CEOs for all their talents are not magicians. There isn’t a wave of the wand for a quick turnaround or a potion that will drive up a stock price. Or at least there aren’t ones available so far. Short of the disguised super hero, boards have to rely on their due diligence and judgment in assessing the right candidate.

Sometimes that doesn’t work out well.

Reader’s Digest CEO Tom Williams was fired in September 2011, less than five months after he took the job, replaced with a board member; Also in September, Hewlett Packard (HP) CEO Leo Apotheker, fired after eleven months, was replaced by board member Meg Whitman, former candidate for Governor of California and former eBay CEO. Other recent high-profile CEO firings include Carol Bartz at Yahoo! and Ernst Lieb at Mercedes-Benz USA.

In monitoring CEO departures, firings are often cloaked as resignations or retirements, and are under-reported. In the monthly reports done by outplacement firm Challenger, Gray & Christmas through the end of third quarter 2011, 922 CEO departures were tracked. September’s tally of 108 was the highest since September 2010.

The firing of a CEO and how he or she leaves their position often reveals a lot about them, their bosses, and their organization. At HP and Yahoo, for example, expectations about turnaround progress and financial results weren’t being met. For Daimler AG, Mercedes-Benz USA’s dazzling results in luxury vehicle leadership didn’t excuse the CEO’s failure to meet Daimler’s zero tolerance for ethical violations.

Apotheker hasn’t discussed publically his reaction to how he was fired. He had to have seen the media reports that HP shares rose 7 percent on the rumor September 21 that he was being replaced by Whitman at a board meeting the next day. He is reported to have gone to the meeting prepared to discuss strategy, the meeting’s original purpose.

Immediately upon being fired, Apotheker sent an upbeat email to employees thanking them for their efforts, accomplishments together, and dedication which he said inspired him. His consolation prize? A rich severance package that critics argue perpetuates the practice of rewarding CEOs for failed performance. During Apotheker’s tenure, HP’s stock price dropped $16.00 a share.

In an effort to distance the current HP board from the board 11 months prior that hired Apotheker, the new executive chairman Raymond Lane, went to lengths to point out that most of the 13 board members, including Meg Whitman, were appointed in 2011 after Apotheker’s selection. Lane said the new board evaluated Apotheker and found him lacking in leadership, execution and communication. Lane, sensitive to criticism HP’s board has faced in the past (a 2006 pre-texting scandal and the departure of former CEO Mark Hurd) is positioning the board as being new; however six of 13 members were on the board when one or both issue(s) came before it.

Yahoo has had its challenges. Bartz was hired in 2009 to replace co-founder Jerry Yang and lead a turnaround. Half the board members who voted to fire Bartz hadn’t been on board when she was hired. Shares increased from $12.90 to $13.70 in after hours trading on news of her firing September 6, 2011; financial results were about the same as when she had been hired.

Board chairman Roy Bostock, chair when Bartz was hired, fired her over the telephone when she was out of town on business - not a technique likely to catch on as an effective way to show respect and contain damage. (Yahoo is now pursing potential buyers for Yahoo’s core businesses as well as a CEO search.)

Bartz responded by emailing Yahoo’s 14,000 employees that she’d been fired over the phone by the board chairman. She wished them the best, saying it had been her pleasure to work with them. The next day she gave an interview to Fortune detailing how Bostock had handled the firing. She called the board members “doofuses” and used the salty language she is known for: “These people f---ed me over,” she said.

John Challenger, CEO of Challenger, Gray & Christmas, referred to Bartz’s exit as the “burning the bridge method.” Generally boards and leaders are cautious on the leader’s exit, Challenger said in a recent interview. “These issues are delicate and most people don’t want a messy divorce. The ideal is to do it quietly, and both parties move on.”

What is the best way for a leader to leave? “With grace,” Challenger replied, “because there is usually fault on both sides.”

Some CEO departures seem like the proverbial bolt out of the blue. Mercedes’ Lieb enjoyed a five-year tenure of successful turnaround, great sales results, market leadership, industry respect, and high dealer approval. But that wasn’t the whole story.

In April 2010, Daimler AG and its subsidiaries in Germany, China and Russia pleaded guilty to violating U.S. anti-bribery laws and were fined $185 million. As part of a deferred prosecution agreement with the Justice Department, changes were made in how Daimler handled compliance throughout the world. Changes that apparently Lieb didn’t apply to himself. He is reported to have used company money for personal expenses, disregarding warnings he received.

Lieb was fired October 18, 2011. He remains with Mercedes in a capacity the company hasn’t yet explained. He has made no public statement. Mercedes USA CFO Herbert Werner replaced him, pending finding a permanent replacement. By removing Lieb from his CEO post, Daimler Chairman Dr. Dieter Zetsche sent a message throughout the Daimler organization that achieving outstanding business results doesn’t supersede compliance and ethical behavior.

So what lessons can be drawn from all this?

First, and maybe most importantly, hire the right CEO to begin with. Given the turnover in boards, directors would be well served to read the excellent, and still relevant, 2002 Harvard Business Review article Don’t Hire the Wrong CEO by Warren Bennis and James O’Toole.

Turnaround situations have little margin for error so how a board and CEO work together requires a unique partnership. Neither the executives nor the directors came off well in the Yahoo and HP examples. Each turnaround has to balance the urgency of expectations against the reality in which a CEO needs to create success. In the search for the winning strategy, how Yahoo and HP directors work with their changes in leadership this time around will reveal what, if anything, has been learned.

