Through its ethics survey, Ethisphere evaluates firms on five criteria, which roll up into a single Ethics Quotient (EQ) score. The first and most important topic is a company’s ethics and compliance program, which accounts for 35% of the EQ. Firms must answer questions like whether they track gifts received by employees and what resources they offer employees for reporting misconduct.
Ethisphere observed an interesting trend in the data in 2016: more companies disclosed information about misconduct to their own employees, telling them how many complaints were filed and what was done about it. Previously, firms tended to keep such matters confidential, says Michael Byrne, Ethisphere’s general counsel. “Essential to an effective compliance program is people feeling comfortable expressing a concern … One of the best ways to [do that] is to shine a light on it.”
The second factor in the ethical list scoring, accounting for 20% of the EQ, gauges whether ethics are embedded into a company’s culture from top to bottom. The third element, corporate citizenship and responsibility, includes questions about what methods companies use to measure their environmental impact.
Corporate governance is the fourth criterion. Ethisphere’s survey asks whether a company’s CEO and board-chair roles are held by separate people. This year, Ethisphere also placed an increased focus on diversity in board and leadership positions.
The final element is leadership, innovation and reputation. Ethisphere asks if companies have been named to top business lists, such as Forbes’ own Most Trustworthy Companies, and whether its executives have spoken at high-profile conferences like the World Economic Forum in Davos, Switzerland.
Of the 124 firms on this year’s list, 13 have made the cut every single year, including: Aflac, Deere & Company, Ecolab, Fluor, GE, International Paper, Kao Corporation, Milliken and Company, PepsiCo, Starbucks, Texas Instruments, UPS and Xerox.