Finance: How companies can give themselves a moral flavour

These days it is not enough just to get the financials right. Any organisation looking to make a splash in the world must also pay attention to other, more nebulous social and ethical issues. Roger Trapp reports.

Some organisations - such as the US ice-cream maker Ben & Jerry's Homemade, and in the UK the Body Shop - have made some effort to measure their performance against such yardsticks as effect on the environment and the general community in which they operate. Other, more mainstream companies - such as Marks & Spencer, and the US electronics and computer concern Hewlett-Packard - have long known that behaving ethically is integral to their business success.

Others are finding this a difficult world in which to operate. But now some help is at hand. Building Corporate Accountability: Emerging Practices in Social and Ethical Accounting, Auditing and Reporting, provides a guide to what leading organisations are doing in the field, as well as putting the whole concept into context.

The editors - Simon Zadek of the New Economics Foundation, Peter Pruzan of Copenhagen Business School and Richard Evans of Traidcraft Exchange - all have great experience of this area, and have commissioned other experts to look at an increasingly important subject.

A sign of the growing value attached to it is the appearance in recent years of initiatives such as the "Tomorrow's Company" campaign to get consideration of "stakeholders other than shareholders into boardrooms. Companies ranging in size from the information technology training company Happy Computer, to BT, are increasingly willing to subject themselves to social as well as financial audits.

Anybody who does not think that companies have to be alive to this trend need only look at Shell, and the episode of the Brent Spar oil platform. Shell is not a badly managed company and - at least until recent events in Nigeria and the Brent Spar affair - had even acquired a reputation for good relations with the communities in which it worked. But it suddenly found itself out of step with public opinion.

As one manager is reported to have said: "We have learnt a serious lesson, and one that may cost the company a great deal for many years to come. We have learnt that we must take the views of the public into account, even where they have been influenced by single-issue organisations to the point where they are thinking and behaving entirely irrationally".

`Building Corporate Accountability' is published by Earthscan, price pounds 15.95.