by Peter Asmus
“We’ve reduced diesel engine emissions by 90 percent and within 10 years, we believe we’ll be at zero or close to zero emissions,” said Tim Solso, chairman and CEO of Cummins, Inc., the Columbus, Ind.-based engine maker in the No. 1 spot this year among the 100 Best Corporate Citizens. “Cummins is the best in the world when it comes to air-emissions reduction research,” Solso added. Plus, over the last decade, Cummins has spent more than half its in-house research and development dollars on emission-reduction technologies.
This environmental commitment has left the company well-positioned to meet more stringent EPA emission standards slated to take effect in 2007. And it’s the kind of forward thinking that helps Cummins achieve stellar financial performance. For 2004, Cummins sales increased an impressive 34 percent, to $8.44 billion, while earnings tripled to $545 million.
Cummins has been on the 100 Best Corporate Citizens list all six years, debuting at the No. 62 slot in 2000. Its mission is “Making people’s lives better by unleashing the power of Cummins” a power that comes from 24,000 employees, who enjoy perks like employee ownership and profit-sharing. “A company’s top stakeholder is its own employees,” Solso emphasized. “If they are worried about pay or working conditions, how are they going to take care of customers?”
This engine maker, you might say, is a company firing on all cylinders. It publishes a sustainability report, underwrites the development of schools in China and India, is purchasing biodiverse forest land in Mexico, and funds great architecture in its local community. Its commitment to excellence embraces stockholders, employees, the community, and the environment. That makes Cummins a compelling example of good corporate citizenship.
Repeat Excellence
The 100 Best Corporate Citizens List is designed to recognize Russell 1000 firms that perform to a higher standard, serving a variety of stakeholders with excellence and integrity.
Nineteen corporations have made the cut each of the list’s six years. Most impressive are Hewlett-Packard (No. 7) and Procter & Gamble (No. 8), who consistently place in the top ten.
New Focus on Governance
A new category of stakeholder service added this year is governance, which means firms are now rated on eight categories. The other categories are total return to shareholders, community, diversity, employees, environment, human rights, and customers. In the wake of ethics scandals, KLD Research & Analytics in Boston the social data provider for this list began rating firms on governance practices. It marks companies negatively for issues such as accounting restatements or excessive CEO pay, and positively for paying CEOs less than $500,000 per year. On the 100 Best list, 16 companies tied for the highest ranking in governance, including firms like Bright Horizons Family Solutions (No. 27), Men’s Wearhouse (No. 30), Gaiam Inc. (No. 57), and MGE Energy (No. 87).
Green Mountain, Whirlpool, Interface
One of the most impressive showings over time has been Green Mountain Coffee Roasters (No. 2) of Waterbury, Vt., a pioneer in helping struggling coffee growers by paying them fair trade prices. The company also supports micro-loans to coffee-growing families, to underwrite business ventures that diversify agricultural economies. The firm first showed up at No. 8 in 2003, climbing to No. 2 this year.
A notable firm in the No. 18 slot is Whirlpool of Benton Harbor, Mich., the world?s leading supplier of major home appliances. Founded in 1911, the firm now has 68,000 employees, and 2004 revenues of $13 billion. How does a firm make a good profit when its products are the most durable purchased by consumers? “We believe our long-term success depends upon creating customers who remain loyal to our brands,” said Steve Willis, director of Whirlpool’s global environment, health, and safety programs. “The zillion dollar question for us has always been: What does it take to create loyal customers?”
Whirlpool has invested in global market research to find out why consumers in many cultures choose Whirlpool among the “sea of white boxes” of look-like appliances. “We discovered there is a strong correlation between a company’s performance in appliance markets and their social response to issues such as energy efficiency and pollution,” said Willis. Whirlpool has set itself apart with its Duet Series of washers and dryers, the most energy-efficient on the market, partially because the machine operates on a horizontal instead of the traditional vertical axis. This allows gravity to displace electricity, reducing energy consumption. Serendipitously, the horizontal axis allow this washer/dryer combo to look much different than the combo to look much different than the competition, a plus in marketing.
Taking its environmental commitment even deeper, Whirlpool recently agreed to engage in The Natural Step, a rigorous sustainability improvement process. Doing so was one of the conditions of a new corporate alliance with IKEA, a popular Swedish furniture retailer with an advanced environmental program.
Also deserving mention is Interface, Inc. (No. 65), the modular carpet manufacturer that has long been the darling of sustainability advocates, but which has struggled financially. The 32-year old company has not turned a profit since this list was first compiled in 2000. This stark fact has some questioning the company’s uncompromising ethical approach to addressing environmental challenges.
CEO Ray Anderson offered several reasons for his company’s struggles. “First, there was Y2K. Resources were diverted from office furnishings to once-in-a-lifetime computer upgrades. Then came the dot.com collapse, and 9/11. These events represented a 40 percent decline in office furnishing purchases, from peak to trough,” said Anderson. Sustainability initiatives did not contribute to problems, they saved the company from bankruptcy, he said. “We might not have made it if it were not for our EcoSense programs. Our products are the best ever and helped us survive the worst office furnishing market in history,” said Anderson. “Our costs are down, not up. Sustainability doesn’t cost more, it saves.”
Interface received a top score in the environment (tying with Baxter International at No. 40), as well as in governance. “Since 1997, our board has bought into long-term thinking and has not been caught up in the quarter-to-quarter performance pressure game,” Anderson said.
++++
Peter Asmus is a freelance writer in Stinson Beach, Calif.
Contact him: pthfind@earthlink.net
Read the full article and see the list of companies.
Excerpted from Business Ethics Magazine, a SustainableBusiness.com Content Partner.
Loading...