Where is AMD on this list of 100 best ethical companies?
business-ethics.com
That may be a possibility (settlement) but I don't trust one word an Intel executive says or agrees to (because of the unethical corporate), and I would prefer a court supervision over Intel's dealings with OEMs for some time.
I see Intel ranked Number 3
Read About the 100 Best Corporate Citizens
The Chart: The 100 Best Corporate Citizens for 2004
Companies on the List All Five Years
How the List is Put Together
Social Data for the 100 Best Corporate Citizens
Press Release
How to apply for the 100 Best
100 Best for 2003
100 Best for 2002
100 Best for 2001
100 Best for 2000
To request a free sample copy of the 100 Best Corporate Citizens issue of Business Ethics (Spring 2004) e-mail your postal address to 100BestSampleIssue@business-ethics.com.
100 Best Corporate Citizens for 2004
Companies that serve a variety of stakeholders well
"We have a slogan around here," says Robert W. Lane, chairman and CEO of Moline, Ill.-based Deere & Company. "‘No smoke, no mirrors, no tricks: just right down the middle of the field.’ That’s John Deere." It’s the kind of straight talk one would expect from a Midwestern maker of farm machinery. And it’s the kind of straight dealing that characterizes the 100 Best Corporate Citizens when they’re at their very best. John Deere ranked No. 6 among the 100 Best this year. When told he had made the list, Lane responded: "It’s recognition like this that makes you want to get up in the morning."
If straight dealing is one aspect of good citizenship, environmental stewardship is another. Bringing the hydrogen economy to life is the aim of the new products division at Modine Manufacturing of Racine, Wisc. (No. 32), a 7,500-employee company, with annual auto parts sales in excess of $1 billion. According to Mark Baffa, director of fuel cell products, Modine’s heat and thermal mass transfer and management systems are helping accelerate the project of generating hydrogen for autos of the future. Fuel cells can not only "supplement our aging electricity grid," Baffa said, they have the potential to replace the polluting internal combustion engine.
Still another part of good citizenship is protecting the interests of minorities, as Rochester, N.Y.-based Eastman Kodak does with its leading-edge anti-discrimination policies toward gay, bisexual, and transgender employees. These policies have earned the company the rare distinction of receiving a perfect score from the Human Rights Campaign, an organization working to end sexual orientation discrimination. It’s no surprise Kodak -- ranked No. 58 overall -- tied for highest score in service to employees.
Service to a variety of stakeholders is the essence of good corporate citizenship. That’s what the 100 Best Corporate Citizens listing is about. While traditional measures of success focus on stockholder return, this list defines success more broadly. Using social ratings compiled by KLD Research & Analytics of Boston -- plus total return to shareholders -- our list ranks companies according to service to seven stakeholder groups: stockholders, community, minorities and women, employees, environment, non-U.S. stakeholders, and customers. Good corporate citizens serve all constituencies well. That’s the emerging definition of corporate success.
This year the 100 Best Corporate Citizens list celebrates its fifth anniversary, and we’re happy to note that 29 firms have placed on the list all five years -- among them Intel (No. 3), Avon Products (No.7), Herman Miller (No. 14), Timberland (No. 17), Cisco Systems (No. 19) Southwest Airlines (No. 22), AT&T (No. 43), Starbucks Coffee (No. 45), Merck (No. 48), and Medtronic (No. 57).
The most consistent performer has been Procter & Gamble. This enduring American icon -- in business in Cincinnati, Ohio since 1837 -- has placed in the top five all five years and this year ranked No.2. Hewlett-Packard has made the top 10 all five years and placed No. 8 this year.
One example of a five-year 100 Best firm is The St. Paul Companies, the 150-year-old liability and property Minnesota insurance firm, which climbed from No. 85 in 2000 to No. 4 this year. Another is Ecolab of St. Paul, Minn., which climbed from No. 29 in 2000 to No. 10 this year. Ecolab scored high in service to customers, in part because the firm has been quick to develop creative new products for unexpected modern hazards. "We ramped up quickly in response to the Anthrax scare with our Vortexx product, a fungicide, not to make a buck, but because it was the right thing to do," said Al Schuman, Ecolab CEO. "We also developed anti-microbial disinfectant products to address foot and mouth disease in livestock, and then yet another new product to combat SARS at the Toronto Airport."
This year we welcome 24 new firms to the list, among them Agilent Technologies, which skyrocketed into the No. 9 slot by virtue of its diversity practices and superior treatment of the community. Newcomer Trex Co. (No. 50), which manufactures building products from recycled wood and plastic wastes, brought in stellar return to shareholders. Other newcomers include Pixar (No. 36) and AFLAC (No. 72), as well as household names like Weight Watchers International, Inc. (No. 68), Kellogg (No. 82), and Pepsi Bottling Group (No. 95).
