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It was a curious scene, and a landmark occasion. Behind the cool sandstone façade of the Commonwealth Bank headquarters in Sydney's Martin Place sat 200 business leaders from around Australia. Chief executives, bankers, brokers, management consultants, investment advisers, fund managers.

They had set aside three precious hours of a Monday morning last month to hear not about mergers or market reforms, capital flows or shareholder movements, but - dare one say it - about bringing "wisdom" and "compassion" to business.

On the stage sat the beaming Buddhist master himself, Sogyal Rinpoche, author of the international bestseller The Tibetan Book of Living and Dying. This was his first face-to-face meeting with the corporate world. He seemed pleasantly surprised.

"I was told I needed to understand the language (of business) and I got a bit worried," he told them, chuckling to himself. "But then I thought, `what the hell' or `what the heaven. Just be true to yourself.'" Chuckle, chuckle.

Sogyal Rinpoche laughed a lot during his seminar, even though he was probably unaware of the irony of what he was saying, and where he was saying it. After all this was the dark realm of the capitalist state he'd entered into, a place which in the Australian public's view has come to symbolise the worst excesses of the new economy - billion dollar profits, huge salary increases for senior executives, branch closures, layoffs by the thousands, escalating fees, declining services.

"All the happiness in the world," he told them, "comes from thinking of others. All the suffering in the world comes from thinking about oneself … (so) the criteria for being the best should not be motivated by how much profit you make, but what benefit you bring." Chuckle, chuckle.

So how had it come to this? How had a laughing lama found himself inside one of the Big Four banks in the first place, and what, if anything, was its significance?

The answer is both straightforward and more oblique. Firstly, the Tibetan organisation, Rigpa, had wanted a place where business leaders might feel comfortable listening to an authentic Tibetan master speak. Sue Hawke, the former prime minister's daughter and a member of Rigpa, was one of a number of Sogyal Rinpoche's students who felt a growing dissonance between people's core values and the values of business.

Being married to Jan Pieters, a middle manager at the CBA, she decided to try and do something about it. Pieters suggested to his superiors that the bank provide a space for Sogyal Rinpoche to air his views. After some intitial hesitation, the bank offered an auditorium normally reserved for bank training. Buddhism had finally come to the Bank.

Two days later, Rinpoche was at the Australian Graduate School of Management addressing business leaders of the future on the subject of "values-based leadership." He was there at the invitation of the dean of the school, Professor Michael Vitale, and the urging of one of Australia's leading management consultants, Ian Buchanan.

"Values and profits are not incompatible. They are interdependent" - Ian Buchanan, Management Consultant.

Buchanan is one of the dynamic faces of Booz Allen and Hamilton, probably the world's largest management and technology consultancy.

In the past 30 years Buchanan has worked for the World Bank, run his own research institute in the United States, advised CEOs around the world, sat on advisory boards with companies like General Electric, written speeches for heads of state and conducted leadership studies in conjunction with the World Economic Forum.

He has also spent years studying Buddhism and practising meditation and while not calling himself a Buddhist, believes its values best satisfy his requirement for a spiritual belief system. "Rinpoche talks about compassion underlying competition," he told the Bulletin, "and if I look at the firms I respect and are the most highly successful, they are led by people who are focused on being the best they can be, rather than beating or screwing the other guy.

"The firms that win consistently are the ones that put those values forward. And that is the fundamental paradigm shift that is taking place … Values and profits are not incompatiable. They are, in fact, interdependent."

Buchanan said recent interviews he had conducted with business school graduates confirmed this view. "Every single student asked me about our values and culture .. and whether we would let them live their values (if they joined the company.)

"Their values were about giving something back to the community, and giving it back more effectively. They were also about ways of working which would allow them to also honour their family commitments … Not one person asked me about our profits or their compensation."

Over at McKinsey & Company, a major competitor to Booz Allen, Michael Rennie says that while most companies are still caught up in best practises culture, some are belatedly realising the most effective way of building competitive advantage is by giving primacy to the intangible assets, ie people, relationships, human capital.

"People's consciousness is shifting," says Rennie. "In economic terms, the ego has become a diseconomy. It has become a huge transaction cost." There is now a clamour, he says, amongs the best and brightest to work for organisations which care for them as "a whole person" and allow them to bring their highest values into the workplace.

Rennie cites Richard Barrett's Liberating the Corporate Soul as the bible for the new wave of thinking in business. Barrett was the "values co-ordinator" at the World Bank and organised in 1995 the Bank's first International Conference on Ethics, Spiritual Values and Sustainable Development.

In his landmark book, he wrote that many of the companies that embraced the corporate re-engineering of the 1980s and '90s were now scrambling for ways to rebuild their organisations's torn social fabric. No longer was it enough for them to focus purely on profit and growth. They now had to embrace the "common good."

