The Business Ethics Blog

The CRO (Corporate Responsibility Officer) Magazine has just announced its 8th annual list of the “100 Best Corporate Citizens 2007”. As always, the list itself and the article that accompanies it both make for interesting reading.

Topping the list are:

1. Green Mountain Coffee Roasters, Inc.
2. Advanced Micro Devices, Inc.
3. NIKE, Inc.
4. Motorola Inc., and
5. Intel Corp

Here’s a bit of the article that accompanies the list:

Environmental responsibility. Corporate governance and ethics. Fairness toward employees. Accountability to local communities. Providing responsible products and service to customers. Maintaining a healthy rate of return for investors.

Those are just some of the challenges of responsible business in the 21st century, challenges that are being met head-on by the 100 companies listed. These are the 100 Best Corporate Citizens for 2007—companies that are proving that good corporate citizenship and good business go hand in hand.

The 100 Best Corporate Citizens list takes a systematic approach to assessing the social and environmental characteristics of a good corporate citizen. The list is drawn from approximately 1,100 publicly held U.S. companies in the Russell 1000, S&P 500 and Domini 400 indices, relying on extensive data collected by KLD Research & Analytics, an independent investment research firm in Boston.

A couple of comments….

My first comment is about size. It’s interesting that the list seems to be dominated by big companies. This means one of two things. It could be that the evaluative criteria used are biased in favour of big firms (in which case they ought to be fixed). The other possibility is that, on average, big firms make better corporate citizens, a thesis that is strongly at odds with many people’s perceptions (though that doesn’t make if false). (FYI, there’s a small but useful literature about the various ethically-significant ways in which small-and-medium enterprises — SME’s — differ from big firms. See, for example, Laura Spence, “Does size matter? The state of the art in small business ethics,” Business Ethics, A European Review, Volume 8, Number 3, July 1999.)

My second comment is about aggregation of indicators. As regular readers will know, one of the criticisms that Wayne Norman and I aim at the so-called Triple Bottom Line is that it’s impossible, even in principle, to meaninfully aggregate various measures of social performance to generate a social “bottom line.” But of course, CRO does reach a sort of “bottom line” of corporate citizenship for each company it studies, upon which it bases its ranking. In particular, it does so by averaging the scores that a company attains in each of 8 categories (Community, Diversity, Environment, etc.). And this method probably does a decent job of indicating social performance. But please do take note of the method used: mathematical averaging. Averaging implies that each of the factors averaged is exactly equally important. So, for example, it implies that Employee Relations is no more important than Community (an ethical perspective which is at the very least debatable). It also means that lousy performance in any area (even a really crucial area) can be hidden. Doing poorly on environment? That’s OK, you did great on Employee Relations, so it ‘all averages out.’ Now, I’m not actually trying to criticize the methodology here. It actually seems pretty reasonable, for the purpose at hand. I just want everyone to be aware of the value assumptions that go into the design of such a ranking.
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(p.s. Here’s a curious question. I saw a press release today from Motorola, touting the fact that they were #4 on the Top 100. Given that thousands of companies are eligible, ranking ANYWHERE in the top 100 is an accomplishment. But rhetorically, it might sound funny to brag about being #92 or something. I wonder, of all the companies that issued press releases about their ranking, what was the LOWEST ranked company?)