Exam 3 Ch 6
What is a POP?
"Persistent Organic Pollutant" • Persistent - They don't break down • Organic - contain carbon that chemically interact with cells of living things • Pollutant - toxic (kills you)
Compare the VOC content of petroleum-based inks vs. soy-based inks.
* petroleum-based inks = 30% - 35% * soy-based inks = 2 % - 5%
What two government agencies enforce the FCPA?
- U.S. Department of Justice (DOJ) - Securities of Exchange Commission (SEC)
List five examples of routine governmental actions:
1-provide permits, licenses or other official documents to qualify a person to do business in a foreign country 2-processing government papers Ex: visas and work orders 3-providing police protection, mail pickup and delivery or scheduling inspections associated with contract performance or inspections related to transit of goods across a country 4-Providing service, power and water supply ; loading or unloading cargo or protecting perishable products or commodities from deterioration 5-performing actions of a similar nature
What is biomimicry?
Design solution are inspired by nature
What's environmental racism?
Disproportion placed on people of color who happen to live there
What's one big criticism of the FCPA?
Facilitation payment = legal payments accepted to expedite or secure performance of a routine government action. These are still bribes but show they are necessary
What are the seven steps for an effective compliance program?
1.) Management oversight - high level officials must be in charge and accountable for the compliance program 2.) Corporate policies - policies and procedures designed to reduce the likelihood of criminal conduct in the organization, must be in place 3.) Communication of standards and procedures - ethical policies / procudures must be effectively communicated 4.) Compliance with standards and procedures - evidence of active implementation of polices must be provided 5.) Delegation of appropriate discretionary authority - no individual should be granted excessive spending money 6.) Consistent discipline - must implement penalties for criminal conduct 7.) Response and corrective action - criminal (actual or suspected) must have a response and action
What is all the aluminum in landfills worth as scrap metal in today's prices
21 billion
How many tons of electronic products become obsolete each year?
5 -7 million
How much PVC do we toss out per year?
7 billion pounds per year
According to the Pesticide Action Network, what does this look like in India?
91% of male at least are exposed in a 8 hour work day and they have health disorders
What part of the economy does SOX generally govern?
Accounting firms and financial markets
What is aluminum ore called?
Bauxite
What kinds of problems do cotton workers suffer?
Neurological - due to pesticides
A CEO has been found criminally liable under the FCPA for bribing a Brazilian official for new business in that country. What's the maximum fine and/or imprisonment he or she faces?
Officers, directors, stockholders, employees, agents = up to $250,000 fine per violation and up to 5 yrs in prison
What's a Fence-line Community or Host Community?
People who live, work and play near factories
What do the FSGO require of organizations?
Requires the organization to police themselves by preventing and detecting the criminal activations of their employees and agents
What kinds of problems do they cause? VOC?
Respiratory allergic immunity problems contamination of soil and water
How are fines calculated under the FSGO?
Step 1: determination of the base line Step 2: The culpability Score:
SOX
The Sarbanes-Oxley Act (2003)
What's the remedy for these communities?
The answer is to clean up our production process and environmental governance
What's the "last line of defense" in promoting ethical behavior on the part of organizations, and what two methods are at use in this?
The last line defense has been a (1) LEGAL and (2) REGULATORY FRAMEWORK that offers financial incentives to promote and to create motivation of ethical behavior and impose penalties for organization that choose not to adopt.
What's the main problem with synthetic materials
They don't exist naturally (created and tested in labs) we don't know how it affects us
Hazardous Materials in a PC: Barium, Lead, Plastics, Brominated Flame Retardants, Cadmium, Beryllium, Mercury, Hexavalent Chromium)
True
If the corporation, as well as the CEO, is found criminally liable for this bribe, what's the maximum fine and/or penalty that could be imposed in addition to that imposed on the CEO?
Up to $2 million
What is the maximum term of organizational probation under the FSGO?
Up to 5 years in prison
What's the downside of growing cotton?
Uses too much water so cotton is grown overseas now
Death Penalty
a fine is set high enough to match all the organizations assets and go out of business
Financial Stability Oversight Council (FSOC)
a government agency established to prevent banks from failing and otherwise threatening the stability of the US economy
Consumer Financial Protection Bureau (CFPB)
a government agency within the federal reserve that oversees financial products and service
Step 2: The culpability Score:
a. Aggravating factors - 1) CEO, VP were involved 2) Obstructed justice 3) Prior history of misconduct 4) Violated judicial order b. Mitigating factors - 1) organization had an effective program to prevent and detect violations of law 2) organization self-reported the offense 3) fully cooperated in the investigation 4) accepted responsibility
The US Federal Sentencing Guidelines for Organizations (FSGO) (1991) - was established in 1984 by comprehensive crime control act and was in charge of developing uniform sentencing guidelines for offenders convicted of federal crimes
applies to organizations and holds them liable for criminal acts of their employees and agents. process where judges calculate fines or prison time
Culpability score means
corresponding degree of blame or guilt used as a multiplier up to 4 times the base fine. This can be adjusted based on aggravating or mitigating factors
What was the purpose of the creation of the Public Company Accounting Oversight Board? (PCAOB)
independent oversight body for auditing companies. •Reestablish perceived independence of auditing companies • Set operational standards • Maintain compliance • In force rules and procedures
The Foreign Corrupt Practices Act of 1977 (FCPA)
introduced to more effectively control bribery and other less obvious forms of payment to foreign officials and politicians by american companies.
