An investigative series by the New York Times and a performance piece by Mike Daisey featured on This American Life have put the spotlight on Foxconn, the Taiwanese company whose massive Chinese factories manufacture some of the world's most popular consumer electronics.

As well as working with companies like Dell, Motorola, Nokia and Hewlett-Packard, Foxconn assembles popular Apple products like the iPhone and iPad.

Here's a quick look at what we know about Foxconn. (The company disputes workers' accounts of abusive conditions. In a 2010 company report, Foxconn said it promotes "employee respect, an atmosphere of trust, and personal dignity.")

Working for Foxconn

1.2 million: number of workers employed by Foxconn in China, according to the New York Times.

40: Estimated percent of the world's consumer electronics manufactured by Foxconn.

7: seconds it takes Foxconn's workers to complete a single step of their work, according to a survey cited by the New York Times.

12: Hours in a typical work shift, according to interviews with Foxconn employees.

83.2: Average hours of overtime worked each month, according to a 2010 survey of Foxconn employee.

13: age of a Foxconn employee Mike Daisey interviewed outside the gates of a Foxconn plant in Shenzen.

91: cases of underage labor found by Apple's audits of its suppliers in 2010, the year Daisey visited China.

3,000: number of workers Foxconn could hire overnight, according to Apple's former worldwide supply demand manager.

10-20: percent estimated monthly turnover in Foxconn's workforce.

$7,500: amount founder Terry Gou used to start the anchor company of Foxconn Technology Group in 1974, according to the company website.

$5.7 billion: Terry Gou's estimated net worth as of March 2011.

Living Conditions

230,000: number of workers at "Foxconn City" in Shenzen, according to the New York Times.

13: tons of rice prepared each day at the central kitchen at Foxconn City.

$0.65: meal allowance for dinner at the Foxconn City canteen in 2010.

2: number of free swimming pools there, according to The Telegraph, which noted that the pools "are said to be quite dirty."

70,000: number of workers at Foxconn's Chengdu plant who live in company dorms, according to the New York Times.

20: number of employees sometimes packed into a three-room apartment.

200: Reported number of police officers who responded to a Foxconn dormitory riot.

Deaths

17: Number of reported suicides of Foxconn workers in China between 2007 and February 2011, according to Wired. Eleven workers died after jumping off buildings in the Foxconn Campus in Shenzen, which were then draped with preventive netting. (Wired noted that the rate actually seems to be below China's national averages.)

70: number of psychiatrists employed by Foxconn to prevent suicides, according to a 2010 announcement by CEO Terry Gou.

100: Estimated number of employees at a Foxconn factory in Wuhan who stood on the roof of a factory building this month to protest working conditions and wages. Several threatened to commit suicide, according to the New York Times.

$450: monthly salary a worker involved in that protest said employees had been promised for moving from the Foxconn campus in Shenzen to one in Wuhan.

34: continuous hours a Foxconn employee worked in 2010 before he collapsed and died, according to media reports.

4: workers killed last year by an explosion at a Foxconn factory in Chengdu, China that assembles iPads.

$22: approximate daily salary earned by Lai Xiaodong, a 22-year-old college graduate, working at a Foxconn factory in Chengdu, China, according to the New York Times.

$150,000: approximate amount the company wired Lai's family after he was killed in the aluminum dust explosion.

ProPublica is an independent, non-profit newsroom that produces investigative journalism in the public interest.   This article is republished with permission under a Creative Commons license.

Can big business do good in the world? Can corporations contribute to a healthier planet while still turning a profit? With each new headline about bad corporate behavior, it would be easy to assume that the answer to both questions is decidedly 'no'.

But in fact, a global army is hard at work every day to answer those questions in the affirmative. They are Corporate Idealists: people who believe that business can make the world a better place and are working from within to put their beliefs into action.

Where are these Corporate Idealists? They're in China's industrial zones, working with factory owners to make sure employees are paid and treated properly. They're in Silicon Valley, collaborating with product developers to protect privacy on the internet. They're in Africa, sitting on dirt floors with village elders to make sure that mining is done without disrupting indigenous traditions. They're in executive suites in London and New York, convincing their colleagues that protecting human rights and the environment is good for business.

Why should we care about them? Corporate Idealists are the change agents we must recognize and support if we are to tackle the biggest challenges facing our world today: climate change, food and water shortages, economic disparity. Big business can either solve or exacerbate those problems; Corporate Idealists are working to make it the former, not the latter.

I know that Corporate Idealists exist because I am one of them. I've been a Corporate Idealist since my first Students for Responsible Business (now Net Impact) conference as an MBA student in 1998. I then joined BP and worked in Indonesia and China for three years, consulting with people living near company sites and setting up social programs to make sure that BP's presence didn't harm local communities.

The Deepwater Horizon disaster last year challenged my belief that companies can be good, as I watched the company I supported for so long wreak havoc on communities around the Gulf of Mexico. But while that tragedy tested my faith, it affirmed to me that we need Corporate Idealists now more than ever: My experience with BP in Asia showed me that a company can do good and operate successfully given the right staff and resources -- but that work then needs to replicated throughout a company, and beyond.

