BETTER Ethics. BETTER Business: March - 2010

Comments on Proposed Changes to the U.S. Sentencing Guidelines

The public comment period for proposed changes to the U.S. Sentencing Guidelines ends today, March 22. To stimulate further discussion and encourage others to voice their opinion, we want to share our submitted comments on proposed changes to the Application Notes in §8B2.1 of the Guidelines. As is well known, §8B2.1 lays out the Sentencing Commission's "7 elements" for an effective compliance and ethics program. The proposed changes deal with two topics: document retention and appropriate responses to misconduct.

We support the Commission's proposal to add the following language to Note 3, which currently explains the responsibilities of management for the E&C program: "Both high-level personnel and substantial authority personnel should be aware of the organization's document retention policies and conform any such policy to meet the goals of an effective compliance program...and to reduce the risk of liability under the law (e.g. 18 U.S.C. §1519; 18 U.S.C. §1512(c))." This addition rightly underscores management's duty to understand the company's document retention policy and align it with compliance objectives, which include mitigating legal risk.

We suggest revising the following proposed addition to Note 6A, which expands on risk-assessment requirements: "(iv) The nature and operations of the organization with regard to particular ethics and compliance functions. For example, all employees should be aware of the organization's document retention policies and conform any such policy to meet the goals of an effective compliance program under the guidelines...and to reduce the risk of liability under the law (e.g. 18 U.S.C. §1519; 18 U.S.C. § 1512(c))."

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Reinventing Corporate Culture: Lessons from Toyota

In the 20 years since the first Toyota vehicle had been built in North America, the company had built a nearly mythic reputation for quality.  An army of passionately loyal customers affirmed Toyota's quality commitment through repeated purchases while investors fueled the company's forward march to become the world's top automaker.  The company's hard-won prize as the world's largest automobile company failed to carry the anticipated satisfaction.  Instead, Toyota's stubborn focus on quantity shattered the company's legendary commitment to quality.

In early 2010, after Toyota's top executives were grilled by a panel of US Congressional representatives and the company was pushed to recall more than 8 million automobiles worldwide, few observers believed that Toyota's reputation and financial strength could fall even further.  They were wrong.  Since then, there have been more recalls, more complaints about vehicle safety, and more accusations that Toyota's senior executives engineered a long-term cover-up of quality problems.

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New Report Highlights Competitive Advantages of Sustainability  

 

Ceres, a coalition of investors, environmental groups and other public interest organizations released a new report that highlights the business case for sustainability.  The report, entitled The 21st Century Corporation: The Ceres Roadmap for Sustainability, emphasizes the importance of companies taking on the strong efforts to solve social and environmental problems.

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