by James Hyatt

So your company hasn't had an OMG moment over Facebook ethics?

As they say, Good Luck With That.

It has been almost a decade since Congress passed the Sarbanes-Oxley Act in the wake of the Enron, Tyco and WorldCom scandals, seeking to put in place a variety of measures to protect investors and address standards of behavior. Over the years, once-controversial practices about disclosure and ethics have become generally accepted standards.

But the social media explosion - from email and Facebook to blogs and Twitter – is making a hash of once-resolved issues and creating all kinds of new dilemmas.

--Businesses have less and less control over how they communicate with the public, while 24-7 bloggers feel free to snipe away.

--Job seekers find their private lives may no longer be private and employees worry that the boss is electronically looking over their shoulders.

--Consumers can't be sure their account information remains safe and have no way to tell whether favorable on-line comments about products and businesses are legitimate.

--Professionals of all sorts -- psychiatrists, attorneys, school teachers, reporters, and even NFL players – are learning to live with new, often controversial, social media rules. A customer's irate blog can undo months and years of corporate image work. A careless email can sabotage delicate contract talks or M&A negotiations. Failure to protect customer information can result in years of costly litigation. An old party-hearty photo may block a chance at a new job. Hitting “send” without thinking can torpedo an executive’s career.

In just one recent week:

--an email circulating among male employees at the PricewaterhouseCoopers Dublin offices – rating the ‘top 10’ new female recruits, with headshots – quickly went “viral” and drew widespread criticism. (Some tut-tutting newspapers, however, also saw fit to run the headshots as news.)

--an executive at Pacific Gas & Electric in California was put on paid leave after seeking to join, under an assumed name, an online discussion group critical of the utility’s plans to install “smart meters.”

--labor lawyers across the country warned clients that a  National Labor Relations Board (NLRB) office planned an unfair labor practice complaint against an ambulance company for firing an employee who posted negative Facebook comments about her supervisor.

--Britain’s financial regulator, seeking to address insider trading, ordered financial services firm to keep records of employee cellphone calls.

No wonder companies are rushing to build new defenses and adopt new policies to reinforce ethical behaviors and learning how to use social media to react to real-time problems. At the same time, individuals are rethinking their casual attitude about exposing personal information on the Web. And in Washington, government agencies are adopting new guidelines defining acceptable social media behavior.

Defining social media behavior is clearly a work in progress

A year ago, the Society of Corporate Compliance and Ethics and the Health Care Compliance Association looked at what organizations are doing about social media issues. Twenty-four percent of those surveyed said an employee had been disciplined in their organization for activities on Facebook, Twitter or LinkedIn, more often in the not-for-profit sector. But half of the respondents said their organization had no policy regarding employee online activity outside of work.

Technology search firm Robert Half in April asked chief information officers about social networking policies; 38% said their companies have tightened social networking policies, while 17% say the policies have eased. And 55% reported “no change”.

A recent survey by Deloitte of about 1,700 companies found that 26% said they had no social media policy which 34% answered “not applicable/don’t know” even though 84% thought every company should have a social media policy in place.

Your Social Media Profile Can Affect Your Job Prospects

A survey commissioned by Microsoft in December 2009 found that 79% of hiring managers and job recruiters reviewed online information about job applicants, and 70% of U.S. hiring managers surveyed said they’d rejected candidates based on what they found online. “Chances are you already have a reputation online, even if you don’t want one,” Microsoft says.  And three-fourths of the U.S. recruiters and HR professionals said their companies have formal policies requiring hiring personnel to research applicants online.

The survey firm declared that “Now, recruiters can easily and anonymously collect information that they would not be permitted to ask in an interview, and the survey found that recruiters are doing just that.”

Corporate and union attorneys went on alert early in November 2010 when word spread of the NLRB’s unfair labor practices complaint involving the Facebook posting. The NLRB said the company’s social media policies were “overly broad.”  The LegalTimes blog quoted the company as saying “although the NLRB’s press release made it sound as if the employee was discharged solely due to negative comments posted on Facebook, the termination decision was actually based on multiple, serious issues.”

Although an administrative law judge will have to rule in the case, Philadelphia-based law firm Morgan, Lewis & Bockius LLP declared that “all private sector employers should take note of this issue, regardless of whether their workforce is represented by a union.”