Shareholders aren’t served by blame games – where leaders call boards incompetent or boards make leaders scapegoats. If directors and leaders don’t take the time to develop the skills to work through difficult conversations in the boardroom, the issues when they surface in the media undermine confidence in the company.

Modeling and following ethical standards matter. Lieb apparently didn’t understand what was at stake for Daimler in needing to raise the bar on its adherence to compliance and ethics.

Just as there is no magic wand to deliver results, there is no short cut to understanding what is expected. Leaders rise and fall on how they get that message.

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.

In their groundbreaking book on failure, When Smart People Fail, written more than 20 years ago, Carole Hyatt and Linda Gottlieb talk about failure as a judgment about an event. “How well you cope with that event in large part determines what kind of person you become.”

Hyatt and Gottlieb interviewed about 200 professionals in many fields, as well as celebrities, and business and industry leaders. They found most had experienced personal or professional failures. Common reasons included poor interpersonal skills, wrong fit, lack of commitment, self destructive behavior, poor management skills, and bad luck.

The way back from failure, the authors said, was to use the power of one’s mind to analyze what went wrong, reinterpret your story, re-label yourself, and expand your options.

Because men have dominated in business and political environments, they’ve had more opportunities to take risks and learn from the experience of both success and failure and how to interpret it, which enhances their self confidence. Women generally haven’t had the same exposure.

In a list of 50 famously successful people who failed at first,  Henry Ford, R. H. Macy, and Walt Disney are mentioned for having several unsuccessful business ventures before they figured out how to lead successful companies. They are three of 43 men on the list. Rounding out the 50 are only 7 women – Oprah, three actresses, two writers and a poet.

Women are also still developing their political metal. And as the late Geraldine Ferraro was often quoted as pointing out, “If you don’t run, you can’t win.” Abraham Lincoln, proof of that theory and the importance of resilience, endured seven political defeats, including losing the nomination for vice president in 1856 and his second run at being a U.S. Senator in 1858, before being elected president just two years later.

Very few of us will become president of the United States. Just as comparatively few will make it to the C-Suite, let alone become CEO. But for those who do, leadership skills are constantly put to the test.

What is the difference between someone who becomes a good leader and one who doesn’t? The ability to learn from mistakes, says Joel Kurtzman, a senior fellow at Milken Institute and executive director of the Center for a Sustainable Energy Future.

Leaders need to learn from their own failures as well as to create an environment where it is safe to fail, an environment that supports innovative behavior, he says. In a recent conversation, Kurtzman pointed to 3M as creating that kind of environment. Leaders ask employees involved in product innovations what they’ve learned from failure, he says. They ask if something is a total failure, or if it can be repurposed or used in a different form?

“If you have an environment where people are tolerant of failure, there are more new ideas, and more people embark on new paths, start new initiatives and break new ground,” he says. Entrepreneurship is low in Spain and parts of Europe, he points out, with failure seen as harming reputation, difficult to recover from. By contrast, there is a high level of entrepreneurship in the United States, Canada, Scandinavia, and Israel, countries more tolerant of failure.

I asked him about second acts for leaders who have initially failed. He referred to Steve Jobs, who failed at Apple the first time, and then at NeXT, the company he founded; when Jobs returned to Apple, Kurtzman says the climate had changed, and Apple’s share price had dropped to $4.00. Now the stock is around $350 a share. “You often get your second chance when no one else wants it,” Kurtzman says.

Second chances also come about because of the strength of one’s network.

It took John Thain, former chairman and CEO of Merrill Lynch, about a year to find his new role as chairman and CEO of CIT after being fired by former Bank of America chairman and CEO Ken Lewis. In the economic meltdown, Thain was a poster child for wretched excess, nailed for spending over a $1 million refurbishing his office at Merrill. He has since worked aggressively to repair his reputation.

Mark Hurd was hired as co-president of Oracle, reporting to his friend, CEO Larry Ellison, a month after being fired by HP’s board. Hurd lost the board’s confidence over how he handled his relationship with a marketing consultant.

It is too soon to tell how these second acts are going and the degree to which Thain and Hurd learned from mistakes.

Have ideas about failure changed in the last 20 years? I asked Carole Hyatt for an update since the publication of When Smart People Fail. She expressed concern about executive and professional women over 50 who have lost their jobs, calling them a new breed. It is harder for them to get their self confidence back, to have them remember how great and successful they were, she says.

These women, who often headed departments or divisions and made six figure salaries, were intrapreneurs, although they don’t think of themselves that way, she says. Meanwhile, corporate jobs are going to younger people and these women’s prospects are at smaller companies at less salary.

Unlike their male counterparts, who “usually have networks they have been in for a long time,” she says, “many women don’t have these networks because they were married to their jobs.” Often single, she says, they have supportive friends not likely to be in positions of power, given the comparatively small number of women in C-suites or on corporate boards.

Hyatt now runs The Leadership Forum and has worked with 2400 women leaders worldwide to advance their careers, almost 10 percent of whom are without jobs and over 50.

With all the challenges facing leaders with and without jobs, I asked Kurtzman what was an enduring quality of success? He responded that it was the capacity of men and women leaders to engage employees. He referred to entrepreneur Steve Wynn. It has been said of Wynn that if he were penniless and dropped into any major city, he would emerge a millionaire in a year. The reason why, Kurtzman says, is that “people who can create success know how to mobilize and motivate others.”

During crises or challenges, these leaders know how to relate to what employees are feeling, and get them to respond, focus and perform. They are resilient, says Kurtzman, because they understand how to work with others.

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.

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.

