The Co-op's investment arm sold shares in six major companies last year after boardroom concerns, it said today.
Co-operative Investments - part of the Manchester-based group's insurance division - withdrew its backing "following concerted but fruitless engagement" with the companies.
The investment division sold its entire stake in online clothing retailer N Brown, fashion chain French Connection, publishing firm Euromoney Institutional Investor and Sir Alan Sugar's Amstrad business, which is now owned by BSkyB.
The Co-op's investment process weighs up environmental, social and governance issues - so-called "ESG factors" as well as financial analysis.
When firms consistently refuse to examine risks highlighted by the Co-op's fund managers, it places them on an exclusion list and sells its stake. It said the four firms placed on the list underperformed the stock market after the sale of its holding.
The policy also saw it sell shares in FTSE 100 Index firms Royal Bank of Scotland, and cruise ship operator Carnival, although it upped holdings in mobile phone giant Vodafone and power company Scottish & Southern Energy after a higher ESG assessment.
The Co-op says its ethically-guided investments have increased better returns for customers, with its range of unit trusts outperforming their peers for the last three years.
Director of investments Paul Sharman said: "We believe that considering ESG issues alongside financial analysis throughout our entire investment process leads to a more robust, informed view of a company and ultimately to superior investment decision-making."
The Co-op's insurance division has around £19 billion of assets under management. It forms part of Co-operative Financial Services (CFS), alongside the Co-operative bank and Smile internet bank.
Profits at the CFS business by fell by more than half to £38 million in the 28 weeks to July 28 after the flooding across the Midlands and the North in June and July last year.