The Ethisphere Institute, which annually selects the World’s Most Ethical (WME) Companies, is proud to announce the release of the Ethics Communications Best Practices Report.

The report, which can be accessed by clicking on the image to the left, delves into how to leverage ethics as a key driver of corporate reputation, reflects key takeaways from a one-day workshop organized by the Ethisphere Institute, in cooperation with AECOM Technology Corp. and General Electric, in 2012.

The Ethics Communications Best Practices Report features insights and perspectives from several recognized leaders in corporate communications and public relations, including Richard Edelman, president and CEO of Edelman, the world’s largest public relations firm; Roger Bolton, president of the Arthur W. Page Society, the leading global professional association for senior public relations and corporate communications executives; and Dr. Edward Queen, director of the Ethics and Servant Leadership Program, The Center for Ethics, Emory University.

Best practices that have enabled companies to attain WME recognition are included in the report, with highlights from AECOM, Aflac, Fluor, General Electric, the Panama Canal Authority and Realogy. The case studies highlight internal communications strategies to create an ethical business culture and engage staff as well as external communications programs that emphasize ethics as a differentiating brand attribute.

“We are delighted to publish this report as part of our ongoing efforts to leverage communications in raising the bar for ethical business performance expectations,” said Alex Brigham, executive director of the Ethisphere Institute. “Our research tells us that robust communications programs that emphasize ethics are key enablers of an ethical business culture.”

The report also includes key takeaways from panel discussions that included Brigham; Jack Martin, global chairman and CEO, Hill+Knowlton Strategies; Rear Admiral Dennis Moynihan, U.S. Navy Chief of Information (at the time of the workshop); Mike Paul, president and senior counselor, MGP & Associates PR; Dana Perino, Fox News correspondent and former White House press secretary; Jennifer Prosek, CEO and founder, Prosek Partners; and Gary Sheffer, vice president of communications and public affairs for General Electric.

According to Stefan Linssen, chief editor of the Ethisphere Institute, the report is the first example of thought leadership pieces that the Ethisphere Institute will be publishing with input from its recently established Communications Advisory Board, which comprises recognized leaders in the corporate communications profession – with WME company communications executives as well as expert perspectives from academia, the leading professional association for communications executives and the world’s largest public relations firm.

“This report, along with the upcoming communications-themed issue of Ethisphere magazine, should serve to elevate and advance the dialogue around ethics communications in a way that benefits WME companies and the business community as a whole,” Linssen said.

Ethics communications will also be highlighted at Ethisphere’s fifth annual Global Ethics Summit, in New York City on March 5 and 6, and the second annual Best Practices in Ethics Communications Workshop, planned for May in New York City.

To download the report, either click on the image at the top of this article, or click on this link.

“It is an honor to be recognized with this distinction by Ethisphere,” said David Karas, vice president, Ethics and Business Conduct, Hitachi Data Systems. “At Hitachi Data Systems, the great task of delivering best-in-class IT solutions is built on the commitment of our people to our core company values. Those values drive Hitachi Data Systems employees to be accountable for their actions and to operate with the highest ethical standards at every level of our organization. This latest recognition adds to the naming of Hitachi Data Systems as one of the World’s Most Ethical Companies by Ethisphere in 2011 and 2012.”

“Obtaining Ethics Inside Certification is a uniquely exhaustive process and is accomplished by a select group of organizations that truly embrace the important correlation between ethics and performance,” said Alex Brigham, executive director, Ethisphere. “Ethisphere is pleased to recognize Hitachi Data Systems as an Ethics Inside Certified organization and we applaud the company for displaying ethical leadership within its industry and clearly communicating to its various stakeholders that ethics plays a key role in its culture and strategy.”

Ethisphere is the leading independent verifier of corporate ethics and compliance programs. The organization awards Ethics Inside Certification exclusively to companies and nonprofit organizations according to two criteria. The first criterion is to implement adequate standards, systems and programs to reasonably prevent compliance failures and ethical breakdowns. The second criterion is to demonstrate a superior employee and leadership culture that promotes ethical business practices.

Ethisphere’s Anti-Corruption Program Verification offers objective, independent verification of a company’s anti-corruption program and initiatives, including a comprehensive review of policies, procedures, training, communication, controls and enforcement. Anti-Corruption Program Verification can be earned only by companies that prove they have designed, implemented, and enforced a robust, best-in-class anti-corruption program that is capable of reasonably detecting and preventing bribery and corruption.

Web Resources
• More information about Ethics Inside Certification.
• Follow HDS on Twitter
• Connect with HDS on LinkedIn
• Friend HDS on Facebook

About Hitachi Data Systems
Hitachi Data Systems provides best-in-class information technologies, services and solutions that deliver compelling customer ROI, unmatched return on assets (ROA) and demonstrable business impact. With a vision that IT must be virtualized, automated, cloud-ready and sustainable, Hitachi Data Systems offers solutions that improve IT costs and agility. With approximately 5,900 employees worldwide, Hitachi Data Systems does business in more than 100 countries and regions. Hitachi Data Systems products, services and solutions are trusted by the world’s leading enterprises, including more than 70 percent of the Fortune 100 and more than 80 percent of the Fortune Global 100. Hitachi Data Systems believes that data drives our world – and information is the new currency. To learn more, visit: http://www.hds.com.

About Hitachi, Ltd.
Hitachi, Ltd. (TSE: 6501), headquartered in Tokyo, Japan, is a leading global electronics company with approximately 320,000 employees worldwide. Fiscal 2011 (ended March 31, 2012) consolidated revenues totaled 9,665 billion yen ($117.8 billion). Hitachi is focusing more than ever on the Social Innovation Business, which includes information and telecommunication systems, power systems, industrial, transportation and urban development systems, as well as the sophisticated materials and key devices that support them. For more information on Hitachi, please visit the company’s website at http://www.hitachi.com.

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© Hitachi Data Systems Corporation 2013. All rights reserved. HITACHI is a trademark or registered trademark of Hitachi, Ltd. All other trademarks, service marks, and company names are properties of their respective owners.

As companies spent the recent year-end holidays closing their fiscal books and creating program budgets for new products and services into 2013, a small and seemingly obscure clause in one of the widest reaching financial reform acts in modern history has added concern and challenge to product manufacturers across industry segments.

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 contains a small but very important section addressing so-called “conflict minerals” – referred to as 3TGs (tin, tantalum, tungsten, and gold) – harvested from the Democratic Republic of Congo and surrounding countries. The people in these areas are experiencing war atrocities, human slavery, and other human rights violations cited by the United Nations.

As such, Section 1502 of the Dodd-Frank Act suggested that this issue requires an aggressive supply chain reporting mandate. The U.S. Securities and Exchange Commission (SEC) made final rulings on this provision in late August 2012 ascribing any publicly traded company and their suppliers to “include a description of the measures it took to exercise due diligence on the conflict minerals’ source and chain of custody” and file a new SEC form SD beginning in 2014 for the 2013 calendar year. The initial reporting period for tracking compliance efforts begins in January, 2013.

Far-reaching Impacts

According to leading industry experts in the field, the effects of the conflict minerals provisions are extensive. “It’s not just whether you are a public company, in which case you for sure must report and show due diligence through your supply chain. Also, private companies and companies that are part of the US company’s supply chains will be affected, as the requirements are cascaded down the value chain. It has been suggested by the SEC that the number of companies that may contain trace elements of conflict minerals could be in excess of 280,000,” notes Thomas Bley, senior project manager for software maker iPoint-systems and participant in a number of industry work groups.

One of the challenges that make conflict mineral compliance to Dodd-Frank so encompassing is the level of trace elements of 3TGs found in most electronics components, used in everything from computers to automobiles to household appliances. It is difficult for one company on its own to trace the flow of materials in raw form back to the component suppliers, however Dodd-Frank requires even deeper due diligence to determine the actual location of the mineral smelter. Some organizations have stated publicly that obtaining declarations of conflict minerals to a level of only 40-60% is sufficient.