"What has been labelled the `soft stuff' by diehard scientific management theorists is about to become the next arena for corporate change," Barrett wrote. "In the next century, the soft stuff will join ranks with the hard stuff in management theories.

"Successful organisations in the twenty-first century will have cultures very different from those of the twentieth century. They will pursue a broad range of goals that support the physical, mental, emotional and spiritual health of their employees."

***

It is easy, of course, to be cynical. On the day Sogyal Rinpoche was bringing his message of values-based leadership to corporate Australia, the newspapers were alive with examples of organisations and prominent individuals failing to meet basic standards of ethical behaviour: Bankrupt lawyers with unpaid tax bills; universities bedevilled by allegations of mark tampering and falling standards; questionable operating practices and poor staff morale within Ansett Airlines; a major Sydney hospital allegedly failing to meet duty of care requirements …. And that was just at the local level.

Around the world hundreds of millions of people have barely enough food to survive. Hundreds of millions of others work in sweatshop conditions. Rivers and estuaries are filled with toxic effluent. Fish, mammal and bird species are being made extinct every day as food chains and ecosystems are destroyed. And the United States, the world's biggest emitter of greenhouse gases, has decided - in deference to corporate America - to abandon its international commitment to combatting global warming.

Meanwhile global corporations become richer and more powerful by the hour. Of the world's 100 largest economies, 51 are corporations, 49 are nations. The economy of Mitsubishi is larger than Indonesia's, the fourth most populous nation on earth.

"The lack of accountability in the world of business has reached pandemic proportions," says Richard Barrett. "The physical environment has deteriorated to such an extent that life on the planet is threatened. Mass poverty is undermining the social stability of many countries, and millions of young adults are giving up hope of having a meaningful future."

In 1995, Willis Harman, co-founder of the World Business Academy, told a World Bank conference that the key to change lay in the corporate ethic. "It is the values embedded in the institutions of business and finance that are the problem," he said.

"People feel a discrepancy between what they know in their hearts is right and what they feel forced to do to support their organisation's values and goals."

As a result, many people - including business leaders - are now beginning to recognise that rampant economic activity doesn't necessarily deliver food and shelter to the majority of humankind; in fact - if left unchecked - can actually destroy the natural world. The idea of "What's in it for me?" has become for an increasing number: "What's best for the common good?"

Anita Roddick began asking that question in 1976 when she founded what was then a small skin and hair-care retailer in Brighton, England known as The Body Shop. A quarter of a century later The Body Shop is now regarded as one of the leading international business voices for social and environmental change.

Nothing, it seems, is outside its purview - child labour in Nicaragua, relief drives in Romania, healthcare projects in Brazil, the plight of the Ogoni people in Nigeria, domestic violence in Canada. The company has led the way on animal rights, helping to achieve three years ago a UK-wide ban on animal testing for cosmetic products.

It has challenged the stereotypes of beauty while at the same time forging links with scores of indigenous groups in third-world countries, paying them Western wages for their work on developing new products. In 1999, worldwide retail sales reached nearly A$1.6 billion from 1700 outlets in 49 countries. Profits soared to around A$70 million.

"This is the first time in human history when economic value has superseded every other human value," Roddick has said. "Businesses have become hypnotized by the bottom line and forgotten their moral obligations to civil society."

Murray Hogarth, an employee of Ecos Corporation, a Sydney-based environmental consultancy specialising in sustainable strategies for corporations, agrees with the sentiment but believes the Anita Roddick approach has become outdated.

By contrast he cites the example of the Ford Motor Company under its new chairman, Bill Ford Jr, as a more significant example of a corporate leader meeting the ethical challenges of business in the 21^st century. (Ecos, led by former Greenpeace executive director, Paul Gilding, was last year asked to advise the Ford Corporation on how to incorporate social and environmental sustainability into its global business.)

"Annita Roddick makes niche products which channel money back into indigenous communities and other causes, and that's great," says Hogarth, "but it's not changing the big processes which are the key to the way society lives and consumes. "Bill Ford has said he wants to preside over the end of the internal combustion engine."

According to Hogarth, a former Sydney Morning Herald environment editor, Ford is the perfect example of a leader whose vision can revolutionise not just his company, but society at large.

Bill Ford Jr is the great-grandson of Henry Ford, pioneer of the car-based society, and his aspirations go well beyond practising meditation, vegetarianism and yoga, or installing wood from sustainable forests in his office.

A "greenie" from the age of nine, Ford Jr has said he wants to produce totally recyclable cars which clean the air while they drive and are produced from a new eco-factory complex where birds come to nest. Literally.

"(As) a leader … he's way, way out in front of everybody," one environmental consultant to both Ford and General Motors told the New York Times recently.