Last year more than 5,500 companies around the world issued sustainability reports, up from about 800 ten years ago. An increasing number of companies are working with nongovernmental organizations to assess their socioeconomic impacts (see Oxfam's assessment of Coca-Cola and SABMiller, done in partnership with those companies) and to tackle particular issues, from supporting factory workers to protecting free expression and privacy on the internet.

The real question is this: How do we get the efforts of individual Corporate Idealists to add up to more than the sum of their parts? In other words, how can the work of committed individuals amount to the sweeping changes that we need?

To start, we need to state our shared values. We need a Manifesto for the Corporate Idealist: an outline of the principles and actions that will help us better align the interests of business and society.

Here's my proposed starting point for such a manifesto, based on my ten-plus years working in and with big business and the experience of other Corporate Idealists I've gotten to know over the years:

1. Renounce the carbon offset model. If a company doesn't pay a decent wage and refrain from polluting, it can't redeem itself by sponsoring youth soccer teams or museum exhibits -- or even by creating beautiful, innovative products. (Apple, I'm talking to you.)

2. Learn and improve the tools of business. I didn't need the finance or accounting I learned in business school to speak with those villagers in Indonesia, but I did need those skills to translate their needs into actions for the company. We also need better models of calculating risks, costs, and benefits, that take externalities into account.

3. Listen. Perhaps it's so obvious that a company should listen to its stakeholders that executives assume someone else is doing it. When I started working for BP in China in 2002, local staff were still calling the company by its former name -- British Petroleum -- because "B" in Mandarin can sound like slang for "vagina", and "P" for "fart". Perhaps a trivial (if memorable) example, but if a company fails to heed its own employees' warnings on something as basic as the company name, will it hear concerns about human rights and the environment?

4. Build community. If you're the only one in a company fighting for better practices, it can be a lonely job. Initiatives like the Global Business Initiative on Human Rights bring together Corporate Idealists from different companies to develop tools to support their work and connect with others facing similar challenges.

5. Share stories. Spreadsheets are important, but at the end of the day we're talking about people, not numbers. We have to keep reminding ourselves that every decision we make affects a worldwide supply chain of real human beings.

To be sure, simply following these five steps won't solve the world's problems: Regulators, consumers, and investors need to demand better company behavior. But we need Corporate Idealists and we need to help them succeed. Consider this Manifesto for the Corporate Idealist the beginning of a conversation we must all have, about how to align the needs of business with the needs of society.

Are you a Corporate Idealist? What's your Manifesto? Tell Christine Bader on Twitter: @christinebader.

Christine Bader is a Nonresident Senior Fellow at The Kenan Institute for Ethics, Duke University.  This article was first published on The Huffington Post and is republished with permission.

Watch Christine's TEDx talk, Manifesto for the Corporate Idealist.

Where can you find a company where employees are happy, have high energy, great morale, and speak the same organizational language? Where people know not only what the organization’s values are, but use those values as their basis for making decisions?

No, we don’t need to go to Shangri-La to find it. The road map, according to Joel Kurtzman, leads to common-purpose companies.  Kurtzman has spent more than 30 years working with global companies and their leaders.

Common purpose is a term Kurtzman uses to talk about a quality of leadership that creates an enormous impact in an organization’s culture and spirit – its soul, if you will - that drives success beyond financial statements. While the concepts aren’t novel, when taken together he has observed significant patterns of success for leaders and in companies when they are integrated and authentically and consistently applied.

In a recent interview, I asked him for some current examples of common purpose organizations: American Express , FM Global and Li & Fung Limited were on his list. Common purpose is about the type of leader a company has, he says: Amex’s CEO Ken Chenault has followed in the footsteps of former CEO Henry Golub who put a high priority on people, values and brand, helping employees understand the brand and values sufficiently that they make good decisions based on them.

Common purpose occurs, Kurtzman says, “when a leader coalesces a group, team, or community into a creative, dynamic, brave and nearly invincible we.”

“We,” that elusive grail which is the subject of countless team building exercises, Human Resources’ angst, and management books, is an outcome when the CEO creates a bigger purpose for the organization than just making money or reaching quarterly numbers. Kurtzman cites as examples Microsoft’s aim to change the world and NASA’s executing President Kennedy’s vision to put a man on the moon. In both, everyone knew what they were focusing on and what the organization stood for – a common purpose.

As a result of the financial crisis, the focus for most CEOs now, says Kurtzman, is thinking about making money, meeting next quarter’s numbers. As an economist he knows all about the importance of numbers, but what he sees changing and engaging cultures is more fundamental: tapping into the passion behind what a company stands for, to drive a common purpose.

Too many organizations, he points out, develop company values and purpose but don’t use them in decision making, so they exist on paper, or on a web site, but don’t become a daily way of creating and reinforcing a shared culture, a sense of “we.”

The sense of “we” starts with the leader. Leaders in any organization are under intense scrutiny, Kurtzman says. Those watching CEOs copy their style and behavior. In his extensive interviews with CEOs over the years, leaders have admitted the connections they have to their respective organizations are fragile, and can be easily broken.

CEOs need to know how to read their organizations’ emotional tone. Committed-to-developing-a-shared-“we” CEOs need to engage in a number of behaviors that build trust including leading-by-listening, building bridges, showing compassion and caring, demonstrating their own commitment to the organization, and giving employees the authority to do their job while inspiring them to do their best work.

