Like most investors, you probably aim for the best possible return when picking potential investments. But as consumers increasingly clamor for companies to embrace social responsibility, good corporate citizenship is becoming a vital part of many companies’ success. And it can boost the performance of our portfolios, too.
CR magazine recently released its “100 Best Corporate Citizens” list for 2013, in which it rated members of the Russell 1000 large-cap index on 325 different elements related to responsible behavior. In the coming weeks, I’ll delve into each of the seven categories that contribute to a company’s overall score. Today, we’ll look at the human rights category, which gets a 16% weighting. Here are the top-rated companies:
The Gap Inc. (NYSE:GPS)
Microsoft Corporation (NASDAQ:MSFT)
Johnson Controls, Inc. (NYSE:JCI)
Johnson & Johnson (NYSE:JNJ)
Northern Trust Corporation (NASDAQ:NTRS)
To earn their high scores, the companies above engaged in a variety of good practices, including applying their human rights policy to their suppliers and vendors, and committing to quantifiable targets and goals.
So what, exactly, are these companies doing right? Here are a few examples of their human rights practices.
The Gap Inc. (NYSE:GPS)’s ranking at the top of the list is impressive, as clothing companies have repeatedly been criticized for poor conditions at globally far-flung factories. The Gap Inc. (NYSE:GPS) spells out its thinking and commitment regarding human rights and also notes that it now monitors 99% of the factories that produce its branded apparel. It also breaks out the ratings for its many factories, revealing that the percentage where action is required has fallen from 18.3% in 2009 to 15.6% in 2011, while those rated excellent rose from 14.5% to 15.9%.
Microsoft Corporation (NASDAQ:MSFT), in its 2012 Citizenship Report, notes that it’s using its “size and leadership to influence government behaviors” around the world. It requires all of its suppliers to abide by its Vendor Code of Conduct and has been checking for violations against requirements such as no child labor and the presence of humane working conditions. It has also “assisted law enforcement worldwide in their fight against online child pornography by making Microsoft Corporation (NASDAQ:MSFT) PhotoDNA technology available for free.”
Johnson Controls, Inc. (NYSE:JCI) specializes in building efficiency, automotive systems and parts, and power solutions. Its Human Rights and Sustainability policy (link opens PDF file) calls for, among other things, no children working under the age of 16, no “forced, bonded, indentured or involuntary prison labor,” no employment discrimination, and supporting the right of collective bargaining. The company expects its suppliers to abide by such principles, too, and includes such language in its contracts.