Said another: "Ford Motor Company, until recently, was the testbook case of a closed, secretive place - always securing its own narrow interests. But Bill Ford arrived and a whole new attitude began radiating from that company."

****

Bringing ethics to business is hardly new. Even Adam Smith, the father of classical economics, believed that while people almost always acted out of fear, self-interest or both, there was still a need to belong to the group. In other words, there was still a moral dimension to economic life.

There have been countless examples of businesses throughout history which have attempted to take their social responsibilities seriously and - when found wanting - be reminded of those responsibilities by religious groups, committed individuals and later trade union movements and non government organisations.

Since the rapid acceleration of globalisation, however, the divorce between economics and society has become so acute as to challenge the very status of economics as a tool for measuring the material welfare of humankind.

The movement of global capital now impoverishes or enriches societies overnight. Foreign investors and multi-national corporations now override the laws of the countries in which they operate, as was seen in 1998 when the American Ethyl Corporation used NAFTA to force the Canadian Government to reverse its ban on the petrol additive, MMT, which Canada had tried to ban on health grounds.

More alarmingly, the proposed Multilateral Investment Agreement (MIA), if mandated, would render governments powerless if they tried to interfere with capital flows on the grounds of national interest. Meanwhile, governments continue to use measures such as gross domestic product as vital indicators of prosperity and future policy-making, even though they ignore the most vital indicators of a nation's true prosperity - the state of the family, the strength of community and the health of the environment.

"These are vital to our well-being but because their contributions lie outside of the marketplace they simply do not count," say the authors of an Australia Institute discussion paper called, "Tracking Well Being in Australia: The Genuine Progress Indicator."

"Years ago ignoring these realms may have been justified ... but in the (twenty-first) century, these presuppositions have become insupportable. (For example) if a crime wave induces us to spend more on household security and insurance premiums then this expenditure is recorded as a positive contribution to our well-being in GDP. In reality we are only trying to maintain our levels of security in the face of a more threatening world."

"Australian companies are responding to the challenge of behaving ethically" - Simon Longstaff, Director of the St James Ethics Centre.

Simon Longstaff, director the St James Ethics Centre, believes the "lights have finally gone on" and that it no longer matters whether one is economically literate or not. "This is about society," he told the Bulletin. "The politics of this (globalisation) is that it touches people's lives and brings disparate groups together in such a way as to make the economics irrelevent. The world is saying that economics has to be reintegrated to the political and social dimension, and that might just be the saving of economics."

Longstaff recalls a moment at last year's meeeting of the World Economic Forum in Davos when a hall filled with the rich and powerful were shown a film highlighting the alarming gap between the haves and have-nots.

"There were people with their BMWs, eating good food and juxtaposed with that was a homeless child with a distended belly. You could feel people shifting in their seats. You could feel them thinking that this world was an unsupportable one. They might have disagreed on how to address it but they could no longer look away."

George Soros, the billionaire investor, has talked about the threat that unfettered capitalism now poses to an open society. In the US, the respected conservative National Journal has predicted the end of our infatuation with capitalism as "an engine of not only economic but also social progress." Books and articles are now being written about "natural capitalism", "human capitalism", even "socialist capitalism" - all of them responses to the urgent need to find common ground between economics, environment and society.

"This is a hot issue," says Barbara Lepani, director of the Australian Centre for Innovation and International Competitiveness. "Socialism is dead but the planet is still in deep shit, so now people are looking at how the hell we civilise capitalism.

"One of the ways we can do this is by reinterpreting the logic of shareholder value because that's what's driving the current insanity." Another key to success, Lepani says, lies in tripple bottom line reporting - ie making sure that enlightened business leaders find a dynamic balance between the various stakeholders - between their own interests, the interests of the local community, the interests of the environment and the interests of society.

"A new leadership philosophy has to be based on this tripple bottom line accounting," she says. "There has to be a re-defining of what we mean by wealth and value."

And this, of course, is the basis of ethical investments which in America alone now account for an estimated US$1.3 trillion in 183 socially-screened funds. According to James Rose, author of Ethical and Active Shareholding, Australia is probably the least advanced nation in the western world when it comes to ethical investing - a screened investment pool of about A$1 billion, which is less than one per cent of all share investments in managed funds.

Simon Longstaff believes this is because of a mostly hidebound business culture which makes it less able to cope with the complexities of the modern world. "Australian companies are beginning to respond to the challenge of behaving ethically," he says …"but it is made more of a challenge because of an unusually monocultural approach.

"In Europe, for example, you find people with degrees in fine arts and philosophy running a bank. Here they would have degrees in economics and they would be male."

