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March 02, 2008

Measuring Companies with a Ruler of Responsibility
    by Anne Moore Odell

With 21 return businesses from the 2007 list, CRO's 100 Best Corporate Citizens 2008 ranks large-cap companies' corporate responsibility. -- Intel claims the top position in CRO (Corporate Responsibility Officer) Magazine's list of 100 Best Corporate Citizens 2008. The list highlights the top performing large-cap companies for their responses to environmental, social and governance (ESG) issues. This marks the second year that CRO has published the list and the ninth consecutive year the list has appeared.

SRI Mutual Funds GuideDennis Schaal, editor-in-chief of CRO Magazine said, "Corporate responsibility is no longer viewed as an optional, add-on program by companies. It isn't viewed as a matter for the folks in the Philanthropy Dept. to take care of. Instead, companies view it as a way to gain a competitive edge, to save money, and to boost their statures with various stakeholders, from shareholders to employees and potential employees. I would say the key trend is transparency, with companies, especially publicly held companies, realizing that they have to put it all out there as much as possible."

CRO partnered with IW Financial, a provider of ESG research and analytics, to compile the list. CRO and IW Financial looked at eight categories of corporate responsibility for the 2008 list: Climate Change, Employee Relations, Environment, Financial, Governance, Human Rights, Lobbying and Philanthropy.

"IW Financial was approached by the CRO to work on the 100 Best list and to help develop top 10 in industry lists for a number of different industries," said Mark Bateman, director of research for IW Financial. "IW Financial helped CRO make determinations about the issues they wished to cover and developed methodologies suitable to evaluating the criteria that CRO selected."

The universe of companies under consideration for the CRO's 100 Best Corporate Citizens included 1,000 of the largest US companies, as defined by the Russell 1000 Index. "We decided to focus on major corporations because we wanted apples to apples comparisons, as much as possible, and because we wanted to focus on companies that have huge impacts on the world," said Schaal. "I'm talking about global corporations that might be doing business in 150 countries. It's difficult to weigh their efforts, and the challenges they face, against a regional or local manufacturer, for example, however exemplary the smaller company's efforts might be."

CRO plans to publish the 100 Best Corporate Citizens among small- and mid-cap companies in their July/August 2008 issue.

The top ten companies on the list are Intel, Eaton, Nike, Deere & Co., Genentech, Corning, Humana, Bank of America, ITT and PG&E.

IW Financial and CRO examined the numbers driving these companies' responses to ESG concerns. CRO and IW Financial also included companies' alleged transgressions in their consideration of which companies should make the cut. CRO has a "penalty box" for companies that could of made the100 Best list except for scandals the companies faced. The companies in the "penalty box" include Bristol-Myers Squibb, Chevron, Eli Lilly, ExxonMobil, Hewlett-Packard, Mattel, Merck, and Travelers Companies.

Schaal explained to "Being on this list doesn't mean you are Mother Theresa, Desmond Tutu or Elie Weisel. The companies on this list are mammoth corporations, and even Intel (No. 1) and Gap (No.61) faced some recent challenges. Intel is the subject of antitrust investigations, and a contractor of a Gap supplier was caught using child labor. The list is a way to assess 'the best' among major global corporations, to measure their citizenship practices against one another."

IW Financial's Bateman added, "To understand how seriously a company takes CR, it is important to monitor the company's policies and practices over time as well as the level of disclosure they maintain. Companies that are engaged in PR tend to have relatively poor transparency when you analyze the specifics of their disclosures. They also tend to have poor follow through and don't continually strive to improve across multiple ESG dimensions."

The 100 Best list is more than just a pat on the back for the companies that appear on it. CRO's list can be a helpful starting point for investors interested in an unbiased ranking of companies' corporate responsibility practices. Furthermore, the list is a useful tool for businesses. Appearing on the list might help companies retain employees.

Robert Lane, chairman and CEO of Deere, told CRO, "We know from our own experience that current employees and future employees want to work for a good corporate citizen. This is an important trend that is showing even more strength with new employees."

With more and more companies publishing sustainability reports and official responses to climate change, the face of corporate responsibility has changed greatly over the past decade:

"Nine years ago, only the most forward-thinking companies were thinking about corporate citizenship in the broadest sense," Schaal said. "Today, corporate responsibility as a profession inside companies is growing at a dramatic rate and the question isn't whether to embark on sustainability programs, but how. Of course, one of the biggest differences is that climate change issues are on everyone's agenda. Thank you Al -- I invented the Internet -- Gore, and others."

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