiated by employees that contravene organisational norms, can collectively cost organisations billions of dollars per year.” The fall of Enron and WorldCom provide a case in point. And it is the ballooning costs to organisations that increasingly underscore the importance of identifying the factors that can lead to deviant behaviour.

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Population Growth and Global Warming

Are condoms and birth control pills more cost-effective than windmills and solar panels as tools to curb global warming?

Yes, and by a wide margin, contends Thomas Wire, a post-graduate researcher at the London School of Economics and author of a recent study asserting that family planning is nearly five times more cost-effective in mitigating global warming emissions than green energy technologies such as wind and solar power.

“It’s always been obvious that total emissions depend on the number of emitters as well as their individual emissions –- the carbon tonnage can’t shoot down, as we want, while the population keeps shooting up,” Roger Martin, chair of the Optimum Population Trust, the British environmental think tank which sponsored the study, said in a statement. “The taboo on mentioning this fact has made the whole climate change debate so far somewhat unreal.”

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Women and Executive Mobility: Is the Boardroom Half Empty or Half Full?

What do a fashion house (Burberry), an investment company (Alliance Trust) and a drinks multinational (Diageo) have in common? All three are London-based FTSE 100 companies that have female board members. But they're the exception rather the rule among large-cap companies in the U.K. The number of FTSE 100 companies with female executive directors has fallen to 15 from 16 in the past year and the number of boards with multiple women directors is now 37, compared with 39 in 2008, according to the latest annual research from Cranfield School of Management in Bradford, England. Cranfield's "2009 Female FTSE" report has also found that 113 women currently hold 131 FTSE 100 directorships compared with 834 men holding 947 directorships. What's more, the overall number of U.K. companies with women on boards has declined, leaving one in four companies having exclusively male boards.

But how do U.K. boards compare with their counterparts in other countries? For the first time since the research began in 1999, Cranfield turned to outside sources to find the answer, enlisting the help of the Center for Corporate Diversity, a research company in Oslo focusing on the Nordic region, and Spain's IE Business School. Why Spain and the Nordic countries? One reason is that, unlike the U.K., Spain and Norway passed laws in recent years requiring a quota of female executives as board members.

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Thio Li-ann on Free Speech... (Part 2)

Singaporeans have been described as 'politically apathetic'. This is an area where the government had sought to address by encouraging citizen participation. Referring to a speech given by (then-Deputy) Prime Minister Lee Hsien Loong at the Harvard Club in 2004, Thio said that Singaporeans could infer new areas where political speech should be permissible; or rather, where the 'OB (Out-of-Bounds) markers' lie.

In the speech, it was outlined that where issues of public morality and decency are concerned, the government would be guided by the community's consensus, and that political debates must be "robust" and “based on issues and not on assertions and emotions”. These are principles that Thio welcomes, as an academic. But, as a former politician, she professes that such ideals are but ideals.

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See Part 1.

Buffett: Rock Star of American Capitalism

Warren Buffett's rock star status is evident from the fact that each year tens of thousands of fans from all over the world travel to Omaha, Nebraska, to listen to him speak at his company Berkshire Hathaway's shareholder meeting. For many at this event, which Buffett calls the "Woodstock for Capitalists," it is an annual ritual of paying homage to the man who made them money through Berkshire's stock and from his investing and business insights. Little wonder that Alice Schroeder's insightful biography titled, The Snowball: Warren Buffett and the Business of Life, has proved popular among readers. She seeks to explain how Buffett became one of the world's richest men and why he is admired for his business ethics and for uniquely pledging most of his money to philanthropy.

Buffett's annual letters to shareholders (see Warren Buffett's Letters to Berkshire Shareholders on berkshirehathaway.com) are widely read. The letters analyze good and bad businesses, give examples of managers who treat customers and employees fairly while also making good profits, and expose accounting tricks that fool many investors. Some letters have noted that executives should be paid bonuses only if their company's long-term performance is better than that of industry peers; others have warned of looming disasters – such as the red flag he raised about derivatives morphing into "weapons of mass financial destruction." During the subprime mortgage crisis that led to the global financial collapse, one of Buffett's letters pointed out that rich people like him should be made to pay a higher tax rate than wage earners like his secretary.

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Ten steps to transform target-setting process

Cranfield School of Management has unveiled a new framework designed to support organisations in the target-setting process. The ‘Cranfield target-setting wheel’ will help firms of all sizes transform their existing performance management and incentive systems to reflect the sales environment that staff operate in and establish targets that will generate the expected behaviours.

The research funded by the Chartered Institute of Management Accountants (CIMA) and conducted by the Centre for Business Performance at Cranfield demonstrates that most sales performance measurement and incentive systems still focus on the need to meet short-term sales targets and assume sales people operate independently. This is despite reality being very different with many sales people working in teams where customer information must be produced and shared. The study highlights that this new selling environment requires innovative ways of measuring performance, setting targets and designing incentive plans.

Commenting on the research findings, Professor Mike Bourne from Cranfield School of Management said: “Setting high but attainable targets is one of the first rules in driving business performance. However, so often companies fail because they miss vital links in the target-setting process. Our research identifies the factors that influence how sales people respond to targets. Often management’s view of role and performance clarity differed from the sales force due to failures in communication, capacity and performance planning.”

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Beyond Copenhagen: An Agenda for Tackling Climate Change

When: Monday 11 January 2010 17:30 to 18:30
Where: Chatham House, London, UK

Athanassia Kontou, Head of Cabinet, Environment Directorate General, European Commission
Chair: Bernice Lee, Research Director, Energy Environment and Resource Governance, Chatham House

In her position as Head of Cabinet to Stavros Dimas, as European Commissioner for the Environment, the speaker has been involved in policy development, adoption of legislative proposals and international negotiations on climate change, biodiversity and other environmental issues. From this perspective she will comment on the outcomes from the Copenhagen Climate Summit and consider the challenges ahead.

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