Got 99 Problems but Ethics Ain't One

Last week, the Ethisphere Institute released its annual list of the world's 99 most ethical companies, and while finalists like Google and Trader Joe's predictably made the cut, there were a few surprises.

Nike, long criticized for exploiting child labor in developing countries, made the list after correcting many of its past sins and making positive strides to help the environment. Textile manufacturing has several negative effects on the planet, yet Nike ranks near the top in its industry for green efforts. The company's most popular campaigns include its long-running Reuse-A-Shoe program, the sustainability driven Considered product line and the Trash Talk Shoe, the first athletic kicks made entirely from recycled products. Despite it increased transparency and oversight in overseas plants, Nike must remain diligent in its efforts after years of broken promises. As one critical website put it, "Don't just do it, do it right."

Also making the cut were aerospace and defense companies like Honeywell International and the Harris Corporation, which counters the negative associations given defense contractors in recent years. Honeywell is involved in everything from making the technology that helped the Phoenix Mars Lander set down on the red planet to special bulletproof body armor for the military and law enforcement, but its Honeywell Hometown Solutions focuses on promoting science and math at school, providing humanitarian relief, and promoting classroom and community child safety. Harris, meanwhile, focuses heavily on giving to charities and other philanthropic efforts in its community. In addition to direct giving, the Harris Foundation matches all contributions given by its employees.

Among other companies making the top 99, Philips Electronics North America has embarked on a four-year plan to increase its energy efficiency by 25 percent, double its investment in Green Innovations to a billion Euros and make Green Products responsible for 30 percent of its revenue. "Our performance in 2008 shows that we are well on track to achieve these goals," said Brent Shafer, CEO of Philips Electronics in North America, in a statement for Ethisphere.com.

On the international front, banking giants HSBC and Standard Chartered Bank made the list, as did German and Japanese automakers BMW and Toyota. Other international companies included Norway's green energy Statkraft, Ireland's CRH, Bermuda's Accenture, the Netherland's Rabobank, Australia's Westpac Banking, France's Accor hotel line and Sweden's Svenska Cellulosa. In total, companies from over 100 different countries applied to make the list.

Finalists General Electric and Sempra Energy also stand out as BELA members. Put together by the Ethisphere Institute, BELA stands for Business Ethics Leadership Alliance, and its members commit to high levels of accountability, compliance and a visible commitment to ethical priorities. Other BELA members among the 99 included American Express, Flour, Ecolab and Dell.

Here is how each company's score is weighed: Corporate citizenship, which includes measuring actions in the community and efforts toward sustainability, makes up 20 percent. Their legal and regulatory track records make up another 20 percent. Innovations that benefit the general public, executive leadership on ethical issues, and internal compliance systems (e.g. "Code of Conduct, whistle-blower policies") each make up 15 percent. Corporate governance makes up 10 percent, while the company's ethical leadership in its industry makes up the final 5 percent.

Interestingly, the Ethisphere Institute notes that the 99 most ethical companies had better combined growth last year than that of the S&P 500, which the Institute sees as a sign that it pays to be ethical.

To see a complete list of the 99 companies, visit www.ethisphere.org/wme2009.