It's a coincidence that could only be described as cruel: Corporate Knights -- a Canadian magazine highlighting responsibility in the business sector -- published its first issue in June, mere weeks before WorldCom Inc. announced it had fudged its 2001 earnings.
Since Enron Corp.'s accounting fraud was first uncovered last December, new reports of corporate sham and gluttony seem to surface weekly. The most recent focus of media scrutiny and ridicule is former Tyco International Ltd. chief executive officer Dennis Kozlowski, who is being investigated for tax evasion and using company funds for personal purchases. Toby Heaps, editor-in-chief and managing partner of Corporate Knights, admits it's not the easiest time to be trumpeting the social virtues of the corporate world, but the scandals of the past year have only strengthened his resolve.
"[Enron]was a huge lightning rod, but it doesn't affect how we look at things," Mr. Heaps contends. "Companies are companies. The big difference between Enron and a lot of the other companies is that Enron got caught. That's the big sort of sin in the bull market: It wasn't that you did something bad, it's that you got caught doing something bad. Enron showed that that mindset was at a certain peak."
Mr. Heaps and partner/managing editor Paul Fengler were friends at McGill University and envisaged the magazine as a "halfway house between Adbusters and Forbes," meaning critical of runaway commercialism yet still pro-business. They have always had an interest in socially responsible investing (SRI), and have written for various business publications, including Investor's Digest and The Mutual Fund Review. Mr. Heaps is the human embodiment of the conscientious corporate citizen: Although he wears a suit, he travels to meetings on in-line skates in deference to the environment.
Published quarterly, Corporate Knights has a circulation of 104,500 and is distributed for free through The Globe and Mail. Bulk copies are also sent to companies that request them. The magazine acquires almost all of its revenue from advertisements, the majority of which are for mutual fund companies specializing in SRI.
Mr. Heaps and Mr. Fengler write many of the articles, which have a strong corporate social responsibility (CSR) angle. Corporate Knights also draws on contributors such author Don Tapscott and Globe columnist Eric Reguly. The next issue, due later this month, will present a business case for the Kyoto Protocol.
Corporate Knights' U.S. counterpart is Minneapolis-based Business Ethics. Editor/publisher Marjorie Kelly says the recent spate of white-collar malfeasance has had a dour effect on the magazine. "You think it would help a publication called Business Ethics, but it hurt us, because companies are afraid to step forward and put their hand up and say they're ethical," she says. In yet another cruel coincidence, Business Ethics marked its 15th anniversary in August by announcing it no longer had the funds to continue publishing.
Corporate Knights made its debut with a cover story on the "50 Best Corporate Citizens in Canada." The magazine examined the largest 300 companies on the Toronto Stock Exchange and assigned them a score based on their performance in six categories: Community, employee relations/diversity, product safety and business practices, environment, international, and corporate governance. No. 1 was Oakville, Ont.-based Zenon Environmental Inc., which produces water-filtration systems. The company was lauded for, among other things, its green initiatives and employee profit-sharing.
Mr. Heaps is sensitive to the fact that companies his magazine extols now may disclose unseemly practices in the future. Enron, for example, was included in many SRI mutual funds before its creative accounting came to light.
"Every one of the corporate citizens has black underwear, and we're not going to pretend that they're saints," Mr. Heaps says flatly. "There are no Mother Theresas here. But these are the best we've got. And the best that we've got, to be honest with you, is a matter of who has the least amount of criminal convictions."
Toby Webb, editor of British publication, The Ethical Corporation, also worries about praising companies that may later be exposed as deceitful, but cautions against maligning an entire firm based on the actions of a few unscrupulous individuals. "If the CEO's a crook, or the [chief financial officer's]a crook, that doesn't make the whole company a crook, which I think is a danger with some of the mainstream media coverage of CSR," Mr. Webb says.
Ms. Kelly says business ethics advocates must work toward establishing "economic democracy," a concept she explores in her recent book, The Divine Right of Capital. "The problem is, everything is focused on share price . . . When you have a single indicator of success you have a destabilized system, so we need corporations to focus on something besides that, like maybe living wages, like maybe paying their taxes."
Despite her magazine's demise, Ms. Kelly says she has experienced a surge in requests for speaking engagements since December.
After publishing only one issue of Corporate Knights, Mr. Heaps and Mr. Fengler have received calls from a number of Canadian companies asking for advice. Toronto-based forest products company Nexfor Inc., for example, solicited the magazine's opinions on standards for sustainable forestry. Other companies ask flat-out how they can make it onto the Best Corporate Citizens list.
"All companies have a God complex. They want to be the best. And we're playing on that," he says. "Vanity is a great vehicle for moving things forward."