Ethical indices provide benchmarks for a company, but with more than 250 local and global ethical indices schemes to follow, a business may have trouble figuring out how it stacks up. These indices can be equally vexing for investors, who use them to determine what can be considered an “ethical investment.”
Phillippa Foster Back, director of the Institute of Business Ethics, a London-based nonprofit dedicated to the study and application of ethical standards in business, makes the case for ethical indices and how a company can use them to influence future business decisions.
What business value do ethical indices have? Ethical indices offer value to businesses in a number of ways. Internally, a ‘high score’ on an ethical index can provide assurance to management about how well ethical values are embedded.
Research has also shown that CR (corporate responsibility) professionals use these indices to gauge the sustainability performance of an organization, compared to others, or even to use the indexing materials as a gap analysis tool indicating where their CR or ethics program may be lacking.
Externally, high scores may be regarded as recognition of good performance, accompanied with a ‘badge’, which can be promoted on the company website, in the annual or in a CR
More at: The Company Ethicist