Indian Companies in World’s Most Ethical Companies List
In the light of the two Indian Companies, Tata Steel and Wipro, being named in the World’s Most Ethical Companies List 2017 by the American think tank Ethisphere Institute, let us analyze what this news exactly means for the these two Indian Companies and also for India.
The News – Tata Steel & Wipro in list of World’s Most Ethical Companies for 2017
The World’s Most Ethical Companies list for 2017 included 124 honorees located across 5 continents, 19 countries and 52 industries. Two companies from India – Tata Steel and Wipro, managed to secure their places among the 124 companies in the list which was highly dominated by US-based companies as 98 out of the total 124 companies are from the US itself.
Tata Steel was one of the 2 companies named in the metals, minerals and mining industry while US-based Schnitzer Steel Industries was its significant other. On the other hand, Wipro was one of the 2 companies in the Information Technology industry, the other company being Xerox Corporation.
“World’s Most Ethical Companies” Program
Starting from 2007, Ethisphere Institute has been honoring those companies who are able to acknowledge their part in the society in order to influence and bring about positive changes in the business arena as well as the society. The companies also must take into account the effect of their actions on their employees, customers, investors and other stakeholders. To be included in the List, a company has to submit a questionnaire answering 200 questions about how the company addresses ethics in their business and other related details. The responses are then independently verified by Ethisphere Institute by taking help from SEC filings, the supporting documents provided by the companies, company’s history of litigation, etc. The application fees for small firms (<$500Mn revenue) is $1000 while larger firms (>$500Mn revenue) has to pay $1500.
The companies are honored based on their excellence in –
- Ethical business and practices promotion within the company
- Permitting employees and managers to choose better alternatives
- Instituting the best practices so as to shape the industry standards for future years
The assessment for the World’s Most Ethical Company is based on the Ethics Quotient (EQ) designed by the Ethisphere Institute whereby the method is weighted into 5 major categories –
- Ethics and compliance – 35%
- Corporate citizenship and responsibility – 20%
- Culture of ethics – 20%
- Governance – 15%
- Leadership, innovation and reputation – 10%
Significance of the List for India and Indian Companies
Now the relevant question in this regard is what makes the honorees on the List so much different from other companies who cannot make there. The answer is –
- Ethisphere Reports reveals that the leading companies in the List maintain strict compliance which helps not only in increasing its vertical authority in the company itself but also helps in developing cross-functional involvement within the company.
- 71% of the honorees on the list make it a point to provide task-specific training to its managers to enable them in becoming role models to the junior officials.
- In addition to the above 2 points, the 2017 honorees also constitutes of a Board of Directors (BoDs) where women constitute 24% of the total seats in the Board, which is 5% more than the average company on the 2016 Fortune 1000 List.
Apart from these, the 2017 List constitutes of 13 11-time honorees – Aflac, Deere & Company, Ecolab, Fluor, GE, International Paper, Kao Corporation, Milliken and Company, PepsiCo, Starbucks, Texas Instruments, UPS and Xerox and 8 new companies on the list – Brightstar, Edwards Lifesciences, Eli Lilly, Grupo Bimbo, Praxair, Republic Services, RTI International and VF Corporation.
Ford Motor Company has been enlisted among the World’s Most Ethical Companies for a record 8th straight yrs in 2017.
Among all these top-notch Multi National Companies (MNCs), Tata Steel and Wipro’s making the cut is an incredible task done. It means that these 2 Indian companies have been able to be at par with the 122 other companies in the List in any aspect, ethical or administrative. The companies have taken the righteous path to shift in terms of societal expectations, the changing scenarios of geo-political climate across the world and also the continuous revamping of laws and regulations. Companies have also been able to exhibit strong ethical and corporate social responsibilities (CSRs) which mark the basic foundation of business ideology and also establish in front of the customers what they are as the organization itself.
In the global scenario, 2016 did not feel the lack of corporate scandals, courtesy of incidents like sexual harassment cases at Fox News and the extensive fraud scam at Wells Fargo, to name a few. But since the last few years a new pattern has been noticed, as per Ethisphere Institute reports. The firms are trying to showcase a well-built moral compass which is evident from the fact that the companies, in increasing numbers, are disclosing information about their employee misconduct, revealing how many complaints were filed and what actions were taken in relation to those cases. This is in contrast to the scenario of a few years back, where the firms would keep no stones unturned to prevent a scandal or complaint see the light of the day.
From the Indian business world, Tata Steel and Wipro are the only 2 companies who are trying to implement the thought “be the change you want to see” efficiently. Their emphasis on maintaining suitable corporate culture and regulations has finally paid off when the Ethisphere Institute included the companies in its List.
The World’s Most Ethical companies has the responsibility to encourage ethical business standards across the world and needs to excel in the legal compliance sector too which will ultimately help in shaping an ideal business industry. They are also required to put forward an extensive sample of exhaustive criterions for competency compliance.
So, to conclude, it can said that as the long-term performance of a organization depends not just on the financial performance of the organization but in today’s competitive world high standards of corporate governance are also required to maintained in order to become one of the “most ethical companies” in the world and bring about positive changes in the society.