Excessive executive compensation is a big barrier to being a common-purpose company Kurtzman says. “When people feel compensation is too much for those in leadership roles, it creates mistrust.” Leaders think they can survive with mistrust but ultimately they can’t,” he says.

More than 20 years ago, when Kurtzman was business editor at The New York Times, he asked leadership guru Warren Bennis a question: How do leaders inspire and encourage followers to take action? Bennis replied that good leaders are deeply integrated into the business and emotional life of the organization and have a deep connection, a real fit.

That question became the catalyst for Kurtzman’s most recent book, Common Purpose: How Great Leaders Get Organizations to Achieve the Extraordinary. The book is essentially a collection of leadership stories from Kurtzman’s interviews and research that illustrate how those in charge have developed or lost common purpose in their organizations, or whose styles precluded its possibility.

Kurtzman refers often to the success of 175-year-old FM Global, a commercial insurance company, and its current chairman and CEO Shivan Subramaniam in building a common-purpose company. The company is united around the purpose that most losses are preventable. One-third of employees are engineers and the other two-thirds are trained to think like engineers. Their focus is help clients identify and mitigate risks that would impact property, product or lives.

Common purpose is reinforced in several ways at FM Global: people hired are a fit with its goals and purpose; leaders are accessible, seek out opportunities to learn from employees, and believe knowledge is developed and embedded throughout the organization; employees have a common language and are developed to have a common understanding of the business and a quick, effective way to set directions;  communication is transparent; employees learn from and support each other, examining what goes wrong to fix it; and there is a formula for everyone sharing in the company’s success.

Subramaniam, who often eats in the cafeteria sitting with employees to listen to their ideas and comments, thinks of himself as an employee as well as the CEO. He follows, for example, the company policy that executives at a certain level fly business class in flights over two hours, rather than buying a corporate jet - which the board had encouraged him to do. He explained in his interview with Kurtzman: “But I told the board I felt it would send a terrible message throughout the company if we bought a private jet.”

Kurtzman’s book shares many other stories of when companies have created common purpose, healthy and functional organizations, and financial success. Some examples: Pixar, Google, Apple, Wynn Resorts, Continental, IBM, Ritz-Carlton, and Clayton, Dublier & Rice.

However, Kurtzman points out in our discussion that while HP was a common-purpose company under its founders (where people lived the HP way) and Toyota in his experience operated with true common purpose in the 1970s (with a sense of empowerment and respect for the individual) in neither case was it sustained.

He is the first to admit that achieving and maintaining a common-purpose company is hard work. “It is difficult for a company to keep a sense of common purpose for longer than a decade,” says Kurtzman. “It has to be nurtured or it goes away. Things happen. Leaders start losing touch with the organization.”

He estimates that 25 percent of companies have achieved creating a common-purpose organization. In general, he says, those that are likely candidates include: a young company (about 40 – 50 percent of start ups begin as common purpose); a company with a new, energized CEO; or an organization on its way back from losing its balance.

Leaders of conscious capitalism companies and those involved in creating and sustaining common-purpose organizations share a leadership style that involves a sense of “we,” that recognizes and rewards employees beyond money and creates a value proposition throughout the organization that impacts stakeholders.

What will it take for other business leaders - looking at the impact on their organizations of high turnover, poor morale, lost productivity, quality problems, and lost clients - to consider whether building a common-purpose leadership style might be worth the effort?

Gael O’Brien is a Business Ethics Magazine columnist. Gael is a thought leader on building leadership, trust, and reputation and writes The Week in Ethics.

Apple Inc.’s latest Supplier Responsibility report shows a 25% increase in audits of supplier facilities during 2010 to establish compliance with the company’s standards for hiring, training and worker safety.

The computer and electronics firm said it has “worked aggressively to prevent the hiring of underage workers” and is “leading the industry by requiring suppliers to return underage workers to school and to finance their education.”

Apple said in 2010 it had terminated business with three firms where management failed to show a serious commitment to Apple’s supplier policies.

The report also spelled out efforts by Apple and its supplier Foxconn Technology Group to address suicides at a Foxconn facility in Taiwan.  Apple said a report by an independent team of suicide prevention experts found that Foxconn had taken quick action, including hiring psychological counselors, establishing a 24-hour care center, and even attached large nets to buildings to prevent impulsive suicides. “The investigation found that Foxconn’s response had definitely saved lives,” Apple said.

The report for 2010 tallied 97 first-time audits of supplier facilities, up from 83 in 2009 and 30 repeat audits, up from 19.  Since 2007, Apple has audited 288 supplier facilities.

Apple said it has spent considerable effort to address exploitation of workers, often involving cases where immigrants who move from their home country to work in factories elsewhere are “charged exorbitant fees that drive them into debt.”  Apple classifies such practices as involuntary labor.

Apple labels as a “core violation” any practice or situation it considers contrary to the core principles of its Supplier Code of Conduct.  Its audits turned up 37 core violations in 2010, up from 17 in 2009.  Eighteen of the violations involved excess recruitment fees to labor agencies.  Apple said it has required suppliers to reimburse $3.4 million in excessive fees to workers since 2008.