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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Recent leadership failures in several high profile companies draw increased attention to the reality that achieving goals – performance – is only part of the formula for success. Another critical piece is the way leaders do it which impacts others – relationships.  Leaders who are low in self-awareness, self-regulation, motivation, empathy and social skills lack something called “emotional intelligence” (EQ), a behavior model popularized by the work of Daniel Goleman.

Rather than being one of the many leadership fads that shed fleeting light on how those in power can be more successful, EQ is an enduring mirror that reflects back who a leader is and how he or she behaves, defining “tone at the top” more compellingly than any words on email, paper or video.

EQ also has a direct bearing on corporate reputation, something that boards of directors have watched impact stock price, media coverage, public opinion and a leader’s viability. Consider how public sentiment turned more negative against BP after former CEO Tony Hayward made the comment, “I want my life back,” and later watched his yacht race while gushing oil was destroying the livelihoods of Gulf residents.

Recently, retired Coast Guard Adm. Thad Allen gave BP credit for doing about as well as any company could have in stopping the oil flow, but Allen, in charge of overseeing the government and industry response to the Gulf spill, gave BP low marks for how it dealt with the people and communities affected. If leaders don’t feel or know how to genuinely express empathy, it makes it that much harder for them to be trusted or supported.

Ethical Failures

Korn Ferry’s Robert Hallagan, Vice Chair and Managing Director, Board Leadership Services, says the percentage of cases where EQ derails a CEO is higher than what we read about in the media, but still a small percentage of the total population of CEOs. “However, because of the press around it,” Hallagan says, “boards are becoming more sensitive to EQ.” Korn Ferry uses various assessment tools to assess EQ and other leadership competencies in the searches they do.

“Leaders’ lack of emotional intelligence can lead to ethical failures if they believe they will never get caught and feel smart enough to worm their way out of it,” says Keith Darcy, Executive Director of the Ethics and Compliance Officer Association. “Arrogance distorts a leader’s capacity to read accurately situations. They can reach a position of power and sometimes develop contempt for ‘the small people’ as BP Chairman Carl-Henric Svanberg was quoted describing the Gulf residents.”

In a recent Wall Street Journal article, Jonah Lehrer talks about the contradiction of power, essentially how nice people can change by having authority. To the point on vulnerability to ethical lapses, Lehrer says that “people in power tend to reliably overestimate their moral virtue, which leads them to stifle oversight. They lobby against regulators, and fill corporate boards with their friends. The end result is sometimes power at its most dangerous.”

Lehrer points out that company surveys are a good barometer of what is happening in the culture of the organization, and surveys provide evidence that the vast majority of rude and inappropriate behavior comes from the offices of those with the most authority.

One of the fallouts from former HP CEO Mark Hurd’s ouster seems to bear witness to this. Immediately after his resignation was announced, past and current HP employees began commenting on blogs about Hurd’s arrogance, rudeness, and treatment of people he disagreed with in meetings. He had the lowest employee approval rating (34 percent) of major tech industry CEOs.  Granted, few CEOs who are credited with significant cost-cutting and layoffs win popularity contests, but a healthy amount of EQ can mitigate the impact of difficult decisions.

Importance of Soft Skills

Recent publicized leadership failures do invite thinking about what it takes to be a good boss, a theme in an article in the most recent McKinsey Quarterly.  Self-awareness wins as probably the most important skill good bosses must have because, aware of their flaws, these bosses work not only to overcome them and reverse the resulting damage, but involve others to help compensate for whatever their own weaknesses might be - and the organization is stronger as a result.

In the rush to find what works, what will create leadership success, something has been staring us in the face, not often acknowledged. Executive coach Jordan Goldrich, who works with the Center for Creative Leadership, points out that “increasingly, research is showing that what we used to think of as the soft skills (building and mending relationships, communication, and humility etc.) are completely connected to the business results.”

A recent story about incoming General Motors’ CEO Daniel Akerson used the headline “Brash, Blunt, Demanding.” Recognized for his discerning questions and for holding others accountable, a style that gained him respect on Wall Street in his role as a GM board member, Akerson will take over on September 1 as CEO. Tagged with a style of being brash, blunt and using colorful language, he will have a chance to demonstrate if soft skills are also important to the success of the new GM.

“It’s interesting (that) leaders lacking EQ see no higher purpose generally than themselves, hearing nothing more than the sound of their own voice, and can’t see beyond quarterly results,” says ECOA’s Darcy. “Those with a well developed sense of self are capable of hearing the deep moaning in the world. They realize everything that we do gets done with, by, for, and through people. They understand that the well being of people translates into a well functioning organization.”

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.

Hewlett Packard’s Board of Directors demonstrated on Friday (August 6, 2010) that if you violate HP’s Standards of Business Conduct (SBC) you can lose your job, even if you are the chairman and CEO.

Mark Hurd, who had served as HP’s CEO for the last five years (and chairman for four years), resigned at the Board’s request after an investigation concluded he had engaged in inappropriate behavior that violated HP’s SBC. The investigation initially began in response to a sexual harassment complaint by a former marketing contractor who retained Gloria Allred (known for taking on high-profile cases) to represent her. While HP did not find that the facts supported the complaint, they did reveal behavior the Board would not tolerate, paying a big severance package  to end the relationship.

Hurd’s severance agreement is outlined in an SEC filing granting $12.2 million, COBRA benefits, and stock options for a total package estimated to be somewhere between $40 and $50 million.

