2008 World’s Most Ethical Companies
A number of companies out there think that a good CSR program consists only of a soapbox and a bullhorn. Unfortunately for them, just being loud doesn’t equate with being ethical. Likewise, simply dropping a cool $100 million into clever marketing and public relations doesn’t make a company ethical, either.
The World’s Most Ethical Companies are the ones that go above and beyond legal minimums, bring about innovative new ideas to expand the public well being, work on reducing their carbon footprint rather than contributing to green washing and won’t be found next to the words “Billion Dollar Fine” in newspaper headlines any time in the near future. These are the companies that stand out among the competition in their industry.
So if that’s what it takes to become one of the World’s Most Ethical Companies, perhaps a good question to ask is, what does it take to be eliminated from consideration for the World’s Most Ethical? The obvious answers involve bribery, discrimination, fraud or any number of other illegal activities. The conditions of supplier factories must be taken into account too, as well as the company’s stance on the environment. Product liability is a factor as well.
Of course, no business is perfect. Every large corporation gets sued or experiences a crisis. The World’s Most Ethical Companies are the businesses that respond not with a PR campaign, but with real action, such as complete transparency for the public and significant effort given to fixing the core problem.
With the help of our methodology panelists, our researchers looked at company history as far back as five years. Products that clearly don’t benefit the public’s best interest pulled down a company’s ranking. Because most large corporations take on lawsuits in five years’ time, we looked at the nature and history of each case and the nature and history of the plaintiff, as well as the effect of the issue in question. We noted if a major case was brought about by a disgruntled ex-employee or generally lacked significant merit.
At the same time, we took note of issues and lawsuits that didn’t hit the largest media outlets. And, because of those little-heard cases, a few of the 2007 winners fell off the list this year. Some fell off because newcomers stood out this year, and others dropped because they got caught up in some unpleasant business since last year’s rankings. You can read more about our methodology below to get a breakdown of how we scored each company.
All of the 2008 World’s Most Ethical Companies are standouts in their industries. These companies up the ante for what it takes to be an ethical leader and force their competitors to follow suit or fall behind.
The World’s Most Ethical Companies use ethical leadership as a purposeful method to drive profits. Finally, each of these companies embodies the true spirit of Ethisphere’s credo: Good. Smart. Business. Profit. We salute them and encourage you to do so as well.
Methodology
01 The Starting Line
We began by bringing together a group of expert attorneys, professors, government officials and organization leaders concerned with ethical and honest business practices to create a methodology panel. The panel assisted us in creating the scoring methodology for the World’s Most Ethical Companies awards.
02 Candidate Selection
Over the course of the year, Ethisphere contacted thousands of companies worldwide about the awards to gather information and create a pool of candidates.
03 Making Contact
Semi-finalist companies were then notified and given an in-depth survey questionnaire to fill out regarding their ethics and compliance program, governance and corporate responsibility. To see a copy of the questionnaire, click here.
04 Crunching Numbers
Ethisphere then conducted data analysis on hundreds of companies based on their responses to the survey, as well as documents and information researched and requested by Ethisphere to confirm survey responses. Every company was then given a score based on the results of the survey and measured against seven distinct categories.
These categories are Corporate Citizenship and responsibility; Corporate governance; Innovation that Contributes to the Public Well Being; Industry leadership; Executive leadership and Tone from the Top; legal, regulatory and reputation Track record; and Internal Systems and Ethics/Compliance Program.
05 The Final Stretch
The highest EQ scores for each industry became finalists and were then notified and interviewed by Ethisphere analysts.
06 And the Winners Are…
Finally, 2008 World’s Most Ethical Companies were announced on June 3rd, 2008 at the Forbes-Ethisphere Ethical Leadership Forum in New York City’s Rainbow Room.
You can find more in-depth information on the methodology for 2008’s World’s Most Ethical Companies at www.ethisphere.com/worlds-most-ethical-companies-methodology.
Ranking
Ethical leadership can and should be profitable. through recognizing companies that pursue an ethical leadership model, the Ethisphere Institute both rewards such behavior and motivates winners and other companies to strive for future recognition.
SPOTLIGHT ON SELECTED WINNERS
What goes on behind the scenes of a company to make it one of the World’s Most Ethical Companies? We spoke with a number of individuals directly responsible for the ethical direction of their company. Following are some excerpts from our conversations:
Mark Burns
Global Compliance & Ethics Coordinator
UPS
Mark Burns, the global compliance & ethics coordinator at UPS, reveals that his company uses ethics as a business strategy. “At UPS, we consider being a good corporate citizen a key ingredient that enables us to be a successful company,” Burns says. “In fact, it is part of our overall corporate strategy.”
