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The New Ethical Mandate for Value-Conscious Companies

Corporate leaders have always seen transparency as a best policy, but what it is becoming increasingly more interesting is the approach some companies have taken to move this concept further.

“To attain an open and transparent culture, the most important decision American companies can make today is who to hire, fire, promote and reward,” said Tim Erblich, CEO, Ethisphere in a recent Huffington Post Business article. “For those companies that have not yet adopted a mantra of transparency, they are now at a pivotal junction.”

Some executives and industry professionals have found that placing a laser-like focus on issues such as corporate citizenship, transparency, diversity, sustainability, governance, and measurable values-based leadership can contribute to long-term value creation and favorable financial outcomes. In today’s turbulent economy, the reality is, companies that establish and embrace these principles underscore their commitment to operational success.

Recent research conducted by Ethisphere bolsters these findings. Firms that rank among the World’s Most Ethical Companies, for instance, outperformed the S&P 500 last year by 3.3 percent. This is where talent comes into play. According to Erblich, for organizations to maintain its place among ethical corporations there should be an emphasis on long-term strategy—one that in inextricably linked to talent and takes value creation to the next level.

Case Studies

Transparency and sustainability are no longer mere buzzwords for corporations. In fact, some top-performing, value-conscious companies have adopted other measures to build and facilitate an ethical culture. Erblich noted the following:

  • Board diversity means better governance: Voya Financial, a retirement company that serves 13 million customers across the United States, made board diversity a top priority. Today, four of the company’s nine independent directors are women and its board represents a diversity of gender, ethnicity, age and skills—creating a strong and highly-skilled board.
  • Creating shareholder value: At Aflac, over disclosure is key. In 2008, the company became the first U.S. publicly traded company to hold a say on pay vote, providing shareholders a voice in the executive pay process.
  • Transparent communications: U.S. Bank has developed a transparent approach to client communications that is reflected in its products and services. This strategy allows U.S. Bank to deliver banking products and services that demonstrate that it is the most trusted choice in the banking sector.
  • The sustainability framework: Ford Motor Company is a leader in ethics among automakers. Under Executive Chairman Bill Ford, the company first introduced its framework for investing in sustainability. Over the last several years, this investment has paid off and enabled Ford to further its commitment to ethical operations.

Read the full post here.


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