“That’s a risky proposition,” suggests Bley. “While there are no penalties for using conflict minerals in company products, the regulations require that a ‘reasonable country of origin inquiry’ is performed. Those companies that lag in this area risk ‘named and shamed’ by the consumer public and nongovernmental organizations (NGOs),” creating a possible impact on brand reputation and sales.

A Reporting Process in the Supply Chain

In order to facilitate some level of consistency of reporting, the Electronic Industry Citizenship Coalition (EICC) and Global e-Sustainability Initiative (GeSI) have partnered to create a consistent reporting template which has emerged as a de facto cross-industry reporting standard. The template contains a questionnaire that allows companies to document their conflict minerals status to their customers. This implies a massive workflow effort as customers notify their suppliers, and their suppliers notify their down-stream suppliers, and so on. “We are more concerned with the process implications of handling large volumes of requests and in turn sending those requests to our suppliers,” observed a global compliance manager at an electronics component manufacturer. “With dozens of locations, many suppliers, and hundreds of thousands of products sold, it is necessary to utilize a solution to collect, review, and address the significant amount of data provided by our suppliers.”

Regarding her company activity in conflict mineral compliance, Amanda Davidson of Freescale Semiconductor says that new requests from customers and trading partners are the rule rather than the exception.

“We receive requests daily,” observes Davidson. “In addition to these … demanding requirements, we also have our brand image to consider as well as new and continued business.” For most companies new to the issue of conflict minerals, the path forward can look extremely daunting.

Industry Takes Action

One of the early responders across industries in 2011 was the Automotive Industry Action Group (AIAG). AIAG, no stranger to large and complex supply chain compliance initiatives, established the need to harmonize the processes around corporate conflict minerals compliance shortly after the Dodd-Frank Act was signed into law. In late 2011, AIAG published a “position statement” that was a clear call to action for all participating members of the North American automotive industry supply chain and their global trading partners.

After an extensive collaboration, AIAG announced in 2012 that it was partnering with iPoint-systems to develop a consistent, process-driven solution in line with the EICC-GeSI reporting standard. In addition to significant workflow features, the iPoint Conflict Mineral Platform (iPCMP) also contains updates to the “certified smelter” database and also allows users to add their own proprietary notations to smelter lists and vendor records of suppliers, significantly enhancing the efficiency of using the EICC-GeSI standard (A free trial of the iPCMP solution is available upon registration at www.conflict-minerals.com, see sidebar).

Other industries are following suit in a less concerted manner relying on the actions of large OEMs rather than a broad industry initiative. Large companies such as Dell, General Electric and others have identified the need to have a comprehensive solution and advise that they are “committed to act on this issue” (in the case of GE) and have described a number of social compliance efforts in their annual sustainability and corporate citizenship reports. In some of these cases, the OEMs have initiated their own course of action inside their own supply chain and have considered automating the reporting process for their own purposes through the use of a common reporting platform.

Developing an Action Plan

Depending upon the size and scope of the company, some organizations have considered offshoring the development of compliance records, essentially creating large customer collection centers to address inquiries down their value chains. While this might be a cost-efficient approach to complete the basic EICC-GeSI template, firms concerned with exposing their bill of material (BOM) due to intellectual property or classified information find that outsourcing the issue – and their BOM descriptions – is not practical. A simple form of declaration allows companies to state their compliance at the company, division, product category, and product levels. This also allows for companies to certify without disclosing complete BOM information.

“Freescale is a company that will not release our BOM, nor will we hire a third party to collect the data for us,” states Ms. Davidson. Other organizations, particularly those in the defense electronics industry, are precluded from doing so based on their respective government requirements. An automated and integrated approach, similar to that initiated by AIAG in the automotive industry, also allows each organization to protect the chemical and structural composition of its products and materials.

These safeguards are similar to those European Union (EU) edicts for Registration, Evaluation, Authorisation and Restriction of Chemicals (REACh) and Restriction of Hazardous Substances (RoHS) provisions enacted in the late 2000s.

Selecting a Reporting Environment

While smaller, less sophisticated organizations consider outsourcing the IP and BOM of their product for third parties to manage record keeping and tracking of notifications and compliance, most companies I have spoken to in regards to conflict minerals compliance feel the need to manage the process in an automated and centralized manner. Given the timeliness of requests received and the volume – in many cases thousands of notifications in large industry segments such as automotive, electronics and medical devices which will begin in early 2013 – manual solutions to the Conflict Minerals reporting requirements are counter- productive and too labor-intensive for some companies.

A number of solutions exist that consider reporting to the EICC-GeSI standard. Some solutions act as simple plug-ins to Microsoft Excel document environments and operate locally. While these solutions are simple and relatively inexpensive, they do little to remove the management cycles required to integrate vendor records, product geometries, and larger supply chain notifications.

In addition, there is some concern that while Dodd-Frank requirements have been finalized, there is still a need to harmonize these requirements and approaches to compliance filing with other organizations, such as the Organization for Economic Co-operation and Development (OECD). A cloud-based solution, that matures as more vendors and certified smelters are added to the platform, creates a more integrated approach such as what the automotive industry has adopted (see sidebar).

Standards and Documents to Evolve While Dodd-Frank continues to be the primary compliance driver on the issue of conflict minerals, several organizations, including OECD and the Association Connecting Electronics Industries (IPC), continue discussions on how to mature reporting standards and guidelines. According to Bley, these evolving standards and guidelines could tackle some remaining issues to compliance reporting, including disclosure of IP and BOMs. “Manufacturing companies are very concerned about disclosing the identity of their suppliers,” observes Mr. Bley. “When you address the critical issue of IP protection, a supplier can still show a clear pathway to what smelters have been used in their supply chain, providing an accurate trace of conflict minerals required under current mandates.” While the final ruling of the SEC has been issued, there is no consensus that the appropriate level of reporting is captured in the current EICC-GeSI reporting framework. Additional industry group discussions in the coming months hope to provide additional clarity on this matter. As such, companies need the flexibility to adapt to changing requirements through the use of a well-monitored and continually evolving solution to the issue of conflict mineral reporting.

The cross-industry solution already widely adopted by automotive manufacturers and many of their suppliers plans to address the topic of integrated vendor and smelter lists, as well as any forthcoming changes to reporting structure which may come down the pike. For example, once a company registers to the iPCMP solution adopted by the automotive industry, each supplier receives a unique identification in the Conflict Minerals Platform. While traceability from customer to first-tier supplier is known and unique with iPCMP, the downstream supplier identity is not shared visible to other users. This resolves the issue of multiple entries of the same organization existing in the supplier database while preserving confidentiality. Similarly, this approach of uniquely identifying organizations in the system is also extended to smelters, reducing the potential duplication of non-certified smelters which may be added by an organization and used throughout conflict minerals declarations.

Summary

Regardless of the path ahead each company chooses, conflict mineral compliance will be on the lips of many executives, compliance officers, and supply chain managers in 2013. “I would say that up until now, the industry did not know what was coming,” reflects Davidson. This year we will find out through our own experiences across industries how best to address conflict minerals reporting.

Expert Biography

William Newman is a recognized author, speaker, analyst and consultant on matters of management strategy and technology. He serves as managing principal of Newport Consulting Group, an independent management and technology consulting firm. Contact him via email at: wnewman@newportconsgroup.com or follow him on Twitter @william_newman.

Awakening Awareness

Every morning, I am woken up by my cellphone’s alarm clock, I turn on the light and laptop on my way to the bathroom, and having tuned in to the latest radio news, clean my teeth with my electric
toothbrush. Even before my vitalizing morning shower, I routinely will have used various products possibly containing so-called conflict minerals—rare natural resources such as tantalum,
tin, tungsten and gold (3TG), the mining and trade of which may finance violent conflicts in the Democratic Republic of the Congo (DRC) or adjoining countries.