In a letter to employees August 6, 2010  interim CEO Cathie Lesjak outlined where Hurd had violated the SBC and the reasons for his departure. Lesjak, who also continues as CFO, wrote that Hurd “failed to disclose a close personal relationship he had with the contractor that constituted a conflict of interest, failed to maintain accurate expense reports, and misused company assets.” She indicated that each was a violation of the SBC and “together they demonstrated a profound lack of judgment that significantly undermined Mark’s credibility and his ability to effectively lead HP.”

The letter reminded employees that everyone is expected to adhere strictly to the SBC in all business dealings and relationship and said senior executives should set the highest standards for professional and personal conduct.

Hurd, who has been credited with driving HP’s turnaround, said in HP’s press release that “there were instances in which I did not live up to the standards and principles of trust, respect and integrity that I have espoused at HP….”  He added that his resignation “is the only decision the board and I could make at this time.”

However, Hurd apparently fought resigning initially offering instead to pay HP back for the disputed funds. The board sent a critical message to HP stakeholders that delivering impressive financial and performance goals, as Hurd had done, wasn’t going to compensate for unethical conduct.

Hurd did get a free pass of sorts in 2006 when HP’s board violated HP’s SBC and “Global Master Privacy Policy” by approving pretexting to try and stop board leaks. The ensuing scandal involved federal and state investigations, a $14 million fine, loss of trust and reputation, and months of negative publicity. Hurd apologized but hid behind his performance role, saying he was focused on the turnaround and expected that others would ensure the compliance issues were handled appropriately.

Just as leaders don’t get a free pass when they miss performance goals, there ultimately isn’t a free pass when ethical standards aren’t met. Trust is essential in sustaining business performance. Leadership without ethical behavior is a failure of leadership.

So when Hurd wrote some time ago in the SBC’s preface that “We want to be a company known for its ethical leadership….” the problem wasn’t that the standard was too high to meet. The issue is Hurd wasn’t engaged in making real what that meant for him.

His message in the preface continued: “Let us commit together, as individuals and as a company, to build trust in everything we do by living our values and conducting business consistent with the high ethical standards embodied within our SBC.”

Tone at the top only counts when leaders use words that they believe in enough to live.

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, a weekly column where this article was first published.

It has been fascinating to watch over the last decade as more investors around the world actively embrace the importance of companies acting responsibly on environmental, social and governance (ESG) issues.  And equally, if not more important, we have seen companies globally step up and confirm the importance of being a responsible corporate citizen and its central importance for protecting and building shareholder value.

Walden Asset Management recently conducted research on how companies see their roles in this evolution. The wide ranging quotes compiled below all connect to the premise that being a responsible company is good for the bottom line.  What’s significant about the quotes is that they all come from the companies themselves, drawn from several dozen corporate social responsibility reports (CSR) including a wide range of industries.

Please understand that including a quote from a company does not mean that I or Walden Asset Management automatically think this company is a “living model” for good CSR reporting or performance.  However, these quotes do illustrate the expanding belief that CSR has become vitally important for a company’s business, and that transparent reporting is, as one CEO said, one of “the prices of doing business today.”

Special thanks go to Carly Greenberg, a Summer Associate at Walden, who painstakingly reviewed dozens of CSR reports to gather this information.

Industry: IT

Intel

From the President and CEO statement, Paul S. Otellini

“Corporate responsibility is about doing the right things right.”

“Our approach has created value not only for our stakeholders and society, but also for Intel.  We have reduced costs through energy conservation investments, minimized risks by proactively working with our communities and supply chain, and enhanced our reputation as a leading corporate citizen by building trusted relationships around the world.” (pg. 2)

HP

“As one of HP’s seven corporate objectives, global citizenship has long been integral to the success of our business. We’re responding to pressing issues, such as mitigating climate change, using energy more efficiently, enriching education and improving healthcare, by providing solutions that are transforming how people live, work and connect.” (pg. 3)

Dell

From the Letter from CEO, Michael Dell

“Dell has a full-time commitment to being a responsible corporate citizen. It’s a commitment driven by the types of goals, strategies and accountabilities that characterizes every part of our business.” (pg. 4)

From the Text of the Report

“We live in an increasingly complex world. That reality, combined with the financial downturn of the global economy and the issues facing our planet and our communities, means business as usual is not enough. To make a meaningful difference, we must inspire and innovate….

"During times like these, we must continue to build trust with customers and stakeholders by demonstrating our positive impact on society and the planet and developing meaningful measures for reporting our progress. Corporate responsibility is a critical component of Dell’s overall business. We are committed to being a responsible corporate citizen.” (pg. 6)

Xerox

From the Letter from the CEO, Ursula M. Burns, and Chairman of the Board, Anne M. Mulcahy

“Despite the toll the recession has taken, we are pleased to report that it has not caused us to waiver from our belief in the need to behave responsibly as a good corporate citizen in the communities and countries in which we operate. There are two broad reasons for that – a belief that good citizenship is the right way to behave and an equally important belief that behaving the right way is a good thing for our business.” (pg. 2)

“The more we have integrated sustainability into our business operations, the more it has become a part of our DNA. We like to think of ourselves as a leader, still pushing the boundaries of what is possible.” (pg. 2)

“We were an early leader in the sustainability movement because we thought it was the right thing to do for the environment. But we discovered something else along the way. Every one of our innovations ended up either saving us money or creating new markets and new revenue. We found, in other words, that we don’t have to choose between the environment and profit. We can do both.” (pg. 3)

“Conducting our business with integrity and transparency builds credibility and attracts investors.” (pg. 4)

“Nurturing a greener world through sustainable innovation and development saves money, creates value and helps develop new markets.” (pg. 4)

