[00:00:00] Hi everyone. You can make millions by investing in ethical companies and I'm going to show you how. I'm your host, Bill Coffin and this is the Ethicast.
[00:00:20] Anyone who has watched an episode of the Ethicast will be familiar with my sign off. Strong Ethics is good business.
[00:00:26] I say that because I believe it deeply. Ethics is not a feel good 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 that up.
[00:00:48] 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 World's Most Ethical Companies honorees.
[00:00:58] This year the ethics premium is 7.8%. That's the amount by which the publicly held World's Most Ethical Companies honorees have outperformed a comparable index of their peers over the last five years. That is not a small number. I think if any of US saw a 7.8% increase in our retirement portfolios, we'd be pretty happy about that. I think if we got a 7.8% raise at work, we'd go out for a celebratory dinner.
[00:01:23] So far, so good. But what would a direct investment in longtime World's Most Ethical Companies honorees look like from a direct financial return perspective? I decided to find out.
[00:01:33] In 2025, 136 companies received world's Most Ethical Companies honors. You can see the full list of those companies in the summer issue of Ethisphere magazine or atworldsmost ethical companies.com.
[00:01:46] of those, there are 49 honorees that are both publicly held and have been recognized 10, 10 or more times.
[00:01:53] I looked at this cohort as a benchmark of the long term value creation of Best in Class business Integrity.
[00:02:00] Next, I looked up the share price of each company on January 2nd of the year they first earned World's Most Ethical Company's 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 price of these companies on January 3, 2025, the first trading close of this year.
[00:02:20] 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 large that they lose their meaning into each honorary company on January 2nd of their first year of Worlds was Ethical Companies Recognition.
[00:02:36] 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 each honoree company.
[00:02:50] Then I multiplied the number of those shares by the January 3, 2025 share price to see what the investment would be worth today. I repeated this process for each of the 49 companies that I listed above.
[00:03:01] Now a handful of these honorary stocks trade in Euros and one trades in Japanese Yen. So for each of those, I converted USD to those currencies for the purchase year to get a sense of how far $100,000 would buy at that time.
[00:03:15] I then ran the same share purchase formula to see how much the investment would be worth in 2025 and then converted that amount back to USD so the final results are all in a single currency.
[00:03:26] So how did I do the entire seed funding for this hypothetical project is $4.9 million US. That's $100,000 times 49 companies that's paid into the fund by variable amounts from 2007 to through 2016.
[00:03:42] By January 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 3.7 times total return on investment.
[00:03:59] Total profit on this fund is $13,049,045 over the life of the fundamental this only reflects stock price and does not include shareholder dividends.
[00:04:09] 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 nearly $18 million for a profit of a little over $13 million. Not too shabby for a simple and easily replicated model that relies entirely on publicly available information.
[00:04:29] I've also run variants of this model against cohorts of publicly held World's Most Ethical Companies honorees that have not yet earned honors 10 or more times and produced similarly compelling results.
[00:04:39] Now, please note, this is just a thought experiment to make a point. I did not actually make these investments, nor does Ethisphere directly invest in the companies that earn World's Most Ethical Companies honors. I have not been asked to promote any companies, nor have I or at the sphere received compensation for doing so. This is not a perfect model and as I like to remind people, I'm just an English major, so surely my friends in the financial services world. What have some pointers on how I can improve my method here, but by my reckoning, what this experiment shows is that the more you invest in ethics, the more it pays off. Because the value of ethics scales upward. Amid times of turmoil and uncertainty, ethics remains one of the safest investments around this editorial is from the summer issue of Ethysir magazine, which will publish on August 1st. In this special issue, we will be looking at the world's most ethical companies, including a deep dive into the 2025 WME Honor Roll, a feature on how the Ethics Quotient Questionnaire has changed and what it means for your application, and Insights from the 2025 Review Team on what best practices they saw from honorees that really impressed them.
[00:05:43] The summer issue of Ethisphere Magazine will be
[email protected] magazine, so keep your eyes peeled for it.
[00:05:50] For past issues of Ethisphere Magazine, head over to the Ethisphere resource
[email protected] resources. There you'll find a wide variety of free reports, articles and videos on best practices, regulatory enforcement, speak up culture manager training, as well as deep dive interviews with past world's most ethical companies honorees.
[00:06:09] If you'd like to appear as a guest on this program to share an ethics and compliance best practice or success story, we'd love to hear from you. Drop us a
[email protected] Ethicast thanks for joining us. We hope you've enjoyed the show. For new episodes each week, be sure to subscribe on YouTube, Apple Podcasts, and Spotify.
[00:06:26] That's all for now, but until next time, remember, strong ethics really is good business.
