With the nation and world in the depths of recession, companies are trying harder than ever to become more efficient, keep their remaining employees happy and have the right current policies for a healthy, prosperous future.
Corporate Responsibility Officer magazine has looked at the largest publicly traded companies in the US--based on the Russell 1000 Index--to produce its tenth annual 100 Best Corporate Citizens List. These companies are doing all they can to bring their shareholders more value and make sure they are running places where employees are proud to work.
CRO publisher Jay Whitehead tells Forbes that the list is all about transparency. "If they are doing it but not talking about it, they might as well not be doing it at all," he says.
The magazine uses all publicly accessible documents to determine who the leaders are in seven categories: environment, climate change, human rights, philanthropy, employee relations, finance and governance. The list weights environment and employee relations the highest, giving each a 19.5 per cent weighting, while climate change and human rights come in next at 16.5 per cent and 16 per cent, respectively.
Whitehead's rationale: Employees and the environment are the two biggest hot-button issues in the current economic climate, as millions of Americans struggle with unemployment and the environment takes center stage in the government's recent $787 billion stimulus package.
Topping the 2009 list is pharmaceutical giant Bristol-Myers Squibb, a company that CRO included in its "penalty box" until just recently. Whitehead explains that the penalty box is for companies that would have otherwise made the list but have some blemish on their record that can't be overlooked.
For Bristol-Myers, that blemish was the 2006 regulatory enforcement issues that arose when former chief executive Peter Dolan botched negotiations with the generic drug firm Apotex over the blood thinner Plavix. "This is a very different company today from what it was five years ago," says Bristol-Myers General Counsel Sandra Leung. "We have gone through some difficult times, but we have learned from the errors of the past. We have emerged a stronger company, not only financially but culturally."
Culturally, this gentle giant has been making strides in changing its environmental impact on the world, including improving its carbon footprint by surpassing its target of a 10 per cent decrease in greenhouse gas emissions by 2010 and creating a U.S. Green Building Council-certified biologics facility.
It has also been working hard to improve its cash position through even the smallest initiatives. Leung tells Forbes that the company saved over a million dollars by making its office supply ordering system more efficient.
One of the other major comebacks on the list is Merck, which slid in at No. 4 this year. Merck did time in the penalty box for its highly publicized problems with Vioxx, but the company has managed to overcome that stain and now trumpets programs that include a Corporate Responsibility Council that works to get employees involved.
Merck chairman Richard Clark tells Forbes that transparency has been the major improvement within the company that has allowed it to move forward. "We've really stepped back and made sure that we are more transparent about our business.
I think we have always done good things, but I don't know we have always communicated them internally or externally the best way we should," he said. "It's even more important today because we are operating in a very difficult environment, and our reputation is being challenged. We need to go the extra mile now so our stakeholders can see what we do and regain their trust."
It can be tough for shareholders and customers alike to see how the greening of a building or local philanthropy can translate into return for investors during such a bleak economic time. So CRO has tried to quantify how a good corporate social responsibility policy can improve financial performance. The companies that made the list during the first nine years outperformed the rest of the Russell 1000 in three-year total returns by 26 per cent (the 2009 companies' results have yet to be calculated). "Good citizenship pays," Whitehead says.
Making your social responsibility policies pay off for your company and its investors is easy enough. Whitehead and other experts agree there are a few simple rules that all companies should follow to institute such programs and make them a success. Publicity is key, especially in a down economy.
"Checkbook citizenship may have worked when times were good, but now it's all about transparency," Whitehead says. There are plenty of things you are already doing that fall under the umbrella of corporate social responsibility, but your community, suppliers, customers and employees may not be aware of them. Make them notice.
R Paul Herman, the chief executive of HIP Investor, a corporate social responsibility consultancy, says the best solutions come up from grass roots. He recommends reaching out to your employees through an intranet or a blog that will give them a chance to tell you how the office can be run more efficiently and what sort of community programs they'd be interested in.
Social responsibility isn't just a policy; it should be a philosophy, says Jay Millen, of Korn/Ferry International. He recommends having a top-down strategy for corporate social responsibility. "If you get the philosophy and values right, the rules will follow," he says.
Ultimately, creating a social responsibility program at your company will not only help you improve value for your shareholders but also create a place where people are proud to work. Sandra Leung adds: "People like working at a place that has a vision and has respect for the environment as well as sustainability. They have respect for a company where they know their concerns will be not only heard but addressed."