The growing public awareness of these critical resources in consumer electronics and various other devices is accompanied by increasing regulatory awareness of companies affected by the
Dodd-Frank Act and its conflict minerals-related Section 1502, signed into law in July 2010. The long-awaited final rule regarding conflict minerals, which was adopted by the Securities and Exchange Commission (SEC) this August after a protracted rule-making process, poses a range of concerns and challenges across the manufacturing industries.

Ambiguous Areas

Like many other compliance-related laws and regulations such as REACh or RoHS, the SEC’s Conflict Minerals Rule is highly complex, at the same time leaving core concepts intentionally undefined or ambiguously worded. Take, for example, the term “product.” Although the 356-page document containing the SEC’s Conflict Minerals Rule clearly addresses every publicly traded company under SEC jurisdiction “with conflict minerals necessary to the functionality or production of a product it manufactures or contracts to be manufactured,” the term “product” is left undefined. If a GPS navigation system using a tantalum capacitor is installed into a vehicle, what is the product – the GPS system or the entire vehicle? If tin is used to solder a circuit board which is then installed into medical equipment such as an ECG machine, is the circuit board or the entire machine subject to the rule? If tungsten is used as a component for an airplane rudder, is the whole plane or just the rudder the product? And if gold plating is used in an electrical connector which is built into an audio power amplifier, is just the electrical connector or the whole amplifier affected by the rule? Several other areas and terms of the Conflict Mineral Rule remain intentionally vague, causing confusion and requiring affected companies from every 3TG-related industry to make ad hoc interpretations and decisions.

International Impact

But is my company actually subject to the Conflict Minerals Rule? This question has also caused a lot of head-scratching among compliance officers worldwide. Legally, the regulation only applies to publicly traded companies under SEC jurisdiction required to file annual reports in the United States. However,
since these so-called issuers will need to ask their suppliers for collaboration on providing declarations, the requirements will trickle down to suppliers around the globe, including privately-held as well as foreign owned companies. That is why the rule is expected to have a significant international impact, affecting more than 280,000 companies worldwide.

Compliance Challenges, Costs, and Court Cases

Tracing conflict minerals through the entire supply chain will be a cumbersome process. The more complex a product and the larger a company’s product lines, the more difficult it will be to trace the source of the material used in their products. Getting thousands of suppliers across several tiers to collaborate is a huge and costly challenge. Those that are contemplating a manual approach should consider that this could be time-consuming, expensive, error-prone and thus impractical for most
companies. The compliance costs as one of the primary ongoing concerns are expected to be very significant—estimated at $3-$4 billion by the SEC, projections from outside the SEC have been as high as $16 billion.

A recent lawsuit filed by two influential organizations, the National Association of Manufacturers (NAM) and the U.S. Chamber of Commerce, has challenged the SEC’s final rule, requesting that it “be modified or set aside in whole or in part.” But even if the lawsuit is successful in changing or delaying the ruling, conflict minerals reporting is here to stay.

Strategies and Solutions

With the first reporting period under this final ruling beginning on January 1, 2013, affected companies are under a lot of pressure. They need to take action now and develop strategies for complying with the rule. However, a recent study released by IHS has revealed that almost 90 per cent of electronic component manufacturers—one of the industries most affected by the new rule—are not yet ready for reporting their usage of conflict minerals.

What kind of strategy is suitable for efficient conflict mineral compliance? Some companies plan on using Excel spreadsheets to track their products, suppliers and supply chain. But as already mentioned, this manual approach can be very time-consuming and costly. Outsourcing the whole reporting to a compliance service provider is another strategy which doesn’t come without drawbacks: It is costly, a third party gains access to sensitive data about business relationships, you have limited control and insight into your own supply chain, there are no economies of scale, and integration with in-house systems is not possible. Working with a compliance software company specifically equipped to handle the Conflict Minerals Rule provision is another option which enables companies to fulfill the challenge of collecting, managing, aggregating and reporting conflict minerals information, and meet the requirements of their customers and the regulatory authorities. Regardless of the chosen strategy, there are already a few valuable frameworks which affected companies can use to support them in their ongoing compliance efforts.

To assist manufacturing companies, two industry associations, the Electronic Industry Citizenship Coalition (EICC) and the Global e-Sustainability Initiative (GeSI), have taken the lead on developing a reporting framework. And fortunately, compliance software companies are already stepping in with solutions that allow companies to scale up reporting and extend features under the EICC-GeSI framework.

Action Items for Affected Companies

The framework developed by the OECD, which is currently the only available guidance on conflict minerals supply chain due diligence, also offers valuable assistance for efficient Conflict Minerals Rule compliance:

1. Determine if Your Company is Subject to the Rule: Be sure to understand the ramifications to your company even if you are not under the SEC jurisdiction—you may still be impacted.

2. Identify and Assess Risk in the Supply Chain: Conduct a RCOI (Reasonable Country of Origin Inquiry) to determine whether Conflict Minerals originated in the DRC or other covered countries; and the significance of the risk this imposes.

3. Establish Strong Company Management Systems: Align internal policies with the SEC ruling requirements including them in your Supplier Code of Conduct. Determine how the information will be tracked.

4. Design and Implement Strategy to Respond to Identified Risks: Conduct supplier trainings and make sure your requirements are clearly communicated and agreed upon.

5. Conduct Independent Third-Party Audit of Smelters/Refiners Practices: This should be a data and process review of supply chain efforts specifically looking for their due diligence actions disclosure.

6. Report Annually on Supply Chain Due Diligence: Adapt your process to accommodate new suppliers and greater detail on reporting as gray areas are better defined.

The road for conflict minerals reporting will not be easy, but no company has to do this entirely on its own. Numerous resources are available, and with a properly planned and thoughtful approach you can optimize the burden of both time and human resources to achieve compliance with SEC’s Conflict Minerals Rule and mitigate its impact on your business.

Expert Biography
Jörg Walden is Chief Executive Officer of iPoint-Systems, a global software and solutions provider in environmental compliance & sustainability.

Ethisphere is now accepting nominations for the 2014 World’s Most Ethical Companies Rankings. If you are interested in nominating your company (or another), please fill out the form below. A representative from the nominated company will be contacted in order to complete the World’s Most Ethical Companies survey.

Nominations for the 2014 World’s Most Ethical Companies are now open. All nominations and completed questionnaires for the 2014 ranking are due on January 09, 2014.

cforms contact form by delicious:days

When: 18 – 19 October 2012 Where: The Royal Garden, Hong Kong

What are the factors that encourage / discourage common types of fraud employed in Asia
Pacific?

Can you execute an investigative interview with Scientific Content Analysis to gather &
present useful evidence?

Do you have in place an incident response strategy for remediation of a fraud crisis?

This 2-day interactive workshop will equip you with critical skills and solutions to detect,
prevent and mitigate fraud risks before a crisis breaks out. Evaluate the design of your
organisation’s defence and control systems and circumvent any risks with advanced
techniques of predictive control measures, anti-fraud vigilance processes and supportive
whistle-blowing policies. Gain insights on fraudster profiling, evidence documentation and
privacy protection in the investigation process. Engage in hands-on interrogation simulations
to improve your forensic interviewing techniques beyond asking the question to listening for
dubious responses with external and internal parties.

At the end of the workshop, you will master how to implement a holistic fraud risk
management and investigation strategy that effectively safeguards your company’s reputation
to meet stakeholders’ ethical expectations.

For more details, click here.

To register or inquire, please contact Ms Elaine Dang at (65) 6592 7366 or
elaine@conferences.com.sg

Where: University Club of Chicago

The Millennium Room
76 East Monroe Street
Chicago, Illinois

When: September 11, 2012, 8:00am – 10:00am

San Diego M&A Due Diligence Seminar: Featuring Tom Fox & Mike Volkov

When: September 25, 2012, 8:00am – 10:00am

Where: San Diego Marriott Del Mar

Room: Rancho Santa Fe
11966 El Camino Real · San Diego, California 92130

Houston M&A Due Diligence Seminar: Featuring Tom Fox & Mike Volkov

When: October 10, 2012, 8:00am – 10:00am

Where: The Houstonian

Contact: David Drey, ddrey@marcusevansch.com or 312-540-3000 x6583
Website: Marcus Evans 

Beyond the FCPA and the UK Bribery Act, there are many forthcoming changes to global anti-
corruption initiatives that can affect your firm. It is imperative that organizations are made
aware of these new rules and regulations to be able to integrate them into their anti-corruption
compliance programs. Maintaining a robust global compliance program along with performing
proper and detailed 3rd party due diligence is of the upmost importance.