Still, he points to BHP under its new chief executive, Paul Anderson, as a company which had undergone an "extraordinary" cultural transformation in recent years - by opening up debate on its hugely controversial Ok Tedi mine in PNG; by establishing a charter committed to integrity and open communication and by promoting women to senior management positions.

However, for the quality of its product, for its transparent business practices and for the way it treats its employees Longstaff points to Blackmores, the health supplements supplier, as an example of a company with a longstanding commitment to "living its values." (Blackmores has a high percentage of female senior management; a staff liaison committee with a direct line to the top; a subsidised gym and canteen; an anniversary system which celebrates birthdays and periods of long service and, finally, a culture which encourages regular staff donations to charities.)

"Blackmores is not a perfect story," says managing director Darin Walters. "We have our problems like every company, but we definitely try hard. We think that a company can grow, prosper, deliver above shareholder returns and still have a culture which encourages common sense relationships and which values openness, trust and integrity."

****

Ethics, of course, keep changing. What seemed right and proper in the early part of last century may no longer be right at the beginning of this one. Henry Ford paid his workers an unprecedented five dollars a day and gave the world "the freedom machine," the first mass-produced car in history. His great-grandson now wants to help clean up the environmental mess caused by such petrol-guzzling mobility.

Throughout history most large companies have been able to more or less set their own rules. Today, as James Rose points out, traditional corporate practices are being pressured to become more holistic because of the emergence of stakeholders. This is, of course, an acknowledgement that companies of all sizes are better served when they engage not just with their customers, suppliers, shareholders and employees, but also with those groups with whom they have indirect relations - government, unions, media and community interests.

But there is a paradox. On the one hand these new voices place pressure on corporations to integrate their operations with the wider community. On the other hand, the growing power of the shareholder and the obsession with shareholder value sees corporations responding in ways that are intended to give the appearance of change, but which are little more than PR exercises.

"Ethical" investment is the perfect case in point. According to funds manager, Ian Darling, most ethical funds in Australia are marketing ploys. "Most of them are exclusion funds," he says. "They are not holistic. They are not about improving the community. Just saying that you are not involved in tobacco, doesn't make you ethical."

Darling cites two investment groups in Australia which he believes are actually "eating their own cooking" - the Canberra-based Australian Ethical Investments and Hunter Hall Investment Management in Sydney.

"The managers of those businesses genuinely want to improve the community through the way they invest," Darling says.

Chairman of Hunter Hall, Peter Hall, told the Bulletin his company was, in fact, an exclusion fund and that his Canberra competitor, Australian Ethical Investments, ran a far "purer" operation than his own. Nonetheless, he was trying to avoid investing in activities which were "destructive or harmful to people, animals and the environment."

Exploding the myth that principled investment means a lower return, Hunter Hall, in the past eight years, has increased its funds under management from $40 million to $165 million and, according to Assirt ratings, been the best performing of 55 international funds since 1996.

"It is not enough to turn one dollar into two dollars," says Hall, "If we lift our eyes for a minute we are really in the middle of a catastrophe. The economic system is in conflict with the environmental system and that is why ethical investments are the first step towards redressing that."

In the end, of course, it comes down to asking the Socratic question: "What should I do?" For a growing number of corporations it would appear that being ethical and socially responsible is the right thing to do for the bottom line. But according to Longstaff, that is flawed thinking. "If you do it only for the dividend, you won't get the dividend," he says. "The only way it will work is if you do something because you think it is right."

Essentially, that's what Sogyal Rinpoche was talking about last month when he made his first foray into the business world. Motivation is the key and ethics is a way of life, not a strategy. Not only do businesses have wider responsibilites to their communities, they can actually serve as transformative agents for social change. Many, in fact, are doing just that.

"If you are independent you just think of yourself," Rinpoche said. "But if you are interdependent you have no choice but to think of others, because it is connected to your own welfare. It is a win/win situation."

"What you stand for is becoming as important as what you sell" - Richard Barrett, World Bank Values Co-ordinator.

Richard Barrett says much the same thing, only he puts it more portentously: "Civic leaders, community representatives and environmental groups are demanding that businesses stop polluting the air, water and land. At the same time they are asking companies to take a more socially responsible attitude toward downsizing and factory closure or relocation.

"Growing numbers of investors are refusing to buy stocks in companies that behave irresponsibly.  Growing numbers of customers are choosing products that are manufactured by socially responsible companies. And, growing numbers of employees are expressing a preference to build careers in companies that have values-based cultures where they can find meaning and make a difference through their work.

"(So) who you are and what you stand for are becoming just as important as what you sell. Governments and communities are recognising that corporate self-interest is leading to the destruction of the planet's life-support systems and the social fabric of society.

"The era of corporate autocracy is coming to an end. There is too much at stake for it to be otherwise ... In the next century (ie, this century), a company will stand or fall on its values."