AT&T Inc., U.S. Bancorp and LinkedIn are among the companies
named to be the most ethical for 2020. Here's why.
By Dan Clark | February 27, 2020 at 10:24 AM | The original version of this story was published on Corporate
Counsel
Roughly 60 percent of the companies named as Ethisphere
Institute’s most ethical for 2020 have an independent chief compliance or
ethics officer who reports directly to the CEO rather than the manager of
another business function.
AT&T Inc., U.S. Bancorp and
LinkedIn are among the 132 companies Ethisphere named to be the most ethical for 2020.
Douglas Allen, managing director of
data and services at Scottsdale, Arizona-based Ethisphere, said nearly every
company named has someone who acts as a chief ethics or compliance officer.
However, the number of companies that have independent, C-suite level
compliance and ethics officers has increased from previous years. That
independent role has led to better corporate behavior from the top down.
“Defining the role and allocating
resources to this role sends an incredibly strong signal that ethics matter to
the organizations,” Allen said.
Tim Erblich, CEO of Ethisphere, said
the pressure to act ethically and have someone in charge of company ethics
comes largely from investors.
“As boards are thinking about this
and are listening to their stakeholder community, they really have to have a
plan for this,” Erblich said.
In January 2019, State Street Corp.
authored a letter to the board members of its
portfolio companies and asking them to focus on company culture and compliance.
BlackRock and Vanguard have also been active on emphasizing workplace culture
to board members.
“We strongly believe this has to be
linked to performance. Investors are always about the return. So the
integration of behavior into performance strategy is important,” Erblich said.
Outside of investors, CEOs are also
beginning to take ethics and workplace culture more seriously, creating a
greater need for a chief ethics or compliance officer. Thirty-nine percent of
the 89 CEOs fired in 2018 were terminated because of their own unethical
behavior or the behavior of an employee, according to a PricewaterhouseCoopers survey.
“That outdistanced financial
performance as to why CEOs are being replaced,” Erblich said. “If there is a
behavioral breakdown your stock gets hammered and you lose your job.”
In addition to a reliance on a chief
ethics or compliance officer, Erblich and Allen said the following of the
companies they recognized also had:
·
Nearly 9 out of 10 companies have a mental health or wellness
program in place. Allen said he would expect to have more data on mental health
and wellness programs in the coming years.
·
Companies are putting more resources into their value chain.
They are helping their suppliers become more ethical and making compliance a
business strategy over risk mitigation.
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