100 Best Corporate Citizens 2003
by Peter Asmus
Click here to see the full list for 2003. [0]
In Brazil, poor kids with no access to school used to burrow under the fence at a Cummins Inc. manufacturing plant, to steal metal they could sell for money. "We talked to the local mayor and ended up deciding to fund the construction of a local school that now serves 800 kids," said Tim Solso, chairman and CEO of Columbus, Ind.-based Cummins. "Their parents can now get schooling at night too. Our workers were so pleased by how the community reacted, they went ahead and also built a community health center," Solso added. "Our employees truly believe in helping out communities where they live and operate." This kind of commitment to communities is one thing corporate citizenship means at Cummins, No. 2 this year among the 100 Best Corporate Citizens.
At Green Mountain Coffee Roasters in Waterbury, Vt., a newcomer to the list this year at No. 8, good citizenship includes fair dealing with suppliers. "Our president and CEO Robert Stiller visited places where coffee is grown and was struck by the levels of poverty. He wanted to do something about it," said Rick Peyser, director of public relations. Today, with suppliers at small farmer cooperatives in Peru, Mexico, and Sumatra, Green Mountain pays Fair Trade prices for coffee beans -- not the market price of 24 to 50 cents per pound, but a minimum of $1.26 per pound for conventional coffee and $1.41 for organically grown. In 2002, these Fair Trade purchases represented 8 percent of sales. Green Mountain also has a "farm direct" program that cuts out middlemen to deliver higher prices to farmers. Roughly a quarter of its coffee purchases are farm direct.
At Intel (No. 3), based in Santa Clara, Calif., good citizenship takes on still a different cast. It includes careful attention to employee safety -- so much that CEO Craig Barrett insists he be sent an e-mail report within 24 hours any time one of his firm’s 80,000 employees loses a single day of work to injury. "This policy allows us to look at the root causes of all accidents and figure out what we can do to prevent them from occurring again," said Dave Stangis, Intel’s director of corporate responsibility. In 2000, Intel’s worldwide injury rate was just .27 injuries per 100 employees, compared to an industry average of 6.7.
At Hewlett-Packard of Palo Alto -- No. 6 -- good citizenship includes a focus on environmental sustainability, as seen in its employee-created Sustainability Network. Inspired by a 1998 Sustainable Development conference, this network now has 300 employee members worldwide. It’s outside of the formal HP organization, using volunteerism to help HP meet its new goal to "become the recognized leader in inventing environmentally sound and sustainable solutions for the common good."
Service to the environment, to employee well-being, to suppliers, and to the community -- these are the kinds of actions that help companies win spots among the 100 Best Corporate Citizens. As we at Business Ethics define it, that’s precisely what corporate citizenship means: service not just to stockholders, but to a variety of stakeholders. Using social ratings compiled by KLD Research & Analytics, Inc. of Boston -- plus a financial measure of total return to shareholders -- our list ranks companies according to service to seven stakeholder groups: stockholders, the community; minorities and women; employees; the environment; non-US stakeholders; and customers.
Now in its fourth year, the list for 2003 has 42 new firms -- in part because data provider KLD expanded its underlying database of public firms beyond the 650 used for the Domini Index (a socially screened stock index), which the 100 Best list was drawn from in the past. This year the list is drawn from the Russell 1000 (the 1,000 largest public companies).
Among newcomers, Green Mountain was the highest ranking, at No. 8. Other high-ranking newcomers were John Nuveen (No. 9), the on-line travel reservation company Expedia (No. 16), and Deluxe Corporation (No. 20).
An interesting tidbit on newcomer Spartan Motors (No. 25) is that the firm lives up (or down) to its name in terms of spartan frugality: CEO George Sztykiel’s annual compensation of $234,000 is unusually low, and he doesn’t have a secretary. Spartan ranked second among the 100 Best in terms of total return to shareholders.
Also new this year are several firms from what’s known as the LOHAS sector -- lifestyles of health and sustainability -- such as food retailer Wild Oats Markets (No. 19), which pledges to stock 80 percent of its produce with organic products, and extends profit-sharing to employees working just 25 hours per week. Another LOHAS company is Horizon Organic (No. 31), which has a history of donating a hefty 10 percent of net profits to charity. Still another LOHAS firm is the retail chain Whole Foods Market (No. 63), on the list for the third year. In November, Whole Foods Woodland Hills, Calif. store had an official "solarbration" ceremony marking the launch of its new on-site solar co-generation system, which makes Whole Foods the nation’s largest food retailer to use solar energy for 25 percent of its power.
