Trust Digest 60 (August 12, 2014)

Judge OKs Lawsuit That Triggered GM Ignition Switch Recalls
General Motors Co. failed to convince a Georgia judge to dismiss a lawsuit over the death of a 29-year-old woman that helped trigger the recall of 2.59 million cars over faulty ignition switches. Cobb County State Court Judge Kathryn J. Tanksley rejected GM’s motion to dismiss the revived lawsuit at a hearing in Marietta, Georgia, and set a trial date for April 2016.
Key Words: GM, Recalls, Lawsuit
Trust Issues: Accountability

An Insider’s View: Why More Companies Should Tie Bonuses to Sustainability
I didn’t get my full stock bonus last year. It wasn’t because I didn’t meet my revenue or profit goals; I exceeded them. Instead, it was because my carbon emissions reduction efforts fell short, partly due to the integration of multiple companies DSM North America purchased in 2012. DSM tied all managers’ compensation to sustainability in 2010, with targets related to greenhouse gas emissions, energy and water usage, eco-friendly product development and employee engagement, as well as - of course - profit. Last year was the first time in my career - on Wall Street, American Standard and DSM North America - that I missed my numbers.
Key Words: CSR, Executive Pay, DSM
Trust Issues: Sustainability, Responsibility

Business Schools Aren't Producing Ethical Graduates
You can’t accuse them of not trying. Business schools make efforts to teach students to carry ethical lessons from their MBA program into the working world and to behave ethically as professionals. Most top schools include ethics courses or build ethics-related segments into classes on global management and leadership.
Key Words: Business Schools, Ethics Education
Trust Issues: Sustainability, Capability, Benevolence

US Sanctions Not Mere ‘Trifles’ for Russia’s Oil Industry
Gennady Timchenko is grounded. Ever since the Russian billionaire and friend of Vladimir Putin was hit by US sanctions back in March, his private jet has been stuck on the tarmac: Gulfstream will not service it or provide spare parts. In an interview with the ITAR-TASS news agency this week, Mr Timchenko admitted that the US penalties had caused him “certain difficulties” – but these were “trifles” compared with the task of safeguarding Russia’s national interests.
Key Words: Russia, Oil Sanctions
Trust Issues: Communication, Accountability

How To Evaluate Your Vendors For Business Continuity Risk
Vetting your vendors from a business continuity and disaster recovery (BC/DR) perspective is hot, hot, hot these days. For example, in October, the federal government put out specific Risk Management Guidance for national banks in October of 2013. In a nutshell, the guidance says, “You’d better make sure your vendors have it together if you’re doing business with them, and it’s on you either way!”
Key Words: Risk Evaluation, Vendors
Trust Issues: Communication, Alignment of Interests

India's New CSR Law Sparks Debate Among NGOs and Businesses
India is the first country in the world to mandate corporate social responsibility. On 1 April this year, the government of India implemented new CSR guidelines requiring companies to spend 2% of their net profit on social development. It sounds like legislation to be celebrated – but does it go far enough? Global Reporting Initiative's (GRI) Sustainability Reporting for Sustainable Development conference, held this June in India, issued a joint declaration (pdf) stating that while the government bill was welcome, the 2% ruling could lead to forced philanthropy, 'tick box' behaviour, tokenism or even corruption, and masking of data to avoid having to comply. Time will show if this legislation will have a real impact on poor people's lives and prevent actual environmental degradation.
Key Words: CSR, India, Mumbai Declaration
Trust Issues: Sustainability, Responsibility

Four Decades of Declining Trust in D.C.
Forty years after Richard Nixon resigned from office, talk of impeachment is once again in the air. But fortunately for all of us, it’s just talk, nothing more. Democrats bandy the “I” word to scare-up campaign dollars, Sarah Palin and Michele Bachmann kick the word around because they have nothing to lose, and the Republican base dreams of impeachment because of who they are. At least House Speaker John Boehner and the rest of the country aren’t buying into this nonsense.
Key Words: US Government, Partisan Politics, Watergate
Trust Issues: Communication, Capability

The Claws are Out on Bankers' Bonuses
UK regulators have put forward what they say are the world’s toughest rules on bankers’ pay. The plans call for big bonuses to be deferred for between five and seven years and, in cases of “misbehaviour” or a “material failure of risk management”, make it possible to “claw back” stock and cash as many as seven years after it was awarded.
Key Words: Executive Pay, Clawback Rules, UK
Trust Issues: Regulation, Accountability

Brazil’s Petrobras: Tarred by Corruption
After years of allegedly secret dealings, the men at the centre of what is potentially Brazil’s biggest corruption case made a careless mistake. In May 2013, convicted black market money dealer Alberto Youssef bought through third parties a luxury car for his friend and alleged accomplice, Paulo Roberto Costa, a former executive at state-oil company Petrobras. But while negotiating the purchase of the R$250,000 ($110,000) Range Rover Evoque in São Paulo, they put their names together on a seemingly harm­less document: a proof of ad­dress. It was the only occasion in the mountains of police investigation documents seen by the Financial Times they voluntarily appeared together.
Key Words: Brazil, Petrobas, Oil, Corruption
Trust Issues: Integrity, Accountability, Regulation

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