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A seal of approval for companies' social progress

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Since hiring an outside auditor can cost upwards of $100,000, companies spending the money to win credibility will want the world to know, observers say. Prominently placed on its corporate social responsibility (CSR) report will be the name of the auditing organization. What's not so obvious, however, is that some audits may be more trustworthy than others.

"You've got a whole set of commercial suppliers that are out there [getting into social auditing] but it's very easy for them, frankly, to get hoodwinked by suppliers in developing countries," says Conrad MacKerron, director of corporate social responsibility for the As You Sow Foundation in San Francisco. Because it can be easy for factory managers to steer auditors away from problem areas, he says, the best audits might be those from organizations with a history of digging deep to bring trouble spots to light. "If they're not going the extra mile to talk to workers in a safe spot," Mr. MacKerron asks, "are they going to be able to find problems that were missed" by internal reviews?

Among the most sought-after names in social auditing are nongovernmental organizations (NGOs) with international reputations, according to Jeff Erikson, Washington director of SustainAbility, a consultancy in London that helps firms prepare CSR reports. Reviews done by advocacy groups like Amnesty International, Greenpeace, and others would carry far more weight, Erikson says, than those done by groups with close ties to industry, for instance.

When the auditor's name is not a household word, diligent inquisitors might send off an e-mail to the investor-relations department asking who accredited the independent monitors. If CSR reports are reviewed against the AA1000 standard from AccountAbility, for instance, then the benchmark is the same one used by more than 100 firms, including British Airways, Toyota, and Canon.

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