In terms of excellence within specific categories, Motorola (No. 24) was far ahead of its peers in service to customers -- thanks to its status as a pioneer in the field of bionics, where everyday products are inspired by the simplicity, efficiency, and beauty of nature. Bringing in top honors in service to overseas stakeholders were two firms: No. 1-ranked Fannie Mae and Green Mountain Coffee Roasters (No. 5). With farmer cooperatives in Peru, Mexico, and Sumatra, Green Mountain pays Fair Trade prices for coffee beans. Fannie Mae created a Native American Conventional Lending Initiative to help finance $75 million in loans on trust land for the Navajo Nation of Arizona, Oneida Nation of New York, and Menominee of Wisconsin.
No. 1 and No. 2 for 2004
That’s just one example of the policies that earned Fannie Mae the No. 1 spot for 2004. This firm is dedicated to "the American Dream business," helping Americans become home owners -- the reason for its unique chartering by Congress. The company buys mortgages from local lenders and repackages them for sale as securities. Fannie Mae’s dominant presence in the mortgage market enables it to play a critical role in keeping mortgage rates down. Yet its most visible impact is on helping those who traditionally have been underserved obtain home loans.
In 2003, more than $240 billion in home mortgages were financed for 1.6 million minority first-time homebuyers, an increase of 60 percent over the year prior. Most uniquely, a $10 million Fannie Mae partnership was established with an Islamic financial institution to open up southern California’s real estate market to Muslims. It accommodates Islamic Law’s ban on paying or collecting interest on debt, by negotiating monthly payments based on a property’s sale price and fair rental value instead of interest rate.
Fannie Mae tied for second highest score in service to minorities and women. And it’s little surprise. "How are we going to accomplish our goal of bringing home ownership to everyone if we don’t look like America ourselves?" asked Maria Johnson, who has been vice president for diversity, health and work-life at Fannie Mae since 1992.
Coming in No. 2 on the list this year was Procter & Gamble, which excelled in service to minorities and women, and to the community. The firm has donated to help disadvantaged youth in Vietnam, to combat childhood malnutrition in India, and to provide earthquake relief in Turkey. "Over 2 million children in developing countries die each year from water-borne diarrheal diseases," said P&G spokesperson Terry Loftus. "We have developed a technology that allows people in the developing world to clean and disinfect water in their homes at low cost."
P&G also makes deposits in nine minority-owned banks, has placed substantial insurance with four minority-owned insurance companies, and is an investor in venture-capital funds for minority businesses. "Diversity is a matter of ethics," said Loftus. And it’s also a "fundamental business strategy," since P&G offers over 300 brands in more than 80 countries. "Our success depends entirely on our ability to understand these diverse consumers’ needs," he said.
Firms Moving Up
The firm that climbed the most in a single year is Aetna, which rose from No. 83 last year to No. 28 this year. 3M rose impressively from No. 72 in 2001 to No. 20 this year. And Staples climbed from No. 87 to No. 47 in the past year.
One climbing firm worth admiring is Deere & Company, which rose to No. 6 this year from No. 73 in 2000. Its roots go back to 1837 when an enterprising blacksmith in Moline, Ill. forged a special plow made from a discarded saw blade. John Deere’s one-man blacksmith shop has grown into a global business that now sells agricultural, construction, and lawn care equipment in 160 countries.
As one example of its practices, John Deere recently decided to forgo selling prime real estate to a developer, instead donating $1.5 million in land and facilities to Western Illinois University, allowing the university to better serve the community, including Deere’s employees.
John Deere is a company that has no problem thinking in the long term. With 60 percent of its core manufacturing employees eligible to retire in six years, it has teamed up with community colleges and labor unions to recruit hundreds of workers -- seeking to instill "the DNA that has made this an outstanding company," said CEO Lane. "We stand upon the shoulders of the folks who worked here before us, many of them for 30 to 40 years."
Lane is proud that since 1975, the company’s lost-injury rates have dropped 94 percent, and that the company was named one of America’s Safest Companies in 2002.
Controversies
If safety is a stand-out feature of John Deere, it’s an issue that has activists concerned about Avon Products (No. 7). This firm is known for its three-day fundraising walks for breast cancer and its products bearing the "pink ribbon" associated with the disease. Yet activists cite concerns about how Avon distributes money from the walks, and say its products contain cancer-causing ingredients, like the phthalates in Avon nail varnishes.