By attending this conference, attendees will learn valuable insights on how to protect their
organization as well as their senior executives from individual prosecutions, helping prevent an
accumulation of costly fines from regulators. Attendees will also review strategies in identifying
the best methods in maintaining a strong compliance program.

You may visit the event website here.

The event featured executives from major public relations firm such as Richard Edelman, CEO of Edelman, and Jack Martin, global chairman and CEO of Hill + Knowlton Strategies, among others, who urged companies to start taking an active role in building and maintaining their reputations.

June 19 2012

NEW YORK: Top communications advisers have more access to high-level meetings and top decision-makers in the federal government than they do in the corporate world, former White House press secretary Dana Perino said on Tuesday.

Perino explained that “the press secretary has a seat at the table in every meeting” at the White House, with the exception of high-level security discussions, during a panel discussion at the Ethisphere Institute’s Best Practices in Ethics conference.

Perino added that US corporations are often “starting at a reputation deficit to begin with,” meaning they must work harder than other organizations to get fair coverage in the media. She noted that when media training a corporate chief executive in 2009, she was surprised to find very few examples of TV CEO interviews.

“Nobody is out there talking,” Perino said, noting that JPMorgan Chase & Co. CEO Jamie Dimon’s response to his company’s major trading losses are a notable exception.

Perino served as President George W. Bush’s press secretary from September 2007 to January 2009. She founded consultancy Dana Perino and Company after leaving the White House and also appears as a contributor on Fox News.

Members of the panel largely agreed that social media has created opportunities for both communicators and organizations, with some risk.

“If [members of] the US Navy are the only people talking about the US Navy, then you’re missing a lot of opportunities,” said Rear Admiral Dennis Moynihan, chief of information for the US Armed Forces branch. He added that embracing social media is “accepting a lot of risk.”

Jennifer Prosek, CEO and founder of CJP Communications, noted that the “opportunity [of social media] outweighs the risk,” adding that her firm has seen a positive response to a company blog where all employees can contribute.

During the panel discussion, Mike Paul, president and senior counselor at MGP & Associates PR, also emphasized the continuing importance of providing counsel to clients on behavioral issues.

“If we are not comfortable counseling people, we’re not going to earn a seat at the table,” he said. Paul later added that communications counselors must make it clear to clients that with social media, “certain things are just not an option.”

New York, NY –  June 13, 2012 –  Ethisphere Institute announced today that Bristol-Myers Squibb Company has earned the Institute’s coveted Compliance Leader Verification™ Ethisphere^® Institute is a leading international think-tank dedicated to the research and promotion of best practices in corporate ethics and compliance.

Ethisphere, the provider of independent verification of corporate ethics and compliance programs, provides independent Compliance Leader Verification^™ for companies with best-in-industry ethics and compliance programs – those organizations that have made the decision to proactively invest resources in compliance, sending a clear signal to key stakeholders that compliance and ethics are an absolute organizational priority.

“We found that Bristol-Myers Squibb’s strong commitment to ethics has led to the creation and maintenance of an effective global compliance program,” said Erica Salmon Byrne, Senior Vice President, Compliance Advisory Services for Corpedia, one of Ethisphere’s licensed credentialing partners. “We are particularly impressed that Bristol-Myers Squibb has an active and involved board of directors, appropriately uses resources both globally and at the  business unit level, and engages its employees through innovative communications and  and extensive training  programs conducted according to risk and job function.”

Ethisphere’s licensed credentialing partners conduct a detailed review of the organization’s current compliance and ethics-related initiatives, and benchmark them against the “hallmarks” of an effective compliance program, as defined by the U.S. Federal Sentencing Guidelines (FSG) and corporate and industry best practices, including standards (code and policies), board of director oversight, program structure and responsibility, training and communications, due care, monitoring and auditing, and enforcement and discipline. Ethisphere then provides companies with a detailed report as to how their program measures up to industry benchmarks, including recommendations for improvement. Additional information about Compliance Leader Verification is available at http://ethisphere.com/ethisphere-compliance-leader-verification/

About Ethisphere Institute

The research-based Ethisphere® Institute is a leading international think tank dedicated to the creation, advancement, and sharing of best practices in business ethics, corporate social responsibility, anti-corruption, and sustainability. Ethisphere provides the only third-party verifications of compliance programs and ethical corporate cultures, including Ethics Inside® Certification, Compliance Leader Verification™, and Anti-Corruption Program Verification™. On a quarterly basis, the Institute produces Ethisphere Magazine, which publishes the globally-recognized World’s Most Ethical Companies® ranking. Ethisphere also maintains a premier membership group, the Business Ethics Leadership Alliance™, a business ethics forum that includes more than 100 leading corporations, universities, and institutions that collectively leverage their experience, expertise, and innovative ways to address emerging compliance challenges. More information on the Ethisphere Institute, including ranking projects and membership, can be found at www.ethisphere.com.

The goal of this event is to bring together communication leaders representing the World’s Most Ethical (WME) companies to engage in a robust dialogue on best practices in internal and external communications. The agenda, which includes best practice presentations, breakout discussions and expert commentary from industry leaders, focuses on:

• Internal communication strategies that contribute to creating an ethical business culture that engages staff and enables organizations to earn and maintain the WME recognition.
• External communication programs that highlight ethics as a differentiating brand attribute and positively position the business community with external stakeholder audiences.

Key conference speakers include:

• Roger Bolton, President, Arthur W. Page Society
• Richard Edelman, President and CEO, Edelman
• Jack Martin, Global Chairman and CEO, Hill + Knowlton Strategies
• Rear Admiral Dennis Moynihan, U.S. Navy Chief of Information
• Dana Perino, Fox News Commentator and Former White House Press Secretary
• Jennifer Prosek, Chief Executive Officer and Founder, CJP Communications
• Mike Paul, President and Senior Counselor, MGP & Associates PR

Agenda (Subject to Change):
8:00 a.m. – 5:00 p.m. Workshop
5:00 p.m. – 6:30 p.m. Cocktail Reception

• Continental Breakfast and Welcome by Thomson Reuters
• Keynote Remarks by Richard Edelman, President and CEO, Edelman: 2012 Trust Barometer
• Sharing Best Practices with World’s Most Ethical Companies representatives
• Lunch Discussion
• Expert Panel Discussions (Unique Perspectives)
• Breakout Sessions, including U.S./Global, Consumer/B2B/B2G, and Small Company/Large Company
• “New Model for Corporate Communications” Roger Bolton, President, Arthur W. Page Society
• Key Takeaways Discussion
• Cocktail Reception

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Ethisphere’s Anti-Corruption Program Verification offers objective, independent verification of a company’s anti-corruption program and initiatives, including a comprehensive review of policies, procedures, training, communication, controls and enforcement.

Anti-Corruption Program Verification can only be earned by companies that are able to prove they have designed, implemented, and enforced a robust, best-in-class anti-corruption program that is capable of  reasonably detecting and preventing bribery and corruption. For more information about this and other programs, please visit http://www.ethisphere.com/anti-corruption-program-verification/

“Corpedia was consistently impressed during the course of the review process with Legg Mason’s culture and particularly its commitment to its long-standing ‘no chalk’ philosophy,” said Erica Salmon Byrne, Senior Vice President, Compliance Advisory Services and Assistant General Counsel of Corpedia, one of Ethisphere’s licensed credentialing partners. “Legg Mason has incorporated this viewpoint into its training, its communications and its evaluation process, and the impact on employees was clear.”

