Ethics and Business: Covalence's Ethical Ranking 2007 report

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Adding to New Year's Eve conversation about Switzerland's contributions to the world (chocolate, cheese, army knives, politeness, neutrality, precision watches, banks, cuckoo clocks, radar-cheating bicycles, ball bearings, possibly the world's largest naval force for a landlocked nation and the ubiquitous Ricola cough drops... but strangely no beer of any kind) here now is Geneva-based Covalence's Ethical Ranking for 2007:

If you aren't familiar with Covalence's ER report, it is extremely Swiss in both concept and execution. From their own press release:
Twenty multinational companies are analyzed in ten major sectors; the top ten performing companies are ranked in each category: Best EthicalQuote Score (positive minus negative news, cumulated from 2002 to 2007), Best Ethical Progress (positive minus negative news, cumulated from January to December 2007) and Best Reported Performance (positive news only, cumulated from January to December 2007).

Best EthicalQuote Score and Best EthicalQuote Progress are given by confronting positive and negative news. Best Reported Performance is calculated by quantifying positive news only – it shows how companies report on their ethical performance without considering criticisms and demands. Some companies being highly targeted by activists have a low EthicalQuote Score while at the same time ranking high in terms of Reported Performance. We can assume that “ethical demands” (negative news i.e. stakeholder issues, campaigns, expectations) stimulate “ethical offers” (positive news i.e. initiatives, reporting, communication by companies).

Environmental Impact of Production, Eco Innovative Product, Waste Management and Anticorruption Policy were all hot topics this year, while Social Impact, Social Sponsorship, Labour Standards and Human Rights Policy - hot topics in the past - started their slow march into relative oblivion.

The report is pretty thorough. here are some of the highlights:

Starbucks, Toyota, Intel, DELL, Hewlett-Packard were among the top 10 across all industries in the Best Ethical Score category.

Best Ethical Quote Progress across all categories counted Toyota, IBM, DELL, Walmart. Hewlett Packard, Intel, Honda and Dupont among its Top 10.

Best Reported Performance (again across all categories) counted WalMart, Coca Cola, Toyota, IBM, DELL, Ford and BP among its Top 10.
Toyota was the clear winner in the automotive category, followed by Ford and Honda.

HSBC was the global winner in the banking category, followed by Citigroup, Bank of America, and ABN AMRO.

In the Chemicals category, BASF and Dupont shared top honors, followed closely by Dow Chemicals, Bayer, and Air Products.

I was surprised to see that the Entertainment category did not include Sheryl O'Sullivan (from my 8th grade art class), but whatever. We're dealing with swiss precision here, so who am I to question the results. Top honors in that category went to Philips Electronics, Sony Corp, and none other than McDonald's. (No, I am not kidding.) LG, Nintendo, Sharp, and Pioneer were on the list, but Micky Dee's beat them out. It can't be the McToys that come with my Happy Meals, so I must have once again underestimated Ronald McDonald's entertainment superpowers.

Either that or the Hamburglar snuck into Covalence's HQ and altered the results.

God bless the Swiss.

Food and Beverage crowned Unilever, Coca Cola and Starbucks as the overlords of culinary brands. Other winners: Nestle, Danone, Kellogg, SAB Miller, Kraft Foods, Heinz and Cadbury. (Nope, no Sony or XBox. Go figure.) McDonald's would have probably won that one if it hadn't already been one of the winners in the entertainment category.

Mining and Metals: Alcoa and Rio Tinto kicked more ass than Xstrada, Nippon Steel and Gold Fields, which is pretty cool. I would love to be able to say "In 2007, we kicked more ass than Gold Fields!" If I worled for Alcoa, I would say that to at least one random person every day.

Oil & Gas saw BP, Suncor Energy, Chevron and Petrobras beat out everyone else.

Pharmaceuticals and biotech: GlaxoSmithKline ruled supreme across all three scores, followed by J&J, Abbott, and Bristol Myers Squibb. (Sorry Pfizer. At least you made the list.)

Retailers: (Drumroll...) Marks & Spencer shared the top spot with WalMart. Home Depot was 3rd, followed by Gap, Tesco and Carrefour. Best Buy and Target made the list. (Whew.)

Technology Hardware: HP, IBM, Intel and DELL beat out Nokia, Siemens, Ericsson, Apple, Sun Microsystems, Motorola and Xerox.
Again, to understand the way this study is compiled:
Covalence’ s ethical quotation system is a reputation index based on quantifying qualitative data, which are classified according to 45 criteria such as Labour standards, Waste management, Product social utility or Human rights policy. It is a barometer of how multinationals are perceived in the ethical field.

The system integrates thousands of documents found among media, enterprise, NGO and other sources, for producing the EthicalQuote curves. These curves measure the historical evolution of the reputation of companies regarding ethical issues. They are created through the cumulative addition of positive news (documents coded as “ethical offers”, which are weighed as +1, curve ascends) and negative news (“ethical demands” weighed as -1, curve descends). The Reported Performance measure is given by cumulating positive news only.
Have a great New year, everyone. :)

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