Record Number of Non-U.S. Firms Make ‘World’s Most Ethical’ List

A record number of companies based outside the U.S., including H&M, Marks & Spencer, L'OREAL and 35 others from 21 countries and five continents, have made Ethisphere’s 2014 World’s Most Ethical Companies list released late last month.

The list honors a total of 144 organizations representing 41 industries such as automotive, apparel, consumer products and electronics, among others.

Other companies named to the list include GE, Microsoft, eBay, Mattel, Visa, Pepsi, International Paper, Johnson Controls, 3M, Marriott, Safeway and UPS. Notably, Starbucks and Gap, Inc. made the list for the eighth consecutive year.

Ethisphere says the “The World’s Most Ethical Company” designation recognizes companies that go beyond making statements about doing business ethically and translate those words into action. These companies not only promote ethical business standards and practices internally, but also embed the theory of "conscious capitalism" into everything they do, every employee they hire and every partner they bring into their network to ensure they deliver long-term value to key stakeholders including customers, suppliers, regulators and investors.

To determine honorees, Ethisphere says it uses its Ethics Quotient framework, developed over several years to assess an organization’s performance in an objective, consistent and standardized way. Rather than measuring all aspects of corporate governance, risk, sustainability, compliance and ethics, Ethisphere collects a comprehensive sampling of definitive data in core competencies. Scores are generated in five key categories: ethics and compliance program (25 percent); reputation, leadership and innovation (20 percent); governance (10 percent); corporate citizenship and responsibility (25 percent); and culture of ethics (20 percent).

Some might question apparent inconsistencies in the way Ethisphere describes its methodology. It is interesting that the organization admits that it does not measure "all aspects of corporate governance, risk, sustainability, compliance and ethics" when vetting honorees. This might make it difficult to back up a blanket statement that these firms are ethical in all aspects of their business. Granted, no awards scheme or ranking is perfect.

“In today’s complex global economy, it can be increasingly challenging for companies to meet performance expectations, while addressing the varying regulatory, compliance and sustainability needs across geographies and cultures,” said Tim Erblich, CEO of the Ethisphere Institute. “Global economic and social challenges from anti-corruption to security and privacy are accelerating the need for companies and organizations to embrace ethics and governance as critical business imperatives.”

“These organizations have taken this challenge head on and recognize that leading ethical business practices present an unprecedented opportunity to deliver significant tangible and intangible organizational benefits. This year’s honorees from all countries and industries understand that outstanding compliance programs, investment in a corporate culture of integrity, and sound business ethics have key roles in attracting and retaining talent, expanding business globally and driving financial performance,” Erblich added.

This year, four more companies made the list than last year’s total of 138, but still one fewer company made the list than the 145 companies named in 2012.

Last month, B Lab released its "B Corp Best for the World" list, which recognizes 92 companies from 15 countries and 31 industries for creating the most positive, overall social and environmental impact. The list includes businesses that earned an overall score in the top 10 percent of all Certified B Corporations on the B Impact Assessment, a rigorous and comprehensive assessment of a company's impact on its workers, community and the environment. Honorees were recognized among micro, small and mid-sized businesses.

Image Credit: Ethisphere

Based in San Francisco, Mike Hower is a writer, thinker and strategic communicator that revels in driving the conversation at the intersection of sustainability, social entrepreneurship, tech, politics and law. He has cultivated diverse experience working for the United States Congress in Washington, D.C., helping Silicon Valley startups with strategic communications and teaching in South America. Connect with him on LinkedIn or follow him on Twitter (@mikehower)