Help:Analyzing a company's social responsibility record

Analyzing a company's social responsibility record is a research guide. See the other research guides

Series: How to research U.S. corporations

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How to research U.S. corporations

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U.S. companies have relationships with their employees and with the communities in which they do business. The way they conduct these relationships is known as the company’s social responsibility record. This page focuses on ways in which one can investigate this record.

Social responsibility profiles and ratings; critical websites

The social investing movement has grown in size and sophistication over the past two decades. One of the outcomes of this is that several organizations provide useful profiles of the social responsibility record of large companies. Some of these sources tend to be weak on labor relations issues, but they have good information on other employment matters (affirmative action, etc.), environmental issues and so forth. Among these are:

SocialFunds.com has a section called the Corporate Social Research Center that provides links to social responsibility information on hundreds of companies.
Co-Op America has a site called Responsible Shopper (coopamerica.org/programs/rs)that rates about 350 consumer products companies according to workplace, environmental and disclosure issues.
A website called Idealswork (idealswork.com/) combines information on the social responsibility record of consumer companies with a shopping resource. Idealswork gives a portion of its commission on the sales to non-profits.
KLD Research & Analytics has what is perhaps the most comprehensive database of social responsibility profiles. Unfortunately, the service, called SOCRATES, is aimed at institutional investors and is thus very expensive. For more information, see KLD’s site (kld.com/).

For current news about corporate misdeeds, one of the best (but expensive) sources is the weekly Corporate Crime Reporter (corporatecrimereporter.com/).

Another source of information on the business practices of companies, including very small ones, is the Better Business Bureau, which has been collecting consumer complaints since 1912. The Bureau has a website (bbb.org/)that contains a search engine through which you can research the reputation of business establishments (at least as measured by the number of customer complaints) throughout the country.

Critics' websites

Another source of critical (though not always accurate) information on companies are websites that have been created by people who have a grievance against the firm, who disagree with its policies, or who just don’t like it. See, for example, Jiffy Lube Sucks (mohea.com/mike/words/000158.html) and I Hate Starbucks (ihatestarbucks.com). It has also become common for unions or environmental groups that are engaged in a corporate campaign against a company to create such a site. Use a general search engine such as Google (google.com) to find such sites on your target company.

Court proceedings

Investigating a company’s involvement in litigation is useful for two reasons. First, it says something about a firm’s way of operating if it frequently ends up as a defendant in lawsuits over matters such as race and sex discrimination, defective products and antitrust violations – not to mention outright fraud. Second, in the course of legal proceedings, companies will often be required to divulge information that might otherwise never make it into the public domain. The latter is also true in court proceedings—especially divorces--involving a top executive or owner of your target company.

The place to begin, if you are dealing with a public company, is the 10-K filing (see above), which contains a section called Legal Proceedings. Companies are supposed to use this section to describe any legal matters that could have a material impact on the firm’s finances. Some companies choose to interpret this narrowly and say little or nothing about litigation; other firms may provide a long narrative of legal issues.

The 10-K is just a starting point, so you need how to do an independent litigation search. There are four main types of court information that you can access:

Dockets

These are lists of pending and recently closed cases that contain basic information about the nature of the case, the parties involved and a chronology of events (motions, rulings, etc.) in the case. Until a few years ago, the only way to search dockets was to go to the courthouse where the case was filed. Today nearly all federal courts and a growing number of state courts have put their dockets online.

The dockets of federal district, appellate and bankruptcy courts can be accessed through a fee-based system called PACER (Public Access to Court Electronic Records) (pacer.psc.uscourts.gov), which is run by the Administrative Office of the U.S. Courts. In order to use the system you must open an account and pay a modest fee based on usage. In addition to providing access to individual courts, PACER provides access to the U.S. Party/Case Index, which allows you to search most, but not all federal court dockets at once for cases in which a specific company or individual is a party.

Courtlink, a commercial service owned by Lexis-Nexis (lexisnexis.com), provides a more convenient and speedier system for accessing PACER information, though at a substantially higher price. Westlaw (westlaw.com) also provides access to PACER docket information.

The U.S. Tax Court, which hears cases brought by companies and individuals challenging IRS notices of deficiency, puts its docket online. Tax Court cases are important to check, because they may require a company to put its tax return into the public record.

State courts have been somewhat slower in putting their dockets online, but they are starting to catch up. For a list of which courts are available electronically, check LLRX.com. Courtlink (lexisnexis.com/courtlink) also provides access to some state court dockets. If you do a large amount of docket checking, you may want to subscribe to a pay website called Legal Dockets Online, which provides a comprehensive set of links to PACER and state court sites.

