The Ethical Company Organisation

THE ETHICAL COMPANY ORGANISATION

Setting the benchmark for corporate social responsibility

Tomato Harverst Immokalee

Human Rights

Human Rights issues are central to our evaluation of a companies ethical background, which is why it is one of the three main categories of our research. Our assessment is far-reaching in this regard, aiming to reveal which companies are guilty of human rights abuses and which alternative companies are acting as catalysts for change regarding human rights and equality-related issues.

Human Rights

In the 1990s NGOs and labour organisations began to look more closely at the global supply chains of big companies, and discovered that people working for these companies in the developing world were regularly subjected to 80-hour weeks, enforced overtime, unsafe factories and humiliating physical tests. These problems have not gone away, and multinational corporations are only beginning to take responsibility for the unacceptable working conditions of their suppliers.

Companies and businesses are penalised in our research if, in the last 5 years, they have been implicated in human rights abuses (either through their supply chain, or through their involvement in a project that has proven links with human rights abuses, or through their economic presence in Burma). A bottom ethical rating indicates more than one serious criticism.

This category is included within Ethical Home & Office and Ethical Fashion research. In other areas of our research, it is subsumed in the more widely defined Public Record Criticisms category.

Armaments

Within our research, the middle ethical rating represents involvement in the manufacture or supply of nuclear or conventional weapons, including ships, tanks, armoured vehicles and aircraft; components of weapons systems; fuel, computing and communications services; systems aiding the launch, guidance, delivery or deployment of missiles. Non-strategic parts of the military, such as catering services, are not included in this list.

The bottom ethical rating indicates that the business was listed as one of the world’s 100 biggest arms-producing companies in the latest list published by the Stockholm International Peace Research Institute (SIPRI).

Political Donations

We include this criteria because we do not believe that corporations should fund political parties. There is considerable evidence that the huge wealth of corporations can distort the political process. Elections in the USA in particular can appear to be ‘bought’ by the candidate with the biggest budget, and parties that are critical of business are quickly marginalised. In some countries, such as Germany, corporate funding is quite sensibly prohibited by law. Until that occurs in the UK, people who agree with this position can use our ethical rankings’ tables to withdraw their custom from political donors.

A middle rating indicates that the company and/or company employees and/or company Political Action Committees (PACs) have donated more than £10,000 (or the equivalent in US Dollars) in the last 5 years to a party-political organization in the UK or the US. A bottom rating indicates that the more than £50,000 (or the equivalent in US Dollars) has been donated as listed by the Centre for Responsive Politics (www.opensecrets.org) and Influence Explorer (http://influenceexplorer.com/) in the US and the Electoral Commission in the UK (www.electoralcommission.gov.uk).

The bottom ethical rating shows that the company has donated more than £50,000 (or equivalent in foreign currency) in the last 5 years to a party political organisation in the UK or the US.

Fair trade

Fair trade ensures that producers are paid regularly and guaranteed a minimum price. This price covers the cost of production, the payment of workers, and the development of farms and small-holdings. Fair trade protects small farmers from the fluctuating prices that have previously pushed many below the poverty line.

In our research on ethical cafés, the top ethical rating is awarded to those companies that exclusively sell coffee certified with the Fairtrade Mark (www.fairtrade.org.uk); the middle rating indicates that some fair trade coffee is served; the bottom rating shows that fair trade coffee is not served at all. Similar criteria apply to our Tea & Coffee, Chocolate, Bananas and Sugar research: companies specialising in these products are rewarded with a top ethical rating if the majority of their tea and/or coffee (or chocolate, bananas, sugar as applicable) is certified Fairtrade; companies with only some Fairtrade lines receive a middle ethical rating. Companies with no Fairtrade certified products receive a bottom ethical rating.

In the other research within the Ethical Food & Drink and Ethical Fashion sections of The Good Shopping Guide a top rating indicates that one or more of the company’s food or drink products or textile products respectively is certified by the Fairtrade Mark.

Irresponsible Marketing

As we all presently live in a free-market economy, we have learned to accept that the language of marketing tends to accentuate the positive and play down the negative. The point at which this becomes ‘irresponsible’ is difficult to define, but we focus mainly on those practices that have direct health implications. The bottom ethical rating indicates the marketing of products in a way that has been criticised for its effect on public health. This criteria only applies within the Ethical Health & Beauty part of our research.