You Need a Social Media Policy

Social media behavior “can have real legal and economic consequences for businesses,” writes attorney Michelle Sherman in a Social Media Law Update Blog for law firm Sheppard Mullin Richter & Hampton LLP.

“A post may seem as innocent as an employee expressing a personal opinion.  However, if the person describes herself as working for a particular company, and then speaks on a highly controversial subject, her post could damage the ‘good will’ of the company. Or, the poster may be recommending a product to all of her Facebook friends without sharing that she happens to work for the product manufacturer in violation of fair advertising practices.”

Sherman says adopting a social media policy can show compliance with Federal Trade Commission guidelines about endorsements, and can better protect brand value “by ensuring that employees do not post unflattering material in association with the business.”

One of the most remarkable studies is the 130-plus-page Social Media White Paper, now in its second edition, prepared by Reed Smith LLP.  The paper review 13 areas where social media is impacting business – from advertising and marketing to trademarks – and declares “the key lesson is that rather trying to control, companies must adopt an altered set of rules of engagement.” Well worth a visit.

It has become increasingly common for major companies to issue specific directives on social media behavior.  While most encourage employee efforts to put companies in a positive light, they also spell out acceptable conduct. For example:

(Wells Fargo): “By posting content on this Blog, you expressly grant Wells Fargo (and its affiliates) the right to use or distribute the posted content in any form, worldwide, and in perpetuity.”

(Kaiser Permanente): “Be mindful of the world’s longer memory – Everything you say is likely to be indexed and stored forever, either via search engines or through bloggers that reference your posts.”

(FedEx): By posting to the FexEx Citizenship Blog “you agree not to post or transmit anything unlawful, threatening, libelous, defamatory, obscene, inflammatory or pornographic, or anything that infringes upon the copyright, trademark, publicity rights or other rights of a third party.”

(Mayo Clinic): “Where your connection to Mayo Clinic is apparent, make it clear that you are speaking for yourself and not on behalf of Mayo Clinic. In those circumstances, you may want to include this disclaimer: ‘The views expressed on this [blog; website] are my own and do not reflect the views of my employer.”

(Microsoft): “As a general rule, Microsoft does not review, edit, censor, or, obviously, endorse individual posts. You should ‘be smart’ and, as an employee of the company, you should not only think about how your blog reflects on you as an individual, but also about how your blog affects Microsoft as a whole.”

Concerns go well beyond defining proper behavior and move into legal areas. FINRA, the successor to the National Association of Securities Dealers Inc., stresses that social media postings can violate industry rules about promoting investments and soliciting customers. FINRA says securities firms should take steps to be sure that employees using social media sites for business are “appropriately supervised” and “do not present undue risks to investors.”

The Social Media Business Council, a group of large companies that explore social media issues, posts a free “Disclosure Best Practices Toolkit” online suggesting checklists to help companies and employees “learn the appropriate and transparent ways to interact with blogs, bloggers, and the people who interact with them.”

It makes recommendations on how to deal with bloggers, on how employees should handle personal and unofficial blogging, on how to be transparent in providing rewards or incentives to bloggers, on best practices for third parties acting on behalf of a company, and on best practices for “artistic/entertainment situations where temporarily obscuring the sponsor of a site is necessary and appropriate.” For instance, it is okay to use a pretend blog where someone writes that they may have discovered aliens in their house to promote a science fiction movie. But it is not okay to create “a fake customer blog where the ‘author’ writes: ‘I’d love to go see this movie.’ “

This is the first of a two-part series.   The second part is available here.

James Hyatt, a retired reporter and editor for The Wall Street Journal, has been writing about business ethics and social responsibility issues since 2005.

by Peter Asmus

The radically altered political dynamics in Washington, D.C. due to the loss of a Democratic Senate seat in Massachusetts mean that so-called “cap-and-trade” climate legislation probably has little chance of passing this year.  The only hope for passing a bill in 2010 that would cut carbon emissions could involve what most pundits have long thought of as the least politically viable approach: a tax on carbon.

