The 100 Worst Corporate Citizens

By Phil Mattera, Corporate Research Project. Posted July 1, 2006.

For the past 52 years, Fortune magazine has been publishing a list of the largest U.S. corporations, an annual chance for chief executives to brag that "my revenue is bigger than yours." For the past seven years, Business Ethics magazine has issued another kind of ranking -- a list of what it calls the "100 Best Corporate Citizens" -- that promotes virtue over size in the perennial game of corporate comparisons.

The Business Ethics list, the 2006 version of which appeared recently, has become a leading scorecard in the field of corporate social responsibility, or CSR (increasingly used as an abbreviation for corporate sustainability and responsibility). CSR has evolved from a rallying cry of business critics to a fashionable concern among corporate executives eager to demonstrate that high-mindedness can co-exist with the pursuit of profit. Many of the companies cited by Business Ethics consider it a badge of honor, putting out press releases touting this accomplishment.

Yet when one looks at the companies on the Business Ethics list, it is easy to be baffled at the real meaning of CSR. Some of the firms may have done laudable things, but the list is riddled with companies that have significant blemishes on their record when it comes to environmental matters, labor practices or treatment of customers. The likes of Wal-Mart and Big Oil have not yet made the cut, but that may be only a matter of time.

Not so clean

Business Ethics compiles its list using data on corporate social performance in eight categories -- community, diversity, employee relations, environment, etc. -- from the Socrates database produced by KLD Research & Analytics. That information is then processed quantitatively using methodology developed by Sandra Waddock and Samuel Graves of the Carroll School of Management at Boston College. Unfortunately, the magazine says nothing about that methodology, so the reader is confronted with a statistical black box. An article accompanying the list provides scanty details. Thus, one must essentially take the rankings at face value.

The first thing that stands out is that the list is top heavy with high-tech firms, including Hewlett-Packard (No. 2), Advanced Micro Devices (No. 3), Motorola (No. 4), Cisco Systems (No. 8), Dell Inc. (No. 9), Texas Instruments (No. 10), and Intel (No. 11). The magazine says this is, in part, because "most top tech companies do well on environmental issues." That claim would come as a surprise to groups such as the Silicon Valley Toxics Coalition (SVTC), which has for years been pointing out that high-tech industry is far dirtier than its clean image. The electronics industry is a heavy user of toxic chemicals, which have a way of seeping out into the environment, resulting in a proliferation of Superfund toxic waste sites in places such as Silicon Valley.

In recent years, SVTC has also been looking at another environmental problem caused by high tech: the growing volume of e-waste generated when obsolete computers and other devices -- with toxic material inside -- are thrown away. SVTC's Computer Take Back Campaign has been pressuring the major tech companies to take responsibility for recycling. While Dell and Hewlett-Packard have responded positively to the pressure, the campaign faults companies such as Apple (No. 25 on the Business Ethics list) for resisting.

Also difficult to accept is the other reason given by Business Ethics for the prevalence of tech firms at the top of the list: high scores on employee relations, including workplace health and safety. The same toxic chemicals that pollute communities around electronics plants have taken a toll on the health of workers inside the plants. For instance, in 2004, IBM (No. 41 on the Business Ethics list) paid an undisclosed amount to settle lawsuits brought by about 50 current and former workers who were suffering from cancer that they attributed to workplace exposure.

As for the aspect of employee relations relating to unions, Business Ethics fails to mention that the high-tech firms on its list are all largely unacquainted with collective bargaining. The electronics industry has resisted unionization of its domestic workforce for decades. A Wall Street Journal reporter once took a job incognito at a Texas Instruments plant and found workers there so intimidated that they panicked at the mere mention of unions. At the same time, these same companies have not hesitated to move much of their production to foreign sweatshops.

Phil Mattera is research director at Good Jobs First and head of its Corporate Research Project.