Thanks to social media and the expansion of news reporting over the past couple of decades, more and more of us are aware of ethical issues as they relate to business. Those of us who care about such things have an interest in supporting businesses that align with our values, such as fair treatment of workers and care of the planet. Whether we are looking to purchase their products or invest in their stock, these are important questions to be asked. What should the benchmarks for these companies be, though, and how do we find the ones that are achieving these standards?
Fortunately, there are various organizations that do the heavy lifting for us, one of which is Ethisphere. The institute was founded in 2006 by Alex Brigham, who observed that while there were many ways of noting how unethical companies violated laws and standards, there was not a definitive way of positively measuring how ethical companies operate. Ethisphere is the result of his vision and has become a standard for ethics evaluation in many industries.
There are five categories that Ethisphere uses to score a company's ranking: Ethics and Compliance Program, Culture of Ethics, Corporate Citizenship and Responsibility, Governance, and Leadership and Reputation. According to their website,
"Each category is evaluated through a combination of answers to our Ethics Quotient® (EQ) questionnaire, submitted supplemental documentation, and where necessary, independent research and follow up with a candidate. Evaluation of the Leadership and Reputation category also includes a review of publicly available information with a bearing on an organization’s reputation for acting ethically."
A foundational premise of Ethisphere is that there is a correlation between a highly ethical company and better financial performance (also tenets of Better Capitalism). Charting the performance of their 2023 Honoree List, it would appear that this premise is true, as seen in the graph below:
Image Credit: Ethisphere
There are several other organizations that recognize companies' efforts at improving how they do business, including Global 100 (The World's Most Sustainable Corporations), 100 Best Corporate Citizens, and Just Capital, to name a few. Do any of these entities have a perfect way for measuring ethical behavior? Ethisphere, for example, has been criticized for honoring certain companies that have some questionable practices and/or history, and all companies they review are, in a sense, tied to them economically through membership in the organization.
Still, as Gretchen Winter, current director of the Center for Professional Responsibility in Business and Society at the University of Illinois says, the awards help in “advancing the conversation about ethics and compliance programs in the executive suites and boardrooms.” As corporate wealth and power continues to increase, conversations directed to corporate ethics and compliance are critical, as is scrutiny of corporations' reactions.
In light of the potential for conflict of interest in any one organization, we have looked across all four of the above-mentioned groups to see if certain companies make the list on most or all of them. Our short list of corporations that repeatedly made the grade include Microsoft, Salesforce, Hasbro, Kellogg's, JLL, Accenture, Hewlett Packard, Apple , Johnson Controls, Aflac, and John Deere. Though not listed on these compilations, Patagonia and Tom's of Maine also turn up again and again in various news articles. While none of these organizations are perfect (and none among us are), these are role models worth emulating.
It is important to keep in mind that because there are a number of different areas under scrutiny--such as sustainability, workplace environment, and supply chain accountability--a company may score well in some metrics but have work to do in others. It is also important to remember that everyone involved in these endeavors is human, and thus prone to undue influence or imperfect methodology. That said, shining the light on business practices in this way is a much needed exercise, and one that will hopefully improve as time goes on.
As a part of our endeavor to honor businesses that are striving toward an ethic of mutuality, we will be featuring some of the above-named companies in future blogs. We will point out both the good and the "to be improved" parts of their résumés, all in an effort to reward what's being done right and encourage betterment in the areas that need it. We invite and encourage you to join us in celebrating every corporate effort to implement ethical practices, such as mutuality, and other Better Capitalism tenets!
What about you? Share your story, question, comment, idea, disagreement -- yes, we welcome disagreement for the sake of mutual benefit! -- with us at blog@PartnershipEconomics.com. We will give a thoughtful response.
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