Industry: Energy

Shell:

From the CEO introduction statement, Peter Voser

“Safety, environmental and social performances are now closer to the core of our business plans and decisions.” (pg. 1)

“I believe sustainable development works best when it is thoroughly integrated in our business decisions at the very earliest opportunity…That is exactly how it must be if we are to meet the complex challenges ahead in the most effective and responsible way.” (pg. 1)

From the interview with CEO Peter Voser, interviewed by Aron Cramer

“Sustainability is central to the way we do business, our business principles and our long-term strategy, so we take a very far-reaching view, not a short-term view.  It means to me that we help to meet the growing energy needs of the world in economically, environmentally, and socially responsible ways.  You can’t have one without the other two” (pg. 7) –Peter Voser

“We wanted to embed sustainable development as deeply into the business as possible” (pg. 7) –Peter Voser

Exxon Mobil:

“It is our view that successful companies are those that see business objectives and sustainability objectives as interlinked.” (pg. 2)

“For a number of years, our business lines have been incorporating sustainability considerations in their operations and sharing the outcomes with stakeholders.” (pg. 2)

“Our disciplined approach and long-standing commitment to corporate governance have contributed to our continued success during the global recession of 2009.” (pg. 15)

“We believe that an unwavering commitment to high ethical standards and business integrity is critical to our competitive advantage and shareholder value.” (pg. 16)

Industry: Utilities

Duke Energy

From the Letter from the Chairman and CEO, Jim Rogers

“In tough economic times, when every aspect of our business is under scrutiny, some might ask whether we can afford to focus on sustainability. To that I respond: Can we afford not to?” (pg. 4)

“Sustainability – operating our business in a way that is good for people, the planet and profits – is, in my opinion, no longer optional. It is the strategic and decision-making approach we are following at Duke Energy to create long-term value.” (pg. 4)

“At Duke Energy, sustainability describes the way we work; it is a competency that leads to improved risk management, efficiency and innovation for today’s complex, resource-constrained and connected world.” (pg. 4)

Industry: Telecommunications

AT&T

“At AT&T, when we talk about 'sustainability,' we’re not just talking about the environment. We’re talking about a broad array of initiatives that will make our business and communities stronger well into the future.” (pg. 13)

Verizon

From the Message from the Chairman and CEO, Ivan Seidenberg

“Our corporate responsibility process helps us assure that our practices keep pace with the evolving needs and expecta­tions of our customers.” (pg. 7)

“We have built a sustainable model for incorporating corporate responsibility into the way we manage our business.” (pg. 7)

Industry: Food & Beverage

The Coca-Cola Company

From the Chairman and CEO Letter, Muhtar Kent

“In the midst of the global financial downturn, the economic, environmental and social implications of business are more important than ever. There’s no question that the world is undergoing a massive resetting of priorities, values and expectations.”

“The strength and sustainability of our brands are directly related to our social license to operate, which we must earn daily by keeping our promises to our customers, consumers, associates, investors, communities and partners. It is an honor, and a responsibility that we take very seriously.”

From the Text of the Report

“LIVE POSITIVELY^™ is our commitment to making a positive difference in the world. Through redesigning the way we work and live, we consider sustainability as part of everything we do. As we act with an eye toward future generations, we will focus on driving business growth and creating a more sustainable world.” (pg. 12)

Kraft

From the Message from the Chairman and CEO, Irene B. Rosenfeld

“To build and sustain brands people love and trust, one must focus—not only on today but also on tomorrow. It’s not easy…but balancing the short and long term is key to delivering sustainable, profitable growth—growth that is good for our shareholders but also good for our consumers, our employees, our business partners, the communities where we live and work, and the planet we inhabit.” (pg. 5)

Industry: Materials

Alcoa

From the Message from the Chairman and CEO, Klaus Kleinfeld

“During these tough economic times, we recommitted ourselves to integrating sustainability as a core value for Alcoa; protecting the health and well-being of our employees and our communities; conducting business with the highest code of ethics; preserving the environment and our natural resources; and earning our license to operate each and every day.”

The Dow Chemical Company

“In short, we are committed – through chemistry – to the betterment of global humanity. And it is this commitment that drives all of our strategies for growth and profitability.” (pg. 3)

From the Letter from Chairman and CEO, Andrew Liveris

““Setting the Standard for Sustainability” is our desire to have corporate citizenship inherent in everything we do as a global corporation, directly supporting our vision of being the largest, most profitable and most respected chemical company in the world.” (pg. 20)

From the Statement from CEO presenting overall vision, Andrew Liveris

“We see sustainable development as an opportunity to tap new markets that create value for our customers, consumers and the planet.” (pg. 23)

” By integrating sustainability elements into every facet of our business – from our product offerings to our energy use – we are creating a better future for our Company and the world.” (pg. 23)

Industry: Consumer Services and Products

Procter & Gamble

From the President and CEO Statement, Bob McDonald

“In fact, our growth strategy for the coming decade is linked tightly to our Purpose. We will grow P&G’s business by touching and improving more consumers’ lives in more parts of the world … more completely.

