The changes stem from a summer 2006 case in which Judge Lewis A. Kaplan of the U.S. District Court in Manhattan dismissed tax-shelter charges against 13 KPMG employees after determining that the government abused its influence and forced KPMG to cut off legal support to its employees. An appeals court upheld the decision today, leading to the rewriting of internal DOJ guidelines.

The reaction so far has been mixed. The New York Times quotes:

A defense lawyer, Mike Madigan, called the ruling a landmark.

“We’re all on cloud nine or a higher one if there is such a thing,” Mr. Madigan said. “It’s really just a great day for the criminal justice system in America.”

On the other hand, the Wall Street Journal quotes:

A coalition that includes the U.S. Chamber of Commerce and the American Civil Liberties Union issued a statement saying that despite improvements made by [Deputy Attorney General Mark] Filip’s revisions: “Federal legislation is still needed to ensure a permanent and lasting solution to the problem of government-enforced waivers of privilege. The Justice Department’s track record of five different policies in ten years cries out for a permanent legislative solution that cannot be revised at the whim of each new Deputy Attorney General.”

Others point out that, while this will save companies legal liability from the DOJ, it doesn’t protect them from the Securities and Exchange Commission and other departments that may come after them for similar charges.

The suits allege that McKesson and First DataBank, a subsidiary of Hearst Corporation that specializes in medical databases, conspired to boost the profits pharmacies make on medicine sales. The plaintiffs argue that rather than profiting directly from the scheme, distributors manipulated pricing to gain favor with retailers such as Rite Aid Corp. and Wal-Mart and to increase its market share, according to Bloomberg.

Since the Racketeer Influenced and Corrupt Organizations Act triples the damages awarded in racketeering cases, and because the plaintiffs claim the alleged backroom deal cost consumers $5 billion, the total damages that McKesson Corp faces is $15 billion. Even as the largest drug wholesaler in the U.S., that’s a number McKesson can’t ignore. According to experts, it’s almost a guarantee that the company will settle the case.

The department found that 3M was shaving six percent off its tape products (the company’s advertised one-inch tape actually came out to 0.94 of an inch), violating the state and federal Fair Packaging and Labeling Act, according to the Fresno County deputy district attorney who prosecuted the case. As part of the settlement, 3M agreed to pay $600,000 in civil fees, $75,000 to a state trust fund benefiting various California weights and measures offices and $18,000 to the Department of Measurement and Standards, according to one report.

As with most settlements, 3M didn’t admit or deny guilty, but in this case it won’t be that easy to get off the hook: one only needs a ruler to figure out that they were, in fact, misrepresenting the size of their tape. The company agreed to remove the one-inch and other inaccurate labels from its tape products. Crisis averted.

Well, according to California law, tips can’t be split between employees and managers. A California court has ruled that Starbucks shift supervisors are in fact “managers” according to state law. Because of this, Starbucks now faces a class-action case stemming from one disgruntled California employee who filed suit in 2004 for the barista/shift supervisor tip sharing. The preliminary trial found the company liable and the damages portion starts today, according to the San Diego Tribune. According to a lawyer involved in the case, the final damages could be in the eight figure range.

The blog Starbucks Gossip has a take on the story here. What’s particularly interesting are the reader’s comments, most of whom apparently work at Starbucks stores across the United States and Canada and tend to side with the shift supervisors on this issue.

The company has also added a ‘CO2 Calculator‘ on its website to help customers analyze their own CO2 use. According to the site:

This calculator provides accurate figures based on verifiable data and the results are based on the actual operating data recorded on each flight:

* The type of aircraft operating the route (or frequency);
* The actual fuel consumed on the route concerned;
* The number of passengers carried;
* The weight of baggage and goods carried on board.

Green biz has a link to the actual calculator in their own report of the announcement.

Sure, buying a hybrid vehicle is a small step toward preserving the environment, but the company’s motivation for doing so is a tad suspect. Adding a single new hybrid SUV to a fleet of cars is not enough to justify a press release bragging about how “green” your company is.

A quote from the release:

“Going green in our business seemed like the logical way to move with our fleet, given that the decision is based on ecologically sound data,” said Marc Shpilner, president and CEO, Limousine Eighteen. “If we are going to start the movement as consumers, then we owe it to the environment to think of more ways to make a difference at the work place. Recycling paper, soda cans, more efficient light bulbs, etc. are a great start, but we wanted to go farther. This year, we started discussing getting a hybrid SUV for our fleet.”

They spent a year discussing the pros and cons of buying one hybrid SUV before deciding?