Another 10 core violations involved underage labor at facilities in China. At one facility, 42 workers were underage and “we determined management had chosen to overlook the issue and was not committed to addressing the problem.”  Apple said it dropped that facility as a supplier.

At four facilities, audit materials were falsified; at another, a manager offered cash to auditors seeking to reduce the number of audit findings.   One core violation involved a chemical exposure and another involved unsafe elevated work without guardrails or safety harnesses.

To address the problem of underage workers, Apple said it has provided stronger age-verification tools, educated managers about dealing with third-party recruiters, and held managers accountable for recruiting practices of affiliated schools and labor agencies.

In 2010, Apple said more than 16,000 workers were enrolled in its computer-based learning program, which includes classes in English and in computer and technical skills.

It required management from all Taiwanese suppliers to attend a workshop on Prevention of Involuntary Labor, and invited government officials fro Taiwan, Thailand and the Philippines to provide information on laws about hiring foreign workers. The program will be expanded to suppliers in Malaysia and Singapore in 2011.

Apple spelled out efforts to require suppliers to use metals procured through a “conflict-free” process.  The issue involves metals including tantalum, tin, tungsten and gold believed to “fuel political strife in the Democratic Republic of Congo and neighboring regions.”  Small amounts of such metals are used in electronics components.  Apple is part of a working group that seeks to validate that smelters use “conflict-free” metals.

Apple said of suppliers audited in 2010, “more than 40 percent stated that Apple was the first company ever to have audited their facility for social responsibility compliance.”

The company said its audits found a number of facilities that used discriminatory practices in using medical or pregnancy tests; 76 facilities where records indicated workers exceeded weekly working-hour limits; 64 facilities with engineering safety violations; 54 facilities where workers weren’t wearing appropriate personal protective equipment; 80 facilities which weren’t properly storing or handling hazardous chemicals; and 37 that failed to monitor and control air emissions.

The complete supplier management report is available at Apple’s Investor Relations website.

Depending on whom you ask, when it comes to shareholder activism and corporate governance issues this year’s proxy season is a glass half full, a glass half empty, or a glass completely shattered.

On the pro-activist side:

Provisions of the 2010 Dodd-Frank financial reform bill, and related moves by the Securities and Exchange Commission, mean that shareholders for the first time will be able to weigh in on a number of issues.

The SEC in January adopted final rules that required shareholders get a “say-on-pay” vote on executive compensation and an opportunity to indicate how often they’d like such a vote.

Or, as Paul Hodgson, senior research associate at the Corporate Library, wrote in his Ratings Haiku V:

To say on pay or
Not to say on pay? Three years?
Or each blossom time?

The new rules apply starting with shareholders’ meetings on or after Jan. 21, 2011.

Many companies are recommending an every-three-year vote (one recent tally of 150 proxy statements found 82 companies recommending triennial, 47 annual), but there are exceptions.  Apple Inc. directors, for example, are proposing that the advisory vote be conducted annually.  (But, as previously noted here, Apple’s board opposed a shareholder proposal to adopt a written CEO succession planning policy.  Apple CEO Steve Jobs has had a liver transplant and this January announced he was taking a medical leave of absence.)

Proxy advisory service ISS recommends an annual vote, and in January, a group of 39 institutional investors with more than $830 billion in assets called for annual votes. “The discipline of an annual vote will encourage Boards to be more responsive and accountable on compensation,” said Timothy Smith, senior vice president of Walden Asset Management, one of the group’s members. And a number of major mutual funds have indicated they’ll support an annual vote.

Already this year shareholders have rejected a triennial schedule at Costco Wholesale (52.8% for an annual vote),  Johnson Controls (58.6% for every year), at Monsanto (62.2% for an annual vote), and at Jacobs Engineering (66%).  Monsanto subsequently announced it would conduct an annual say-on-pay vote.

A January analysis by the Latham & Watkins law firm observed that annual say-on-pay votes “may take some of the pressure off director elections” by directing attention to pay issues, while “less frequent votes may allow an unpopular pay practice to continue too long without timely feedback.”   Triennial votes, it suggested, “will provide shareholders sufficient time to evaluate the effectiveness of short- and long-term compensation strategies.”

The new rules also require advisory votes on executive compensation (a majority of Jacobs Engineering shareholders also voted against the company’s compensation practices) and on golden parachute provisions where mergers are in the works, although small public companies with a public float of less than $75 million don’t have to adopt such votes until 2013 annual meetings.  The Dodd-Frank legislation forbids brokers from giving proxies to vote shares without instructions from beneficial owners on matters relating to executive compensation; the change will cut down on the size of the vote and remove corporate leverage in voting broker proxies on pay issues.

Noted attorney Martin Lipton and colleagues, in a recent memo on governance, declares “This latest round of reforms is remarkable not because it has ushered in bold new ideas for improving governance, but rather because of the extent to which it has one-sidedly embraced the shareholder rights agenda and further expanded the ability of shareholders to direct corporate decision-making. As a result of the Dodd-Frank Act and other reforms, boards will increasingly need to solicit shareholder views and support for a range of decisions – including executive compensation and director nominations—that have traditionally been a core responsibility of boards.”