Court filings

Once your docket search has turned up an interesting case, the way to find out more about the matter is to look at the actual documents that have been filed by the parties. These would include things such as the original complaint (in a civil matter) or indictment (in a criminal matter), briefs, motions, depositions and transcripts of court proceedings. Generally speaking, these documents are available only in hard-copy form at the clerk’s office of the court in which the case was filed.

The federal courts, however, have been developing an extension of PACER that allows subscribers to view images of court filings on their home or office computer. The list of links to court sites on the PACER Service Center site indicates which ones have begun to post document images. Legal Dockets Online (see above) also has this information.

Verdicts, judgments and liens

There are a variety of reporting services around the country that collect information about significant verdicts in civil cases. There are also some that collect nationwide data. For example, the National Law Journal has a pay site called VerdictSearch (verdictsearch.com). A number of services are collected in the Verdicts Library on Lexis-Nexis and on Westlaw.

Financial judgments in civil matters become a matter of public record as do liens on property and federal and state tax liens. You can search these records at the county courthouse in the jurisdiction where the action occurred. If you want to do a wider search, use services such as KnowX, the Liens Library on Lexis-Nexis or Westlaw.

Written opinions

Lawyers and legal researchers review written opinions via expensive services such as Lexis-Nexis or Westlaw. Both allow you to search for cases in which a particular company was a party and to display the full text of the opinions. At the federal level, more and more courts are putting their opinions on the web. See the websites of individual courts; for a list of links, see the Federal Judiciary site or Legal Dockets Online (see above).

Legal representation

To find out which law firms are used by the 250 largest companies in the United States, see the annual list called Who Defends Corporate America, which is published by the National Law Journal. The list can be found online (law.com/special/professionals/nlj/2002/nlj_client_list_who_defends_corporate_america.shtml). Determining which law firms list a particular company as a client can also be done by searching the electronic version of the Martindale-Hubbell directory on Lexis-Nexis.

Federal regulatory matters

The Securities and Exchange Commission

The SEC, which regulates publicly traded companies as well as entities and individuals involved in the securities industry, has been much in the news because of controversy over its failure to prevent or even detect the spate of corporate financial scandals in recent years. The SEC does, however, engage in enforcement. The agency’s website contains an archive of Litigation Releases dating back to September 1995; Lexis-Nexis has an archive that goes back decades. The SEC site (sec.gov) also has information about administrative proceedings of its Division on Enforcement. Also check out the Securities Class Action Clearinghouse for information on fraud lawsuits brought on behalf of investors against public companies.

Federal Trade Commission

The FTC enforces a variety of consumer protection laws and shares enforcement of the antitrust laws with the Department of Justice. The Commission’s website (ftc.gov/) contains an archive of formal opinions it has taken since 1996. The Trade Library on Lexis-Nexis has an archive of consent decrees that companies have signed with the FTC since 1980. It also has an archive of Justice Department final judgments during that same period.

Federal product regulators

The Consumer Product Safety Commission (cpsc.gov) has an archive of product recalls and other commission actions. The Food and Drug Administration (fda.gov) has an archive of safety alerts and product recalls. The National Highway Traffic Safety Administration (nhtsa.dot.gov) has an archive of motor vehicle recalls.

For more on product safety, see the website of the non-profit Underwriters Laboratories (ul.com/), which includes a database of which products it has certified.

General Services Administration

The GSA (gsa.gov), which oversees federal purchasing, maintains a list of those individuals and companies that have been barred from doing business with the federal government for violations of various kinds; it is called the Excluded Parties Listing System. See also the Federal Contractor Misconduct Database (www.pogo.org/db), which is assembled by the Program on Government Oversight.

See below for information relating to the Environmental Protection Agency, the Federal Election Commission and the Occupational Safety and Health Administration.

Labor relations and employment practices

Public company 10-K filings (see above) contain a section indicating the number of employees and the portion of the workforce covered by collective bargaining agreements. Companies that deal with unions to a significant extent may also name the unions, indicate how many employees are members and give a description of the general state of labor relations. In almost all cases, the company will say that those relations are good.

On the other hand, there is substantial evidence that this country’s low level of unionization is in large part a result of anti-union animus on the part of many employers. A key way to document a company’s labor relations record is to look at the unfair labor practice (ULP) charges that have been filed against it by unions or individual workers.