Unfortunately Limousine Eighteen isn’t alone; green-washing is becoming more and more common as consumers really do consider environmental issues when choosing where to spend their money. While it’s laudable (and increasingly profitable) for businesses to take a bigger role in curbing carbon emissions and upping their eco-friendliness, it’s counterproductive to try and grab publicity from relatively insignificant claims.

Today the bar has been raised by companies that spend hundreds of millions of dollars on everything from becoming carbon neutral to cracking down on suppliers for their wasteful habits. If Limousine Eighteen developed a plan to replace their entire fleet with hybrid equivalents by 2012, or discovered a way to run their vehicles on nothing but leftover chicken fat, then that would be something to brag about. These days, making a whole lot of noise about nothing just isn’t going to cut it.

Polyvinyl Chloride is an extremely profitable substance for the chemical industry. Although there are fears that PVC releases toxins like mercury and dioxins – far traveling chemicals that can lead to immune system disorders or cancer – PVC is still commonly used by the construction industry because of its low cost and high durability.

Several companies have already eliminated PVC from their products, or are in the process of phasing it out. Microsoft addressed the problem a couple years ago and Wal-Mart has recently eliminated PVC from its in house brand products as well.

As report author Bob Gordon puts it:

“Corporate responsibility continues to evolve from what was a mainly philanthropic activity to a more mainstream approach where it is integrated into core business activities.”

The study compares businesses from different countries and ranks them in categories such as independence of directors, human rights issues and environmental responsibility.

Read the story from The Independent.

Commentary: A notable example of U.S. companies lagging behind their European counterparts is in environmental policy rankings (in terms of the percentage of businesses by country that have basic or advanced environmental policies in place). The United States ranks 17th overall. Japan and Canada are the only two non-European countries ahead of the U.S. on the list. Perhaps high-profile activists like Al Gore will help make improvements in this category, but documentaries about other subjects such as “Separation of Chairmen From CEOs” might not catch on quite as easily (a category where the United States ranks dead last).

Peter Liria, Director of Global Ethics and Compliance for Avaya, will take part in the discussion to speak to Avaya’s response to receiving the award as well as what the rankings mean to an organization.

To register for the event, click here. Participation is free for anyone interested.

In addition, the Ethisphere Council has announced the opening of nominations for its World’s Most Ethical Companies 2008 Rankings. To nominate a company, visit http://ethisphere.com/nominations.

The company introduced a “corporate responsibility supplier questionnaire” last year with a goal of ensuring that Barclays “engages with the right suppliers and that they have suitable corporate responsibility policies in line with Barclays’ standards,” according to a company spokesman.

Much to the delight of London Barclay employees, the company has also raised the minimum wage paid to London employees to £7.50. The current minimum wage set by the Mayor of London is £7.20.

Commentary:When living in the second most expensive city in the world any raise is a welcome one. We’re talking about a place where a meal at McDonalds can cost you over £6 (nearly $12).

The worldwide recall affects 967,000 Nickelodeon and Sesame Street toys, including such popular items the Big Bird, Elmo, Dora and Diego characters.

In an interview with the Associated Press on Wednesday, David Allmark, general manager of Fisher-Price, said the problem was detected by an internal investigation and self-reported to the consumer product safety commission (CPSC).

Under current U.S. regulations, children’s products found to have more than .06 percent lead accessible to users are subject to a recall.

Commentary: Understandably, Fisher-Price spun the positives hard to this: an internal probe discovered the contamination and they were able to ‘quarantine’ two-thirds of the toys before they reached store shelves, and that the company would use the recall as an opportunity to put even better monitoring systems in place.

Reportedly, the three lower-level managers were taking large bribes from flooring vendors out of Asia in return for featuring these vendors’ products in Home Depot stores.

Home Depot is cooperating with law enforcement authorities who are looking into the situation – prosecution against these employees is a possibility.

The company released a statement adding to their stance on the situation:

“Maintaining our ethical standards is of utmost importance to the Home Depot and is something we enforce strongly.”

O RLY?

Unfortunately, crashing housing and home renovation markets aren’t the only things buffeting Home Depot. The company has also been fighting ethics, compliance and governance scandals on multiple fronts:

(1) Paying a CEO $225 million while employees were continually laid off and the stock declined (Nardelli, who was later terminated after he refused to answer questions at the annual shareholders’ meeting).

(2) The subject of wrongful termination lawsuits by former employees in Maryland and Alabama who claim that they were fired in retaliation for blowing the whistle on Home Depot, accusing the company of pumping up its financials with fraudulent product return procedures (which the SEC is now investigating).

