how do you measure ethical performance?

Influx Insights — 2008-01-05T23:43:03Z

It's now a given that most multinationals are paying at least some attention to their ethical performance.

With the environment becoming such a big issue, the area of corporate responsibility is going to be under the microscope even more than in the past.

The problem is that there's very little performance measurement and comparative auditing between companies.

There are surveys and polls, but it's hard to find anything else that challenges and compares company standards.

It was therefore interesting to be send a press release from Covalence in Switzerland, who have been measuring and ranking companies on the their ethical performance for the past 3 years.

The company tracks performance by examining a variety of sources including the companies themselves, news media and non-profit organizations.

Covalence has just released its performance data for 2007 and there are some interesting findings.

The company provides three rankings.

1. Best Ethical Quote Score (positive minus negative news)

2. Best Ethical Progress

3. Best Reported Performance (How the company presents itself)

It's interesting and something of a challenge for US companies to see the foreigners, Unilever, Toyota and HSBC leading the way, with HP, Alcoa and Starbucks trailing in their wake.

On a cynical note, the US companies do a rather good job at talking up their own performance with Wal-Mart and Coca-Cola emerging as the leaders in that category.

Covalence also found that in 07, the environmental impact of production, eco product innovation and anti-corruption policy were the leading areas of ethical responsibility.

In addition to the annual report, Covalence provides real-time tracking of ethical peformance.

Useful if you manage an ethical funds or work in the CSR or PR department.

As I mentioned in an earlier post, audits and quality standards are going to emerge as an important issue for the environment and corporate ethics this and its good to see someone attempting to provide some comparative data.

Posted by Ed Cotton

health and the environment are too big to be treated as skus

Influx Insights — 2007-07-23T12:20:45Z

Giant corporations,leaders in their respective categories often come in for their fair degree of criticism.

There’s often something about the ubiquity and success that brings out the haters, Coca-Cola, Levi’s, Starbucks, Nestle and The Gap have all found themselves targets.

However, fast-food giant McDonald’s has had a disproportionate share of lawsuits and vicious attacks. As a result, McDonald’s spends most of its days living on a PR tightrope.

In recent years, it’s been the movies that have threatened McDonald’s most, last year there was the potentially worrisome Fast Food Nation (an adaptation of Eric Schlosser’s 2001 book), but it took nothing at the box office and wasn’t a threat. Before, Fast Food Nation, there was Morgan Spurlock’s Supersize Me, an attack on the life threatening characteristics of fast food with a special focus on McDonald’s.

In 2002, a couple of years before the documentary’s release McDonald’s was in a slump, suffering from what many analysts considered to be a trough that Ray Kroc’s lovechild was never going to dig itself out of. With some smart insightful leadership McDonald’s did the improbable, turned itself around with a line of premium salads being the catalyst for this transformation that started in April 2003 and has continued ever since. It’s stock price has quadrupled in four years.

It’s even become very adept at managing its image, the Make Up Your Own Mind web effort in the UK, is quite simply one of the best examples of corporate transparency in recent times. On the site, users are invited to ask the company any question they like and they mean it. The company responds to everything, including allegations that its burgers contain horsemeat.

What’s fascinating about McDonald’s is how to so desperately wants to appeal to two contradictory constituencies; it’s hard-core loyalists and those occasional wannabe healthy mom visitors. It launches premium salads in 2003 and almost immediately after, the McGriddle; a syrup infused breakfast pancake.

Now, after urgings of it promised to give up on Supersize drinks and meals, in a way it has remained true to this, the recently launched oz drinks maybe aren’t called Supersize, but that’s the only difference, as the new Hugos weigh in at 42 ounces and contain 410 calories.

With ethical issues becoming more important and the environment coming to the fore as a bigger consumer issue and a money making opportunity, what’s a consumer to think about the belief system of a corporation that produces hybrids and gas guzzlers, or one that has an eco line of clothing and a non-eco line and another that challenges the morals of the beauty business while at the same time making a living from the same business?

Brands and corporations have thrived on giving consumers seemingly choices; skillions of flavors of spaghetti sauce, or washing powder of toothpaste to cater for different needs and audiences and there’s nothing wrong with that.

The new challenge is that environmental and health issues are now so big and blindingly obvious that they aren’t going to remain choices for very long, they are going to be “the choice”.

At the moment, companies are treating both issues as SKU opportunities and forcing themselves into a corner where they can easily look schizophrenic and worse, opportunistic.

The reality is that the issues of health and the environment are now so big companies are going to be forced to take a stand. In food, just look at the movement against trans-fats, a critical ingredient of many of the things we eat.

It appears we are at the cusp of a twin revolution that is going to force companies to radically overhaul their product lines, making them as environmentally responsible and as healthy as they can possibly be. As a consequence, there will be no confusion where they stand.

For all the schizophrenic corporations out there, time to start altering your mission statement.

Posted by Ed Cotton

Influx Insights Tag Feed: ethics

how do you measure ethical performance?

health and the environment are too big to be treated as skus