The website of the National Labor Relations Board (nlrb.gov) has an archive of the agency’s written decisions going back to 1984. To do a comprehensive search of ULPs that may have been filed against a company, as well as other aspects of a firm’s labor practices, the best source is the Labor Database CD-ROM compiled by the Food and Allied Service Trades Department of the AFL-CIO. (fast-raa.com) Among its contents are:

an index of all ULPs since 1990;
data on NLRB elections since 1990;
data on collective bargaining agreements filed with the Federal Mediation and Conciliation Service since 1990;
compliance data since 1996 relating to the Fair Labor Standards Act (overtime, minimum wage and child labor violations), Davis-Bacon and Service Contract Act (prevailing wage violations); the Family Medical Leave Act and other employment laws; and
Equal Employment Opportunity Commission cases since 1989.

For information on ordering the CD, see the FAST website.

The AFL-CIO has a database called UNICORE that contains extensive data showing which companies have relationships with which unions. Requests to access the database must usually come through an international union. If you need to know which unions a (large) company deals with but you cannot get access to UNICORE, some of that information can be found in a volume called Profiles of American Labor Unions, which was last published by the Gale Group in 1998. The AFL-CIO’s Union Label and Service Trades Department also has a list of union-made products and services.

The AFL also has a site (to which trade unionists can get a password) called Bust the Union Busters (aflcio.org/unionbuster). It contains information on the use of anti-union law firms and consultants and can be searched by company name. Similar information is openly available on the website of American Rights at Work, especially the sections on The Anti-Union Network (americanrightsatwork.org/unionbusters). The AFL-CIO National Boycott List of anti-union companies can be found on the web (unionlabel.org/?zone=/unionactive/view_page.cfm&page=Boycott).

A website called FreeErisa (freeerisa.com) has information on labor relations as well as employee benefits. Its features include:

Results of NLRB elections and ULP cases by company;
A list of companies that are parties to collective bargaining agreements on file with the U.S. Bureau of Labor Statistics (this information is also available directly from on the BLS website) (bls.gov);
Data contained in Form 5500 filings that companies have to make to the U.S. Department of Labor about their employee benefit plans.

Decisions of U.S. Department of Labor Administrative Law Judges on cases involving matters such as black lung claims, ERISA disputes and whistleblower cases can be found here (www.oalj.dol.gov).

DOL also has a disclosure page with information on foreign labor certifications (including pay levels) given to companies that claim they have to import foreign workers to the United States to perform certain jobs.

The best news sources on U.S. labor relations are publications of the Bureau of National Affairs (bna.com): the Daily Labor Report and Labor Relations Week. If you subscribe to these expensive publications online, you can search for past articles that mention your target company. The BNA newsletters are also available on Lexis-Nexis and Westlaw.

Foreign sweatshops

In recent years, more and more information has come to light about the dismal working conditions of third world factories that supply multinational corporations. Here are some sources for information about sweatshops:

National Labor Committee (nlcnet.org)
Sweatshop Watch (sweatshopwatch.org)
United Students Against Sweatshops (studentsagainstsweatshops.org)

Workplace safety and health

Health and safety conditions on the job have been a matter of public controversy since the beginning of the Industrial Revolution. For the past three decades in the United States, those conditions have been regulated by a federal agency, the Labor Department’s Occupational Safety and Health Administration. To carry out its mandate, OSHA is supposed to conduct periodic inspections of workplaces and cite employers for any violations that are found. The OSHA website has a database (osha.gov/oshstats/index.html) that contains the results of every inspection the agency has carried out since 1972.

The Mine Safety and Health Administration’s Data Retrieval System (msha.gov/drs/drshome.htm) contains accident and violation histories for specific mines as well as inspection dust sampling data.

Environmental compliance

One of the ways in which many companies fail to act in a socially responsible manner is by violating environmental regulations, which all too many corporate executives regard as an annoyance rather than a means of protecting public health. Environmental regulation in the United States is conducted both at the federal level – through the Environmental Protection Agency (EPA) – and at the state level.

The EPA website (epa.gov) is a source of a great deal of data on environmental matters. Start at the Envirofacts page (epa.gov/enviro/index_java.html), which allows you to search a variety of EPA databases at once for data on a particular geographic location. If you enter the zip code of a facility of your target company, Envirofacts will give you information such as the following:

data on your target facility and others located in the same zip code that produce air pollution (from Aerometric Information Retrieval System)
data on hazardous waste (from the Resource Conservation and Recovery Act database and from the Superfund list of the worst hazardous waste sites)
data on water quality (from the National Drinking Water Contaminant Occurrence Database and the Permit Compliance System).