With over 100 years of business under its belt, UPS has become the world’s largest package delivery company, operating in more than 200 countries and territories worldwide. Mark points out that UPS is “a global company with many different cultures. Although languages and cultures around the world may be different, we do not change our ethical standards at UPS.” To keep up with the worldwide operations, his ethics program must be ready for international demands. “Our ethics program is global in nature,” he says. “We provide ethics and code of conduct materials in 12 languages, ensuring that our employees understand and adopt ethics policies. Our culture also reinforces written policies. Managers are expected to be role models with their subordinates and their performance and career is judged accordingly.”
Andrew Hinton
Chief Compliance Officer
Google hasn’t even celebrated its 10th birthday yet, and it’s already one of the most influential companies in the technology industry. From the beginning, however, Google has been dedicated to conducting business responsibly and reducing our impact on the environment. The most prominent example is Google.org, the company’s philanthropic arm, which is committed to using the power of information and technology to address some of the world’s most challenging problems: Climate change, poverty, disasters and disease. As of January 2008, the organization had already committed over $75 million in investments and grants around the world.Google encourages its staff to become involved in these efforts at all levels and routinely communicates the importance of ethics and compliance to its employees. Additionally, Google is working with a group of other companies, NGOs and academics to help develop a global code of conduct for how to deal with governments that suppress free expression and privacy. As Andy Hinton, Google’s global ethics & compliance officer, puts it, “World class technology is only the tip of the iceberg at Google. Google wants to change the world for the better in very fundamental ways. That’s part of what makes us a ‘different’ kind of company.”
David Frishkorn
Director of Business Ethics & Compliance
Xerox
Speaking with David Frishkorn, Director of Business Ethics & Compliance at Xerox, reveals a unique approach that Xerox employs in their ethics program. Many companies will place a strong emphasis on tone from the top, and stop there. Frishkorn prefers a different approach. “When everyone focuses on tone from the top, you can have somebody standing there, yelling and shouting, but if they’re not respected, or if the message isn’t properly received, or if the environment is one that is contrary to what the words from the top are, it’s not going to be effective,” says Frishkorn. “The real test of the tone from the top is that it’s received well and that the employees commit to the program.” To that end, Frishkorn says that Xerox helps employees get involved in the ethics program through a basic monthly survey that asks simple questions such as, “Do you think it’s an ethical environment?”, “Do you know about the helpline?” and “Would you call the helpline?” These fundamental questions help the compliance team get an accurate reading of the corporate environment. “There is ample opportunity and space in that survey for people to write in comments, and that’s where we actually get a lot of the ‘good’ data,” Frishkorn says. “So when something monumental happens that is either good or bad from the employees’ perspective, relative to the ethics at Xerox, we can pick up on that pretty quick in the write-in comments.”
David Landau
Chief Compliance Officer
Starbucks
Starbucks isn’t just a household name when it comes to coffee, but it’s also synonymous for outstanding CSR practices. David Landau, the company’s chief compliance officer, notes that Starbucks has a long history of ethical leadership. “Starbucks was founded upon notions that all people should be treated with respect and dignity, that diversity is to be respected and embraced,” explains Landau. He notes that these principles are instilled in employees at every level, from barista to the board. “Even during times of transition, Starbucks partners are focused on doing what’s right by each other, customers, farmers, vendors and shareholders; and we are driven by our mission statement and guiding principles.”Landau points out that a successful ethics program is one that “provides key, clear policies and expectations, and is also flexible enough to move with the business. It adapts to support and promote appropriate decisions and outcomes in an ever-changing and complex business environment.”So, what part of Starbucks’ ethics program is Landau most proud of? The way that it enhances everyday life at the company. “Our program supports and promotes an amazing corporate culture,” he says. “Our business ethics and compliance program is truly global and has helped not only Starbucks partners, but business partners as well, to operationalize the company’s values and guiding principles. We’re proud that partners regularly show their trust by contacting us to share concerns or broach questions.”
