advertisement
advertisement

Can Corporate Ethics be Rated?

A relatively new magazine called Ethisphere has come out with its second issue, featuring the “2007 World’s Most Ethical Companies.” It looks like quite a piece of work. Ethisphere explains: “In assembling the 2007 rankings of the World’s Most Ethical Companies, the researchers and editors of Ethisphere examined more than 5,000 companies across 30 separate industries looking for true ethical leadership.” Among the winners: Alcoa, General Electric, Kellogg, Eaton, and Caterpillar.

A relatively new magazine called Ethisphere has come out with its second issue, featuring the “2007 World’s Most Ethical Companies.”

advertisement

It looks like quite a piece of work. Ethisphere explains: “In assembling the 2007 rankings of the World’s Most Ethical Companies, the researchers and editors of Ethisphere examined more than 5,000 companies across 30 separate industries looking for true ethical leadership.” Among the winners: Alcoa, General Electric, Kellogg, Eaton, and Caterpillar.

It’s hard to get a fix on how Ethisphere actually pulled off this apparently ambitious assessment; the methodology brochure is slick, but kinda light on facts. Since I’ve helped run the Fast Company/Monitor Group Social Capitalist Awards and similar projects over the last few years, though, I know exactly how hard it is to attempt to quantify stuff like “innovation.” Seriously rating 5000 companies? That’s an endeavor that would seem to require either a Web 2.0-like technology that asks thousands of stakeholders to participate–or else many millions of dollars in traditional research.

(Ethisphere, by the way, is a publication of the Ethisphere Council, which was started by Corpedia, an ethics consulting firm; the Practicing Law Institute; and Lexis/Nexis.)

What Ethisphere does indicate, however, is that its assessment was concerned with the structures and processes companies have set up in attempts to encourage and support ethical behavior–rather than with the behavior itself. Alcoa, for instance, is lauded for establishing an “Ethics and Compliance Council,” which “presents findings to the Board on a quarterly basis.” Fine and good, but does that make Alcoa per se a more ethical company? Of course not.

Sara Olsen, a co-founder of SVT Group who helped research our March feature Measured Progress on building non-financial metrics into investment decisions, comments on the four criteria Ethisphere did define for ethical businesses:

advertisement

“‘Good- company engages in community it impacts.’ This assumes that the engagement has substance, and assumes the company knows what communities it impacts. I doubt they looked at evidence for those assumptions comprehensively.

“‘Smart- companies invest in innovation, quality and business practices with positive impacts’– again this is not results-oriented, it’s just looking at the inputs and activities (investments in certain types of spending).

“‘Business- companies that leverage their positions to influence positive industry change.’ Not sure why that is “business” but sure, although how they gauge the difference between intent and actions to influence, and actual influence, or the scale or scope of impact, remains obscure.

“‘Profit- companies that look to fairly profit…’ What is definition of fair? And, aren’t all companies looking to profit? The question is, do they profit?

As Sara observe, Ethisphere claims that “ethics are absolute. Business ethics are relational.” “Heady stuff! My first thought is, this sounds like something that might fly in Europe but can it fly in the US at this point in history? (Much less Phoenix, where their contact number is??) If so that says something interesting about (their assessment of) the hunger to restore standards of decency across the board. But I’m surprised if they’re getting traction, since I thought peoples’ beef with CSR lately is that the R is so subjective. I would have thought ethics was the same as Responsibility: subjective.

“But this magazine says it’s not; they say ethics are absolute. (One benchmark for ethical behavior is to ask, if everyone else did what I am doing right now, would society continue to function? so I suppose that is an absolute standard, despite being open to
interpretation….) So I looked for their definition of the absolutes of ethics, and I don’t see it, except where they say some companies known for ethics have bigger marketing spends on telling about ethical things they’ve done. Does that mean a company that markets more do-gooderism is ethical?”

advertisement

Well? Does it?