"To execute this strategy and fulfill the Company’s Purpose, we must grow responsibly and sustainably. As a result, Sustainability is at the heart of P&G’s business model. Keeping Sustainability at the core of our business fuels innovation and strengthens our results.” (pg. 4)

“We’re a company that focuses on growth now and for generations to come, and therefore Sustainability should and will be a focus area for me.” (pg. 4)

Nike

From the Letter from the CEO, Mark Parker

“We saw that doing the right thing was good for business today – and would be an engine for our growth in the near future. With each new discovery and partnership, we willingly gave up old ideas to shift our thinking toward a better, smarter, faster and ultimately more sustainable future – financially, environmentally and socially.” (pg. 4)

“All companies face a direct impact from decreasing natural resources, rising populations and disruption from climate change. And what may be a subtle effect now will only become more intense over the next five to ten years. Never has business had a more crucial call to innovate — not just for the health and growth opportunities for our companies, but for the good of the world.” (pg. 5)

“We see sustainability, both social and environmental, as a powerful path to innovation, and crucial to our growth strategies.” (pg. 5)

“And for all the athletic and cultural and financial successes of the company, believe our work in sustainable business and innovation has equal potential to shape our legacy.” (pg. 5)

“There is now only one path and it leads to greater sustainability, equity, growth and prosperity.” (pg. 5)

Wal-Mart

From the Letter from CEO, Mike Duke

“I meant we would make sustainability a priority throughout our entire company and we would act with a sense of urgency.” (pg. 3)

“It shows that even during the economic crisis, our company does not slow down on sustainability or even just stay the course; we redouble and strengthen our efforts.” (pg. 3)

“When we look at the world today and the trends that will shape the world in the future, we see that sustainability is no doubt one of Wal-Mart’s greatest opportunities to make a difference for our business, our communities, our customers and the planet.”  (pg. 5)

Kimberly-Clark Corporation

From  the “Choices for a Sustainable Future” section

“Put simply, sustainability is critical to our future success. It’s an enormous challenge. But we choose to do it, and to work with those who support positive change, because it’s the right thing to do. That’s one choice that will never change.” (pg. 3)

From the Message from the Chairman and CEO, Tom Falk

“Sustainable business practices are woven into the fabric of our Global Business Plan. We challenge ourselves every day to look for ways to sustain the resources we enjoy today for generations to come. That’s why Kimberly-Clark is focused on setting and achieving sustainability performance metrics for our brands and facilities. And through our resource stewardship, we are demonstrating to our stakeholders that sustainability isn’t just the right thing to do, it’s also good business.” (pg. 4)

Industry: Automotives

Ford

The letter from Executive Chairman and Chairman of the Board, William Clay Ford Jr.

“We continue to aggressively search for new ways, both big and small, to improve our economic and environmental sustainability. Often the actions we take accomplish both goals.”

“Creating a strong business and building a better world are not conflicting goals – they are both essential ingredients for long-term success.”

From the Letter from President and CEO, Alan Mulally

“We also know that the successful companies of the 21st century will be those that understand global sustainability issues and offer viable solutions. Through a decade of work and a disciplined reinvention of our Company, we have built sustainability into our business model.”

Industry: Pharmaceuticals

Pfizer

From the Letter from the Chairman of the Board and CEO, Jeff Kindler

“In times like these, some companies might choose to focus simply on running their businesses and think of their corporate responsibility work as a luxury that can wait for better times. Not Pfizer. We believe successful companies can’t do one without the other.” (pg. 5)

Industry: Capitol Goods

Caterpillar

From the CEO and Chairman’s Message, Jim Owens

“We’re making sustainable development part of how we do business. In 2007, in the midst of our growth period, we set bold aspirational goals for 2020, and abandoning those goals, in the face of dramatic economic challenges, was simply not an option. This isn’t a passing fad that we only care about during prosperous times. It’s a serious commitment. And it’s a real business opportunity, now and in the future.”  (pg. 2)

“Good things happen when we integrate sustainability into our products, services and solutions. We improve our competitiveness and create and capture customer value. We save money, reduce our environmental impact and improve employee satisfaction. And by partnering with others, we can help ensure sound policies that promote sustainable development and innovation.” (pg. 2)

“In the next decade, the most successful companies will be those that integrate sustainability into their core businesses. That’s what we’re doing at Caterpillar, and we are also helping our customers do the same.” (pg. 3)

“Some of Caterpillar’s fastest-growing businesses are those focused on the sustainability of materials and resources.” (pg. 3)

“In fact, the economic downturn has helped secure sustainability’s place at the core of our strategy. It’s not something extra that we do during good times. It’s something that creates and captures value for the company, our customers, investors, employees, suppliers – and really, the world.”  (pg. 4)

Industry: Industrials

General Electric Company

From the Letter from the Chairman of the Board and CEO, Jeff Immelt

“Successful companies can only create solutions to some of the world’s toughest problems by working collaboratively. Business must engage — with communities, governments, customers and each other — because the status quo is not an option. It is not only possible for a global business leader to be a good citizen, but a requirement.” (pg. 4)

“Based on a commitment to integrity, a commitment to performance and a commitment to learn and grow stronger, GE is creating a better company coming out of this reset — a renewed focus that is better for GE, and also better for our world.” (pg. 4)

Trade Associations and Consultants

BSR Report 2009: Innovating for Sustainability

From the Letter from the President and CEO, Aron Cramer

“2009 presented numerous challenges for the entire world, not least for all of us dedicated to sustainable business. At the start of the year, many observers thought companies would consider corporate responsibility to be an expendable luxury that could be cut along with other discretionary budgets. 'Sustainability,' they predicted, would be redefined as 'basic economic survival.'  Fortunately, these predictions did not play out. Rather, 2009 showed us that sustainability can—as we had argued—help pull business out of the recession.” (pg. 1)

“Despite the difficulties presented by the economic conditions, it is clear that sustainability remains as important to business—and to the world—as ever before.” (pg. 1)

From the Text of the Report

“What’s more, revived economic growth is again exacerbating existing challenges related to climate, water, and biodiversity.  Long after the recession passes into history, these trends will be shaping economic conditions. They are the reference points that business should consider in shaping their strategies.