About Legg Mason

Since its founding in 1899, Legg Mason has evolved into one of the largest asset management firms in the world, serving individual and institutional investors on five continents. Today’s Legg Mason is a diversified group of global asset management firms (“affiliates”) who are recognized for their proven investment expertise and long-term performance. The principal investment affiliates of Legg Mason are among the industry leaders in their respective areas of specialization, with unique investment approaches that have been developed over decades. The distinctive Legg Mason “multi-affiliate” business model provides clients with a broad spectrum of Equity, Fixed Income, Liquidity and Alternatives solutions, from mutual funds to college savings plans to variable annuities to separately managed accounts. Visit Legg Mason at http://www.leggmason.com

About Ethisphere Institute

The research-based Ethisphere® Institute is a leading international think tank dedicated to the creation, advancement and sharing of best practices in business ethics, corporate social responsibility, anti-corruption and sustainability. Ethisphere Magazine, which publishes the globally-recognized World’s Most Ethical Companies® ranking, is the quarterly publication of the Institute. Ethisphere provides the only third-party verifications of compliance programs and ethical cultures that include Ethics Inside® Certification, Compliance Leader Verification™ and Anti-Corruption Program Verification™. The Institute’s premier membership group, the Business Ethics Leadership Alliance™, is a business ethics forum that includes more than 100 leading corporations, universities and institutions that collectively leverage their experience, expertise and innovative ways to address emerging compliance challenges. More information on the Ethisphere Institute, including ranking projects and membership, can be found at www.ethisphere.com.

Yes, protection of our reputation for integrity and the exercise of good judgment [are], to me, our code of ethics. Defined in this fashion it puts a great deal more burden on each of us as individuals than were we to have, as many companies do, a list of rules or a series of do’s and don’ts. To me, such rules are merely props for weak characters. And, to my mind, there is no room for weak characters in our Company – or in any company which strives to be a good corporate citizen.

– William P. Drake, C.E.O. of Pennwalt Corp., 1976

In today’s corporate legal environment, it is nearly unfathomable that only thirty-five years ago, corporations like Pennwalt publicly eschewed formalized compliance protocols. Then again, the governing legal regime has greatly changed since that time. Corporations operating in the current global economy are subject to a myriad of laws and standards regulating nearly every aspect of business, from internal accounting practices to external environmental standards. “Something as simple as failing to check the right box on an environmental report can lead to greater criminal consequences than theft.” In short, these laws are complex, ever-changing, and most of all, consequential.

The consequences of failing to implement a compliance program extend beyond legal penalties. Compliance programs affect the credibility of a company in the eyes of its business partners, the capital markets, and the general public. In the long term, businesses that act in accordance with the law have an advantage in the marketplace. Companies that are viewed as ethical are better able to recruit and retain staff, enjoy more stable business relationships, and experience greater earnings potential. Conversely, compliance transgressions can devastate a company, as evidenced by the recent Foreign Corrupt Practice Act cases involving Alcatel-Lucent, BAE, and Siemens.

Accordingly, today’s corporations no longer have the luxury of choosing to implement a compliance program. Compliance is now a presupposed component of a corporation’s organization. The choice for corporations instead is how to structure such programs. Although the possible organizational models are many and varied, this Article argues that models based on functional rather than structural considerations are the most effective. While decentralized compliance models underscore that compliance is a collective task, such organizational structures ultimately are dependent on the aptitude or attitude of ever-changing individual employees. Conversely, the efficient deployment of company resources and expertise gained through centralization are for naught if employees view compliance as little more than ignorable directives from the command on high. A functional approach to compliance achieves a balance between centralization and decentralization. It ensures that a compliance program is substantive enough to satisfy a company’s legal obligations while remaining sufficiently nimble to address novel compliance issues.

Traditional Corporate Compliance Structures

The decision as to how to organize a compliance program is typically within the executive discretion of senior management. Among the numerous considerations that affect that decision are the company’s objectives. The manner in which a company structures its compliance program will vary depending on whether its primary goal is to improve its bottom line, protect senior management, or comply with a particular legal regime. For the purposes of this Article, the presumption is that that choice is driven primarily by the question of which compliance organization is the most effective in ensuring adherence to the relevant ethical and legal obligations. In order to answer that question, however, it is important first to understand the corporate scaffolding on which compliance programs are built.

In a board-structured management system, there are generally two methods for organizing a compliance program. One approach is to assign compliance responsibilities to the board as a whole. Alternatively, compliance duties and responsibilities may be delegated horizontally to a board committee or select board members. Regardless of whether compliance responsibilities are delegated horizontally, they are almost always delegated vertically to subordinate levels of management through the creation of hierarchical levels of supervision. At the subordinate levels, specific employees are responsible for the performance of particular compliance tasks. At the highest level, board members retain overall supervisory responsibility with specific compliance portfolios delegated to designated managers.

Centralized Compliance Models

Horizontal delegation of authority typifies centralized compliance systems. The most common horizontal delegation structure is the appointment of a chief compliance officer (CCO). The CCO’s role is to support and advise the management board, set up and maintain a compliance program, monitor observance of compliance regulations, organize appropriate training for the workforce, and coordinate with internal auditing and control departments. In short, the CCO position demands objective independence and organizational autonomy.

An alternative model of centralized compliance is the autonomous compliance executive committee. Organized as a matrix, these committees generally consist of the head of each organizational unit of the corporation, such as the legal department, auditing department, and human resources department. Although the entire committee is delegated responsibility for compliance and associated tasks, typically the compliance department is charged with preventing unlawful acts. Uncovering misconduct pursuant to company policy that does not violate laws and responding to it, on the other hand, is the job of the other members of the compliance committee. Clearly defined responsibilities ensure that those tasks are properly and promptly executed.

The advantage of a detached compliance system is two-fold. First, the management board’s supervisory duties are simplified. The monitoring of compliance and the necessary documentation are the responsibility of the CCO or the compliance committee. The board need only interface with the CCO as a single point of contact to track the company’s compliance efforts. Second, the individual liability risks of board members and executive management are reduced. Presuming that the board selects sufficiently qualified and competent individuals and provides them with adequate resources, the board can demonstrate without too much difficulty that all organizational and supervisory duties incumbent upon them have been carried out. This may be in the interests of the corporation, as its direction and business strategy may depend most heavily on the senior management team and its continuity. Even compliance committee members enjoy some level of liability protection as their responsibility for noncompliant acts becomes increasingly indirect the further down the vertical delegation chain the misbehavior occurs. Third, the independence of a CCO or compliance committee may better enable consideration of compliance risks and issues without the influence of immediate business pressures that apply to other executive managers.

The cultivation of a culture of compliance may, however, be in tension with centralized compliance structures. Individual employees are routinely presented with operational business dealings that implicate a variety of compliance issues. Yet, employees may fail to recognize or choose to ignore such problems in a centralized compliance system, viewing compliance as someone else’s problem. Also potentially problematic is the CCO’s or compliance committee’s perceived independence. Employees may see these individuals as antagonists to business development; personified bureaucratic red-tape whose sole existence is to serve as a liability cushion for senior management.

Decentralized Compliance Models

In a decentralized compliance structure, compliance and operational business functions are brought together in the same place. Senior management delegates compliance responsibilities and duties to the individual divisions of the company. These tasks include educating staff, promoting a compliance culture, and ensuring that applicable laws and regulations are obeyed. While the divisions may further delegate compliance duties vertically, either to compliance coordinators or to individual sub-units, accountability for compliance ultimately rests within each division. They are responsible for drawing up guidelines and addressing individual compliance incidents.

Decentralizing compliance responsibilities does not require the elimination of a compliance council or its equivalent. Such an entity may still exist in such an organizational model. Yet, its role as the central compliance unit is limited to mere coordination and advisory functions. In a decentralized compliance model, a compliance council initially proposes to the senior management the establishment of a compliance organization based on the particular circumstances, and subsequently advises the senior executive on maintaining and developing the compliance organization. The compliance council also regularly reports in writing to the management board on its activities and in response to events where appropriate. Ultimately, however, the management board decides on its own authority as to the implementation of the recommendations and the individual divisions are charged with executing the adopted policies.

