Henkel, Kao, L’Oréal Named

What do Vodafone, L’Oréal and Whole Foods Market have in common? They have each been named one of the World’s Most Ethical Companies (WME) by Ethisphere Institute, which has released its 2010 list of the companies “that truly go beyond making statements about doing business ‘ethically’ and translate those words into action.

WME honorees demonstrate real and sustained ethical leadership within their industries, putting into real business practice the Institute’s credo of “Good. Smart. Business. Profit,” according to the international think-tank which publishes Ethisphere Magazine.

Making the list of the 100 World’s Most Ethical Companies for 2010 were Henkel, L’Oréal and Kao in the consumer products sector, while Ecolab, Ashland and Dow Corning were tapped for the designation in the chemicals sector.

Henkel’s designation was its third in a row, while both Kao and Ecolab made the list in 2009.

There is no set number of companies that make the list each year, rather the designation is awarded to those companies that have leading ethics and compliance programs, particularly as compared to their industry peers. Of the 100 companies on the list, 26 are new in 2010, while 24 dropped off from 2009. These “drop offs” generally occurred because of litigation and ethics violations, as well as increased competition from within their industry, according to Ethisphere.

A methodology committee of leading attorneys, professors, government officials and organization leaders, assisted Ethisphere in creating the scoring methodology for the World’s Most Ethical Companies awards. Companies submitted their applications, and based on these applications, as well as information Ethisphere gathered throughout the year, a list of semi-finalists is created. Semi-finalist companies are given an in-depth survey questionnaire regarding their ethics and compliance program, governance and corporate responsibility. Ethisphere then conducted data analysis on hundreds of companies based on their responses to the survey, as well as documents and information researched and requested by Ethisphere to confirm survey responses. Every company is given an EQ score based on the results of the survey and measured against seven distinct categories. These categories were Corporate Citizenship and Responsibility; Corporate Governance; Innovation that Contributes to the Public Well Being; Industry leadership; Executive Leadership and Tone from the Top; Legal, Regulatory and Reputation Track Record; and Internal Systems and Ethics/Compliance Program. The highest EQ scores for each industry are then named the World’s Most Ethical Companies.

“We are delighted to have received this international accolade. The ranking confirms that, in Henkel’s case, corporate social responsibility and exemplary corporate governance are actually practiced virtues,” Henkel chief executive officer, Kasper Rorsted, said about the WME designation. “Our commitment to sustainable development also serves to motivate our employees, enhancing their identification with the company and – through this – further contributing to our commercial success.”