More and more companies recognize this. As a result, they are making sustainability not just a program, but, in fact, the defining feature of success in a fast-changing world.” (pg. 5-6)

“While calmer economic conditions have returned, the road to tomorrow’s prosperity is not the same as what came before. The businesses that assert leadership, take a comprehensive approach, use sustainability as a driver for innovation, and champion sustainable consumption will not only become the sustainability champions, but also the most successful companies in the years ahead.” (pg. 11)

Accenture Report: “A New Era of Sustainability”

This report summarizes findings from a survey of CEO’s globally

From the Forward by Georg Kell, Executive Director UN Global Compact, and  Bruno Berthon, Managing Director Accenture Sustainability Services

“It is a decade that, CEOs believe, could usher in a new era where sustainability issues are fully integrated into all elements of business and market forces are truly aligned with sustainability outcomes.” (pg. 2)

“Today’s CEOs are more convinced than ever of the need to embed environmental, social and corporate governance issues within core business. But they are also convinced that good performance on sustainability amounts to good business overall: The imperative to act has shifted from a moral to a business case.” (pg. 2)

From the Text of the Report

“93 percent of CEOs see sustainability as important to their company’s future success.” (pg. 10)

“Demonstrating a visible and authentic commitment to sustainability is especially important to CEOs because it is part of an urgent need to regain and build trust from the public and other key stakeholders, such as consumers and governments—trust that was shaken by the recent global financial crisis. Strengthening brand, trust and reputation is the strongest motivator for taking action on sustainability issues.” (pg. 10)

“Our survey found widespread agreement among CEOs about what the next era of sustainability will look like: It is one where sustainability is not only a separate strategic initiative, but something fully integrated into the strategy and operations of a company.” (pg. 11)

“96% of CEOs believe that sustainability issues should be fully integrated into the strategy and operations of a company (up from 72% in 2007).” (pg. 14)

“80 percent of CEOs believe that the economic downturn has raised the importance of sustainability as an issue for top management.” (pg. 16)

“74 percent say that the downturn has led their company to align sustainability more closely with core business.” (pg. 16)

“Also bolstering the continued commitment to sustainability during the economic downturn has been demand for sustainable products and services.” (pg. 18)

From “Industry perspectives: Belief in the importance of sustainability varies considerably by industry”

“Fully 100 percent of automotive CEOs identify sustainability issues as important or very important to their future success. This finding reflects how environmental concerns present both a challenge to the industry and an opportunity to serve a new market with low carbon alternatives such as e-vehicles.” (pg. 19)

“CEOs from the energy and utilities sectors also see sustainability issues as critical to their future success.” (pg. 19)

“Wolfgang J. Ruttenstorfer, CEO and Chairman of European oil and gas company OMV, said, ‘I regard these issues as bringing competitive advantage in the long term; a transparent approach clearly oriented toward values, human rights and environmental objectives is the only right approach that will be  appreciated in the long term.’” (pg. 19)

“Support is especially high in the banking industry, for example: 68 percent of CEOs note that sustainability is “very important” to their success…a commitment to environmental and social issues may be a prominent part of restoring brand value as the financial industry struggles to regain the trust of consumers.” (pg. 19)

“CEOs in the communications and electronics & high-tech sectors are the least likely to identify sustainability issues as critical to their future success— just 22 percent and 31 percent of those industries’ CEOs, respectively, cite sustainability as very important to their future success…leading companies in these sectors are beginning to think beyond the direct physical impacts of their business on sustainability issues, and are looking to shape a vision of the role that they can play in society by driving sustainable development…providing companies around the world with new technologies and ways of working that will help them achieve their own environmental objectives.” (pg. 19)

KPMG

This report published every 3 years; following statements are from the 2008 report.

From the Forward

Message from Global Head of Citizenship and Diversity, KPMG International, Lord Michael Hastings of Scarisbrick CBE

“As you will see in the results, there has been an important shift in this direction with CSR reporting becoming the norm instead of the exception within the world’s largest companies. Three years ago only 50 percent of companies surveyed included CSR in their reporting, in this survey the number jumped to 80 percent. More companies report the information as it relates to specific objectives and more companies include this information in their annual reports.” (pg. 5)

Message from Global Head, KPMG Sustainability Services Partner, KPMG in the Netherlands, Wim Bartels

“But would these reports pass the “greenwash” test? For the first time in the 15 years we have been doing this survey, we think they just might. Nearly all of the Global 250 companies that report also publish a corporate responsibility strategy with defined objectives.” (pg. 5)

From Text of the Report

“One of the most significant findings of the 2008 survey is that corporate responsibility reporting has gone mainstream - nearly 80 percent of the largest 250 companies worldwide issued reports, up from about 50 percent in 2005.