Boycott Call

This part of our research can be problematic since a boycott may be called by groups across the political spectrum. It is important, therefore, to be clear about the reasons why a particular boycott has been called.

Some campaign groups have problems with boycotts. For example, development charities CAFOD and Oxfam contend that boycotts of companies involved in workers’ rights abuses could put workers’ livelihoods at risk. However, boycotts can be a useful means of exerting economic pressure and can encourage companies to change their policies.

A bottom rating indicates that a boycott of either the brand or the company group has been called (and has not been dropped). For more information on specific ongoing UK boycotts, visit www.ethicalconsumer.org.

Public Record Criticism

A bottom rating indicates more than one serious criticism in the last five years from NGOs such as Human Rights Watch and Friends of the Earth. The huge range of criticism covered in this column mainly relates to the environment and human rights. Undue political influence, exercised through lobby groups and industry associations, and involvement in political corruption, are also represented in this column.

Companies have been penalised if they are part-owned by a separate company which has been the subject of severe criticism from campaign groups or is heavily involved in the armaments and nuclear industries. For instance, Pret a Manger has received a bottom rating because it is a third-owned by McDonalds. If a company owns more than half of another company’s shares, it is listed as the company group.

In the Ethical Home & Office and Ethical Fashion area of our research as shown on The Good Shopping Guide online, this category is split into the Human Rights and Other Criticism columns.

Ethical Accreditation

While there are many single-issue certification bodies which ensure standards for organic produce, fair trade or energy efficiency, the Ethical Company or Ethical Award logos cover the whole spectrum of ethical concerns and grants approval at a corporate rather than product level. These logos certify the company rather than the product, so that, while Nestlé’s Partner’s Blend may be approved by the Fairtrade Foundation, Nestlé itself would not qualify for Ethical Accreditation.

The companies which have gained Ethical Accreditation have been thoroughly screened and scrutinised by our team of researchers, ensuring that only companies that are eco friendly and have a strong code of ethics, a strong business ethics, and an unwavering commitment to corporate social responsibility, have the privilege to wear the Ethical Company and Ethical Award logos.

Ethical Company Index

The Ethical Company Index provides one overall score for each company. The top, middle and bottom ethical ratings on the ethical rankings detailed tables as shown on The Good Shopping Guide online count as ten, five and zero points respectively. Some categories, however, are weighted slightly differently according to the level of NGO and consumer concern. For instance, due to the number of reported human rights violations in the supply chains of electronics manufacturers and clothes companies, a clean record scores 20 points in these product sectors.

Each company’s total ethical score is then converted into a percentage, which becomes the Ethical Company Index.

Legal Status

In this part of our research, mutual building societies and organisations which are not for the profit of shareholders are identified with a top rating. Mutuals only invest in mortgages, and so never get involved in business projects condemned by many of the world’s NGOs. They make important policy decisions democratically, with each saver entitled to one vote.

Developing Country Debt

All UK banks have sold or written off the bulk of ‘Third World’ debts, but some still have lending relationships with developing country governments. A bottom rating indicates that Third World debts are still held. We have relied on information drawn up by the Ethical Investment Research Service (EIRIS).

Ethical Investment Policy

It is promising to see our financial institutions starting to introduce ethical criteria into their lending policies. While for now these are often no more than token gestures, we hope that the trend will continue to grow. The middle ethical rating is given for any kind of ethical policy; a top rating represents a policy that goes beyond negative screening, and gives priority to projects that are socially or environmentally beneficial.

Environmental Destruction

The bottom rating represents involvement in a project in the last six years that has drawn widespread criticism from environmental NGOs and campaigners. A bottom rating indicates involvement in a project in the last five years that has drawn widespread criticism from human rights groups.

Political Activity

A bottom rating indicates either that donations over £50,000 (or $94,500) have been made to a political party in the UK or the US in the last five years, or that the bank/financial institution has been criticised by NGOs such as the World Development Movement (WDM) for its involvement in lobby groups.

Code of Conduct

The top ethical rating is awarded to those companies which have drawn up a comprehensive ethical code of conduct that formally acknowledges the right to form a union. The code must be publicly available, and it must regulate against excessive working hours and forced or child labour.

Ethical Trading Schemes

The top ethical rating is awarded to those companies which are members of the Ethical Trading Initiative (ETI) or are affiliated to the Fair Labor Association (FLA). This guarantees that the company’s supply chain is subject to independent scrutiny.