By integrating compliance into all of the functional divisions of a corporation, a decentralized compliance structure necessarily increases the number of compliance stakeholders. The task of compliance is shared across many shoulders, thus demonstrating to those within the company that compliance is a collective and pervasive, rather than individual and independent, task. Moreover, a decentralized compliance system recognizes that no single board member can effectively master the nuances of each department’s unique compliance issues. Compliance committees may focus on its advisory functions rather than specific ethics inquiries that blunt its effectiveness and drain its resources. Meanwhile, the individual organizational units are “closer to the ground,” and can utilize their specialized knowledge of particular risks, pressures, and even individuals in order to respond to compliance issues in a robust and rapid fashion.

Yet, decentralized compliance programs have their own shortcomings. Decentralization may increase the number of people involved in compliance, but additional individuals do not guarantee an effective compliance program. As with any grouping of individuals, there is an extant pressure in corporate bureaucracies to conform to the norms established by one’s colleagues. If compliance directives are inconsistently communicated, or even worse, if an entire unit of a corporation is corrupted, then it is unlikely that compliance will be the prevailing norm. Further, in a decentralized system individuals responsible for compliance may have other responsibilities that compete for their time and attention, or may report to business unit management that have competing business or budgetary pressures that may be in conflict with compliance goals. Moreover, in light of the whistleblower rewards program established by the Dodd-Frank Wall Street Reform and Consumer Protection Act, decentralization may also discourage internal reporting and deprive corporations of the benefits associated with having a compliance organization.

Putting aside the issue of effectiveness, decentralization offers more limited legal protection as well, especially in the United States. Some legal regimes explicitly demand a high-level commitment to compliance. The United Kingdom Bribery Act (UKBA), for instance, requires “(1) top-level internal and external communication of the company’s zero-tolerance approach to bribery; and (2) an appropriate degree of top-level involvement in developing the anti-bribery procedures.” Furthermore, decentralization does not absolve senior management of liability as seen in the U.S. Securities and Exchange Commission’s utilization of a “control person” theory of liability in Foreign Corrupt Practices Act (FCPA) prosecutions. In 2009, the Securities and Exchange Commission charged the chief executive officer and former chief financial officer of Nature’s Sunshine Products with books and records and internal controls violations of the FCPA. The charges against the executives were based on bribes paid by the company’s subsidiary in Brazil even though there was no accusation that the senior executives knew about the bribery. Instead, the Securities and Exchange Commission’s case was premised on the failure of the executives properly to supervise their subordinates. Such an application of the FCPA raises serious questions as to whether a decentralized compliance structure will be viewed as an abdication of executive responsibility.

An Alternative Approach to Compliance: Functional Objectives

In light of the limitations of both centralized and decentralized compliance structures, it may seem that building a compliance program is a futile exercise; a matter of selecting the lesser of two evils. There is, however, an alternative approach to compliance. Instead of focusing on the formal compliance structure, companies might critically determine their compliance obligations and build their compliance programs accordingly. That is, corporations should craft their compliance organizations based on the applicable statutory authorities without regard to whether the overall compliance structure is centralized or decentralized. Such an action-oriented approach frees corporations to build compliance structures that best fit their particular needs and resources.

For instance, a functionally-driven compliance structure of a corporation subject to the jurisdiction of the United States would take into account the Organizational Guidelines found in Chapter Eight of the United States Sentencing Commission Guidelines. The Guidelines set forth a range of sentences for corporations convicted of criminal violations. They also describe an “adequate compliance program,” that if adopted, can positively influence the U.S. Department of Justice’s charging decisions and “result in up to a thirty percent reduction of a corporation’s advisory guideline fine range . . . .” Accordingly, a compliance program crafted around the Organizational Guidelines would include at a minimum: (1) the establishment of “standards and procedures to prevent and detect criminal conduct” and regular communication and training thereof; (2) the assignment of supervisory responsibilities to high-level personnel and delegation to specific individuals of particular “day-to-day operational” duties and corresponding resources and authority; and (3) the implementation of “reasonable steps” for monitoring, enforcing, and revising compliance protocols. The Organizational Guidelines thus contemplate a hybrid compliance program: some compliance tasks are for executive managers while others are the responsibility of low-level employees.

The U.S. Sentencing Guidelines are but one of many legal and regulatory regimes that a company adopting a functionally-based compliance structure would want to consider. It is consequently not possible to provide the same kind of detailed blueprint for compliance that the traditional compliance models offer. Indeed, the functional compliance model’s eschewing of the “one-size-fits-all” axiom is what makes it so effective. By considering three common compliance issues, however, it is possible to delineate three essential ingredients to a robust functional compliance program.

The starting point for a functional compliance programs is ascertaining the applicable compliance obligations. Yet, this is not as simple as thumbing through a statutory code book. Multinational corporations are subject to competing foreign and domestic laws that require varying degrees of compliance. Thus, as seen in the context of anti-corruption, consumer protection, employment, environmental, and securities laws, this first component of functional compliance programs also requires a comparative analysis of the applicable laws in order to identify the most stringent compliance obligations to which a company operating in multiple jurisdictions should adhere. The second step in crafting a functional compliance program is recognizing how the compliance standards identified in the first step may clash with other foreign or domestic laws and structuring the compliance program to marginalize the potential for conflict. This is especially evident in complying with internal controls regulations. The last component of a functional compliance program is assigning appropriate compliance responsibilities to individuals or entities that are best positioned, as a matter of resources and the law, to carry out those duties – a requirement essential to environmental compliance.

Finding the Common Denominator

As previously discussed, functionally-based compliance programs are built upon the compliance obligations of the applicable legal regime. The first step in constructing a functional compliance program thus is identifying the relevant compliance duties. For multinational corporations, this identification process requires an expansive outlook and an ability to identify interrelations among seemingly singularly-focused foreign and domestic laws. Securities regulation, for instance, is generally a matter of domestic concern. Yet, because U.S. courts have expanded the global reach of the plaintiff-friendly Securities Exchange Act of 1934 to certain transnational securities fraud claims, multinational corporations must now be prepared to litigate non-U.S. based claims under U.S. securities law. Employment laws prohibiting discrimination are similarly common worldwide and often domestically focused. U.S. companies operating abroad, however, must understand the interaction between U.S. and foreign employment regulations as the protections afforded in such laws as Title VII of the Civil Rights Act and the Americans with Disabilities Act extend to U.S. citizens working abroad unless local law requires discriminatory employment practices. Enforcement of intellectual property rights also may turn on the interaction between foreign and domestic laws. In adjudicating intellectual property rights, some countries, such as Germany, apply the lex loci protectionis principle to many choice-of law issues. That is, the governing intellectual property law is that “of the country for which protection is sought.” Conversely, other nations, such as the United States, have limited lex loci to particular authorship or copyright ownership questions.

The identification of the applicable compliance obligations is further complicated where the multijurisdictional regulations conflict. For instance, with respect to anti-corruption laws, the United States specifically delineates the minimum requirements of an adequate anti-corruption compliance program, while the United Kingdom only outlines the broad contours of such a program, and Germany is largely silent on the issue. The transnational standard of quality for goods sold is equally assorted. The European Union requires that goods sold must satisfy their use as set forth in the associated contract whereas Russia only requires that the goods “be safe and suitable for their usual use.” Likewise, with respect to environmental compliance, “[i]n the United States, Canada, and many European nations, one of the defenses to many criminal charges is the defense of due diligence.” But the showing that a corporation must make in order to afford itself of the due diligence defense may vary depending on the country.

These variances in multijurisdictional legal regimes are not an impediment to functional compliance programs, however. Multinational corporations building a functional compliance structure need not expend vital resources on parallel, country-specific compliance organizations. Instead, such corporations should craft functional compliance programs by identifying commonalities among the competing laws and adhering to the most stringent requirements. For instance, in the case of a corporation with operations in Germany, the United Kingdom, and the United States, this approach would result in an anti-corruption compliance model that closely tracks the strictest aspects of the FCPA and UKBA. Although such a compliance program may result in an anti-corruption program that is more robust than what is required in Germany, so long as the program does not run afoul of German law (an issue discussed in the next subpart), it will be universally applicable and thus easier to install and track in countries in which the multinational corporation operates.