But if that’s going to happen, an alliance of strange bedfellows will have to coalesce in short order, bringing together extremes on the left and right.  Joining in a legislative push would be environmental advocates and some large oil companies – most notably ExxonMobil, long a chief climate change skeptic, but more recently a carbon tax advocate following shifts in upper management.

“Climate change is an issue we take seriously and (we) believe responsible steps should be taken to address the risk,” says Ken Cohen, the oil company’s vice president of public affairs.  “We believe a revenue-neutral carbon tax is a more efficient policy option to reduce emissions…and is more able to be applied on a global basis than a cap-and-trade system.”

ExxonMobil’s opposition to a cap-and-trade policy is based, Cohen says, on a belief that “we should not be creating a complex derivatives market for a new commodity called an ’emission allowance’ as the recent financial crisis demonstrates. There is no need to create an opportunity for traders to extract profits from a trading system.”

Getting 60 Votes

Cohen’s critique of proposed cap-and-trade legislation – long the favorite of Washington insiders – sounds almost identical to that of the system’s environmental critics, like Friends of the Earth, Greenpeace and the Sierra Club.

Under a cap-and-trade framework, a cap would be set on carbon emissions.  Then, large carbon emitters would be able to trade for “clean air” credits created by companies which either perform activities that allegedly reduce net carbon (like planting trees or controlling emissions) or deploy new energy technologies that displace carbon, like replacing coal with wind.

A carbon tax involves a tax on all fossil fuels, such as coal, oil and gas.

“In my view, there is zero chance that any [cap-and-trade] climate legislation will pass this year,” predicts David Bookbinder, chief climate counsel for the Sierra Club. “The only thing that really makes sense is a carbon tax – but that’s the big ‘T’ word. A carbon tax has no price volatility, there is no abusive manipulation or a market; it is a very rational policy approach.”

In January, 80 U.S. corporate leaders -- including CEOs from companies such as eBay, Virgin America and Pacific Gas & Electric -- signed a joint letter urging President Obama and Congress to pass comprehensive climate and energy legislation this year. The prime message in the letter is that unless the U.S. sets clear carbon reduction targets, it will fall behind in the current global race to develop new carbon-free renewable technologies.

But most of those companies hold little sway among conservatives in Congress.  ExxonMobil and other energy companies not invested in coal do carry weight.  If they place a high priority on passing climate legislation in the form of a carbon tax, they could bring with them the prized 60^th Senate vote environmentalists need to avoid a filibuster against climate legislation.

Changing of the Guard

Under its prior CEO, Lee Raymond, ExxonMobil earned a reputation as an eco-renegade.  A smart and hard-nosed chemical engineer, Raymond was tone deaf to the social and environmental investors and advocates who framed the sustainability movement a decade ago.  He proudly positioned the company as the world’s most powerful climate change denier.

Now, three years after the transition to current CEO Rex Tillerson, the company is gently edging out of its self-imposed period of sustainability exile.  Tillerson can’t be regarded as an unbridled green advocate, in the model of BP’s former chairman Sir John Browne, but an increasing number of one-time critics think that, when it comes to actual performance on the human rights and the environment, Tillerson and his company could be the real deal.

“ExxonMobil seems to have recently had a dose of reality pills, and is taking climate change seriously,” says Bennett Freeman, Senior Vice President, Sustainability Research and Policy, for Calvert Investments, a leading socially responsible investment company. “For example, they recently invested $600 to $700 million on developing biofuels from algae.”

Freeman suggests that ExxonMobil’s support of a carbon tax is not driven by any desire to woo environmental advocates. “ExxonMobil does not do the warm and fuzzy thing well,” he says.  On the other hand, the company could be a powerful force in the carbon tax debate.  Culturally, says Freeman, “they are very straightforward. If they tell you ‘no,’ they mean ‘no.’  They have a “command and control” culture that helps drive commitments through the company.”

Seasoned eco-warriors like Randy Hayes, founder of the Rainforest Action Network and former head of the International Forum on Globalization, are happy to see oil companies such as ExxonMobil supporting a carbon tax.

“Either cap-and-trade or a carbon tax can be made to work to reduce the damage our society does, but the carbon tax is cleaner and my choice,” says Hayes. He goes on to say that “I can't imagine the version [of the carbon tax] that ExxonMobil, the Wall Street Journal, or the Financial Times want is the same one that nature needs. That said, we need the captains of industry to back a plan commensurate with the scale and timing of the problem.”