Routine governmental actions (FCPA)
regular administrative process or procedures excluding any action taken by a foreign official in the decision to award new or continued business
Dodd-Frank Wall street Reform Consumer Protection Act Legislation
was promoted as the "fix" for the extreme mismanagement of risk in the financial sector that led to a global financial crisis in 2008 - 2010
Step 1: determination of the base line
will be the greatest of: a. Monetary gain to the organization from the offense b. Monetary loss from the offense caused by the organization to the extent the loss was caused knowingly, intentionally, and recklessly c. Amount determined by a judge based on an FSGO table EX: fraud is level 6 offense BUT fraud causing harm of $5 million or more is level 20 offense if it were preplanned
What's the carbon dioxide footprint of manufacturing one traditional t-shirt versus one Patagonia t-shirt?
• 1 traditional t-shirt = 5 pounds • 1 Patagonia t-shirt = 3.5 pounds
Andrew Fasto, former CFO of Enron, was found criminally liable for cooking the books at Enron to hide bribes paid to Indian governmental officials. What are the potential fines and/or prison terms at stake in this situation under the FCPA?
• Agent = up to $5 million fine and / or 20 yrs in prison • Corporation = up to $ 25 million
What are the three factors that came together to form the perfect storm that caused the 2008 crash?
• Aggressive lending - banks lend money out even if people were not asking for it • Subprime borrower - lending to people who cannot pay back • Deregulated financial environment
What are the two distinct areas of focus of the FCPA?
• Disclosure - FCPA requires corporations to fully disclose any and ALL transactions conducted with foreign officials and politicians • Prohibition - FCPA inclusion of wording from the Bank Secrecy act and the mail fraud act to prevent the movement of funds overseas for the express purpose of conducting a fraudulent scheme
What is a Superfund site ?
• Government website that sites the land in the U.S. identified by EPA that it poses a risk to the environment
What are the two main processes for making paper pulp, and which one is used more frequently?
• Mechanical • Chemical - used more often
What are the three types of penalties under the FSGO?
• Monetary fines • Organizational probation • Implementation of an operational program to bring the organization into compliance with FSGO standards
Is paper indefinitely recyclable (pg. 53)?
• NO - the fibers shorten after a while and no longer will function
What's a big problem with PVC ?
• Polyvinyl Chloride = off gassing means chemicals in PVC give out gases and it leaks out an enters our system
Describe the difference between pre-consumer and postconsumer recycled waste
• Pre-consumer - trimmings are at the factories (never been to consumer) • Postconsumer - consumer uses then recycles
What are the five key directives that further enforce the independence of auditors?
• Prohibits specific "non-audit" services of public accounting firms • Prohibits public accounting firms from providing audit services to any company whose senior officers (CEO, CFO...) who were employed 12 months prior • Requires senior auditors to rotate off an account every five years, and junior auditors every seven years • Requires external auditor to report to the clients audit committee on specific topics • Requires auditors to disclose all other written communication between mgt and themselves
What terms can probation include?
• Reporting the business financial condition to the court on a periodic basis • Remain subject to unannounced examinations of all financial records by designated probation officer and or court appointed experts • Report progress In the implementation of a compliance program • Being subject to unannounced examinations to confirm compliance
What are the three key changes to the FSGO made in 2004?
• Required companies of periodic evaluation to improve • Active promotion of ethical conduct • Guidelines defined accountability more clearly
What are the nine core principles of how nature functions that we should try to copy?
• Runs on sunlight and uses only the energy it needs • Uses a water based chemistry • Fits firm to function • Recycles everything • Rewards cooperation • Banks on diversity • Demands local expertise • Curbs excesses from within • Taps the power of limits
What are VOCs (pg. 55)?
• Volatile organic compound - that can easily become gases
Designing products that don't cause health and environmental problems provides an area of great opportunity for achieving business sustainability goals. What seven items are determined by product design
• Which ingredients need to be extracted or created • The amount of energy used in making and using the product • The presence or absence of toxic chemicals • The length of the products life span • The ease or difficulty of repair • Its ability to be recycled • The harm caused by burying or burning the product of its not recyclable