Repeat performers who have made the 100 Best Corporate Citizens list all four years add up to 32 -- including some familiar names that have been in the top ten every time: Procter & Gamble (No. 4), IBM (No. 5), and Hewlett-Packard (No. 6). Enjoying the No. 1 spot for the first time is General Mills, which moved up from No. 67 in 2000 and has also been on the list all four years.
Each of these firms excels as a corporate citizen in a slightly different way. Among its 100 Best peers, for example, IBM came in first in service to women and minorities. It was among the first companies to implement child and elder care programs, and it funds near-site childcare centers in 60 locations. General Mills and Cummins tied for top score in service to the community, while Intel was top scorer in service to employees and the environment. In general we find these companies do exceptionally well in service to two or possibly three stakeholder groups -- but no firm excels at serving all seven.
Dual Areas of Excellence
At General Mills, the Minneapolis-based food products company, the company’s two prominent areas of excellence are service to the community and to women and minorities. One program that exemplifies both is the funding of a partnership between Glory Foods, a minority-based food company, and the Stairstep Initiative, a community organization, to create Siyeza, Inc. A $2 million investment by General Mills created 150 jobs in the inner city of Minneapolis, in a company where employees will be given the opportunity to have an ownership stake.
Unlike many other corporations, General Mills funds an organization’s operating costs, a good indication of its long-term commitment to communities. "Business ethics and corporate social responsibility are bedrocks of our culture," said Siri Marshall, senior vice president of corporate affairs for General Mills.
At Cummins, manufacturer of diesel and natural gas engines, the top two areas of particular excellence are service to the community and to non-U.S. stakeholders. An example combining both is Cummins practice of giving out micro-loans to jump-start small businesses near its overseas plants. At the urging of one its employees, Cummins bankrolled a program teaching blind people basic carpentry skills at its San Luis Potosi manufacturing facility in Mexico. "Initially, they just built pallets for Cummins, but now they are selling pallets to others, generating a profit in the process, and paying back the loan from our foundation," said CEO Solso.
For Intel, the dual areas of excellence are service to employees and the environment -- both represented in the firm’s robust Environmental Health & Safety (EH&S) programs, which Stangis pointed to as a key reason for the firm’s top ranking. In locations like Malaysia and China, for example, the company is working to upgrade solid waste handling to Intel standards, which are higher than local standards. "We only send our hazardous and solid waste to facilities that are certified to meet our U.S. EH&S standards," said Stangis, citing an example of how Intel goes beyond compliance with environmental laws.
In service to employees, Intel offers 22 weeks of maternity leave, 10 more weeks than the federal mandate, plus a sabbatical for every seven years of employment. Such programs, Stangis said, "allow employees to stretch their wings, increasing our competitiveness."
None of these firms are perfect, of course. In reviewing news about these firms, we’ve seen lawsuits alleging age discrimination, a Labor Department complaint alleging race discrimination, a Justice Department investigation of price inflation, and so on. In cases where the complaints were proven and were serious, we pulled firms from the list.
We pulled UnumProvident Insurance, for example, after a California jury in January ruled the company had acted with fraud and malice in denying disability payments -- which was just one of nearly 3,000 similar lawsuits against the firm in five years. The company was also the focus of a CBS "60 Minutes" show, quoting workers saying the company rewarded employees for denying insurance claims. No matter how good their community programs or environmental policies might be, such behavior does not represent good citizenship.
Concerns about accounting irregularities led us to drop Xerox, Dollar General, and Lucent. Baxter was dropped because of numerous deaths from its dialysis equipment, plus other serious health-related issues. TXU was dropped because it is one of the largest emitters of CO2 among U.S. electric power companies.
The companies that remain are not, of course, without blemish. That’s not what this list means. What it does mean is that, when an impartial social rating firm judged these firms’ programs and practices, it found they were better than nine out of 10 peer firms.
It’s that simple: These 100 companies excel at serving a variety of stakeholders well. And that’s something worth celebrating.
Peter Asmus ( [1]pthfind@earthlink.net [2]) is a freelance writer in Stinson Beach, Calif.