Hard Assets On The Line

Glencore, the world's largest commodity trader,  is seeking to merge with Xstrata, a global leader in coal and mining, to form a post-merger company to be valued at nearly $90 billion.  Latest bid .  The proposed merger would become the biggest deal of the year, involving (literally) tons of hard assets.  When we consider the magnitude and impact of this deal, it is hard not to look askance at the other big deal of the year--Facebook.  There, hard assets were tough to quantify in the face of massive valuation estimates. No such problem here, as Glencore's reach expands to aluminum, coal, sugar, grains, and crude oil.  It could not be more brick and mortar.

I don't know what Xstrata's record is on the environment, labor, or human rights.  But as putative partners in one of the biggest mergers of the year, both Glencore and Xstrata might want to shore up their compliance on non-financial matters, which are always problematic in the commodities and extractive sectors. Glencore's IPO was the largest ever on the premium listing of the London Stock Exchange, and this deal will make it an even higher profile target for activists. Plus, the company's provenance as a spin-off from Marc Rich & Company increases its mystique quotient.  A few smart steps by CEO Ivan Glasenberg today can bring reputational, as well as financial, success for the new company going forward tomorrow.

--Adonis Hoffman is a corporate advisor, professor and attorney in Washington, DC. He is the author of Doing Good--The New Rules of Corporate Responsibility, Conscience and Character.

Go Green

"Business is recognizing the role it can play in combating climate change. Thank God, is all I can say, for there is a desperately urgent need for business to play that role. Your lobbying influence can be substantial, but together, united and in large enough numbers it could prove decisive in turning the tide."

Prince Charles


If you have not yet realized the impact of the green revolution on business, you should accelerate your learning curve. Eco-friendly environmentally-conscious policies and practices are the order of the day for corporations, and consumers, policymakers and the media all expect companies to play by the new rules.

After decades of carping from the outside, environmental activists have succeeding in placing the environment on the corporate agenda. Today, environmentally conscious policies are a major part of the sustainability standards that all companies are expected to adopt if they are going to be considered responsible citizens. In addition to lowering carbon emissions and greenhouse gases, green policies and practices are proving to impact the bottom line quite favorably through reduced costs and increased energy savings.

Of course your commitment to going green will require your organization to make both short-term and long-term commitments and to open itself to even more scrutiny. But consider the impact made when private equity financiers made an environmental group a key part of the deal for a natural gas plant. In the end, leadership in this area will pay great dividends in corporate reputation, good will and consumer satisfaction.

(c) Adonis E. Hoffman, 2008

Create a Code of Conduct

"There is no such thing as business ethics. There is only one kind - you have to adhere to the highest standards."

Marvin Bower, former managing partner of McKinsey & Company


Codes of conduct have found favor and acceptance among many leading companies and are popular today. In essence, a code of conduct refers to a set of behavioral principles or standards that companies pledge to follow voluntarily.

In addition to their own codes, many companies are endorsing codes developed by organizations such as the United Nations and chambers of commerce. Codes tend to be responses to concerns raised by consumers and other stakeholders, and as such are market-driven. For the most part, they are not legally binding, although it is not good to violate a code you have voluntarily adopted.

A good company code of conduct will address at least five main areas: (1) fair business practices; (2) rule of law; (3) fair employment and labor; (4) environmental issues; and (5) corporate citizenship.

If your company does not have a code of conduct, or if it does not endorse any external codes, change this right away. Directors, officers and managers, as well as senior employees should be encouraged to submit suggestions for the code. This process reinforces so many other positive components of good corporate citizenship that it, alone, is worth the effort.

(c) 2008 Adonis E. Hoffman

Influence Others to Do Good

“There is but one rule of conduct for a man to do the right thing. The cost may be dear in money, in friends, in influence, in labor, in a prolonged and painful sacrifice, but the cost not to do right is far more dear: You pay in the integrity of your manhood, in your honor, in strength of character; and, for a timely gain, you barter the infinite.”
--Archer G. Jones


Competition not only is good for business, it is good for society. When one company sees its competitors behaving responsibly, its own competitive instincts get into gear, especially when those competitors are being rewarded and recognized in the marketplace as is often the case.

In the same way as a company establishes itself as the pacesetter for an entire industry, it can lead the way in other areas. I am reminded of organizations such as Levi Strauss, Johnson & Johnson, and Starbucks who, by their consistent examples, have prompted their industry competitors to strive to do good things.

Corporate leaders set positive examples for others to follow. All too often, corporations are influenced by the wrong kinds of actions—spiraling executive pay, more and more perks for the board, and stupendous stock grants—while many of the basic issues that matter to their customers go overlooked.

True corporate leadership propels a company to influence others to make lasting investments in underserved communities, to take extraordinary measures to preserve the environment, and to promote sustainable development throughout the world, for example. Doing well, alone, is never enough. A corporate leader must seek to do good for others, too.

(c) 2008 Adonis E. Hoffman