2011 Worlds’s Most Ethical Companies–It pays to be ethical

Posted on April 5, 2012

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Ethisphere.com

The World’s Most Ethical Companies designation recognizes companies that truly go beyond making statements about doing business “ethically” and translate those words into action. WME honorees demonstrate real and sustained ethical leadership within their industries, putting into real business practice the Institute’s credo of “Good. Smart. Business. Profit.”

There is no set number of companies that make the list each year. Rather, the World’s Most Ethical Company designation is awarded to those companies that have leading ethics and compliance programs, particularly as compared to their industry peers. This year, there are 110 World’s Most Ethical Companies. Of these companies, 36 are new to the list in 2011 and 26 companies dropped off from the 2010 list. These “drop offs” generally occurred because of litigation and ethics violations, as well as increased competition from within their industry.

METHODOLOGY FOR DETERMINING MOST ETHICAL COMPANIES IN THE WORLD

At the heart of the evaluation and selection process for Ethisphere’s World’s Most Ethical Companies is Ethisphere’s proprietary rating system, the corporate Ethics Quotient (EQTM). The framework of EQ is comprised of a series of multiple choice questions that capture a company’s performance in an objective, consistent and standardized way. The information collected is not intended to cover all aspects of corporate governance, risk, sustainability, compliance or ethics, but rather it is a comprehensive sampling of definitive criteria of core competencies. The EQ framework and methodology was determined, vetted and refined by the expert advice and insights gleaned from Ethisphere’s network of thought leaders and from the World’s Most Ethical Companies Methodology Advisory Panel.

The EQ framework consists of five core categories. The categories and associated weighting for each is defined as follows:

1. Ethics and Compliance Program (25%)
The criteria used for this category are fully aligned to corporate best practices, relevant case law and the “hallmarks” of an effective compliance and ethics program as outlined by the Federal Sentencing Guidelines, including:

Program structure, responsibility and resources
Program oversight and the tone at the top
Written standards
Training and communication
Due care
Detection, monitoring and auditing
Enforcement and discipline

More information on what the criteria for selecting the most ethical companies can be viewed here.

IT CAN PAY TO BE ETHICAL

Investing in ethics is beneficial for any company, even in a recession. The below graph compares the “WME Index,” or all publicly traded 2011 World’s Most Ethical Company honorees, against the S&P 500 since the initial World’s Most Ethical Companies recognition from 2007.

Please click here for the list of most ethical companies in the world.

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