That’s an example of the controversies that surround many firms on the 100 Best Corporate Citizens list. It raises an important point: this list is not a certification of flawlessness. Firms are evaluated carefully, and 16 firms were pulled this year because of significant controversies. But not every controversy warrants dropping a firm. All firms here were deemed worthy of being on the list, despite controversies -- some of which we mention here.
In 2003, a federal judge ruled that IBM (No. 12) had discriminated against older employees in converting to a cash-balance pension program. Washington Mutual (No. 29) has been accused of predatory lending. In December 2003, Eastman Kodak (No. 58) was targeted by the Citizen’s Environmental Coalition for air emissions and on-site hazardous waste incinerators. Both Timberland (No. 17) and Sara Lee (No. 87) have faced accusations of unhealthy working conditions at overseas factories.
The controversies don’t end there. But neither do the exemplary practices, which also could be cited at length. In the end, the 100 Best Corporate Citizens list aims to make a simple point: excellence in business is about more than profits for shareholders -- it’s about serving a variety of stakeholders well. To put it another way, it’s about having your good deeds outweigh your misdeeds. Judged against their peers among the nation’s largest public companies, these 100 companies have risen to the top. We think that’s worth applauding. ƒƒ
Peter Asmus is a freelance writer in Stinson Beach, Calif. pthfind@earthlink.net
To request a free sample copy of the 100 Best Corporate Citizens issue of Business Ethics (Spring 2004) e-mail your postal address to 100BestSampleIssue@business-ethics.com.
Top of Page
Five Years of the Best
Congratulations to Companies on the List 2000-2004
1. Fannie Mae
2. Procter & Gamble
3. Intel Corporation
4. St. Paul Companies
6. Deere & Company
7. Avon Products
8. Hewlett-Packard
10. Ecolab Inc.
12. IBM
14. Herman Miller
17. Timberland Company
19. Cisco Systems
22. Southwest Airlines
24. Motorola
27. Cummins Inc.
31. Adolph Coors
32. Modine Manufacturing
33. Clorox
43. AT&T
44. Pitney Bowes
45. Starbucks Coffee
48. Merck & Company
49. Graco
53. Brady Corporation
57. Medtronic
63. New York Times Co.
74. Golden West Financial
89. Sonoco Products
98. Whirlpool
Top of Page
How the List Is Put Together
The methodology behind the corporate citizenship rankings
By Samuel P. Graves, Sandra Waddock, and Marjorie Kelly
The aim of this listing is to identify firms that excel at serving a variety of stakeholders well. For 2004, the 100 Best Corporate Citizens list marks its fifth anniversary. Over those five years, KLD Research & Analytics in Boston has been the consistent source of our social data, while our methodology has evolved slightly. Initially, the list was drawn from 650 firms used in the socially screened Domini Index: the S&P 500, plus 150 other firms selected for industry balance and social performance. In 2003 we expanded to cover the Russell 1000, the 1,000 largest public traded firms (for consistency we included the 150 Domini firms). We also switched in 2003 from using three-year average scores to one-year scores. The stakeholder list has also expanded from four stakeholder groups to seven.
The seven stakeholder groups are shareholders, community, minorities and women, employees, environment, non-U.S. stakeholders, and customers. In each category, KLD notes where companies have "strengths" and "concerns." For example, in the employee category, a firm might get three strengths for profit sharing, retirement benefits, and employee involvement, while it gets two concerns for union relations and workforce reductions. To arrive at a net score in this category, we take three strengths and subtract two concerns. The same is done in each category. Environmental strengths, for example, might include beneficial products, pollution prevention, and recycling, while concerns would include emissions, climate change, and regulatory problems.
Since all seven variables have different scales, we standardize them to determine a standard deviation from the mean -- which indicates performance relative to peers. The scores shown in the chart represent the number of standard deviations a firm fell above or below the mean. For the shareholder performance measure, we use one-year total return to shareholders (stock appreciation plus dividends), standardized in the same way.
Next we take an unweighted average of all seven stakeholder measures, to arrive at a single score per company. The fact that the scale is unweighted means that all stakeholders are accorded equal status.
In a final step, a selection committee does additional research on social scandals, or other issues possibly missed, and recommends firms to be pulled. Firms were removed for accounting fraud, for example, or if they lost money two or more years in a row.
Data analysis was done by Sandra Waddock and Samuel Graves with the Carroll School of Management, Boston College. Additional consultation on selection was provided by Shelley Alpern of Trillium Asset Management in Boston and Eric Fernald of KLD Research & Analytics, Boston. An activist advisory panel included Conrad MacKerron of As You Sow Foundation in San Francisco, and Tracey Rembert of Co-op America in Washington, D.C. The individuals involved may own stock in one or more companies studied |
