Corporate Responsibility Magazine announces its 12th annual 100 Best Corporate Citizens List, known as the world’s top corporate responsibility ranking based on publicly-available information and recognized by PR Week as one of America’s top three most-important business rankings.
CR Magazine maintains a documented, transparent procedure for the Corporate Citizenship Lists' methodology that incorporates a wide variety of inputs and viewpoints. Click here to download the methodology procedure.
In 2010, the members of the CRO Association’s Corporate Citizenship Methodology Committee met to discuss and debate the 12th annual List. As has been the case for several years, the data were gathered from 100-percent, publicly-available sources and computed by IW Financial, the Portland, Maine-based financial analysis firm serving the ESG (Environment, Social, Governance) investment community. Data in each category is of two types: binary (true/false) or numerical. For the binary data elements, “True” counts as a positive value, and “False” counts as no value. (A “non answer” is considered a “False” and therefore counts as no value. In other words, companies receive “one point” for each True value and no points for False values. Numerical values are compared with all other companies’ numerical answers in order to generate a ranking; a non-response is considered lower than the lowest reported value. Click here to download methodology details.
As has been our policy for some time, in order to facilitate meaningful year-over-year comparisons, we are evolutionary rather than revolutionary in our change management. Following discussion among the committee members, as well as soliciting commentary from all stakeholders through a public comment period, we added two data points: one to the financial section – “earnings per share” – and one to the corporate governance section – “do shareholders have rights to call a special meeting”). We eliminated two data points: a catchall Philanthropy data element that sought to capture any specifically unnamed philanthropic giving, but that we thought was too vague to have value; and a question from the Human Rights category about whether the company had “dedicated staff to support Human Rights programs,” a question we felt unfairly penalized organizations that dedicate time and effort to supporting Human Rights programs, but do not necessarily dedicated staff exclusively to that exercise. Click here to download the list of 324 data elements.
A “tie-gap” happens when several companies are tied for the same score, which results in a “tie-gap” between those tied companies and the next-highest score. In the Olympics, for example, if two competitors are tied for the top score, each gets a gold medal, and the next-highest score earns a bronze medal. The silver medal is sacrificed for the “tie-gap.” This is important because mathematically the 100 Best Corporate Citizens List recognizes the ranking as a company’s score in any given category. The impact comes when a large number of companies tie in a category. For example, if 267 companies tie for the #1 rank, that means the #2 companies in that category earned a #268 rank. And that 268 value figured into those companies’ total scores. In this example, if we eliminated the “tie-gap” and counted #268 as #2, mathematicians and statisticians tell us that we would be disrespecting the achievement of those ranked #1. Also, if we re-cast the entire list to eliminate “tie-gaps,” the ranking would be significantly altered. As a result, the 100 Best Corporate Citizens List will continue to include “tie-gaps” using the generally-accepted Olympics format for rankings. In the spirit of transparency, the listing shows the “tie-gap equivalent” score—shown as (T-XX) next to the mathematical rank.
Each year, based on the numbers, some companies make “The List,” despite some self-caused reputational damage, which usually appears as a pending or completed administrative or official legal sanction. To address those kinds of issues, we’ve turned to European football’s (a.k.a. soccer) sophisticated, two-level penalty regime—the yellow card for a caution, the red card for an expulsion.
On the 12th annual List, a Yellow Card icon next to a company’s listing indicates a caution — a significant but pending investigation initiated in 2010 by a recognized authority. Yellow Carded companies remain on the list without impact on their ranking unless and until the investigation is resolved. Red Cards recognize a significant adverse judgment in 2010 against the company by a recognized legal or regulatory agency, and the company is excluded from the list for a three-year period.
3M: In December 2010, the state of Minnesota filed a suit against 3M for contaminating the state's waters. Minnesota Attorney General Lori Swanson says 3M disposed of industrial waste from its PFC operations over the course of 50 years, polluting more than 100 square miles of groundwater.
Dell: In July 2010, Dell agreed to pay $100 million to settle fraud charges from the SEC, ending a case dating back to 2005. Dell did not disclose to its investors “large exclusivity payments” that Intel made to Dell in exchange for Dell's agreement not use chips made by rival chipmaker AMD. The payments were so large that they made up 76% of Dell's operating income in the first quarter of 2007, and double-digit percentages of its earnings in several other quarters.
Johnson & Johnson: In 2010, lawmakers and drug safety regulators began an investigation into Johnson & Johnson recalls at McNeil Consumer Healthcare. The recalls involved some of the company's adult and children’s brand drugs, including Motrin IB caplets. An investigation revealed that McNeil Consumer Healthcare hired and subcontracted WIS International to buy Motrin IB caplets from specialty store shelves and did not notify consumers of potential problems. An email from an executive at WIS speculated about "potentially larger" recalls of McNeil products.
JPMorgan Chase & Co.: In December 2010, JPMorgan was sued for $6.4 Billion by the trustee liquidating Bernard Madoff’s former investment firm over claims the bank aided the imprisoned Ponzi schemer's fraud as his main banker. In addition, the bank faces class action lawsuits in California and Illinois for "common law fraud and misrepresentation, as well as violations of state consumer fraud statutes." Furthermore, "JPMorgan Chase is being sued by homeowners who say that banks failed to honor mortgage contracts, foreclosing on families making payments on proposed modifications."
Occidental Petroleum Corp.: Occidental is involved in a major human rights and environmental contamination lawsuit regarding the pollution of indigenous land and the Amazon River. The indigenous plaintiffs filed suit in 2007 accusing Occidental of knowingly dumping an estimated 850,000 barrels of toxic wastewater per day into the rainforest inhabited by the Achuar people of northern Peru. In December 2010 and appeals court ruled that the case be heard in Los Angeles.
Allergan Inc.: In September 2010, Allergan pled guilty to a misbranding charge related to Botox for $375 million and took on an additional $225 million fine to settle civil claims from the Department of Justice.
Exxon Mobil: In October 2009, Exxon Mobil was found liable for contaminating groundwater in New York City and must pay the city $104.7 million in compensatory damages. The suit began in 2003, when the city sued 23 oil companies over M.T.B.E. contamination from fuel leaks from gas station storage tanks. It reached settlements totaling $15 million with all of the companies except for Exxon. Exxon Mobil lawyers denied the company was responsible, pointing to other sources of contamination. Under our Red Card rules Exxon Mobil should have been Red Carded last year. We are correcting that oversight this year, and this will be considered year two of Exxon Mobil’s Red Card.
Pfizer Inc.: Year two of a three-year Red Card. In 2009, Pfizer was fined $2.3 billion by the U.S. Department of Justice, after its subsidiary Pharmacia & Upjohn pleaded guilty to a felony violation of promoting off-label uses of Bextra. The complaint charged that the company sent doctors on all-expense-paid trips to resorts, gave out free massages, and paid kickbacks to doctors to get them to prescribe the drug for off-label uses.
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