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The top honor for 2001 goes to Procter and Gamble, which moved up from number four in 2000, Business Ethics reports in its March-April 2001 issue. The giant consumer products company scored high in the category of "service to international stakeholders," a measure of how well the company behaves in the 44 countries outside of the United States in which it does business. P&G "has been generous in international grants and gifts in these communities, including earthquake relief in Turkey, community building projects in Japan, plus contributions for schools in China, school computers in Romania, special education in Malaysia, and shore protection in France," according to the magazine.

Following P&G in the top 10 are Hewlett-Packard, Fannie Mae, Motorola, IBM, Sun Microsystems, Herman Miller, Polaroid, The St. Paul Companies, and Freddie Mac.

"The term 'corporate citizenship' is coming into broader use these days, as awareness grows that business has responsibilities beyond profits," write Business Ethics editor Marjorie Kelly and management professors Sandra Waddock and Samuel Graves. "There is no single indicator of good citizenship. It must be measured through lenses representing various viewpoints."

The magazine has been ranking corporate citizenship for five years, at first using data collected in-house, then in 2000 adding data from Kinder, Lydenberg, Domini & Co. (KLD), a social-research firm in Boston whose data serves as the basis for the Domini 400 Social Index. For 2001, Business Ethics further refined its rating system, adding the environment, minorities, and non-U.S. stakeholders to the previous list of stakeholders: stockowners, customers, employees, and the community.

"In addition to stockholders, other stakeholders also make investments in companies," the authors note. "Employees invest their time and their intellectual capital. Customers invest their . . . trust and repeated business. Communities provide infrastructure and education of future employees, in addition to more direct investments of tax supports. And so on."

All of the companies of the Standard & Poor 500, plus 150 other publicly owned companies, are ranked on a standardized scale measuring the various stakeholder ratings. And to further ensure that only good corporate citizens make it onto the list, the magazine did a scandal scan: "We did a search of the Lexis data base of news sources on each company to look for scandals or improprieties not detected in the KLD data. As a last check, we submitted the rankings to a board of experts for review." Among the companies dropped from the list during this process were Ben & Jerry's, which had been acquired by Unilever; Xerox, due to allegations of misstated financial information; and Microsoft, due to its antitrust conviction.

"What corporate citizenship is about is progress toward better treatment of stakeholders," the authors conclude. "We publish this list not to certify companies as unblemished, but to push the envelope on what it means to be a good corporate citizen, and to move corporations toward ever-better practices in stakeholder relations."

Source: Business Ethics (March-April 2001). Mavis Publications Inc., 2845 Harriet Avenue, Suite 207, Minneapolis, Minnesota 55408. Website www.business-ethics.com.