The Business Virtues of a Tax

There are compelling business reasons for companies like ExxonMobil to support a tax on carbon.

First, if Congress fails to act on climate, the U.S. Environmental Protection Agency will be forced to regulate carbon emissions under the Clean Air Act, creating a library of complex rules that could be expensive and only marginally effective.

Second, if Congress enacts a cap-and-trade approach, ExxonMobil fears the price volatility that could come with a global carbon trading regime, which could wreak havoc on oil development planning and finance.

Third, a carbon tax will reduce demand for coal, the most polluting fossil fuel, and give a marketplace advantage to natural gas and biofuels, the most carbon-lean.  ExxonMobil has increased its investments in natural gas, and recently made major investments in advanced algae biomass energy conversion.

Fourth, ExxonMobil may want to counter competitors like Shell, who are highly invested in energy commodity trading.

Environmental groups have their own reasons for supporting a carbon tax. “The whole concept behind the House and Senate cap-and-trade bills – creating large, international markets for carbon – is flawed. Worse, it gives away incentives to polluters and the targets for reductions are woefully inadequate,” concludes Ben Schreiber, Climate & Energy Tax Analyst for Friends of the Earth.

Friends of the Earth is one of more than 400 organizations now collaborating under the broad umbrella of “Climate Reality Check,” an initiative contemplating alternative legislative approaches to those already being considered by Congress.  “We don't have the 60 votes in the Senate to get where we need to be: a 40% reduction in carbon from 1990 levels,” says Schreiber.  “Even if the offsets included in either House or Senate cap-and-trade bills were real and verifiable, the reductions in carbon from 1990 levels are still less than 10 percent.”

Members of the “Climate Reality Check” coalition – which includes environmental justice, low-income and faith-based organizations - signed a letter last year opposing the House cap-and-trade legislation sponsored by Reps. Henry Waxman and Edward Markey.  The group had been exploring a "Plan B" even before the Copenhagen summit, but has yet to publicly come endorse a carbon tax or any other approach.

Elaine Kamarck, of the Kennedy School at Harvard University, and co-chair of the U.S. Climate Task Force, thinks the political viability of a carbon tax has actually increased over time.

“If a consensus emerges that cap-and-trade is just not going anywhere – and that seems to be just sinking in – then they will go back to the drawing board and examine other options,” she said. “You have to realize that cap-and-trade was initially being pushed before the economy fell apart. Markets were God and Wall Street was still filled with heroes. In that kind of political environment, cap-and-trade had some ‘oomph’ behind it. Now, Goldman Sachs and the rest of Wall Street are in the same category of bad guys as big polluters.”

Is ExxonMobil Serious?

Of course, any alliance with environmentalists depends on whether ExxonMobil is truly committed to a carbon tax.   Some critics claim the company’s public about face on climate change under CEO Tillerson is not heart-felt.

Robert A.G. Monks, a long-time ExxonMobil shareholder and critic, gives Tillerson credit for acknowledging “that there is such a thing as global warming” but harshly criticizes the ”inability of top management of this colossal company to understand, to take into account, to respond responsibly to the expressed concerns of entitled constituents.”

And there are lingering doubts regarding ExxonMobil’s role in the climate change debate. A recent story in the U.K.’s The Independent claims ExxonMobil was the funding source behind the rash of stories feeding skepticism about climate change in the lead up to the Copenhagen summit last December. While there is no doubt that ExxonMobil has delivered large financial contributions to think tanks such as the Atlas Economic Research Foundation (in the U.S.) and the International Policy Network (in the U.K.) as late as 2008, there is a lack of current available evidence the firm is the largest funder of such activities in 2009.

Whether ExxonMobil is playing two sides of the climate change issue at once is intriguing, to say the least. It could very well be that the company is a bit schizophrenic, which would not be surprising, given the history and size of the firm.

If a carbon tax is to ride to the rescue for both radical environmentalists, the faith community, human rights activists and, yes, oil companies, then something had better happen soon, since the attention span of Congress is limited, and another election cycle is nearing.

