Ethisphere has long held that strong ethics is good business. But in light of the recent failure of Silicon Valley Bank (SVB), a financial institution decried by some as a “woke” bank, does that philosophy still hold? Absolutely, and Ethisphere has the data to prove it.
Every year, Ethisphere acknowledges those companies that have excelled in embodying and advancing robust programs of ethics and compliance, and that advance business integrity in the coveted designation, The World’s Most Ethical Companies®.
Ethisphere also compares the five-year financial performance of the publicly listed World’s Most Ethical Companies honorees against a comparable index of large-cap companies. This connection between good ethical practices and financial performance is called the Ethics Premium. This year, the Ethics Premium is 13.6% demonstrating a tangible ROI for doing the right thing. The connection between good ethical practices and financial performance has remained consistent since Ethisphere began tracking the equity performance of its honoree companies 10 years ago.
Ethisphere believes that this outperformance is the result of the kinds of practices that lead a company to be on the World’s Most Ethical Companies list, such as:
- Transparency. 96% of Honorees share real stories of things that have inside of their organizations, and 52% share their investigation statistics publicly.
- Accountability. 50% of Honorees link their Environmental, Social, and Governance (ESG) key performance indicators (KPIs) to their financial KPIs.
- Management. 90% of Honorees train managers on their special responsibilities to lead outside of harassment training. 93% also equip managers with tools to keep the anti-harassment conversations going. 68% are building ethics metrics into performance evaluations even before the Department of Justice recommended it. And Honorees are 10% more likely than their peers to train managers on mental health issues.
- Inclusivity. 93% of Honorees formally assess the impacts of their Diversity, Equity, and Inclusion (DEI) programs. 57% of the 2023 World’s Most Ethical Companies honorees have Boards of Directors with at least 31% gender-diverse directors. And 79% of Honorees are training their key third parties on DEI.
These kinds of practices demonstrate investment in an organization’s people, culture, and communities. These are companies that demonstrate superior ethics programs and governance practices, significant culture measurement efforts, conscious ESG impact programs, and are viewed as leaders. Such practices, Ethisphere data shows, lead to stronger financial performance.
Ethisphere CEO Erica Salmon Byrne is available to discuss what data goes into the Ethics Premium, and how this particular data point has become one of the strongest pieces of evidence that businesses that behave ethically also perform well financially.