Envirofacts also has a feature that maps much of this information. Environmental Defense has a valuable site (scorecard.org/) that combines data from the Envirofacts databases and other sources to give a comprehensive profile of the environmental condition of a given location.

In 2002 the EPA made a major advance in disclosure with the launch of a pilot website containing enforcement data on some 800,000 regulated facilities nationwide. The service, called Enforcement and Compliance History Online (ECHO) (epa.gov/echo), contains information relating to Clean Air Act stationary sources, Clean Water Act facilities with direct discharge permits (under the National Pollutant Discharge Elimination System), and generators/handlers of hazardous waste regulated under the Resource Conservation and Recovery Act. It also provides information on state enforcement data.

A page of links to state environmental agencies can be found on the Clay.net site (clay.net/statag.html). For links to environmental groups working in various areas, see the Environmental Organization Web Directory (webdirectory.com/).

Campaign contributions and lobbying

Corporations are barred from making direct contributions to federal candidates, but they do find other ways to greatly influence the political process. These include individual contributions by company executives, contributions through company Political Action Committees (PACs) and company contributions to political parties. The latter, known as soft money contributions, have been outlawed by federal campaign reform legislation (though it appears companies are finding ways around the restrictions).

These various kinds of contributions are part of the public record and are disclosed via reports issued by the Federal Election Commission. The FEC website has a database (fec.gov/disclosure.shtml) with lists of contributions and files with images of the original documents.

Several organizations have taken the FEC data and created websites with extensive analysis and better searching capabilities. Among the best of these is the Center for Responsive Politics site (opensecrets.org), which contains, for example, excellent analyses of contribution patterns by industries and interest groups. FECInfo’s Political Money Line (www.tray.com/fecinfo) has more extensive historical data, but you have to pay a subscription fee to access all of its features.

State contribution data has been slower to come on line, but the Institute on Money in State Politics (followthemoney.org) has done a heroic job in gathering the information and putting it in a uniform searchable format. The Institute’s site allows for searches by contributor or recipient in specific states or across the entire country. For some states the information starts as early as 1990. Note that some states allow direct campaign contributions by corporations.

For access to the personal financial disclosure forms filed by members of Congress and top federal officials, see the site (opensecrets.org/pfds/overview.asp) compiled by the Center for Responsive Politics.

Lobbying

Federal lobbyists have to submit semi-annual reports to the Secretary of the Senate and the Clerk of the House identifying their clients and the amount of income they receive. Companies have to report their overall lobbying expenditures and the names of any lobbyists employed as part of an in-house lobbying effort. The Senate has put its filings online (sopr.senate.gov) in a database that allows you to search by the name of the client. Political Money Line has a page (tray.com/cgi-win/x_bna.exe) that provides access to the lobbyist disclosure forms by industry. A good compilation of available data can be found on the Lobbying Spending Database (opensecrets.org/lobbyists) created by the Center for Responsive Politics.

For lists of which lobbyists represent a given company, you can also consult the print volumes Washington Representatives (which is published by Columbia Books and is also available through a pay website) (lobbyists.info) and the Government Affairs Yellow Book (which is published by Leadership Directories and is also available along with other directories on a CD-ROM or a subscription website)(leadershipdirectories.com).

State websites contain a list of the lobbyists registered in the legislature.

Public relations, corporate philanthropy and sponsored research

Public relations is essentially a process of lobbying the public, either directly or through the media. Large companies spend large amounts of money to build their image. Think, for example, of the ad campaigns that the likes of tobacco maker Philip Morris and Wal-Mart have conducted to publicize corporate disaster relief efforts.

Companies use both in-house personnel and outside public relations agencies to carry out these initiatives. The National Directory of Corporate Public Affairs, published by Columbia Books, is the best collection of information on corporate flacks. See also O’Dwyers Directory of Public Relations Firms, published by J.R. O’Dwyer & Co., which also provides data online (odwyerpr.com). To keep up with trends in corporate propaganda, subscribe to the newsletter PR Watch (prwatch.org); the website also includes profiles of industry front groups. For information on which companies are sponsoring which events, see Sponsorship.com (sponsorship.com).

One of the more aggressive forms of p.r. is manipulation of scientific research. For information on industry ties to scientists and non-profits, see the Center for Science in the Public Interest database (cspinet.org/integrity/index.html).

