SPRING 2025
BACK MATTER

_{SPRING 2025 |}_{BY THE NUMBERS}

^{Data & Insights}

The World’s Most Ethical Companies^® are themselves a trove of interesting data around the throughlines that unite companies that place business integrity at the heart of their operations. The following data points were taken from Ethisphere’s benchmarking platform, The Sphere. ■

93%

have directors with only 1-2 board commitments, recognizing the fact that oversight activity is a full time job.

58%

Require all people managers to have discussions with their direct reports regarding specific ethics and compliance topics at least once a year.

15%

have more than 50,000 employees, while 8% have fewer than 5,000 employees. Bottom line: size does not determine ethics.

57%

have trained their employees on artificial intelligence (AI) within the last two years.

61%

are publicly held. This is the smallest percentage of public companies in the last six years, as companies eschew capital markets.

114

Is the average number of FTE equivalents in the ethics and compliance function, compared to the global benchmark of 85.

_{FINAL THOUGHT |}_{SUMMER 2025}

It Really Pays to Invest in Ethics

^{by BILL COFFIN | Editor-in-Chief,}^{Ethisphere Magazine}

A nyone who has watched an episode of the Ethicast will be familiar with my signoff: “Strong ethics is good business.” I say that because I believe it deeply. Ethics is not a feelgood exercise or a drift into ideology. It is a strategic differentiator that builds better businesses by making them more innovative, more resilient, and more attractive to talent, markets, and capital. And best of all, this isn’t just a passionately held opinion. Through the Five-Year Ethics Premium, we have the data to back it up. The Five-Year Ethics Premium, of course, is a proprietary measure that Ethisphere releases annually in concurrence with the announcement of that year’s World’s Most Ethical Companies^® honorees.

This year, the Ethics premium is 7.8%. That’s the amount by which the publicly held honorees of this year’s World’s Most Ethical Companies have outperformed a comparable index of their peers over the last five years. That’s not a small number. I think if any of us saw a 7.8% increase in our retirement portfolios, we’d be happy about that. But what would a direct

investment in long-time World’s Most Ethical Companies honorees look like from a long-term return perspective? I decided to find out.

There are 136 honorees in the 2025 World’s Most Ethical Companies. (You can see the full honoree list in the cover story of this issue, or also at worldsmostethicalcompanies.com. Of those, there are 49 honorees that are both publicly held and have been recognized 10 or more times. I looked at this cohort as a benchmark of the long-term value creation of best-in-class business integrity.

Next, I looked up the share price of each company on Jan. 2 of the year they first earned World’s Most Ethical Companies honors. (A few of them went public later in the year after their first recognition, so their starting stock price will be set to that date.) Then, I looked up the share prices of these companies on Jan. 3, 2025, the first trading close of this year.

For this exercise, I invested an imaginary $100,000—an amount large enough to buy a decent chunk of stock without verging into numbers so big they lose their meaning—into each honoree company on Jan. 2 of their first year of World’s Most Ethical Companies recognition. I divided that amount by the starting share price. To keep things simple, I used dollar-based investing, so this fictional investment amount can buy fractions of a share. That let me know how many imaginary shares I would own of the honoree company. Then I multiplied the number of shares by the Jan. 3, 2025 share price to see what the investment is worth today. I repeated this for each of the 49 companies.

(Note: A handful of these honoree stocks trade in Euros, and one trades in Japanese yen. For each, I converted USD to those currencies for the purchase year to get a sense of how far $100K would buy at that time. I then ran the same share purchase formula to see how much the investment was worth in 2025 and then converted that amount back to USD so the final results are all a single currency.)

So, how did I do?

