What a difference a new decade makes. In the 1980s, employees of advertising agency J. Walter Thompson attended office Christmas parties at such trendy locations as New York’s Palladium night club. This year they worked in soup kitchens, renovated low-income housing and wrapped Christmas presents for hospital patients instead. Throughout the last decade, The Sharper Image traded on its reputation as a purveyor of $5,000 tanning beds and other Yuppie playthings. This year, it’s selling “The Recycler’s Handbook” and touting its use of popcorn, which is biodegradable, for packing. In the My Decade, Procter & Gamble’s Ivory soap commercials emphasized the cleansing properties of its product. In a recent campaign, it features heart-rending scenes of a young gymnast with Down syndrome training for the Special Olympics.

Heard about “political correctness” on campus? Now the concept is flooding the boardroom as well. Faced with mounting pressure from consumers and watchdog groups, businesses are scrambling to do the right thing–in areas ranging from homelessness and poverty to ethical investing and family-leave benefits. They’re revamping product lines, re-evaluating their investments, setting up child-care centers, offering tutorials to the underprivileged, even pushing world peace. Last week a coalition of nine American companies bought a fullpage ad in The New York Times urging President Bush to avert a war with Iraq. Businesses are finding that selfless deeds can enhance their image–and increase their profits. But in the rush to cash in, some are merely paying lip service to do-goodism. “No one wants to be seen as a socially irresponsible company,” says Bob Rosen, a partner in the Washington, D.C., consulting firm Healthy Companies, Inc. “[So] there’s a gap–sometimes a large one–between rhetoric and reality.”

Studies have shown that the public is paying ever-closer attention to corporate behavior. A recent Roper poll of 1,496 U.S. consumers found that 52 percent said they would pay 10 percent more for a so-called socially responsible product and 67 percent said they are concerned about a company’s social performance when they shop. It was an outcry from consumers, for example, that recently forced McDonald’s switch from polystyrene containers to paper ones. “It’s amazing how many shareholders are saying, look, I can always walk. I can sell my stock,” says business professor Mark Albion, an expert on the social-responsibility movement.

Consumer watchdog groups are putting the heat on business, too. The Council on Economic Priorities rates companies on their corporate citizenship records; the results are published annually in a paperback (the 1991 edition is due out this week) that has sold 800,000 copies. Last year recipients of its Corporate Conscience Awards included AT&T, for its program to stop using ozone-depleting chlorofluorocarbons, and U S West for its employee support groups for gays, minorities and veterans (box). Among its dishonorable mentions was USX, which has been charged with discriminating against some 6,000 black applicants. (The company plans an appeal to the U.S. Supreme Court.)

Some companies get mixed report cards from the stewards of political correctness. IBM wins praise as a promoter of women and minorities–but conducts business with South Africa. Even Ben & Jerry’s, long a pacesetter in the social-responsibility movement, does not get perfect marks. While it builds plants in areas of high unemployment, uses suppliers who train homeless people and helps preserve the rain forests, it draws criticism for what some believe is a socially unacceptable product–high-fat ice cream.

A number of ventures have sprung up to help companies conform to the new standards. About 230 companies and investors have joined the social Venture Network, a group of entrepreneurs dedicated to running for-profit, socially responsible businesses. In Chicago entrepreneur Susan Davis recently created Capital Missions Co., the first consulting firm specializing in moneymaking social ventures. The movement has gotten its own magazine. Business Ethics, launched four years ago as a newsletter, has grown into a full-size bimonthly. Among its nearly 10,000 subscribers: Dow, Exxon and USX. And earlier this year, the research firm Kinder, Lydenberg, Domini & Co. introduced the Domini Social Index (DSI), a common-stock index of 400 U.S. companies that have passed stringent social screening.

To bolster their images as corporate good guys, companies are conjuring up new products–and repositioning old ones. Though dishwashing detergent rarely pops to mind as a symbol of do-goodism, it is turning out that way for Procter & Gamble. Rescuers used its Dawn detergent to clean off animals caught in the Alaskan oil spill. P&G immediately found itself basking in media attention and answering calls from admiring customers. It created a training video that explains how to use the detergent to clean birds and otters. Some players in the recording industry are also winning points. As the leader of an industry “Ban the Box” movement, Robert Simonds, president of Rykodisc record company, recently adopted a smaller, more ecologically acceptable alternative to cardboard-heavy compact disc boxes. The small shrink-wrapped package is being used by artists such as Peter Gabriel.

Will the social responsibility movement pay off for corporate America? Not necessarily, says Robert Dewar, professor of organizational behavior at Northwestern University. Companies whose words speak louder than their actions can expect to reap little from their efforts, he says. While Monsanto touts its work in wildlife preservation, it has come under fire for opposing California’s Big Green initiative and incurring fines from the Environmental Protection Agency. And even the most socially conscious companies may not be able to offset the effects of recession. “I don’t know that being socially responsible gives you a leg up in hard times,” he says.

Yet strong evidence exists that consumers are willing to put their money where their consciences are. The Body Shop, a British-based cosmetics firm, has built its reputation by eschewing animal testing and avoiding hyped beauty claims. (Sales during the past decade have grown an average of 50 percent a year, to $143 million in fiscal 1990.) Loblaws, a Canadian grocery chain, reports it sees a 10 to 60 percent increase in sales of products after they are labeled with the company’s environmental seal. Ethical mutual funds are also paying off. In a test that compared the return of DSI-listed companies and the S&P500 from 1986 to 1990, the DSI’s total return was 80 percent, almost identical to the S&P’s. Josh Mailman, chairman of the Social Ventures Network, expects ethics and corporate citizenship to become even more important to the bottom line in the next decade. “The companies that don’t stand behind those values are going to be left in the dust,” he says. For corporate America, the 1980’s “greed is good” ethos may soon prove as passe as a Christmas bash at the Palladium.

Socially responsible companies got stars from the Council on Economic Priorities. Other corporations with less than stellar records received dishonorable mentions.

For its affirmative-action, profit-sharing and child-care-leave practices.

For allowing employees with three years of service to take a leave with full pay to do community work.

Gets high marks for giving 5 percent of its domestic pretax profits to charity.

For its unsafe facilities and for allegedly firing workers with job-related injuries.

Recently settled federal charges for workplace health and safety violations, paying $3.3 million in fines.

For its poor handling of the 1989 Alaskan oil spill and for the explosion of an oil pipe near Staten Island.

SOURCE: COUNCIL ON ECONOMIC PRIORITIES