Ethics: companies that practice what they preach

Comments (0) | 16 Mar 2011 | Rating by Aarti Maharaj

New list delineates world’s most ethical companies.

The Ethisphere Institute, a New York City think tank, yesterday announced selections for its fifth annual list of the world’s most ethical companies. The list highlights 110 organizations that have paved the way in promoting fair business practices and standards.
 
Of the 110 companies honored this year, roughly 42 came from outside of the US, with six from Japan. Companies like eBay, Hitachi Data Systems, Adidas, Stonyfield Farm and Singapore Telecom were a part of the 36 first-time winners.
 
There’s a clear correlation between ethical business practices and improved financial performance, Ethisphere says.
 
Steven Barth, a partner at Foley & Lardner who regularly counsels public companies on corporate governance matters, agrees.
 
‘Long-term business performance is absolutely dependant on ethical behavior and the companies listed demonstrate this principle having withstood the test of time,’ he says.
 
While Ethisphere’s list gives the winners the chance to tout their companies’ ethics principles, it does not show any rankings. All the companies on the list are winners.
 
Using in-depth research and analysis, Ethisphere reviewed nominations from companies in more than 100 countries and 36 industries. The research company determined who would be on the list by: reviewing codes of ethics, litigation and regulatory infraction histories; evaluating the companies’ investments 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, the institute says.
 
So what role does corporate governance play in all this? According to Barth, ‘good governance starts with tone at the top and carries down through the entire organization to every corner of the globe.’
 
And, even though the newcomers in the selection trumpet honesty, integrity and commitment, Barth believes it all boils down to one word: action.
 
‘Companies can have the best policies and procedures written on paper, but unless the CEO and board of directors walk the talk and take an active role in ensuring that all employees worldwide are doing business ethically, the policies aren't worth the paper they're printed on,’ says Barth.  ‘Firms can achieve business success in the short-term without ethical leadership, but maintaining this success requires strong business relationships and spreading principles of good governance to every employee in the company.’

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