Siemens boost diversity efforts while Primark lands itself in a lose-lose child labor situation

General Motors, General Electric and Ford each get a PROFIT PROPELLER for “plugging-in” with the U.S. Department of Energy to develop advancements in Plug-in Hybrid Electric Vehicles (PHEV). The three companies and the DOE are hoping to design PHEVs that can travel up to 40 miles without recharging and to make PHEVs more cost-competitive by 2014. The plan is to have the new PHEVs ready for commercialization by 2016, according to the DOE. “The projects announced today demonstrate a shared public-private sector commitment to advance clean vehicle technologies and will help reduce our dependence on foreign oil while also confronting the serious challenge of global climate change,” DOE Assistant Secretary Andy Karsner said.

Daimler earns a long-term strategy PROFIT PROPELLER for announcing BlueEfficiency, a program that will improve its entire fleet’s fuel efficiency by 12 percent and significantly reduce CO 2 emissions. What makes this a long-term strategy profit propeller? The program was announced around the same time the company revealed that its annual profit will be $1 billion lower than expected, which subsequently led to a 10 percent drop in its stock price. This goes to show just how large consumer demand is for environmentally friendly vehicles or, perhaps more accurately, cars with better fuel efficiency (less price at the pump). Daimler will be developing this program to help sell more cars and to turn its stock right-side up.

W.W. Grainger Inc. earns a PAPER BAG for ripping off Uncle Sam. The Justice Department announced that the company paid $6 million to the U.S. Government to settle a whistleblower lawsuit that alleged Grainger regularly marked up special items sold to various government agencies. The DOJ also announced that the settlement will resolve allegations that the company mislabeled products from countries that do not have reciprocal trade agreements with the United States. These countries’ products are banned from use in government contracts. The whistleblower will earn $70,400 for blowing the lid off the case.

A PROFIT PROPELLER goes out to Gap Inc. for a new joint initiative the company has begun with India’s Ministry of Women and Child Development, as well as other regional governments. The initiative’s aim is to help end abusive labor conditions within India. It comes just over a year after sweatshop conditions were discovered in the factories of several Gap suppliers. Since the discovery, Gap has been very proactive in creating new, stringent safeguards to detect and prevent child labor and other abusive practices throughout its supply chain. According to one report, the company has also begun rehabilitation programs for women and children who were exploited by various companies.

We’re giving Primark a not-so-Fab PAPER BAG to don after it was reported by the BBC that clothing sold in the company’s stores were produced by young children from a refugee camp in India. One of Primark’s suppliers, Fab-N-Fabrics, used a factory staffed by children as young as eleven. The children were from the Bhavanisagar refugee camp in India’s Tamil Nadu region, according to a report by the UK’s Telegraph. Primark fired Fab-N-Fabrics along with two other subcontractors in response to the revelations. Unfortunately, this led to additional problems. Now activist groups argue that firing the shops is making life even harder for the children and their families. The activists argue a better solution would be to improve the existing supply chain.

A PROFIT PROPELLER goes to Siemens after its chief executive, Peter Löscher, announced that he will be increasing the racial and gender diversity of the company’s top managers. As Löscher put it in an interview earlier this year, “The management board are all white males. Our top 600 managers are predominantly white German males. We are too one-dimensional.” A story by the Financial Times points out that Siemens is reflective of the trend of many Germany companies. They all benefit from increasing globalization, but their international executive staff doesn’t always match up with the markets they’re doing business in. One way that Siemens is looking to correct this problem is through a mentor program of senior managers.

SK Foods, a California-based grower and processor of vegetable products, digs up a PAPER BAG after it was accused of using a third party vendor to bribe purchasing agents of large customers. The company allegedly used broker Randall Rahal and his New Jersey-based Intramark USA corporation to pay hundreds of thousands of dollars to some of the best-known food companies, including Kraft, Frito- Lay and Safeway. According to a former SK Foods employee, Rahal would drop a $100 bill on the ground and tell the buyer, “You must have dropped this. Is it yours?” If the buyer accepted the bill, Rahal allegedly knew they were open to further bribes.

Mayday! Mayday! Budget airline RyanAir flew itself into a PAPER BAG after the company recently announced that it had been breaching laws designed to make online pricing clear. The discount airline admitted that its website neglected to show the total price of flights, including taxes and charges that customers would have to pay. The company blamed the problem on a system error and said that it was actively working to solve the glitch.

If the shoe fits… Timberland Company earns a diligent PROFIT PROPELLER for its new policy of reporting on its corporate social responsibility work. While Timberland will still publish its traditional “full” CSR report every other year, with the next big one coming out in Spring 2009, it will now also publish a quarterly report of “key CSR metrics” on its website. So far their quarterly reports include Energy Data, Product Data, Workplaces, Service and Factory List. Each section includes a brief description of what they’ve done over the quarter and a message board for user feedback.

BUSTED. A PAPER BAG goes to UBS after Andrew Cuomo, the attorney general of New York, filed a lawsuit against the company, accusing it of fraud. Cuomo believes that UBS misled more than 50,000 customers holding more than $37 billion in auction-rate securities by telling them their investments were as liquid as cash. Now, the company is allegedly holding billions of dollars that investors can’t get back. Cuomo also alleges that UBS’ top executives sold $21 million of their own money held in auction-rate securities, while still advertising this investment as a sound choice. “Not only is UBS guilty of committing a flagrant breach of trust between the bank and its customers, its top executives jumped ship as soon as the securities market started to collapse, leaving thousands of customers holding the bag,” Cuomo said in a statement. Now UBS has a bag to hold as well.

Do you have a Profit Propeller or Paper Bag that you think should be awarded in the next issue of Ethisphere? Send your ideas to Stefan Linssen at slinssen@ethisphere.com.