Charitable contributions are one of the ways that companies do public relations. Sometimes companies set up their own foundations to conduct this activity. For larger companies, check the website to see if there is a report on philanthropic activities. The Corporate Giving Directory, published by the Taft Group, has data on direct contributions by companies. The Foundation Center, whose website (fdncenter.org)is the best online source of information on corporate and other foundations, publishes the National Directory of Corporate Giving and Corporate Foundation Profiles. A newer resource is NOZA (nozasearch.com), a database that assembles details of charitable contributions by individuals as well as companies.

Private foundations, like other non-profits, must file a Form 990 with the Internal Revenue Service (the private foundation version is called the 990-PF). These documents, which are public records, contain a great deal of information about the finances of the foundation and usually contain a list of the organizations that have received grants. Scanned images of 990s can be accessed on the web at Guidestar (guidestar.org).

Some states also regulate charities and may have reporting requirements in addition to the 990. For a list of links to such states, see the Portico site (indorgs.virginia.edu/portico/nonprofits.html#stdb).

Executive compensation

Excessive pay for top corporate executives is a perennial problem in corporate America. Finding out how much CEOs and other top dogs in publicly traded companies earn is not difficult. The information – including stock option data – is spelled out down to the dollar in the company’s proxy statement (Form DEF 14A), which can be obtained online through the EDGAR system (see above). For faster access to summary compensation information on a company, use the website eComp (ecomponline.com).

For more on the subject of executive compensation, see the AFL-CIO’s Executive Paywatch site (paywatch.org) and United for a Fair Economy (faireconomy.org).

Government subsidies

Over the past few decades, corporate executives have come to expect that government will subsidize their operations in one way or another. The federal tax code and the tax policies of the states provide a myriad of subsidies for particular types of companies or business in general. Yet there are also programs that provide individual companies with special tax abatements/exemptions or direct grants, loans or loan guarantees. These benefits, often called corporate welfare, are usually justified in the name of economic growth or development.

At the federal level, there are several programs that promote U.S. exports or foreign investment by U.S. companies:

The Commerce Department’s Advanced Technology Program, which funds corporate research. The program’s website (atp.nist.gov) has a list of funded projects.
The Export-Import Bank, which provides loans and loan guarantees to promote sales of U.S. goods to overseas buyers. Its website (exim.gov) has an archive of annual reports that list sellers and buyers.
The Overseas Private Investment Corporation, which provides political research insurance. OPIC’s website (opic.gov) does not have a database of clients, but the site does archive press releases and annual reports that list companies receiving OPIC aid.
Some companies are recipients of farm subsidies offered through the U.S. Department of Agriculture. A database of recipients of such subsidies has been compiled by the Environmental Working Group (ewg.org/issues/siteindex/issues.php?issueid=5015).

Cities and states offer subsidies to companies to induce them to move their headquarters or locate a factory or other facility in a given jurisdiction. There is no central database of these handouts; in fact, only a small number of states have laws requiring that economic development subsidies be disclosed. The public may learn about the subsidies only when politicians in the community that won the contest brag to the media about how they lured a new job-creating facility. Unions or community groups that want to know the details of the subsidies often have to file a freedom of information request—and even then may be denied the documents on the grounds that they contain proprietary information.

The one area in which better disclosure exists is in connection with Industrial Development Bonds (also known as Industrial Revenue Bonds). State and local governments issue these IDBs on behalf of manufacturing companies to help finance new factories or other facilities. The company is responsible for payments to bondholders, but the interest on IDBs is exempt from federal (and often state) income tax. For this reason, the bonds can offer significantly lower interest rates than regular corporate bonds, which makes the bonds an appealing source of low-cost financing. For more on tax-exempt bonds, see a website called Public Bonds (publicbonds.org).

When IDBs are offered to the public, the company has to prepare a prospectus known as an Official Statement. The OS will contain information about the planned facility and the company itself, which may include financial data about privately held as well as public companies. Because private companies generally do not want to reveal much about their finances, they will often take advantage of a loophole in the law that allows IDB issuers that have a bank letter of credit to forgo financial disclosure.

Getting access to Official Statements is more difficult than obtaining SEC filings. They are distributed mainly through private document retrieval services that are not required to post them on the free web. However, there is a service called Munistatements (munistatements.com) that allows you to search an OS database and display the cover page for free. Downloading complete Official Statements, which sometimes run over 100 pages, costs about $25 each. Official Statements and other documents relating to tax-exempt bonds can also be obtained from DPC Data (dpcdata.com).

Articles and resources

Associate Managing Editor's note: This article is based on The Corporate Research Project with the permission of Philip Mattera, the project's director.

Sources

External resources

Good Jobs First: Offers a variety of information on economic development subsidies and a research guide on the subject.

External articles