Dan Amos
CEO
Aflac
Dan Amos, CEO of Aflac, joined the company in 1973, and during his tenure the company has grown into an international powerhouse in the insurance industry. Amos inherited a company that was founded on ethical principles, like many of the World’s Most Ethical Companies. “This company was founded with the premise that if you take care of your employees, they will take care of the company. This principle has proven true for more than 50 years as Aflac has grown from a small family business to a Fortune 500 company,” says Amos.One of the aspects that helps the company continue to thrive is Amos’ transparent leadership. “As a public company there is a responsibility to tell people what is happening regardless of whether the news is particularly good or bad,” Amos admits. “At Aflac, it is our custom to tell the people what we are doing and why we are doing it to limit any surprises in the future. As a publicly traded company, our actions impact the lives of shareholders and since they own our company, they have a right to know what lies ahead.” This isn’t just rhetoric—Amos can regularly be heard around the office telling employees, “Bad news does not improve with age.”Amos notes that Aflac’s ethics program isn’t just intended for upper levels of management. Rather, an ethical culture is taught from the top down. “Our ethics program is company-wide,” says Amos. “It extends from the call center worker to the IT technician to the board room. You cannot work at Aflac without having taken an online course on ethics and privacy and every employee receives constant reminders of the Aflac way of doing business, which is to treat customers, stakeholders and colleagues with respect and dignity. We are proud that our program impacts all who enter our doors and that it is embraced by our employees.”
Shunichi Nakagawa
Executive Vice President,
Legal and Compliance-Global
Global Corporate Communications
Global Information Systems
Kao
What began as a soap company in the late 19th century, Kao Corporation has since become a leading international manufacturer of cosmetics. Based in Tokyo, Japan, the company has operations in Europe, North America, Asia, the Middle East and Australia.Shunichi Nakagawa, the executive vice president in charge of legal and compliance for Kao, told us that the company was founded with the concept of integrity. “One of our key values written in Kao Way, ‘Integrity’ has been long shared among employees since the foundation of the company, 120 years ago,” Nakagawa told us. “We have Kao’s Business Conduct Guidelines as a code of conduct in our daily activity.” This concept is spread through all employees. “Kao Way and Kao’s Business Conduct Guidelines are introduced and communicated to the employees of the whole group. Programs for ethics and compliance trainings are conducted by various means like internal seminars, intranet, etc. to the employees,” he said.“With this corporate culture, ethics and compliance programs are thoroughly carried out to the employees and each employee fully understands the importance of ‘Integrity.’ This makes Kao stand out among its peers and it is what we are most proud of.”
Thank You
The World’s Most Ethical Companies Methodology Committee is comprised of leading attorneys and government officials, professors and organization leaders who care about ethical and honest business practices.
Ethisphere would like to thank the following individuals for their invaluable assistance in creating the methodology for 2008’s World’s Most Ethical Companies ranking.
| COMMITTEE CHAIR: ALEX BRIGHAM Executive Director The Ethisphere Institute |
DAVID LOGAN Co-founder and Executive Director The Corporate Citizenship Company |
| GEORGE W. ASH Partner Foley & Lardner, LLP |
CHRIS MACDONALD, PHD President Canadian Society for the Study of Practical Ethics |
| STEVE CHURCHWELL Partner DLA Piper US LLP |
TRACI MELVIN Deputy Director Ethics Bethesda, MD |
| CHRIS DERI Head CSR/Sustainability Practice Edelman |
BRIAN MORIARTY Associate Director for Communications Business Roundtable Institute for Corporate Ethics |
| JOHN DIENHART, PHD Director Northwest Ethics Network, Seattle University |
DR. JAMES O’TOOLE Professor Daniels College of Business, University of Denver |
| THOMAS DONALDSON Professor The Wharton School, University of Pennsylvania |
KAREN PAUL Professor Florida International University |
| SEAN GIlBERT Technical Director The Global Reporting Initiative |
RAMA VELAMURI Associate Professor China Europe International Business School |
| JENNY KIM Senior Associate Miller & Chevalier Chartered |
MARTIN WEINSTEIN Partner Willkie Farr & Gallagher |
| BEVERLY KRACHER Professor Creighton University |
ANDREW WEISSMANN Partner Jenner & Block LLP |
| MARC LE MENESTREl Professor of Management and Ethics UPF and INSEAD |
ALEXANDRA WRAGE President TRACE International |
Note: The methodology committee is only involved in reviewing and commenting on WME’s Methodology and is not involved in selecting companies.
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September 16th, 2008 at 1:24 pm
“The World’s Most Ethical Companies Methodology Committee is comprised of leading attorneys and government officials, professors and organization leaders who care about ethical and honest business practices.”
This statement causes some doubt as to your methodology. Attorneys and government officials as groups have a pretty low reputations in terms of ethics. I might suggest looking at surveys that indicate which professions rank highest in ethical behavior, then form a committee from the most respected individuals in those professions.