In Mr. Lipton’s view, “we have reached a point of serious debate…as to whether the scales have tipped too far in empowering shareholders and preventing boards and management from managing for the long term.”

Even if proxy access rules are struck down, Mr. Lipton says, “it is likely that activists will pursue shareholder proposals and bylaw amendments to impose proxy access on a company-by-company basis.”  Despite the legal uncertainties, he suggests, “companies will need to engage constructively and proactively with shareholders and, in the cases where directors nominated by shareholders are successfully elected, boards will need to work to minimize the potential for adverse effects on board stability, collegiality and effectiveness.”

He urges boards and compensation committees to “review compensation policies with great care, being mindful of pay-for –performance principles while also seeking to avoid policies that will encourage excessive risk-taking.”

He has commented several times on the increased problems in recruiting corporate directors, given regulatory and investor emphasis on “director independence at the expense of other skills and qualifications.”  Such factors “preclude the candidacy of insiders with extensive, day-to-day knowledge of the company” as well as industry experts with “naturally developed relationships and affiliations in the sector.”  He concludes “given the importance of expertise, there should be no complaint about adding additional inside directors to a board so long as a majority of the board consists of ‘independent’ directors.”

On the hurry-up-and-wait side:

The long-sought proxy access rules, adopted by the SEC last year, are frozen pending an aggressive legal challenge by the U.S. Chamber of Commerce and the Business Roundtable.

The SEC has adopted a rule allowing shareholders with at least three percent of ownership for at least three years the right to have their own board candidates listed on the proxy ballot without the need for an often-expensive proxy fight. The Chamber/Business Roundtable lawsuit asserts, among other things, that the SEC exceeded its authority, violated companies’ First and Fifth Amendment rights, erred in appraising the costs of proxy access, ignored evidence of adverse consequences of the rule, and ignored state laws on proxy access.  The SEC filed its response in January, and the case will be herd by the U.S. Court of Appeals for the D.C. circuit April 7.

A useful analysis of major arguments in the case has been published at the Conference Board’s Governance Center Blog.

An amicus brief supporting the SEC rule has been filed by the Council of Institutional Investors. CII executive director Ann Yerger says proxy access will “make companies more responsive to their shareowners and more vigilant in their oversight of management.”  And a group of 36 law professors, who hold varying views on many corporate governance and legal issues, have filed a brief arguing the SEC rule doesn’t violate the First Amendment.

While corporate pay and proxy issues are dominating the blogs and legal commentary, the 2011 proxy season will include a wide range of environmental, social and governance issues.  The Interfaith Center on Corporate Responsibility, whose members last year filed 308 shareowner resolutions, and withdrew dozens more after conducting dialogues with companies, has tallied 159 resolutions filed so far, SocialFunds.com reported in January.

In an interview with SocialFunds, ICCR executive director Laura Berry noted that at least 25 resolutions address corporate political spending, reflecting concern over the 2009 U.S. Supreme Court decision in the Citizens United case.  Other resolutions seek disclosure on indirect political spending by corporations through trade associations, address labor practices in agriculture, and examine healthcare access and how pharmaceutical companies can address neglected diseases, she said.

On the snarky side, one critic is boldly declaring “corporate governance is dead.”  John Richardson, who blogs on governance, risk and human rights issues at Global Investment Watch, declared at year end that “Corporate Governance as we know it is dead. Gone. Pfffft.  As 2010 comes to a close, we must all come to terms with the fact that this old clunker has seen its day. Its rusted hood ornament and fins are of a bygone era, an artifact of another time.”

After tracing the mid-2000s history of governance issues, and noting the various mergers in the proxy advisory world, Mr. Richardson declares “…the arcane discussions about executive pay, director responsibility and risk are proving to be ever more irrelevant in a world concerned about the influence of the corporate enterprise on society and the environment.  Corporate Governance as a tool for addressing these problems has lost its edge.  While these discussions remain important to the initiated, its backward-looking approach and its failure to influence the ills of global corporate conduct speaks to its ultimate irrelevance.”

His rant prompted James McRitchie of CorpGov.net to respond: “Richardson appears ready to throw in the towel even before the most significant reform, proxy access, has even been implemented.”  He cites increased numbers of issues submitted to corporate annual meetings and declares “if individuals embrace the importance of corporate governance in both their equities and in how their institutions vote, half the battle will be won.  Corporate governance is far from dead.”

Dead or not, governance continues to intrigue researchers.  The conservative Manhattan Institute for Policy Research has launched ProxyMonitor.org containing information on all shareholder proposals submitted for a vote between 2009 and 2010 at the 100 largest American public companies.

The Institute’s initial analysis of the proxy statements finds that “a substantial percentage of shareholder proposals have little to do with corporate performance or increasing share value. Issue-advocacy groups with social agendas that go beyond shareholder protection as well as labor unions with interests that sometimes conflict with those of the average shareholder are major sponsors of shareholder proposals. Also striking is the large role in shareholder activism played by ‘corporate gadflies,’ individuals who repeatedly initiate shareholder proposals despite having only small holdings in a wide variety of companies.”

Apple Inc., requested by a shareholder to adopt a written CEO succession planning policy, is asking holders to reject the proposal.

Apple CEO Steve Jobs in June 2010

Apple’s successorship plans are particularly sensitive because Apple CEO Steve Jobs underwent a liver transplant operation in 2009.