(3) Admitting this past December that the company had engaged in improper stock option backdating for 26 years.

Commentary: We talked to a number of companies that have done business with Home Depot, and many of them repeated stories that indicated a broad culture of ‘browbeating’ and unreasonable demands being made by purchasing personnel at the company. Interestingly, such culture doesn’t appear to be limited to store merchandising – it extends elsewhere in the company as well. For example, we heard about the IT department demanding free products from vendors for the company simply so the vendor can promote Home Depot as a client.

We are also told that the company has virtually ZERO ethics and compliance training or programs.

At the core of the development are Xerox’s technical achievements, which have increased the amount of a tree that can be used (doubling the yield per tree from 45% to 90%) and used less water and chemicals in production (resulting in reduced energy use and emissions by up to 75%). And finally, as the paper is materially lighter in weight, it costs less to transport (and uses less energy along the way).

The downside to the paper, however, is that it does not age as well as normal paper, turning yellow over time.

Commentary: This is an excellent example of aligning business innovation with environmental responsibility for greater profit (in keeping with Ethisphere’s slogan GOOD. SMART. BUSINESS. PROFIT.).

Due to the “yellowing” issue, however, there will be limits to how widely this paper will be used (do you really want all of your documents to turn yellow?). As Xerox itself points out, the core market for this yellower greener paper will be in paper printouts which are not intended to have a long shelf-life (such as invoices, statements, direct mail pieces, manuals, catalogs and brochures).

Xerox appears to be stepping up its sustainability and resource commitments across the board. Less than two weeks ago on July 19th, the company also announced that it was joining the U.S. Climate Action Partnership (USCAP), increasing the total membership of the group to 31 corporations representing nearly $2 trillion in revenues.

In the letter, Disney Chief Executive Bob Iger insisted that smoking in Disney-branded films would be “non-existent” in the future.

Commentary: Before everyone raises Disney on some throne, a dose of skepticism may be in order, as smoking has never been so rife as in such movies as The Princess Diaries, the Shaggy Dog, and the Santa Clause. Furthermore, Iger makes no commitments regarding all the other titles and studios under Disney’s control, such as Miramax and Touchstone. And finally, the timing of this note is a little suspicious as it came just weeks after the Motion Picture Association of America, responsible for the film ratings system, said it would consider smoking alongside other factors, such as violence or sexual content, when rating a film.

So, while we like Disney overall, Iger might have been better off not trumpeting Disney’s position through letters and media interviews.

Meanwhile, poor Hallmark studios (which does make movies for older audiences) hopped on the bandwagon just two days after Disney’s letter… and got ZERO press for it.

We now know who has a better PR firm. :)

By 2020, the confectionery company intends to slash half of its net absolute carbon emissions, with at least 30 percent a result of internal actions.

“We recognize that if we are serious about tackling climate change, we need to be ‘absolutely’ committed,” said Cadbury Schweppes CEO Todd Stitzer in a statement. “This means re-thinking the way we do business, embedding sustainability into every decision we take.”

Cadbury Schweppes also plans a 10 percent reduction in packaging per ton of product in addition to a gradual shift to using up to 60 percent biodegradable packaging.

Commentary: Many people in the U.S. are not familiar with the term “absolute net” when it comes to carbon offsetting (most are more focused simply on purchasing carbon offset credits, as opposed to actual reduction in carbon generation at the source). The Cadbury “absolute net” effort focuses first on minimizing energy use through efficiency improvements, switching to more environmentally energy forms, and then, only as as a last resort, purchasing offsets such as sponsoring the planting of carbon-neutralizing trees, etc.

What we particularly like about Cadbury’s environmental strategy is that they have given the initiative its own brand: “Purple Goes Green.” We have found that “branded” initiatives are easier to understand by employees, generally allow for greater buy-in and acceptance/participation, and also demonstrate greater commitment to the initiative by company leadership as well as the organization as a whole. Kudos to Cadbury!

One division in particular, Wal-Mart’s transportation department, has reported extensive improvements that should allow it to meet or even surpass its goals. The retailer’s 7,200 semis are already 15 percent more fuel efficient, and the company knows what needs to be changed in order to meet the goal of 25 percent by late next year. The carbon dioxide saved with the change will be equivalent to taking 67,744 cars off of the road.

Citing findings from a recent survey by Goldman Sachs, Ling asserted that companies with strong ethical standards outperform the market. For example, companies on an ethical list compiled by Goldman Sachs outperformed the MSCI World Index by an average of 25 percent. 72 percent of these companies were also found to have outperformed their industry peers.