September 9th, 2008 at 9:45 am
This is an article which displays a companies approach to becoming ethical — each company has its short comings but taking action on becoming better is something that we all are trying to accomplish. Hopefully word spreads and other companies will realize that consumers and employees won’t tolerate dishonesty and unethical practices.
http://buendia4you.blogspot.com/
September 5th, 2008 at 4:19 pm
McDonald’s sells literally trainloads of MSG and worse yet, aspartame (cancer causing, addictive, obesity causing, brain damaging exitotoxin), not to mention dozens of other additives they don’t reveal. Their coffee is deliberately kept at a too-hot temperature, despite thousands of hospitalizations for burns which no other commercial coffee would have caused. They train babies to eat sludge with a food base, and advertise mercilessly to children, who want the toys that come with the sludge. My youngest just threw the food away and kept the toy, before we showed him “Super-Size Me”. Now he doesn’t even ask to go there. As a former victim/customer, I think you have revealed flaws in your selection process with this pick.
Or Starbucks, which KNOWINGLY sponsors gay pride events run by convicted pedophiles, with closed off children’s areas which forbid parents from seeing what the organizers do or say to the kids in those areas. If this were, say, a veterans’ pride group, with convicted child molesters running the event, and so forth, Starbucks would be a pariah. Instead, the have “Ethics Inside”. Right.
You discredit yourselves.
db
August 26th, 2008 at 5:02 pm
I had the opportunity to work for a Rio Tinto operation in Juneau, Alaksa for summer as an intern. I was more than impressed with their focus on producing a quality product in a safe and environmental method. More than this, I was impressed by the way they treated their employees and the local communities. I wish Gabriel could site his sources for the strong comments he made above towards Rio Tinto.
August 14th, 2008 at 9:20 am
Would it be possible to get info on Target ethical results for 200?
Thanks an dbest regards
August 13th, 2008 at 9:12 am
Hillary…Yes Aflac agents drive to their accounts to sell policies. There was a time back in the early ’80’s that cell phone companies had sales forces that went out and did presentations to companies to show how a cell phone could help them improve their business. Now when you want a cell phone, what do you do? You drive to any mall and go to the kiosk and get one. There will come a day when a business will pick up the phone and call an Aflac office and say “I want Aflac for my employees.” That day is not here yet so until then we have to take the product to the potential customer. By the way … did you know that Aflac will now email policy documents to the insured instead of printing one out and mailing it? Yep … it’s true. Saves trees. That should make you happy.
August 4th, 2008 at 11:50 am
Dear sirs,
I think you should carefully examine Xerox’s business practices before giving any classification as an ‘Ethical’ company. Yes, it all looks good on the outside they have processes and say the right things. However behind the scenes it is a different story. When it comes up against serious ethical violations it all falls apart. The HR function, Senior Management and Business Ethics & Compliance Officers including David Frishkorn himself, are to put it bluntly corrupt. They will outright lie avoid their responsibilities of ruling against each other and these functions are allowed to get away with the worst Business Ethics violations.
They are allowed to cheat their employees, customers and the environment without fear of recourse. The reason for such Business Ethic violations, money and egos. Senior managers’ egos play a heavy role in committing Business Ethics violations and allowing them to be undressed. People refuse to own up to mistakes.
Nepotism is ripe in Xerox, those that tow the Company line and don’t report or stand up to violations, instead continue the trend are promoted. The HR function in charge of employment are corrupt and rule in favour of the managers. Employment law is often ignored. People are accepted into unsuitable roles before they are advertised, that’s assuming they are advertised at all, which many aren’t. Accurate job descriptions and benchmarking are virtually non-existent, despite claims to the contrary. Unlawful changes to employee contracts are forced as the employee is threatened. An employees role is whatever the manager feels like at the time and HR will automatically take the side of the manager. A lot more is expected, then what is actually paid for. Loyal employees are leaving and being replaced by expensive inexperienced employees who fail to meet the requirements of the role and customer service level agreements suffer. This then has a negative impact on the loyal employees who remain and the cycle repeats. Xerox prefers this to staff retention through recognition and reward. Employees are giving the excuse that it is hard times, so their loyalty can not be rewarded, yet see money be wasted on inexperienced fresh employees and in other areas. There are examples of managers spending R&R budget on their own xmas party rather than recognising employees efforts. R&R was revamped and now the cost comes out of the managers P&L, so they are reluctant to recognise their employees, instead favouring their bonuses. Xerox are constantly throwing money at rebranding, their image is more important than their actual practices. This is the key word in Xerox, Image, be seen to be doing it rather than actually do it. Xerox constantly receives low scoring in employee engagement surveys and feedback. They excuse this with the outrageous claim that the low scoring is due to the employees not understanding the questions. In addition employees live in fear for their jobs. As such the employees concerns remain unaddressed.
