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January 6, 2009
Ethical Firms Fought to Hold Ground in 2008
In the midst of corporate and political malfeasance in the past year, some companies managed to hold true to their core mission while promoting the well-being of their workers, the public and the planet to mixed results.
It's not all doom and gloom in 2008. Though there have been a few bad apples in the bushel, there were encouraging signs in the area of corporate responsibility during the current financial climate.
The following are six companies that have appeared in at least two of the following Top 20 lists Fortune's most admired, the Ethisphere Institute's most ethical and BusinessWeek's most influential.
Google, Inc.
With its informal "Don't Be Evil" motto, it's no wonder Google appeared in all three lists' top 20. Google has influenced "the way people think and how companies respond. Media and advertising giants are struggling to adapt to a world ruled by Google. Why shovel big bucks into traditional ads when it lets you reach the right person for pennies a click?" BusinessWeek posits. Google's goal to transform the world and its success come from simplicity and reliability. It's easy and it works.
BusinessWeek notes Google for its unique management style, such as letting technical people spend 20 percent of their time on their chosen projects and being a benchmark for innovations in human relations and finance, along with technology.
Google has also committed $75 million in investments and grants to address some of the world's most challenging problems such as climate change, poverty, disasters and disease. Additionally, the company is working with non-governmental organizations and academics to help develop a global code of conduct for dealing with governments suppressing free expression and privacy.
"World-class technology is only the tip of the iceberg at Google," Andy Hinton, Google's global and compliance officer, tells the Ethisphere Institute. "Google wants to change the world for the better in fundamental ways. That's part of what makes us a different kind of company."
Apple Inc.
Apple won the top spot on Fortune's most admired list for its ability to crawl out of the "slag heap" and 10 years later be a $24 billion (in sales) company. CEO Steve Jobs' simple pitch to put 1,000 songs in your pocket coupled with the idea that "Apple products work and if you buy more than one, they work better," has garnered a mass following. Plus, unlike its rivals, Apple has its own store where devotees can bask in all things Apple.
"For Apple, the key has been turning its isolated flashes of brilliance into a science," BusinessWeek notes. "Even amid a recession, Jobs is obsessing over new products. And he knows everyone else is obsessing over what he'll do next."
Unilever
Instead of jacking up prices and marketing to the elite, Unilever built a following among the world's poorest consumers by making products at a price even people living on $2 a day could afford. "What Unilever does well is get inside these communities, understand their needs, and adapt its business model accordingly," Joan E. Ricart, professor at IESE Business School, tells BusinessWeek. In 2004, Unilever built a free community laundry, sponsored by its Omo detergent brand, in Heliopolis, one of the biggest slums in Sao Paulo, Brazil.
Unilever also appears in the Ethisphere Institute's most ethical list for its work in sustainability. Its latest Sustainable Development Report can be found HERE.
Toyota Motor Co.
Toyota has changed the way companies, from steelmakers to service firms, approach their processes. Many agencies have benefited from "leaning" their operations by using Toyota's approach to eliminating waste, variability and inflexibility.
A leader in processes, Toyota also led "greener motoring" by introducing the hybrid car Prius. Rivals claimed it would never catch on. Ten years and 1.2 million hybrids sold later, General Motors Corp. and Ford Motor Co. are now following Toyota's path and producing their own hybrid cars.
Although not immune to the current downturn it reported its first ever annual operating loss this year due to slumping sales Toyota continues to add capacity and invest in hybrid technology.
Starbucks Coffee Company
After years of dizzying growth, Starbucks has become synonymous with coffee. And although it suffered from slowed sales profits, over-expansion and resultant store closures and layoffs, the coffeemaker remains a powerful brand and sought-after employer, Fortune says. That's because, along with coffee, Starbucks is known for its corporate social responsibilities practices.
"Even during times of transition, Starbucks partners are focused on doing what's right by each other, customers, farmers, vendors and shareholders; and we are driven by our mission statement and guiding principles," David Landau, Starbucks' chief compliance officer, tells Ethisphere Institute.
Landau explains that a successful ethics program such as Starbucks' "provides key, clear policies and expectations, and is also flexible enough to move with the business."
Target Corp.
The top merchandiser on Fortune's most admired companies list, Target managed to give back to the community despite lackluster sales. In 2007, it donated $3 million a week to the community and continued to make cheap chic.
In stark comparison to the companies listed above, there have been some companies this year that have taken advantage of taxpayers' money, workers and the general public.
Multinational Monitor, a non-profit magazine that tracks corporate activities, has released its list of the 10 worst corporations of 2008. In light of the financial crisis and in keeping with the magazine's tradition of highlighting diverse forms of corporate wrongdoing, the publication named only one financial company on its worst list to represent them all American International Group (AIG).
AIG made the list for trying to get money for nothing. AIG functioned through credit default swaps "collecting insurance premiums and assuming it would never pay out on a failure let alone a collapse of the entire market it was insuring," Multinational Monitor explains. The publication goes on to say:
AIG had to start paying out on some of the securities it had insured. As it started recording losses, its credit default swap contracts require that it begin putting up more and more collateral. ...[O]ver the course of a weekend in September, the amount of money AIG owed shot up from $20 billion to more than $80 billion.
AIG was bailed out by the government and less than a week later, its executives were partying it up at a posh resort.
Among Multinational Monitor's "worst corporations of 2008": Cargill, Chevron, Constellation Energy, Chinese National Petroleum Corp., Dole, General Electric (which, strangely, also made it onto the most admired and most ethical lists), Imperial Sugar, Phillip Morris International and Roche.
So what can you take away from these companies? The best companies were leaders and were not afraid to tap into new markets. They continued to innovate despite a downturn, and some even managed to give back to their communities at the same time.
Earlier
Bailout Bashes (second item)
The Party is Over. But Not Really (second item)
Resources
America's Most Admired Companies 2008
Fortune Magazine
2008 World's Most Ethical Companies
Ethisphere Institute
The World's Most Influential Companies
by Jena McGregor
BusinessWeek, Dec. 11, 2008
The System Implodes: The 10 Worst Corporations of 2008
by Robert Weissman
Multinational Monitor, November/December 2008
From Lean to Lasting: Making Operational Improvements Stick
by David Fine, Maia A. Hansen and Stefan Roggenhofer
The McKinsey Quarterly, November 2008
Brazil: Free Laundry & Volleyball in the Favelas
Unilever
Decade of the Toyota Prius Hybrid
by Todd Kaho
Greencar.com, Nov. 5, 2007
Toyota Has Sold Almost 1.2 Million Hybrids Worldwide Since 1997; Prius Accounts for 72%
Green Car Congress, Nov. 5, 2007
Toyota Sees First Operating Loss
by Chang-Ran Kim
Reuters, Dec. 22, 2008
U.S. Steps Up Fight Against Corporate Crime (subscription required)
by Evan Perez
The Wall Street Journal, Dec. 23, 2008
Review of the Year: 2008 - The Year the Economic Climate Changed
Ethical Corporation, Dec. 2, 2008
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