The Central Laborers' Pension Fund has proposed that the company “adopt and disclose a written and detailed succession planning policy.”

The plan, it declared, should include an annual review by directors, criteria for the CEO position, identification of internal candidates,  “non-emergency CEO succession planning at least 3 years before an expected transition,” and an annual “report on its succession plan to shareholders.”

The shareholder proposal notes that a 2007 study by Hay Group found that “85% of the Most Admired Company boards have a well defined CEO succession plan” that includes long-term and emergency planning.

In Apple’s proxy materials for the Feb. 23 annual meeting, directors urged a NO vote, declaring that the board has already implemented “many of the proposed actions” and that the company “maintains a comprehensive succession plan throughout the organization.”

Adopting the proposal, the directors said, “would give the Company’s competitors an unfair advantage” by publicizing confidential objectives and plans.  And, directors said, the proposal would undermine efforts to recruit and retain executives.  Naming potential successors, it said, would invite competitors “to recruit high-value executives way from Apple,” and could cause executives not named as potential successors to voluntarily leave the company.

Apple did propose that shareholders be given an opportunity to consider an advisory “say-on-pay” vote on executive compensation on an annual basis.

Photo by Matt Yohe, courtesy Wikipedia

Does a commitment to corporate responsibility provide cover for bad corporate behavior?  Three recent stories about companies behaving badly – the disastrous BP oil spill, GlaxoSmithKline’s disputed diabetes drug trials, and Apple’s lame response to the reception problems with its new iPhone – make commitments to CR look hollow at best. It’s not just commitments that matter, it’s corporate culture, set by the person at the top of the organization, but in reality determined by the employees and managers well below the C-suite.

Corporate culture is the underlying values and norms that tell employees and managers “the way we do things around here.” Although it doesn’t appear on a balance sheet, corporate culture is central to how a company performs. Within every organization there are also different subcultures,  which define day-to-day behaviors and ultimately the performance of business units and corporate functions. Operating in silos, these subcultures are typically not well understood by each other and therefore often work at cross purposes. It’s this lack of alignment that causes operational failures like the BP oil spill in the Gulf of Mexico or the reception problem following the launch of Apple’s iPhone 4.

A company’s commitment to its core values often appears inconsistent or worse, opportunistic. A 2004 study by Booz Allen, following a series of ethical breaches and billion-dollar lawsuits, and fines for legal and regulatory violations, found that three-quarters of the executives surveyed said they “felt personally pressured to demonstrate corporate values.” Yet when pre-occupied with maintaining the organization’s growth and financial survival, senior executives find it harder to observe and influence the basic work and behaviors within their organizations. As a result, operating responsibly becomes an after-thought rather than deeply ingrained in the culture.

Case in point: The environmental and safety goals BP posted on its Web site as far back as 2003 are no different than those of most other companies: “no accidents, no harm to people, and no damage to the environment.” Yet for the last decade, investigations into BP’s environmental, health and safety practices, starting with Alaska’s Prudhoe Bay pipeline spill in 2000, revealed a “pattern of the company intimidating workers who raised safety or environmental concerns” and “managers shaved maintenance costs by using aging equipment for as long as possible,” according to Newsweek magazine. Following BP’s ruptured pipeline on Alaska’s North Slope in 2006, newly appointed CEO Tony Haywood promised to improve safety amid what others internally have since described as a “toxic culture.”

According to news reports, in an effort to cut costs, layoffs at BP “seemed to target the best and most seasoned.” In a recent article in Compliance Week, an outside expert on offshore platform disasters, hired by the company to study its approach to catastrophic risk management, said “BP worried a lot about personal safety slips, trips and falls, but did not worry as much about low-frequency, high-consequence accidents.” Survivors of the Deepwater Horizon drilling rig explosion reportedly said, “it was always understood that you could get fired if you raised safety concerns that might delay drilling.”

In reading through BP’s sustainability reports since 1999, there is no mention of the Prudhoe Bay spill in 2000, a $100 million settlement with the state of Calif., in 2002 for falsifying inspections of fuel storage tanks, more than 700 safety violations at its Texas City refinery where an explosion in 2005 killed 15 people, or the subsequent impacts to the environment and the local economy on Alaska’s North Slope where BP later admitted to breaking safety laws by failing to guard against corrosion of the ruptured pipeline.

GlaxoSmithKline’s obscuration of the heart risks of its diabetes drug, Avandia, offers another case study of how senior management’s failure to ensure ethical behavior was inherent to the company’s culture resulted in a reputational nightmare, which underscored that corporate responsibility was not, in fact, a company priority. In its 2009 Corporate Responsibility Report, GSK’s CEO, Andrew Witty, renewed his company’s commitment to “increasing transparency of clinical research.” He went on to say, “I believe that being open and transparent about how we do business will help us build trust with our stakeholders.” Yet only a few months after the report’s release last March, the British pharmaceutical giant faced charges that it withheld from U.S. Food and Drug Administration regulators data showing that Avandia may cause heart attacks.