If you have a problem it is very difficult to get it resolved as with staff losses, Xerox are loosing the knowledge and replacements do not know how, thus do not want to help you. Also people don’t like upsetting the apple cart by querying things or going out on a limb, as mistakes are highlighted more than the effort.
Xerox customers are regularly lied to or misled. They are ‘encouraged’ into buying services or equipment they do not need or worse, still not up to the job or never materialise or even used unknown to the customer, on other Xerox contracts. What Xerox sees as more prestige contracts are allowed to ’succeed’ at the expense of non prestige contracts. These non prestige contracts’ funding and resources are diverted to the more prestige contract without either customer knowing. Therefore on paper the ‘prestige’ contract which Xerox undersold in the first place, to get, looks more profitable then it is and the manager in charge can pick up their bonus. This is common practice, transferring money been contracts or ordering supplies on another contract’s account or using resources owned and paid for by another contract in order for the manager to achieve their bonus. Service Level Agreements put in place to protect customer sensitive information are not enforced or bypassed without the customer knowing. Incomplete work is hidden from the customer on site visits. Job tracking information is falsified. Headcount requirements are not met or falsely propped up by heads from other contracts. Employees’ working environment breaks basic Health and Safety in order to reduce costs. Broken down warehouses are used without heating or cooling, ceilings collapsing due to rain, on live electrical equipment, which when raised to the site manager, instead of addressing it, they just laugh it off. What happens to an employee who queries these unethical practices? They are removed from site and labelled a trouble maker. The HR function supporting the manager and thus committing unethical practices in order to do so. There is no one with the ethical standing and authority to hold them accountable. If it is a senior manager or HR committing the offence, no one is interested and the employee is constantly lied to, leaving the matter unaddressed.
A lot of resources are wasted by Xerox including power and paper. Xerox engineers recommend leaving Xerox machines on as switching them off and on produces more faults and they have to maintain a low service level. Paper is wasted by inexperienced operators who constantly require their work to be reprinted or those that just want an extra copy. Expensive coated gloss paper from a non prestige contract was used for tracking sheets of a prestige contract as the printer needed a service, thus unable to take the appropriate paper and the manager did not want to repair it as it affected their bonus. Stock was often ’stolen’ for various purposes from other contracts rather than buying their own and it eating into their bonus. The cost centre system is widely abused, with other managers charging to your cost centre without you knowing. P&L’s are categorised and tracking down such purchases are very difficult. Also with all the dodgy accounting practices, Xerox just don’t want you to know.
Anyone foolish enough to report the unethical practices to David Frishkorn and his team are unlawfully forced out of the company. This is the preferred action to actual addressing unethical conduct, though of course is kept quiet from the media, even as far as to threaten the employee.
This is just a small example of their unethical practices. More specific details can be given.
Yours faithfully,
Xerox Complaints
July 23rd, 2008 at 12:07 pm
I am an employee for Fresenius Medical Care. What a GREAT company. Since my first day here in 2002, I have been trained to comply with all regulations and to follow procedures exactly. All employees in the clinical setting strive to make life a little easier for the dialysis patients. The patients we provide services to have repeatedly thanked Fresenius Medical Care for the outstanding service they receive. I feel very priviledged to work for such a wonderful company.
July 22nd, 2008 at 11:05 pm
Accenture is very far to be one of the “Most Ethical” companies
Examples:
1) During the IPO. The partners of that time “take the cake”. Many of them finished with more than USD 10 or 20 millions in shares and left nothing for the future generations of partners.
2)Look at the following news about a giant tax fraud commited and accepted by accenture partners in Spain
LOS INSPECTORES ACTUARON TRAS RECIBIR UNA DENUNCIA
HACIENDA OBLIGA A 100 SOCIOS DE LA CONSULTORA ACCENTURE A PAGAR 110 MILLONES DE EUROS
http://www.elmundo.es/mundodinero/2008/0...
July 17th, 2008 at 12:42 pm
Re: AFLAC
While many have different criteria for ethics, AFLAC is a fairly responsible corporate citizen.
One of the criteria you mention is “sustainable business practices that reduce resource consumption”. Due to AFLAC’s method of domestic distribution, ie. independent sales force in cars, it would be interesting to study the carbon output per policy. Anecdotal evidence suggests that it would be appalling.