Anthony Ling of Goldman Sachs International insisted that a company’s “ESG” performance (its environmental, social, and corporate governance) can provide an advantage to the company over competitors because these factors are sure to pay off with customers and employees.

Ling stated that these factors, combined with careful consideration of the company’s place in its industry, competitive advantage, and financial performance should all be taken into account when evaluating investment options in mature or emerging markets.

Commentary: We were thrilled to see this report. Our research at Ethisphere has found similar results. The Ethisphere Ethics Index, which tracks the publicly traded components of the annual World’s Most Ethical Companies Ranking, OUTPERFORMED THE S&P BY MORE THAN 2:1 over the five-year period that ended March 31, 2007.

Allegedly, soon after Coca-Cola launched Dasani in Argentina in late 2005, the bottled water has been smeared as “bottled tap water” and “cancer water” on the Internet. It is Coke’s position that there is strong evidence linking Danone and Euro RSCG to the two-year long campaign.

And, as the Internet has “no borders”, the campaign appears to have spread to other Spanish-speaking Latin American countries such as Mexico, Colombia, Costa Rica, Chile, Peru, and Ecuador. Coca-Cola said that this has negatively impacted their business.

Commentary: Want to know a few interesting facts?

Interesting fact #1 – - While, theoretically, the penalties could be huge (up to $10,000 per consumer), they won’t be. This is in part because under Argentine law, any fines/penalties/damages in this case would not be paid to Coca-Cola but instead to the Argentine state treasury. Coca-Cola probably isn’t looking for big fines so much as to make a statement, offset some bad publicity, and to have the practice stopped.

Interesting fact #2: Unfortunately, the history of Dasani is not crystal clean, which will cloud up Coca-Cola’s case. In fact, back in March 2004 the company had to recall it from the shelves in the UK due to excessive levels of cancer-causing bromate being present in the bottled water.

Interesting fact #3 – - Evian is a huge bottle water brand/supplier (owned by Danone). Guess who the U.S. distributor is? Answer: Coca-Cola.

The statement, “Caring for Climate: The Business Leadership Platform,” was signed by executives that committed their companies (30 of which are from the Fortune Global 500) to reduce climate risks by using energy more efficiently, decreasing overall carbon burdens, setting targets for their progress, and publicly reporting the achievement of these targets on an annual basis.

Following the declaration of their intended action, they issued a call to governments to do their part for the effort by passing effective and long-term legislation and financial frameworks designed to make industries more climate-oriented.

Commentary: Kudos to these companies. While some of the companies are relatively small, there are some quite large ones involved – such as: IKEA, LVMH, Airbus, Anglo American, ABB and Repsol. Click here to see the entire list.

The article went on to highlight the importance of corporate governance to a company’s success, reinforcing Ethisphere’s long-held idea that more ethically strong companies outperform the less ethical (the article even highlighted our reasoning by pointing out that the 65 companies on our “World’s Most Ethical” list outperformed the S&P over the past five years).

And while the article cites a few different (and sometimes conflicting) measures along with Ethisphere for rating a company’s corporate citizenship, it sends a clear message for those who might still wonder if stock market behavior is any reflection of a company’s ethical reputation. Dvorak’s answer to this? A resounding YES.

Click here to see the full article.

The fast-food group, which to date has been running trucks on 95 percent diesel and five percent biodiesel, will initially use a blend of 85 percent biodiesel and 15 percent rapeseed oil.

The company said the net effect of the plan would be a 78 percent reduction in its carbon emissions.

The move is yet another effort by the group to overhaul its environmental image. A year ago, after a sustained campaign by Greenpeace, McDonald’s agreed to stop using soya from newly deforested land in the Amazon rainforest. This year, it started selling coffee certified by the Rainforest Alliance in its UK restaurants – a move that it says boosted sales by 10 percent.

Commentary: Sorry about the doobie comment – but seriously, there have been numerous instances when we have been passed by bike messengers in New York City and London that are simply ‘pot on wheels’ as the smell lingers for several blocks.

Anyhow, McDonald’s continues to show innovation in sustainability – and the PR that surrounds it. However, can you imagine how hungry everyone is going to be from McDonald’s trucks burning cooking oil as exhaust all day long around London? Hmmm…. perhaps we smell a devious marketing plan here to increase french fry sales across the city through subliminal marketing.

The report, based on results gathered from a survey of 10,000 U.S. workers, showed the impact that working in a strong ethical culture can have on an employee’s pride in an organization, confidence in its future, and overall satisfaction.

