Let the light shine in

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Eye from Albany
ESR January2002 column

Let the light shine in
by Paul M. Bray

An emerging trend worthy our attention is the growing transparency of business. It can be a force for much greater corporate environmental and social performance.

The notion of corporate transparency runs against the grain. Secrecy and confidentiality have been the order of the day for competitive businesses. Corporations invest huge amounts of money in corporate intelligence activities or monitoring their competitor’s and, as they did in the tobacco industry, covering up negative product or other societal impacts.

Times are changing for businesses. In the post-Bhopal world, the public or those advancing the “public interest” are increasing demanding the right to know what business is doing. As a result we have disclosure laws like the Toxic Release Inventory (“TRI”).

Laws are not the only source of pressure on businesses to report on their environmental and social performance. The Global Reporting Initiative with guidelines published on the web is one of a growing number of public reporting protocols that has corporate managers complaining of “survey fatigue”.

Pressure is coming from public interest groups, local and national governments and shareholders. States like Connecticut encourage business reporting by offering regulatory incentives. Financial reporting firms like Innovest and the Investor Responsibility Research Center are telling the investment community that there is a real link between good environmental and stock market performance.

Initially, the larger corporations like Ford feel compelled to do public reporting and they spread the compulsion down the food chain to their suppliers.

Technology is also a driving force for greater corporate transparency. Albany NanoTech located at the University at Albany is the vanguard of efforts to allow the commercialization of advanced sensor-on-a-chip systems that will allow, for example, cost effective monitoring of ground water quality. It would replace costly manual water sampling with real time chemical analysis of all wells.

A New York Times article pointed out the focus on air pollution “…is on what people are actually breathe-walking around, working, exercising, living their lives-rather than on what is measured on high-rise rooftops”. We aren’t far from the day when we may wear a button that can be downloaded each day with a record of the pollutants to which we were exposed. Needless to say businesses are going to have to be much more careful about what they put out into the environment.

Consumers are also beginning to demand to know more about the company behind the product including how the product is manufactured. Questions are being asked about factory conditions in off shore factories. An internet company, Viatru, is providing “visible commerce” to enable customers to identify products made in a sustainable way. Customers can find on www.responsibleshopper.org website rating of corporations regarding workplace, environment and disclosure.

Business transparency works for the corporation as well as the public. Reputation is often a businesses’ most valued asset and it is built on trust. Transparency is a building block for that trust.

Yet, despite all these drivers and rationales for business transparency, we have a long way to go to reach a transparent business utopia. Disclosure or reporting itself can be a cover up when it is wrapped in a flood of technical information or comes with glossy photographs of the corporation’s latest effort to save a cute little critter. Corporate reports are not always easily intelligible by the public at large let alone to public decision makers.

There is still much resistance on the part of corporate managers to openness. The knee jerk corporate response is to retreat to secrecy whenever the light of possible exposure falls and there is too often a disconnect between what is reported and internal business processes.

Business transparency does not appear to be very advanced in New York State. This can be attributable in part to the drag of the past deeds like the many hazardous waste sites and perhaps other liabilities that have yet to be settled. Here the priority for many businesses is to contain their liability and public exposure is clearly of no help in this regard.

Yet, in going forward transparency and all that goes with like better environmental and social performance are critical to the State’s future economic competitiveness. From this perspective it makes allot of sense for the public sector to fashion both carrots and sticks to foster business transparency.

The Toxic Reporting Initiative was a Congressional stick that most acknowledge had a significant effect of toxic pollution prevention. New York should build on this kind of reporting requirement to have, for example, a required material accounting process found in New Jersey.

Even more valuable would be efforts by the State through incentives for disclosure and setting measures for corporate environmental performance and sustainability that will let the consumer make intelligent choices. The public and private sectors in New York need to make the change from looking back to going forward. When we see more indications of business transparency in New York, we will know we are on the way forward to a healthier and cleaner State.

Paul M. Bray is President of P.M.Bray LLC, a planning and environmental law firm in Albany. His e-mail address is pmbray@aol.com.