Marginalizing Potential Legal Quandaries

In structuring a functional compliance program, simply locating the regulatory floor is not enough. Corporations must ensure that it does not extend that floor out to an unsupported foundation. Internal controls regulations illustrate this balancing act best. Among other obligations imposed by the Sarbanes-Oxley (SOX) Act and related regulations, companies registered under the Securities Act must “establish procedures for employees to anonymously submit concerns about questionable accounting or auditing. . . . Although neither SOX nor the [Securities and Exchange Commission] regulations prescribe a method for receiving such complaints, they do mandate that corporations provide employees at least one confidential, anonymous method.” Many multinational corporations have responded to these internal controls obligations by creating confidential “hotlines” – either phone or web-based – for employees to report misconduct anonymously. Yet, recent whistleblower litigation in France and Germany involving the ethical violations reporting systems of McDonald’s and Wal-Mart, in addition to European Union data privacy laws, raise serious concerns as to whether U.S.-compliant anonymous hotlines are permissible without alteration in Europe.

Thus, the second principle of functionally-driven compliance organizations is a corollary to the first. After determining commonalities among overlapping laws, companies must then critically assess whether adopting broadly applicable measures will create other legal issues. This is the sort of function that requires the involvement of a supervisory compliance board or executive manager. Such entities or individuals are in a position to take a global view. They can utilize their expertise to weigh corporate resources against legal requirements while ensuring that the resulting compliance structure remains internally consistent.

Assigning Functional Duties

The final essential ingredient to a successful functionally-driven compliance program is proper assignment of the compliance duties. This is not only a hierarchical consideration but also a structural one. Assigning compliance functions is a matter of choosing between senior management and among departments. It is also important to remember that assigning functional responsibilities need not be a binary choice. Several individuals or departments can share compliance duties so long as there is sufficient coordination.

Environmental compliance guidance from the U.S. Department of Justice and the U.S. Environmental Protection Agency illustrates this principle. In 2000, the Environmental Protection Agency released “Incentives for Self-Policing: Discovery, Disclosure, Correction and Prevention of Violations,” which describes a “compliance management system” that will garner reduced penalties for environmental violations. Such a system requires:

(a) compliance policies, standards, and procedures that identify how employees are to meet the requirements of laws and regulations; (b) assignment of overall responsibility for overseeing compliance with policies, standards, and procedures; (c) mechanisms for systematically assuring that compliance policies are being carried out; (d) efforts to communicate the entity’s standards to all employees and agents; (e) appropriate incentives to managers and employees to perform in accordance with the compliance policies; and (f) procedures for the prompt correction of any violations, and any necessary modifications to the compliance program.

Similarly, in weighing the criminal prosecution of environmental offenses, the Department of Justice assesses a corporation’s compliance program by asking several questions, including whether “environmental compliance [was] a standard by which employee and corporate departmental performance was judged[.]”

Reading these factors together, it becomes clear that compliance responsibilities are not broadly assignable to one level of management or one department. Subsection (b) of the Environmental Protection Agency’s guidelines specifically contemplates the designation of a compliance supervisor while subsection (d) likely requires the involvement of more than just top-level management. Likewise, the Department of Justice’s decision to prosecute environmental violations turns in part on to whom environmental compliance is assigned. A corporation that tasks its sales department with compliance functions, for example, will have difficulty convincing the Department of Justice that environmental compliance is more than a token goal. This is because, regardless of a corporation’s articulated commitment to green initiatives, it is unlikely that sales representatives in practice will forgo transactions – the metric by which they are judged – in the name of environmental compliance. Rather, compliance responsibilities lodged with independent management able to seek funding, apply regulations, and make decisions without the pressure of meeting sales targets demonstrates a stronger commitment to compliance.

Conclusion

Corporate compliance is no longer a voluntary aspiration but instead a mandated expectation. Around the globe, countries have implemented legal and regulatory regimes in which the difference between an effective compliance program and an ineffective one can mean the difference between prosecutorial leniency and harsh criminal and civil penalties. Because these global laws are numerous and varying, corporations must have sufficiently flexibility in structuring their compliance organizations. Accordingly, corporations should avoid purely centralized or decentralized compliance organizations. These compliance structures not only constrain a corporation’s ability to innovate, but also often undermine a company’s compliance goals. The better approach is a functionally-driven compliance model. Corporations should use the compliance functions set forth in the applicable legal regimes as the touchstone for building a robust compliance structure.

Take Aways:

1. Strict adherence to a centralized or decentralized compliance organization inhibits a corporation’s ability to innovate and respond to ever-changing global laws and regulations.

2. A hybrid, functional-approach to compliance enables corporations to efficiently allocate resources and expertise.

3. In devising a functionally-driven compliance structure, multinational corporations must identify applicable laws and regulations and determine the compliance requirements common to each.

4. Corporations must be cautious in devising universally applicable compliance structures; they should ensure that their compliance program is legally permissible in each country in which they operate.

5. Compliance duties should be assigned to the most capable individual or entity regardless of their place in the corporate hierarchy.

About the authors:

Alexander Berrang is an associate in Arnold & Porter LLP’s Washington, D.C. office.

Seattle, WA. – March 27, 2012 – Holland America and Seabourn earned the coveted Ethics Inside^® Certification from the Ethisphere Institute, a leading international think tank dedicated to the research and promotion of best practices in corporate ethics and compliance.

Holland America Line and Seabourn’s leading compliance and ethics programs and environmental stewardship were two of several noteworthy components of their Ethics Inside Certification.

“This distinction is founded not only on the strength of Holland America Line and Seabourn’s current ethics and compliance programs, but on the organization’s continuing efforts to improve. Holland America Line and Seabourn are also recognized for their strong emphasis on workplace health and safety, community engagement and going beyond basic environmental compliance with active support of marine environment and biodiversity. A great example of industry leadership is a software package to prevent whale strikes by ships that Holland America Line developed and makes available to the entire shipping industry free of charge,” said Robert Leffel, director of Compliance Advisory Services for Corpedia, a licensed Ethisphere Institute credentialing partner.

Ethisphere, the provider of independent verification of corporate ethics and compliance programs, awards Ethics Inside Certification exclusively to companies that not only have implemented adequate standards, systems and programs to reasonably prevent compliance failures and ethical breakdowns, but that can also demonstrate the existence of a superior employee and leadership culture that promotes ethical business practices.

Ethisphere’s licensed credentialing partners look at more than 100 separate criteria during the Ethics Inside Certification process, including corporate citizenship and responsibility; overall compliance and ethics program; organizational health and culture of ethics; corporate governance; and regulatory history. No company is expected to excel in all criteria areas—yet the aggregate score must meet or exceed a level at which ethical behavior becomes the core expectation, fundamental compliance systems are in place, tone from the top is clear and the company’s actions bear unmistakable signs of good corporate citizenship. More information about Ethics Inside Certification is available at http://ethisphere.com/inside.

About Holland America Line [a division of Carnival Corporation and plc (NYSE:  CCL and CUK)]

Holland America Line’s fleet of 15 ships offers more than 500 cruises to 354 ports in 98 countries, territories or dependencies.  Two- to 110-day itineraries visit all seven continents and highlights include Antarctica, South America, Australia/New Zealand and Asia voyages; a Grand World Voyage; and popular sailings to ports in the Caribbean, Bermuda, Alaska, Mexico, Canada/New England, Europe and Panama Canal.

Fleetwide, the company features Signature of Excellence enhancements, a commitment totaling more than $525 million, that showcase the Culinary Arts Center presented by Food & Wine magazine — a state-of-the-art onboard show kitchen where more than 60 celebrated guest chefs and culinary experts provide cooking demonstrations and classes — Explorations Café powered by The New York Times, Digital Workshop powered by Windows, teens-only activity areas and all new stateroom amenities highlighted by flat-panel TVs and plush Euro-top Mariner’s Dream Beds.