The most surprising finding? Just over half of those polled rated their organization positively in providing an ethical culture- only 29 percent actually reported that their employers have an ethically strong culture.

Commentary: Naturally, we are not surprised with the report, as the ability to attract and retain workforce talent is one of the “profit points” behind Ethisphere’s “Good. Smart. Business. Profit.” motto. Of course, it’s always nice to see reaffirming data. This can prove extremely useful for internal compliance and ethics officers looking for additional support for their program efforts.

The company also admitted that it deliberately falsified the Oil Record Book of various ships, a required log in which all overboard discharges are to be accurately recorded, made discharges at night, and concealed bypass methods used to circumvent required pollution prevention equipment during U.S. port calls so that the Coast Guard would not discover the criminal activity.

The total $37 million penalty is the largest-ever involving deliberate vessel pollution and as part of the sentence, 12 crew members who were “whistleblowers” will receive $437,500 apiece.

Commentary: There are a few interesting things about this case:

(1) it is rare to have more than one whistleblower, let alone 12! Reportedly there were a number of employees very upset about the conduct of the company. In one case, a fitter allegedly was threatened with firing if he did not make a bypass pipe to facilitate the polluting – and he responded by keeping a secret record of the dates of oil discharges. In another case, an employee called a U.S. Coast Guard hot line to report that ship officers were “tricking” an oil sensor by flushing it with fresh water; and

(2) how come there were no criminal charges brought against an individual? Clearly someone in authority was driving this scam (while not necessarily at the most senior levels).

BAE refuses to name the countries it has blacklisted, but analysts suspect that it includes some former are thought to include some Commonwealth members and former customers. Defence analysts believe that these include Nigeria and Indonesia, both of which have bought Hawk jets from BAE.

As Mike Rouse, group marketing director said to the Times:

“We used to be everywhere, but now we operate in about 30 per cent of countries. Some countries we don’t do business with because they are too small to buy our equipment and others are politically sensitive, like China.

As the group marketing director, Make Rouse, said to “There are about 15 to 20 per cent of countries where we just say ‘no’. We take calls from them all the time, but we just cannot do business there. Everybody that operates in this market today has to be compliant with the laws and regulations.”

Commentary: While they may not be popular, military hardware providers are an important part of the global economy and we support the right of any business to pursue its profit. However, this announcement still sounded a bit goofy in some ways. We would have been more impressed if they had named the countries.

Considering there are 245 official countries in the world, this would imply nearly 50 exclusions. Hmmm…here are some of our guesses to fill out what must be a big list after China, Cuba and North Korea… let’s see perhaps Togo, Tonga, Luxembourg, Christmas Island, and Barbados.

The plan is detailed in a New York Times report:

The voluntary changes, which will be put in place over the next year and a half, will apply to about half of the products that Kellogg currently markets to children worldwide, including Froot Loops and Apple Jacks cereals and some varieties of Pop Tarts.

The president and chief executive, David Mackay, said those products would either be reformulated to meet the nutrition guidelines or would no longer be advertised to children.

“It is a big change,” Mr. Mackey said. “Where we can make the changes without negatively impacting the taste of the product, we will.” And if the product cannot be reformulated, the company will either market it to an older audience or stop advertising it.

Last November, for instance, 10 of the largest food and beverage companies, including McDonald’s, General Mills and Kellogg, vowed that at least half of their advertising directed at children under the age of 12 would promote healthier foods or encourage active lifestyles.

The companies also agreed not to advertise in elementary schools and to reduce the use of licensed characters to promote food. Those companies are expected to complete individual plans for how they will address the guidelines in the next 60 days or so.

In a related initiative, Kellogg said that it would introduce new “Nutrition at a Glance” labels on the top right-hand corner of cereal boxes this year to make it easier for consumers to glean nutrition information. The new labels will show consumers the percentage of calories, total fat, and sodium in a single serving, based on a 2,000-calorie daily diet. The label will also disclose the amount of sugar and specific nutrients like fiber and calcium contained in a serving.

Commentary: Let’s put aside the fact that Kellogg was subject to a lawsuit about its marketing practices from the Center for Science in the Public Interest and the Campaign for a Commercial-Free Childhood (an action which was dropped as part of this announcement) and simply applaud them for demonstrating leadership.

Kellogg was among the 93 global companies honored several weeks back by Ethisphere Magazine and the Ethisphere Council as one of 2007′s World’s Most Ethical Companies. In reformulating products and highlighting nutrition, Kellogg has the opportunity to profitably deepen and improve loyalty in its customer relationships – which is the epitome of the Ethisphere Council’s slogan: “Good. Smart. Business. Profit.”