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Doing the right thing

Not so many years ago, social and ethical auditing were notions associated with organisations seen as idealistic. As long as such matters were confined to mavericks like the Body Shop and Ben & Jerry's Ice Cream, there was not much danger of their becoming part of the mainstream.

After all, the likes of Shell and Hewlett-Packard had espoused "values" for years and, while they claimed such cultures worked for them, there was not much sign of many rivals following suit.

Increasingly, though, business ethics is moving out of the shadows. Companies like Shell - which had an uncomfortable ride over its involvement in Nigeria and Brent Spar - and HP set out to raise what many perceived to be high standards and others began to see a business case in taking a principled stand. The Co-operative Bank, for example, claims that its ethical lending policy has played a key part in raising its profile and increasing its success.

It is perhaps surprising that the Co-op Bank's sister company, Co- operative Insurance Services, has not seen the opportunities for taking this kind of approach in its own area of financial services sooner. Announcing last week that it was launching a social and ethical audit, the organisation acknowledged that the pensions mis-selling scandal, in particular, suggested that all had not been right with the business sector's principles.

Though CIS has long adhered to the principles of community and social inclusiveness associated with the co-operative movement, it sees an opportunity to differentiate itself in a market that Martin Clarke, a marketing manager, describes as "characterised by arrogance and complacency".

He and his colleagues believe that by asking the organisation's 2.5 million customers what is important to them, they are approaching the area with "a bit more humility" and not presupposing that they always know what is best.

Of course, the nay-sayers always like to point out how companies that take this approach are not immune from the vicissitudes of business. Body Shop's recent problems have been well-documented and Levi-Strauss, another company noted for its attempt to push values up the agenda, was recently dissected in a critical Fortune article. But, then, conventionally- run companies do not always find it plain-sailing, either.

This new environment is well explored in Peter Schwartz and Blair Gibb's book When Good Companies Do Bad Things (John Wiley, pounds 19.50). But, as the title suggests, values do not guarantee a smooth ride.

"When companies have not examined their operations from a long-term perspective in a social context, they are much more vulnerable [to do bad things]," they write.

And they go on to propose that bringing this perspective to strategy development and operational planning will lead to social responsibility being looked at in a different way - and create many opportunities for turning the issue into what they call a "distinctive competency".