Ethisphere has released its list of most ethical companies for 2014. The Scottsdale, AZ. based consulting firm seeks to promote ethics in business, corporate governance, and employee relations. The list is released via its company magazine,which advertises a number of verification services such as “Ethics Inside Certification” and “Anti-Corruption Program Verification.” The consulting firm audits companies in over 20 countries and 40 industries. The intent is to improve business ethics with such recognition.
Companies in the United States made a very strong showing; the country was represented in over 35 of the 41 industries, and in some sections, such as Financial Services and Healthcare Services, all noted corporations were U.S. based.
The company’s consultants analyze companies according to its Ethics Quotient™ framework. The model was developed over years of researching a means to grade an organization’s performance consistently. Rather than measuring all aspects of each of the individual aspects, the firm collects a comprehensive sampling of definitive data in core areas. The Ethics Quotient framework and methodology was determined by the firm’s network of thought leaders and from the World’s Most Ethical Company Methodology Advisory Panel. Ethisphere’s develops its scores from five different sections. The categories range from “ethics and compliance program,” to having a “culture of ethics.”
There are a number of circumstances that motivate corporate managers to pursue ethics-based certifications. For example, a company like Target Corporation will want to assure its customers that the company has reestablished electronic security. Companies like Wal-Mart and Citigroup will wish to reestablish a reputation of ethical management after the two companies faced scandal involving their Mexican subsidiaries. An audit and certification declaring the company’s commitment to competence and honesty can be a good vehicle for public relations. When a consulting firm such as Ethisphere releases its 2014 list, most of those who notice the certification have a degree of trust in the firm.
Some have voiced skepticism with such consulting and auditing, claiming that the scoring is altered to guarantee the client firm a positive evaluation. The information is often provided by the client company itself. Ethisphere requests client companies provide proof such as news articles, court records, and Consumer Reports. The consulting firm acknowledges that reports given by these client companies could be false. Moreover, the corporation charges clients to be part of its membership groups, buy ads in its magazine, and certify them with its “Ethics Inside” label.
However writing for Forbes Magazine, Susan Adams offers defense. Ethisphere reports a revenue less than $10 million per year, and only minimally engages in other types of consulting. The result is that certifying a client company is not especially profitable for the consulting company. There is no application fee for those companies that nominate themselves as list members. According to CEO Tim Erblich the most revenue comes from clients who pay up to $25,000 to be conference sponsors. Erblich’s company also offers a “benchmarking” service, to help companies internally assess their ethical compliance. However Erblich states only three of the 143 member companies on the Most Ethical pursued that service.
Ethisphere Institute was founded in 2005 and has released its List of Most Ethical Companies since 2007. The list of companies for 2014 was officially announced on March 20.
By Ian Erickson