National trends - National level companies trail the G250 with only 45 percent of the total sample issuing reports, but numbers vary from less than 20 percent in Mexico to more than 90 percent in Japan.” (pg. 7)

“Now that some of the world’s largest companies have been able to quantify the business case for corporate responsibility and reporting, it is likely that the practice will spread through countries and sectors to the smaller players.” (pg. 7)

“Reporting is necessity if companies are to know and understand their social and environmental impacts, and how to minimize the dangers and maximize the opportunities associated with new and emerging challenges.” (pg. 10)

““In these challenging times it is now perhaps more crucial than ever for companies to show their commitment to transparency through sustainability reporting. Effective public disclosure of economic, environmental, and social performance can enable a company to rise above the rest and take advantage of the opportunity to position itself as a forward-thinking leader among an increasingly sophisticated constituency of stakeholders. No longer is publishing a sustainability report merely a matter of mitigating risk to reputation and costs. More than ever, employees, investors, and consumers are looking to the companies from which they buy, invest in, and work for to join them in addressing the critical sustainability issues of the day in innovative ways.” (pg. 17)--Judy Henderson Board of Directors, Global Reporting Initiative

Efforts to combat transnational bribery and corruption could be enhanced by the creation of a top level U.S. government task force with a mandate to develop diplomatic and other incentives for other countries to adopt laws similar to the U.S. Foreign Corrupt Practices Act (FCPA), according to a new report published by The Conference Board, a nonprofit business research and membership organization.

The report, co-authored by attorneys Andrea Bonime-Blanc and Mark Brzezinski, suggests that the task force – comprised of officials from the U.S. Departments of Justice, State and Commerce - approach the issues of bribery and corruption in the same way that the U.S. government promoted international adoption of anti-money laundering legislation.

"After two decades of lax enforcement and half-hearted commitment, global anti-corruption efforts appear poised to intensify," the reports says. "But achieving the goal shared by both policymakers and international businesspeople to eradicate at least the most blatant forms of public corruption will require a more concerted and integrated approach—not only within companies and governments but across industries and borders."

Signs of progress on the international anti-corruption front, according to the report, include more multilateral agreements such as last year’s adoption by 38 member countries of the Organization for Economic Cooperation and Development (OECD) of guidelines for voluntary private sector compliance with the OECD Anti-Bribery Convention. In the United Kingdom, Parliament earlier this month passed a groundbreaking anti-corruption bill that has even more expansive enforcement and punishment provisions than the FCPA.

The report follows a wave of major criminal and civil prosecutions and settlements involving transnational bribery by large global companies including Siemens, BAE and Daimler.   Only last week, Avon Products Inc. disclosed that it had suspended four senior executives while it investigated charges of bribery in China and other countries.  Hewlett Packard has also confirmed an investigation of several of its former employees in connection with possible bribery and business contracts in Russia.

“The first year of the Obama Administration has seen a surge in FCPA enforcement, producing  a buzz among corporate executives that the old ways of doing business with ‘a wink and a nod’ are over, and that business decisions taken years ago may result in serious liability,” the report states.

In addition to the top-level government task force, according to the report, other possible steps to enhance enforcement include an increase in multilateral anti-corruption efforts with an eye toward greater collaboration with international police (InterPol), national prosecutors, and local ministries of justice and the interior.   Another step would be the creation of a federally-funded anti-corruption institute that could tap monetary settlements by FCPA violators to finance research on “what works and what doesn’t” regarding anti-corruption efforts.

The reports says the “interests of the public sector, whether the U.S. government or any other responsible government, in eradicating corruption are clear: corruption is the scourge of economic development, seems to be correlated to more authoritarian and despotic regimes, and is the depriver of goods and services to the masses in favor of the few. Indeed, corruption is associated with a variety of other forms of criminal behavior, including organized crime and terrorism.”

Private sector interest in opposing corruption is also growing, the report adds, in part because it is increasingly costly to engage in corruption. “If a business pays bribes, it not only loses the money paid but it becomes automatically beholden, through extortion, to the payee (and others in the know),” the report states.  “Moreover, when a business is caught in the act of bribing, it can suffer serious legal, criminal, and reputational consequences.”

Durbin’s initiative follows Google’s announcement that it had been the victim of cyber attacks aimed at gaining access to the email accounts of Chinese human rights activists. Google has said it is considering pulling out of China because of the attacks and what the company called “attempts over the past year to further limit free speech on the web.”

Only two weeks ago, U.S. Secretary of State Hilary Clinton called on American technology companies to make a “principled stand” against attempts at censorship.

Sen. Durbin, Chairman of the Judiciary Subcommittee on Human Rights and the Law, said his hearing next month will feature testimony from Google and other companies about their business practices “in internet-restricting countries,” as well as from high-ranking Obama Administration officials about the Administration’s efforts to promote internet freedom.

“I commend Google for coming to the conclusion that cooperating with the ‘Great Firewall’ of China is inconsistent with their human rights responsibilities,” Durbin said. “Google sets a strong example in standing up to the Chinese government’s continued failure to respect the fundamental human rights of free expression and privacy. I look forward to learning more about whether other American companies are willing to follow Google’s lead.”

Durbin’s letter asks each firm for details of its business in China, and what, if any, measures it will implement to ensure that its products and services do not facilitate human rights abuses by the Chinese government.

This week’s letter also follows up on a letter that Durbin sent last year, urging technology firms to join a voluntary code of conduct known as the Global Network Initiative (GNI). The code of conduct, which regulates the actions of technology firms operating in countries that restrict the internet, has been backed by Google, Microsoft, and Yahoo! and a number of leading socially responsible investment firms.

Durbin’s office said the list of companies that responded to his previous letter included Apple, AT&T, Cisco, Dell, eBay, Facebook, HP, McAfee, News Corp, Nokia, Nokia Siemens, Siemens, Skype, Sprint Nextel, Verizon, Vodafone, Websense.

According to Senator Durbin’s office, companies that did not respond to his previous letter were Acer, Juniper, Toshiba, Twitter; companies that “partially responded” to his previous letter were Fortinet, Lenovo, Motorola.