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 fast becoming a vital part of any business or stock's success.
Corporate Responsibility magazine recently released its "100 Best Corporate Citizens" list, in which it rated members of the Russell 1000 large-cap index on more than 300 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 human rights, which gets a 16% weighting. Here are the top-rated companies in this category:
- Ford (NYSE: F )
- Johnson Controls (NYSE: JCI )
- Occidental Petroleum
- Alcoa (NYSE: AA )
- Freeport McMoRan Copper & Gold (NYSE: FCX )
To earn their high scores, the companies above engaged in a variety of good deeds, including making their board of directors responsible for the company's human-rights policies, having a clearly stated policy on child labor, and not being fined by any government over human rights issues in the past five years.
Johnson Controls was rated No. 1 overall, and second in human rights. Among other things, it's working on beefing up the diversity of its suppliers, whom it requires to integrate human-rights concerns into their overall management systems.
On its website, fellow list member Alcoa details its positions on issues such as child labor, equality, safety, and fair compensation, and lists the practices through which it pursues these goals, including regular internal audits and surveys.
Ford, credited for improving its attention to human rights, also details such efforts in its annual sustainability report. It has been assessing individual factories and adding human-rights training throughout its supply chain, among other actions.
Freeport McMoRan Copper & Gold is also open about its commitment, and publicly displays its targets and its progress toward them.
Critics often challenge these companies' commitment to human rights, so it's worth watching how they deal with issues that arise. Ford, for instance, is now looking into recent allegations of unsafe conditions at a plant in China.
Companies that take honest and benevolent action can not only lift your spirits, but also boost your portfolio. In its first nine years, companies on the "100 Best Corporate Citizens" list outperformed the Russell 1000 over the ensuing three-year period by more than 25%. That's a great motivation for even the most coolly rational investors to take social responsibility to heart.
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