Q&A with Ethisphere Executive Director Alex Brigham

The Ethisphere Institute recently announced the 2010 World’s Most Ethical Companies, highlighting 100 organizations that lead the way in promoting ethical business standards. These companies go beyond legal minimums, introduce innovative ideas benefiting the public and force their competitors to follow suit.

Below is a Q & A with Ethisphere Executive Director Alex Brigham.

Corporate Compliance Insights: How does the ranking process work?

Alex Brigham: Ethisphere tracks companies around the globe, and each year, the process and methodology continue to improve. When it comes down to it, earning a World’s Most Ethical (WME) designation takes a strong commitment to compliance and ethics, as well as the law.  This is evidenced by how well a company meets or exceeds the definitions of an “effective compliance and ethics program” as set forth by Section §8.B2.1 of the US Federal Sentencing Commission (www.ussc.gov).   Ethisphere’s editorial staff believes that a firm commitment from the top to uphold both letter and spirit of the law is necessary to create an ethical culture throughout.

Through in-depth research and a multi-step analysis, Ethisphere reviewed nominations from companies in more than 100 countries and 35 industries. The methodology for the World’s Most Ethical Companies includes reviewing codes of ethics, litigation and regulatory infraction histories; evaluating the investment in innovation and sustainable business practices; looking at activities designed to improve corporate citizenship; and studying nominations from senior executives, industry peers, suppliers and customers.

Other important factors in the analysis of a company include such things as: track record of ethical, compliant behavior; strong tone on ethics from top leadership; effective corporate governance; commitment to sustainability; transparency to investors and the public; and commitment to quality and safety.

Corporate Compliance Insights: Why does Ethisphere put this list together?

Alex Brigham: Ethisphere assembles these lists to: (a) bring greater awareness to the compliance and ethics profession; (b) highlight and give public credit to companies that are demonstrating leadership; and (c) encourage companies that are laggards to improve.  Public recognition creates incentive for companies to do what it takes to be named to the list year after year, encouraging continual improvement of corporate behavior, which Ethisphere feels is a valuable public service.

Corporate Compliance Insights: What trends did you notice about the companies named to this year’s list?

Alex Brigham: The competition for the World’s Most Ethical Companies was the strongest it has ever been, with a record number of organizations vying for this distinguished honor. Enhanced transparency is the most dominant trend, exhibited by this year’s winners. Additionally, the issue of ethics and reputation is making its way into the boardroom, which is a new phenomenon. Companies are also more sensitive than ever as to how the actions of other organizations they do business with could reflect back on them, and thus, are taking measures to ensure ethical behavior.

Corporate Compliance Insights:  What does it mean for companies who are named to the WME?

Alex Brigham: We have seen companies that earn WME distinction use it in all sorts of ways to further their own investment in ethics and their business over all.  This includes using it as a valuable employee and customer recruitment tool.  Companies have informed us that receiving WME or Ethics Inside Certification™ recognition from Ethisphere has translated into millions of dollars of new opportunities for their organizations.    Furthermore, companies trumpet their WME distinction to shareholders.  The 2010 World’s Most Ethical Companies have outperformed the S&P 500 by delivering a 53 percent return to shareholders since 2005—compared to the S&P’s four percent shareholder loss over the same period.   This trend is a continuation from the initial WME list from 2007 comprised of companies that still dramatically outperform the S&P to this day during the subsequent three years.

Corporate Compliance Insights: How long has Ethisphere been identifying the WME?

Alex Brigham: Ethisphere began identifying the World’s Most Ethical Companies in 2007. Thirty-six companies on this year’s list have the distinction of earning this honor all four years, including General Electric, Starbucks, American Express, Google, Nike, Time Warner and PepsiCo. Additionally, 25 companies are new to the list in 2010 and 24 dropped off since the 2009 rankings.

Corporate Compliance Insights: Where can people go if they want to learn more about the World’s Most Ethical Companies?

Alex Brigham: They can visit www.ethisphere.com/wme-2010 to view the full list of companies on this year’s WME and to learn more about the methodology.

Tags: alex brigham, business ethics, ethisphere