There may be no profit in human rights...

...but demands for ethical auditing will not go away, says Jack O'Sullivan
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The Independent Online
Shell is probably one of world's most enlightened multinationals. Its PR people proudly champion a recent award from the Financial Times for "Europe's most respected firm". But that's not the image most people have. The public remembers Shell for trying to dump the Brent Spar oil platform in the north Atlantic. And we know the company still profits from oil production in Nigeria, long after the execution of Ken Saro-Wiwa who accused the company of colluding in the alleged environmental destruction of oil-rich Ogoniland.

Yesterday's row at Shell's AGM just makes matters worse. Shell's top brass fought off demands from a minority of shareholders that its business practices should be examined from now on by outsiders. Such lack of openness leaves a nasty smell - if this company is so clean, how come we can't look inside Planet Shell?

But is all this fair criticism? Last year the company, wounded by criticism, called in Integrity Works, a business ethics consultancy, to help clean itself up. After a year-long study, involving hundreds of senior managers and enough energy to reverse an oil tanker, Shell agreed in a new mission statement to "respect human rights". Each Shell company must now sign a letter annually saying how it will achieve this goal in the local context.

For Shell this is big news, given that business normally leaves morality to the clergy. John Drummond of Integrity Works recalls one manager's shock at his new role. "He said that he sometimes feels like he's in a Western movie. He's just walked into town and someone has given him the sheriff's badge, telling him to round up a posse to catch the bad guys. Then, immediately after the gun fight, they want the star back because they don't trust him with it. In other words, he is getting all sorts of contradictory signals from the public."

Shell seems genuinely serious about morality - just as Labour sounds serious about putting "good" back into Britain's foreign policy. Following Robin Cook's commitment this week to setting a high moral tone for relations with other countries, the worlds of Mammon and Machiavelli are moving in the same direction. But like Mr Cook, the company can't quite understand why we're unimpressed; why, at yesterday's AGM, loud voices called for more.

Business people and politicians still do not see that people have grown so cynical that high-minded principles are no longer enough. We want to know what all this means in practice. Will Robin Cook let his scruples mean the loss of jobs in the arms industry? Answer unclear. Will he take sanctions against companies that use child slave labour? Answer equivocal. Will Shell let outsiders check out whether the company has really been keeping its promises to honour human rights? No. There's the crux of the problem. If you can't prove what you say, people won't trust you.

It is easy to understand why Shell prefers to operate in private. The alternative invites catastrophe. Who could Shell trust to sit in judgement on its operations? Greenpeace, which got its data so wrong over the Brent Spar that it cost Shell millions in lost sales at the petrol pumps? And who is entitled to define human rights, a fluid notion that seems to change according to the culture and country you are in? No company boss wants to find his organisation rated in an ethical league table.

The discerning chief executive need look no further than the experience of the Body Shop to get the jitters. Anita Roddick's company, so careful in its ethical practices, has nonetheless been subject to minute and damaging scrutiny in the media. After that, which company director, aware of his own venality, would let a bunch of do-gooders loose on the company records?

Shell executives know all of this. They take comfort in their oft-repeated mantra that it has taken 500 years to agree the accountancy rules for external financial auditing. It is bound to take a long time to agree upon the ground rules for such modern concepts as "environmental and ethical auditing". Better, then, to wait a while - certainly until those individuals are well into retirement.

But they are mistaken. The world will not wait until ethical auditing has developed into the fine art practised by financial auditors. Next year, the clamour for outside inspection will grow a little louder and unless solid proof is forthcoming, human rights pledges will ring more hollow. Companies such as Shell will have to agree criteria quickly about who will judge them on what. Consumers may be more sophisticated, less easily duped by ill-informed pressure groups. But, after yesterday, the danger remains that when the next scandal breaks, Shell's reputation will still be prey to any organisation - tinpot or reputable - that can steal the headlines.