Coverage in The New York Times, claims GSK hid from consumers and federal regulators an Avandia drug trial from as far back as 1999 that showed the drug showed a risk of heart damage. A GSK spokesperson said that the company did not release the result of its study because it “did not contribute any new information.” In July Bloomberg Businessweek reported the company also “allegedly pressured medical researchers, who observed heart and liver problems in patients taking Avandia to stop disseminating their findings and in several cases contacted the doctors’ superiors.”

A study by cardiologists at Cleveland Clinic made public in 2007 found the drug increased the risk of heart attack by 43%. GSK officials contend no studies have proved Avandia is dangerous, yet the company has reportedly paid out almost $500 million to settle about 10,000 consumer lawsuits, which claim the company hid the drug’s heart risks. The company’s first U.S. trial over Avandia is set to start in October. In a pre-trial deposition, a former FDA official lawyers that GSK withheld from regulators a 2001 study showing Avandia may cause heart attacks. Further, GSK failed to disclose emails from researchers who concluded that the diabetes drug “strengthens the signals” of heart ailments.

Yet another example of a company saying one thing about its responsibility to stakeholders, while doing something else entirely was Apple’s recent release of the new iPhone 4. With a culture that reportedly extends beyond its employees to its customers, Apple’s initial response to consumer complaints about the smartphone’s signal coverage was anything but customer-centric. As reported in Computerworld, the company’s initial response, telling customers to “avoid gripping it in the lower left corner,” struck many as insulting. When contacted by a customer complaining about the iPhone’s poor reception, CEO Steve Jobs was dismissive, telling the customer “Just avoid holding it that way,” wrote The Mercury News. The company also advised users to buy and wrap a Bumper case around their new phones to improve reception.

Moreover, according to the Wall Street Journal, Apple engineers warned their superiors of the antenna’s signal problems before the June launch. After a flood of criticism, at a press conference in mid-July at Apple’s Cupertino, Calif., headquarters, Jobs, appearing far more humble, finally did the right thing, offering buyers a free case and a full refund if their phones were returned within 30 days.

These three stories are common in the corporate world. Anyone who has worked for a large company can quickly recognize the mixed messages that come from those above.  While people at the top, with their sights set on becoming the CEO, will mimic their boss’s behavior, those at the bottom, where most of the best operational solutions come from, grow disillusioned and cynical, and start looking elsewhere for an employer whose values more closely match their own.

There is a bright side to all this. The Booz Allen study found, among those companies that reported superior financial results, their core values, such as adaptability, innovativeness, inclusion, and respect for others, “were explicitly linked to how they do business” and reinforced day-in and day-out by their CEOs.

The CR and sustainability movements are filled with success stories that include improvements in environmental practices, increases in corporate giving that today reach millions of people around the world, and greater oversight and responsibility for the working conditions of contract workers. Yet the role of the CEO as a leader and model for others in building and sustaining a truly responsible and transparent organization should take center stage. Equally important: a board of directors that insists the company doesn’t just pay occasional lip service to integrity and ethical behavior. The board should hold itself and the company’s top executives, to the highest standards of corporate responsibility.

Neil Smith is managing partner of SmithOBrien, a management consulting firm in New York City that specializes in corporate responsibility strategy development, organizational change and measurement.

Dear EarthTalk: Where can I find information on which electronics and their manufacturers are greener than others, with regard to components, manufacturing processes and end use efficiency? -- John Franken, New York, NY

Nokia got top honors from the Greenpeace Guide to Greener Electronics for the second year in a row. Pictured: The Nokia N97.

Now that many consumers are beginning to care about their own environmental footprints, manufacturers are responding with loads of greener offerings. One good place to find them is the Greenpeace Guide to Greener Electronics, which ranks the 18 top manufacturers of personal computers, mobile phones, televisions and game consoles according to their policies on toxic chemicals, recycling and climate change. Greenpeace hopes that by publishing and regularly updating the guide they can both educate consumers about their choices and influence manufacturers to eliminate hazardous substances, take back and recycle their products responsibly, and reduce the climate impacts of their operations and products.

According to Greenpeace, the top five electronics manufacturers from a green perspective are Nokia, Sony Ericsson, Philips, HP and Samsung. These companies get high marks with Greenpeace for eliminating or scaling way back on the use of hazardous chemicals linked to cancer and other health and environmental problems, which in turn makes recycling their products less problematic.

Nokia gets top honors from Greenpeace for the second year in a row: All of the company’s new phone models and accessories for 2010 are free of brominated compounds, chlorinated flame retardants and antimony trioxide, three of the most toxic chemicals used commonly in most mobile phones and other consumer electronics today. Toshiba, Microsoft and Nintendo are the last place finishers on Greenpeace’s list for various reasons, including backtracking on or failing to make commitments to phase out chemicals used in the production of vinyl plastic (PVC) and brominated flame retardants (BFRs).

Another good place to find info on green electronics and related products is the new website of TopTen USA, a non-profit that identifies and publicizes the most energy-efficient products on the market. The goal of the group—which is part of a global alliance of like-minded non-profits—is to make it easier for consumers to find the most energy- and money-saving models, which in turn encourages manufacturing innovations that will shift the whole market in a greener direction. Besides listing the greenest individual models of desktop computers, laptops, monitors and televisions TopTen USA also lists the greenest refrigerators, freezers, dishwashers, clothes washers and even vehicles.