BILL COFFIN

INVESTED COMPANIES

Accenture – ACN (NYSE)
Aflac, Inc. – AFL (NYSE)
Allstate Insurance Company – ALL (NYSE)
Anywhere Real Estate Inc. – HOUS (NYSE)
Aptiv PLC – APTV (NYSE)
Best Buy Co., Inc. – BBY (NYSE)
Capgemini – CAP.PA (Euronext Paris)
CBRE Inc. – CBRE (NYSE)
Colgate-Palmolive Company – CL (NYSE)
Deere & Company – DE (NYSE)
Dell Inc. – DELL (NYSE)
Eaton – ETN (NYSE)
Ecolab – ECL (NYSE)
Energias de Portugal, SA (EDP) – EDP.LS (Euronext Lisbon)
HCA Healthcare, Inc. – HCA (NYSE)
Henry Schein, Inc. – HSIC (NASDAQ)
Iberdrola, S.A. – IBE.MC (Bolsa de Madrid)
Ingredion Incorporated – INGR (NYSE)
Intel Corporation – INTC (NASDAQ)
International Paper Company – IP (NYSE)
JLL) – JLL (NYSE)
Johnson Controls, Inc. – JCI (NYSE)
Kao Corporation – 4452.T (Tokyo Stock Exchange)
Kellanova (Formerly Kellogg’s North America) – K (NYSE)
Kimberly-Clark – KMB (NYSE)
L’ORÉAL – OR.PA (Euronext Paris)
ManpowerGroup – MAN (NYSE)
Mastercard – MA (NYSE)
Oshkosh Corporation – OSK (NYSE)
Parsons Corporation – PSN (NYSE)
Paychex – PAYX (NASDAQ)
PepsiCo Inc. – PEP (NASDAQ)
Premier, Inc. – PINC (NASDAQ)
Principal Financial Group – PFG (NASDAQ)
Prudential Financial, Inc. – PRU (NYSE)
Rockwell Automation Inc. – ROK (NYSE)
Royal Caribbean Group – RCL (NYSE
Salesforce – CRM (NYSE)
Schneider Electric – SU.PA (Euronext Paris)
TE Connectivity – TEL (NYSE)
Teradata Corporation – TDC (NYSE)
The AES Corporation – AES (NYSE)
The Hartford – HIG (NYSE)
The Timken Company – TKR (NYSE)
U.S. Bancorp – USB (NYSE)
Visa Inc. – V (NYSE)
Voya Financial – VOYA (NYSE)
Waste Management Inc. – WM (NYSE)
Weyerhaeuser – WY (NYSE)

The entire seed funding for this hypothetical project is $4.9 million USD ($100K x 49 companies) paid into the fund by variable amounts from 2007 through 2016.

By Jan 3, 2025, the total value of these 49 stock holdings amounted to $17,949,045 (rounded up). The total seed fund grew over time by 366%, for a nearly 3.6x total return on investment. Total profit on this fund is $13,049,045 over the life of the fund. This only reflects stock price and does not include shareholder dividends.

So, there we have it. By investing in companies that have a proven track record of best-in-class ethical behavior, I would have turned $4.9 million into a little over $13 million. Not too shabby for a simple and easily replicated model that relies entirely on publicly available information. I’ve also run variants of this model run against different cohorts of publicly held World’s Most Ethical Companies honorees and produced similarly compelling results.

(This is a thought experiment. I did not actually make these investments, nor does Ethisphere in World’s Most Ethical Companies honorees.)

Now, this isn’t a perfect model, and surely my friends in the financial services world have pointers on how I can improve my method. But by my reckoning, what this experiment shows is ethics remains one of the safest investments around because the value of ethics scales upward.

See you next issue. ■

The total seed fund grew over time by 366% for a nearly 3.6x total return on investment. Total profit on this fund is $13,049,045 over the life of the fund.

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Spring 2025

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Ethisphere^® is the global leader in defining and advancing the standards of ethical business practices that fuel corporate character, marketplace trust, and business success. Ethisphere enables companies to advance business performance through data-driven assessments, benchmarking, and guidance. Ethisphere honors superior achievement through its World’s Most Ethical Companies^® recognition program, provides a community of industry experts with the Business Ethics Leadership Alliance (BELA), and showcases trends and best practices in ethics with Ethisphere Magazine.

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Erica Salmon Byrne, J.D.

Chief Strategy Officer & Executive Chair

Kevin McCormack

EVP & Executive Director, BELA

Jodie Frdericksen

VP, Data & Services

Neal Thurston

Director, Data & Services

Eric Jorgenson

Director, Data & Services

Emily Miner

Director, Data & Services