Every business is looking for the edge that will help them outperform the competition, or trying to find the panacea for its performance woes. Today, that edge comes from driving an ethical culture across the organization. It’s something that all top-performing boards will need to address throughout the year. A number of high-profile troubles at major companies in recent months have highlighted what happens to a company as a result of a skewed culture.
The scandal that came from Volkswagen’s emissions reporting fraud led to numerous investigations on how a bad culture leads to outright cheating at the company. At VW, these perceptions trickled down from the top, across the organization. With better board oversight, this culture likely could have been discovered and nipped in the bud before it became the scandal it is today.
It’s worth noting that having an ethical culture is not just about risk mitigation, it also gives companies an edge. In fact, Ethisphere has found that share price of the publicly traded companies recognized as the 2016 World’s Most Ethical Companies consistently outperform other major indices, including performing 3.3% higher than the S&P 500 last year, and even greater outperformance as compared to the MSCI ACWI. Similarly, other research has found that portfolio managers today actively review a company’s governance practices when deciding whether or not to invest. Rivel Research for example has found that CSR is cited as an important investment driver by 22% of portfolio managers, a number that has steadily increased for the past few years.
The full article is available in the summer 2016 edition of C-Suite, an Equilar Publication.
Author Biography
Ty Francis is Executive Vice President and Group Publisher at the Ethisphere, where he is responsible for long-term strategy and revenue production across Ethisphere’s full suite of events, research and publishing business. Ty can be reached at [email protected].
