Westpac is the only Australian company selected on The Ethisphere Institute’s 2009 list of companies it considers to be the most ethical groups around the globe.
The list of 99 companies (http://ethisphere.com/wme2009/) is the Institute’s third annual listing designed to encourage ethical practices within the global business community.
Besides Westpac, the 99 companies include Honeywell International Inc, Nike Inc, Unilever, General Mills, Patagonia, BMW, Johnson Controls Inc, Standard Chartered, IKEA, Cisco and HSBC Holdings, come from 35 different industries.
Westpac was on the 2008 list as well. Its shares rose 3.3% yesterday to $20.67 as the overall market advanced in the wake of the better than expected results from Goldman Sachs and Wells Fargo.
The Institute said that making it onto the World’s Most Ethical Companies list proves to be more and more difficult every year.
This year Ethisphere received a record number of nominations from companies in over 100 countries and 35 industries.
This year, 99 companies made the cut. Twenty companies dropped off the list from last year, and 25 companies were newcomers. A remarkable 44 companies are “three-peats,” making the list for the past three years.
Many are American and European, plus British. Few are from Asia. Westpac is one of the few, Toyota another.
"The mission of our group is to improve corporate behavior," said Alex Brigham, executive director of the Ethisphere Institute, an international think-tank based in New York dedicated to the advancement of best practices in business ethics, corporate social responsibility, anti-corruption and sustainability.
The companies are chosen against their peers within their industry, as each industry operates under different circumstances, Brigham said in a statement.
The rankings are based on factors that go to the heart of corporate governance and environmentalism, the institute said, including innovation that contributes to public well being and the use of fewer resources.
They also are judged on corporate governance, legal and regulatory reputation and track record, executive leadership, industry leadership, and internal systems and ethics compliance programs.
Brigham said there is no specific definition of the term ethical for the rankings. For example, diversity, layoffs, executive compensation and outsourcing are not part of the criteria, he said.
This year’s group features 22 first-time recipients including Dell Inc, Thomson Reuters Corp, Best Buy Co Inc and T-Mobile International AG & Co KG.
Of the companies on the list, 44 are on it for the third time. They include General Electric Co, American Express Co, PepsiCo Inc, McDonald’s Corp, Starbucks Corp and IKEA AB.
The Institute said "The winners of the World’s Most Ethical Companies are the standouts.
"Each of these companies will have materially higher scores versus their competitors.
"They are the companies who force other companies to follow their leadership or fall behind. These are the companies who use ethical leadership as a profit driver.
"Some, such as Nike have demonstrated a will to correct past mistakes."
The winners are based on the following criteria, according to the Institute’s website:
Corporate citizenship and responsibility: 20%
How does the company respond to the community and workplace, what is the company’s sustainability track record and how does it audit its supply chain? Ethisphere factored in placement on major sustainability lists, such as FTSE4Good Index Series.
Corporate governance: 10%
Is the company properly aware of potential value conflicts at and around the company and address those conflicts in an effective way?
Innovation that contributes to public well being: 15%
Does the company provide products, services and/or process innovation that positively contributes to public well-being?
Industry leadership: 5%
How does the company set industry standards for business ethics and compliance, corporate governance, responsibility, sustainable development and environmental protection?
Executive leadership and tone from the top: 15%
Does the company have strong and visible executive leadership on ethics, corporate governance and citizenship?
Legal, regulatory and reputation track record: 20%
What is the legal history of the company?
Internal systems and ethics/compliance program: 15%
Does the company have satisfactory internal control systems, including a leading Code of Conduct, whistle-blower policies, prevention and detection controls, etc?
