The World’s Most Ethical Companies

The Ethisphere Institute, an international think tank, has just announced its seventh annual list of the World’s Most Ethical Companies. The selection, open to every company in every industry around the globe, gives its winners an opportunity to trumpet their do-gooding ways. It is not a ranking, so they are all equally winners.

Thousands of companies were nominated–or nominated themselves–to be considered this year. The record-high number of nominations and applications demonstrates companies’ desire to be acknowledged for high ethical standards. The 2013 list includes 138 organizations.

“I’m pleased to announce that the 2013 list is our most competitive to date,” says Alex Brigham, executive director of the Ethisphere Institute. “Companies have become increasingly aware of the advantages being ethically conscious has to offer, especially in the global economy. Companies find that ethical business practices increase their competitiveness in their respective industries, helping to further substantiate the notion that a culture of ethics is crucial to sustainable excellence.”

Ethisphere reviewed nominations from companies in more than 100 countries and 36 industries. Ethisphere’s proprietary rating system, which it calls the Ethics Quotient, is based on a series of multiple-choice questions in a survey that is designed to capture a company’s performance in an objective and standardized way. The winnowing process includes reviewing codes of ethics and litigation and regulatory infraction histories; evaluating investment in innovation and sustainable business practices; looking at activities designed to improve corporate citizenship; and studying nominations from senior executives, industry peers, suppliers and customers.

“Based on the information in the World’s Most Ethical (WME) survey, Ethisphere verifies responses before a final score is provided,” Brigham says. “Some of the information is publicly available and easily verified. In other instances, we request that companies send us non-public information to validate responses. This could include training policies, whistle-blower programs, internal tone-from-the-top communications and so forth.”

Once the pool is culled to a few hundred companies, Ethisphere cross-checks it against governance lists from organizations including GMI Ratings and FTSE4Good. Any company that has had significant legal trouble over the past five years is dropped. Companies that focus on alcohol, tobacco or firearms also get the boot.

The 138 companies that made the final cut this year include first-time recipients Visa, Sherwin-Williams and 12 other newcomers. Several companies from last year disappeared, because of litigation or ethics violations, or increased competition from within their industries. Fifteen companies have been recognized as a WME company for all seven years, and over 30 companies more have made the list at least twice.

This year’s list also includes more global companies, with 40 winners from outside of the U.S., including six from the U.K. and five from Japan. “Much of the growth in the list comes from new foreign markets, as well as private companies,” Brigham says. “The Ethisphere Institute continues to see huge interest and demand overseas, most notably in Latin America, for this sort of measurement and we have regionalized scores as necessary.”

Why is there so much interest? Brigham says that recognition on the WME list has proven to be beneficial in various ways for the winners. “Many companies promote the recognition in their recruitment materials, as studies show that employees increasingly want to work for an organization that aligns with their own personal values. They are more loyal to such organizations,” he says. “In addition to providing a competitive advantage in workforce recruitment, many companies also display the designation in their marketing materials to attract customers, particularly in new markets,  where the company may not be well-known.”

The World’s Most Ethical Companies are leaders of their respective industries when it comes to key ethical criteria such as tone from the top, employee well-being, CSR, compliance programs and other important areas, Brigham adds. “Every year we are impressed to learn some of the new ethics initiatives that these companies have developed and we are pleased to see the bar raised higher year after year. These companies also understand that a strong culture of ethics is also key to helping drive financial performance,” he concludes.

The Worlds Most Ethical Companies in 2013

(Listed alphabetically)

Click here to see the full list and read more about the nomination process and methodology.

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