The non-profit Green Electronics Council, initially set up to help government, institutional and corporate purchasers evaluate, compare and select electronic products based on various environmental attributes, has now opened up its EPEAT green certification database to consumers. Some 1,300 computers, thin clients, workstations and monitors from dozens of manufacturers now bear the EPEAT certification label ensuring compliance with green manufacturing and recycling standards. All federal purchasers are required to choose between EPEAT-certified models when possible, and the database has steadily gained traction across a wide range of industries. Now consumers can freely browse the listings to see how various items from the likes of Apple, LG, Panasonic, Lenovo and Sony, among others, stack up.

Photo by William Hook, courtesy Flickr

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In a demonstration of how perception can sometimes trump reality, Johnson & Johnson topped a list of companies perceived by American consumers as having the best reputations for corporate social responsibility (CSR) practices.

The Corporate Social Responsibility Index, developed by the Boston College Center for Corporate Citizenship and the Reputation Institute, attempts to measure how companies' reputations are affected by public perceptions of performance related to citizenship (the community and the environment), governance (ethics and transparency) and workplace practices.

The 2010 CSR Index is based on a survey of 7,790 online U.S. consumers conducted in January and February 2010.

Johnson and Johnson has since admitted - months after the CSR Index survey was conducted - that it misled regulators and consumers by using company-paid contractors to buy defective Motrin painkiller products from store shelves rather than announce a recall.

In testimony before a Congressional committee only two weeks ago, company CEO William Weldon said, “This was not one of our finer moments.”  The “phantom recall” is reportedly the subject of a U.S. criminal investigation and at least one shareholder lawsuit.

The 2010 CSR Index shows the following companies in the top 25 positions:

1. Johnson & Johnson
2. The Walt Disney Company
3. Kraft Foods Inc.
4. Microsoft
5. PepsiCo
6. Apple
7. Hershey Company
8. SC Johnson
9. Kellogg
10. Google
11. Caterpillar
12. Intel
13. Publix Super Markets Inc.
14. JC Penney
15. Green Mountain Coffee Roasters
16. Campbell Soup Company
17. Marriott International
18. Anheuser-Busch InBev
19. UPS
20. Adobe
21. AmerisourceBergen
22. General Mills
23. Clorox
24. Eastman Kodak
25. Fidelity Investments

Companies with the largest year-over-year gains in the Index’s top 50 companies included Johnson & Johnson, Apple, Caterpillar, Intel, Adobe, Dell, AMD, Unilever, Goodyear, Dunkin’ Brands, Texas Instruments and Starbucks.

“Looking at the rankings by industry sectors, it appears the public has positive attitudes about companies that provide them with creature comforts,” with the beverage, consumer products and food manufacturing industries topping the rankings, the Index report said. Companies that fell most in the Index ratings “were in industries plagued with larger reputation challenges” such as automotive and financial services, according to the report.

The report said that many of the companies in the leading industry sectors “are also successful communicators of their CSR efforts and link those efforts with their brand. Communicating about corporate citizenship efforts becomes even more important in an age of skepticism when only two in 10 consumers trust what companies say in their advertising.”

Regulators and rulemakers led the list of 100 most influential people affecting corporate governance in America’s board rooms in 2010, according to the National Association of Corporate Directors.

Administration officials on the list include President Barack Obama, David Axelrod, Rahm Emanuel and Valerie B. Jarrett.  Re-elected to the list were Sen. Christopher Dodd and Rep. Barney Frank, authors of the Wall Street Reform and Consumer Protection Law, and Securities and Exchange Commission Chairman Mary L. Schapiro.

The list, published in Directorship Magazine, is based on a survey of 15,000 public company directors and executives. The magazine doesn’t rank the 100 but instead selects several people each from a number of categories including regulators, directors, CEOs, governance policy makers, attorneys and professors.

Corporate directors in the top 100 include Dina Dublin (serving on the boards of Microsoft, Accenture, Pepsico); J. Michael Cook (Comcast, Burt’s Bees,  International Flavors and Fragrances);  Raymond J. Groves (Boston Scientific);  Bonnie G. Hill (Home Depot, AK Steel Holding, California Water Service Group, Yum! Brands); and Mellody Hobson (DreamWorks Animation, Estée Lauder, Starbucks).

CEOs who are also top 100 directors include Steven Ballmer of Microsoft, Rex Tillerson of ExxonMobil, Warren Buffet of Berkshire Hathaway, Steve Jobs of Apple, and Ellen Kullman of DuPont.

Based on the selections, Harvard University claimed bragging rights.  According to the Harvard Law School Forum on Corporate Governance and Financial Regulation blog, the Directorship 100 list includes twenty-seven individuals who are Harvard Law School faculty or fellows, guest Contributors to the blog, and/or Harvard Law School alumni – suggesting, the blog says, that Harvard and its governance program play  “a central role in the corporate governance landscape.”

Said Directorship Magazine:  “All members of the Directorship 100, regardless of how they arrived here, have power and influence. Some of it is new, some of it is long-standing.  Our modest job is to reveal those who exert the kind of influence that will permit the continued, if sometimes shaky, path that our system of capitalism is on, and the importance of corporate governance as a critical guidepost along the route.”