World’s Leading Cruise Lines

Holland America Line is a proud member of World’s Leading Cruise Lines. Our exclusive alliance also includes Carnival Cruise Lines, Cunard Line, Princess Cruises, Costa Cruises and Seabourn. Sharing a passion to please each guest and a commitment to quality and value, World’s Leading Cruise Lines inspires people to discover their best vacation experience. Together, we offer a variety of exciting and enriching cruise vacations to the world’s most desirable destinations.  Visit us at www.worldsleadingcruiselines.com.

“OfficeMax is recognized as one of the ethical leaders in the retail industry,” said Robert Leffel, director of Compliance Advisory Services for Corpedia, a licensed Ethisphere Institute credentialing partner. “Highly noteworthy and commendable are OfficeMax’s organizational commitment to ethics, integrity and sustainable business practices, evidenced by a strong tone at the top, robust code of conduct and a good compliance program to match. OfficeMax has a well-developed environmental and social responsibility strategy, with excellent sustainability reporting, setting a great example of both depth and transparency.”

In bestowing OfficeMax with ethics honors including both the EIC and the 2012 World’s Most Ethical Companies (WME) designation, the Ethisphere Institute noted the company’s in-store recycling programs, focus on sustainable product sourcing, its social accountability audit of suppliers and its A Day Made Better program benefitting public schools.

“At OfficeMax we have worked hard to build our talent base and instill a culture of leadership, ethics, innovation and transparency,” said Ravi Saligram, President and CEO of OfficeMax. “These honors by the Ethisphere Institute are a tribute to the success of all our employees in exemplifying a deep commitment to ethical conduct in all their business activities.”

Ethics Inside Certification

OfficeMax received the EIC designation for 2012-2013 based on Ethisphere’s review of the OfficeMax’s ethics and compliance program, culture of ethics, reputation and leadership, corporate citizenship and responsibility initiatives, and governance systems.

NEW YORK, N.Y. – March 15, 2012 – The Ethisphere Institute, a leading international think-tank dedicated to the creation, advancement and sharing of best practices in business ethics, corporate social responsibility, anti-corruption and sustainability, announced today the sixth annual selection of the World’s Most Ethical (WME) Companies, highlighting a record 145 organizations that show leadership in promoting ethical business standards.

This year’s list covers more than three dozen industries, from aerospace to wind power, with 43 of the WME winners headquartered outside the U.S.

Each 2012 honoree – including U.S. industry standard-bearers like Cisco, Ford and Timberland and smaller international firms like the Ethical Fruit Company (UK), Tokio Marine Holding (Japan) and the Panama Canal Authority – was chosen for promoting ethical business standards and practices by exceeding legal minimums for compliance, introducing innovative ideas that benefit the public and forcing their competitors to follow suit. They demonstrate how corporate citizenship is undoubtedly tied to the success of a company’s brand and bottom line.

Click here or visit www.ethisphere.com/wme to view the complete list of the 2012 World’s Most Ethical Companies, past lists, and to read the methodology behind it.

“Each year the competition for World’s Most Ethical Companies intensifies as the number of nominations submitted for consideration grows,” said Alex Brigham, Executive Director of Ethisphere. “This year’s winners know that a strong ethics program is a key component to a successful business model, and they continue to scrutinize their ethical standards to keep up with an ever-changing regulatory environment. Corporate ethics has become much more important globally, as well, and that is reflected in the truly global nature of this year’s honorees.”

There have been 23 companies that have been honored each of the six years the WME has been awarded, including Aflac, American Express, Fluor, General Electric, Milliken & Company, Patagonia, Rabobank and Starbucks, among others.

“We recognize that when it comes to purchasing insurance, a big part of the decision is based upon the consumer’s perception of a company as being trustworthy, transparent and ethical,” Aflac Chairman and CEO Dan Amos said. “Our products represent a promise to customers that we will be there in their times of need, so we are proud to be a World’s Most Ethical Company for a sixth straight year because it sends a strong message from Ethisphere — the foremost authority on business ethics — that Aflac can be trusted.”

“Juniper’s engagement with Ethisphere has enabled Juniper to get a respected third party perspective on our ethics and compliance program,” said Mitchell Gaynor, Executive Vice President, General Counsel and Secretary of Juniper Networks. “Ethisphere has provided us with a unique view of best practices in this area, and we have a stronger program because of the engagement.”

There were 53 new and returning honorees from lists prior to 2011 for this year’s WME, including Blue Shield of California, Hasbro, Honeywell, L’Oréal, Petco, the Progress Group of Insurance Companies, and University Hospitals (Cleveland), among others.

“As a business, employer and responsible corporate citizen, L’Oréal strives to be exemplary and to operate with integrity and respect for each of our stakeholders,” said Jean-Paul Agon, Chairman and Chief Executive Officer of L’Oréal. “We believe that ethical behavior lays the foundation for future performance. We are honored and privileged to be part of Ethisphere’s World’s Most Ethical Companies list and are convinced that we can continue to positively impact the world by bringing beauty to everyone in an ethical manner.”

“SCA’s track record in ethical business practices and strong environmental performance is a business differentiator strengthening our competitive advantage,” said Jan Johansson, President and CEO of Sweden-headquartered hygiene and paper company SCA. “Our customers, consumers and investors trust us because of the high level of transparency we demand at all levels of our business. We have seen a true difference in our company’s performance as we have put sustainability on top of the agenda. We are honored by the recognition an Ethisphere inclusion implies.”

Ethisphere will celebrate the winning companies during an Honoree Dinner at New York’s Grand Hyatt Hotel tonight, with former U.S. Secretary of State Madeleine K. Albright serving as the program’s keynote speaker. The World’s Most Ethical Companies is also featured in the Q1 2012 issue of the quarterly magazine Ethisphere.

Media contacts:
Jennifer Mitchell
Ethisphere
(800) 369-7583 x7
jmitchell@ethisphere.com

Alex J. Stockham
Rubenstein Associates
(213) 537-0017
astockham@rubenstein.com

Gabe Roth
Rubenstein Associates
(212) 843-8067
groth@rubenstein.com

EVANSVILLE, IN – February 13, 2012 – Old National Bancorp earned the coveted Ethics Inside^® Certification from the Ethisphere Institute, a leading international think tank dedicated to the research and promotion of best practices in corporate ethics and compliance.

“Old National Bank clearly understands that effective ethics and compliance requires a strong commitment from the top and throughout the organization. ONB devotes resources to continually improve and support its program,” says Eric O. Morehead, Senior Compliance Counsel, Compliance Advisory Services for Corpedia, an Ethisphere licensed credentialing partner. “Old National Bank is not afraid to reach out to the local communities it serves.  ONB encourages and supports its associates to do the same and this has led to an effective partnership that benefits many of the communities where ONB operates.”

Old National Bank first earned its Ethics Inside Certification in 2010.  “The renewal of our certification is yet another tremendous honor.  This designation reaffirms our continued commitment to maintaining the highest standards in business and governance practices when serving our clients and communities,” said Bob Jones, President and CEO

Ethisphere, the provider of independent verification of corporate ethics and compliance programs, awards Ethics Inside Certification exclusively to companies that not only have implemented adequate standards, systems and programs to reasonably prevent compliance failures and ethical breakdowns, but that can also demonstrate the existence of a superior employee and leadership culture that promotes ethical business practices.

Ethisphere’s licensed credentialing partners look at more than 100 separate criteria during the Ethics Inside Certification process, including corporate citizenship and responsibility; overall compliance and ethics program; organizational health and culture of ethics; corporate governance; and regulatory history. No company is expected to excel in all criteria areas—yet the aggregate score must meet or exceed a level at which ethical behavior becomes the core expectation, fundamental compliance systems are in place, tone from the top is clear and the company’s actions bear unmistakable signs of good corporate citizenship. More information about Ethics Inside Certification is available at http://ethisphere.com/inside.