Peter Asmus (www.peterasmus.com) is the author of four books on energy and has been covering energy policy for over 20 years.

World leaders recently concluded the Copenhagen summit to chart a global strategy on climate change, and the U.S. Congress hopefully will soon take up cap-and-trade legislation to reduce carbon emissions here at home.  Contrary to what some climate skeptics would have us believe, business leaders from across the globe and in our own country are actually supporting these efforts.  The reason is simple: there is an urgent need to put a price on carbon so that markets and businesses can not only plan for, but profit from, the transition from an industrial age economy powered by coal and oil to a sustainable economy powered by clean energy and energy efficiency.

As world leaders gathered in Copenhagen, more than two-dozen major U.S. companies – including Dow Chemical, Microsoft, Nike, eBay, Sun Microsystems and Pacific Gas & Electric – sent a letter to President Obama encouraging him to secure a strong climate change agreement with significant emissions reduction targets and substantial new financing commitments from the United States and other developed nations.

Saying that "our environment and economy are at stake," the letter calls for forceful leadership to achieve a global climate deal and accelerate investments in clean technology deployment, job creation and enhanced U.S. competitiveness.  "We must put the United States on the path to significant emissions reductions, a stronger economy and a new position of leadership to stabilize our climate," the letter states. "The costs of inaction far outweigh the costs of action."

Copenhagen is now concluded but in the coming months we can expect to see leading members of the U.S. business community supporting the Obama administration and Congress in efforts to cap and reduce greenhouse gas emissions.

It is curious, therefore, that the U.S. Chamber of Commerce, which ostensibly represents the business community, has not only chosen to oppose climate change solutions but continues to advance the specious argument that we face a stark choice between the environment and the economy – that addressing climate change will somehow be bad for business and cost us jobs.  The opposite is the case.  I am afraid the Chamber is completely out of touch with contemporary business and economic realities.

Joe Keefe

My company, Pax World, manages approximately $2.4 billion in mutual fund assets.  In recent years, we have joined with other institutional investors in efforts to engage publicly traded companies and regulatory authorities on the issue of climate change.  In 2007, we were signatory to a petition to the Securities and Exchange Commission (SEC) requesting interpretive guidance on company reporting of climate risk.  We also signed onto a request for SEC action to allow shareholder proposals requesting information about climate risks and other environmental and social issues.

More recently, we were a signatory to an international investor statement, released at the United Nations in mid-November, encouraging the world’s governments to reach a global agreement on climate change and reduced carbon emissions.  We also recently signed onto a letter, sponsored by the Investor Network on Climate Risk, supporting the development of a new Northeast Low Carbon Fuel Standard.  Eleven New England and Mid-Atlantic states have, through the Regional Greenhouse Gas Initiative (RGGI), entered into an agreement to define common principles of a Low Carbon Fuel Standard.

We participate in these initiatives, along with other institutional investors, for the very same reason that some of the nation's largest electric power, manufacturing, technology and consumer-facing companies recently wrote to President Obama: because businesses, regulatory authorities and investors must be attentive to the financial risks as well as the tremendous financial opportunities associated with climate change solutions and the transition to more sustainable energy economy.  Addressing climate change will be good for business and good for investors, whereas failure to do so poses dire financial and economic risks.

This is not to say there won’t be costs.  There will be – for the very simple reason that today there is no price on carbon.  There needs to be if we are going to encourage energy efficiency and clean energy technologies and usher in the next great era of economic growth.  But the upfront costs of carbon mitigation will be far outweighed by the long-term economic and environmental benefits.

The Chamber of Commerce is dead wrong on climate change, and dead wrong on cap-and-trade legislation.  The Chamber may speak for a small subset of the business community but it does not speak for the business community as a whole.  Its agenda seems to be more of a political agenda than a business agenda.  By contrast, many local chambers of commerce across the country, being more practical and less ideological, clearly understand the economics of addressing climate change and are hard at work on local strategies.

Putting a price on carbon and capping emissions will not only help avert the costs of a looming climate disaster but will make businesses more efficient and help catalyze a green technology revolution; it will benefit businesses, investors, consumers and the planet.

Joe Keefe is President and CEO of Pax World Management LLC,  investment adviser to Pax World Funds, headquartered in Portsmouth, NH.