A seal of approval for companies' social progress

As someone who hunts for ethical firms, Tim Smith pores over hundreds of company social reports about labor conditions and community involvement. But how many does he trust?

Far fewer.

"It's not credible if somebody is monitoring and reporting on themselves," says Mr. Smith, director of socially responsive investing at Walden Asset Management in Boston. "You need to do your own review, but you [also] need an independent monitor who has got integrity and is outside" the company.

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