Most of us are conflicted about corporations. We like brands but are uneasy about marketing hype. We love small-store Main Street but shop at Wal-Mart. We condemn excessive profits but cheer when our stock portfolio goes up. We denounce sweatshops but buy the cheapest running shoes. We’re happy when companies give us one-on-one attention, but we’re concerned about our privacy.

Despite these mixed and often contradictory signals, a clear path for corporate success has emerged in recent years. Increasingly, to do well, a company should do good. This month’s cover story looks at the worthy projects and causes that companies in the beauty and fashion industries champion to buff their images and boost their sales. The good news: This type of conscientious behaviour isn’t confined to beauty and fashion companies. Corporations in all sectors realize they need more than just a good product at a good price if they want to win the wallets and hearts of consumers.

I attribute this attitude to transparency. Thanks to information technology, companies now face unprecedented scrutiny, not just by consumers but by their employees, shareholders, business partners and society in general. These groups can now look deeply into the performance, management, operations and values of corporations. And if these people don’t like what they see, they’ll take their business – and their trust – elsewhere.

For example, savvy customers now flock to on-line sites where they debate the true worth of products and services. Companies use intranets to keep employees informed, and employees use e-mail to take their water cooler gossip global. To collaborate effectively, companies and their business partners have no choice but to share company secrets that were once fiercely guarded. Powerful institutional investors such as pension funds now own most of the stock market, and a growing number feel duty bound to second-guess management if corporate performance is below their expectations. And in a world of instant communications, whistle-blowers, inquisitive media and Web news sites, citizens and communities routinely put firms under the microscope.

My message to companies everywhere is straightforward: Since you’re going to be naked, you better be buff. To successfully withstand such non-stop scrutiny from every direction, companies need to have integrity as part of their corporate DNA. Nothing enhances a company’s financial worth more than good ethical values.

Different firms articulate this sentiment in different ways. Recently in Fortune magazine, General Electric chairman and CEO Jeffrey Immelt said he wants virtue to be the number one driver of his company’s success. “The reason people come to work for GE is that they want to be about something that is bigger than themselves. People want to work hard, they want to get promoted, they want stock options. But they also want to work for a company that makes a difference, a company that’s doing great things in the world.”

The U.S. clothing retailer Gap recently released a report detailing incidents of child labour and health and safety violations in offshore sweatshops run by the company’s suppliers. Gap has made great strides in cleaning up its supply chain. Nevertheless, the company’s president said he felt “compelled” to publicize the recent infractions because “we cannot expect others to move forward, to expect systemic change, if we don’t get to the root cause, to be transparent about the challenges.”

A growing number of North American companies, particularly those doing business in Europe, have adopted so-called triple bottom line reporting. In addition to financial reports, they also evaluate their social and environmental performance. Social issues could include treatment of minorities and workforce matters, while environmental reporting would include the company’s impact on air and water quality and initiatives to save energy or promote recycling.

So how to account for companies such as Enron, WorldCom and Hollinger? They are the last gasps of a former era. Because of transparency, the corporation is becoming an institution rooted in sound values and integrity. Corporate citizenship is coming from the margins into the mainstream, and business integrity is on the rise.

I developed this view two years ago when David Ticoll and I wrote The Naked Corporation: How the Age of Transparency Will Revolutionize Business. This was in the wake of the NASDAQ free fall, duplicitous behaviour by Wall Street advisors and a seemingly endless parade of financial restatements by many respected firms. Some readers told me they doubted the book’s optimistic outlook.

But slowly and surely, a new picture of the corporation is emerging, with new-style leaders like Dov Charney from American Apparel providing real-life examples. [ ]

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Don Tapscott’s portal is www.ageoftransparency.com.