Great points, Steve! I’d like to add to what you wrote.

Corporate responsibility is also about making sure your company controls its own brand and narrative. In 2006, at the Conference Board’s Business Ethics and Compliance Conference, a speaker from a well-known public company remarked that, for most of their corporate history, they’d assumed if they did right by their customers, that would be enough. And while this attitude is certainly admirable, it didn’t prevent outside organizations from hijacking their reputation and causing them all sorts of reputational and even legal problems. They learned the hard way that actions are not enough.

You need to tell your story “early and often,” because chances are you may not like the way others tell it. In the post-Enron age of transparency, being open about all your practices (business, governance, ethical, compliance or corporate responsibility) is not a luxury but a necessity. The activist/NGO leaders have become masters at taking a brand identity and turning it against a company.

Click on the links below to see some examples:

Example 1

Example 2

The nightmare scenario is for a dedicated group of people to organize themselves exclusively around destroying your company. And such groups do exist. The best way to counter their actions is by (1) having responsible business practices; (2) being open and honest and (3) engaging with responsible NGOs in the field of interest. And no, “responsible NGOs” is not an oxymoron. They are out there, and they can help you understand emerging concerns.

Obviously, if your actions don’t match your values, then you have a problem no amount of words can solve.

In other words – take care of your actions and your words. You’ll need both.

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Staples has cancelled its contracts with Asia Pulp & Paper, according to today’s Wall Street Journal. Worries that Singapore based APP is destroying rain forests in Sumatra led Staples to this move.

We understand that sophisticated companies prefer supplier engagement rather than divorce. We do too. It is hard to have leverage when you no longer wield the power of the dollar (although that, of course, is less powerful than it used to be.) To its credit, Staples tried engagement. But it didn’t work. Mark Buckley, Staples VP of environment, “decided engagement was not possible anymore.”

So they cut the cord. This is a big deal—APP, one of the world’s largest paper companies, supplied Staples with 9% of its paper supply. Yet Buckley believed that being a customer of APP was “great peril to our brand.”

Environmental and human rights activists often echo Martin Luther King in his letter from the Birmingham Jail. “For years now I have heard the word ‘Wait!’ It rings in the ears of every Negro with a piercing familiarity. This ‘Wait’ has almost always meant ‘Never.’”

To send a credible message to those scrutinizing corporate actions for responsibility, sometimes engagement must end in divorce. Staples is to be applauded for taking this step. We also trust that they have held out hope for reconciliation, should Asia Pulp & Paper embrace its environmental responsibilities. Then the ‘Wait’ combined with action will have been well worth it.

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Lehman Brothers, the investment banking and financial services firm, released a report on the economic impact of climate change in September. Their analysis concludes that carbon emissions carry a social cost of about $50 per ton, and that companies should be planning for how they will deal with likely emerging regulatory requirements and opportunities presented by emissions trading and reduced energy usage.

While this is the first comprehensive report of its kind by an organization like Lehman Brothers, these conclusions are hardly new. In fact, if you open the annual report of any energy company, you’re likely to see at least a short discussion of the company’s approach to climate change. (Take a look at at Edison International’s 2006 corporate annual report for an excellent example of how to address this issue. In particular, check out pages 4 and 81.)

And don’t think the regulators aren’t busy. Two environmentally focused NGOs, Ceres and Environmental Defense, along with financial officers of 10 states and New York City have asked the Securities and Exchange Commission to require companies to disclose the risks that climate change may pose to their bottom lines (New York Times news article available here, free registration required).

In addition to Federal regulation, there has been additional movement at the State level. New York’s Attorney General Andrew Cuomo has started an investigation of five energy companies to determine if they have adequately disclosed financial risks associated with climate change.

In the near term, energy companies are going to be the most directly effected by climate change regulations, but they will hardly be alone. Any organization that is a major user of energy should consider what impact predicted climate change will have – in terms of higher energy costs, new potential regulatory challenges, impacts on facilities, and even disruptions to global supply chains.

The good news is that there are significant economic opportunities for organizations that successfully manage their climate change risks. Emissions trading is a tool for addressing air pollution problems and providing economic benefits to companies that are the cleanest. And of course any reductions in energy use are savings that go directly to the bottom line.

Even those who are global warming skeptics should consider that it doesn’t seem prudent to ignore it from a business perspective. Businesses are better off managing the risks associated with climate change themselves rather than having an antagonist’s solutions imposed on them.

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We hear it all the time in our focus groups. “If I were in charge . . .” or “If only management would . . .” Phrases that suggest that ordinary employees (or managers or even Vice Presidents) have little power to change things in a company.

Contrast that attitude with a story from the October 1, 2007 New York Times “The Everyman who Exposed Tainted Toothpaste.” Eduardo Arias really is an everyman. This 51 year old lives in Panama City, Panama. He is a mid level government employee. He lives alone and does not own a car, let alone have access to newspapers or the airwaves.

Eduardo read a label on a tube of toothpaste for sale—and saw that it contained diethylene glycol. Many Panamanians had died taking cough syrup with diethylene glycol—so the ingredient and its negative connotations were well known to Mr. Arias.

But this is what is—sadly—remarkable. He bought a tube, and took it to a government health office. Who told him to go to another office. And another. He persisted. And—equally remarkably—somebody in the government office paid attention. Three days later Panama’s top health official held a news conference alerting the country—and eventually the world—of this problem.

If a working class shopper in Panama can make a difference, what does this tell the rest of us?

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A recent Wall Street Journal front page headline (Monday, July 9) announced that the development of alternative energy in the U.S. was being impeded by a shortage of windmills. This reinforced my suspicions that the free market isn't going to wait for Congress to quit dithering over how -- in President Bush's own words -- to reverse this country's "addiction" to fossil fuels. Clearly demand for alternative energy sources was driving market activity, regardless of what Congressional nay-sayers and global warming skeptics who profess their unshakeable belief in the free market are saying on the topic.

I laid out some thoughts on this subject in an article that was just posted on Ethical Corporation On-Line. Here's the link. Take a look, and let me know what you think.

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