Whenever corporations, NGOs, and academics mix in one milieu, buzzwords seem to multiply like mosquitoes after a spring rain. They can be just as irritating if you’re not prepared. So let’s slather on some Sustaina-Buzz and avoid the bites.
Today’s buzzword: transparency.
The metaphor is easy to understand: anything transparent allows you to see through it to what’s on the other side, or on the inside of something. Anything opaque keeps you from seeing.
In the corporate world, “transparency” refers to what corporations tell us about themselves. If they are publicly traded, and therefore regulated, they are required to tell us a lot about their financial performance. Unfortunately, they’re not required to disclose much else.
All that other stuff is called “externalities.” Externalities include extracting minerals from the earth in ways that erode and degrade the environment; making products that can’t be recycled; and using child labor in order to sell t-shirts for under $10.
The term “externality” is an example of itself, because it pretends that these things are “external” to the company’s business. They are not external. They are part and parcel of the ten-dollar t-shirt, the $100 notebook computer, and a million other things we buy and throw away.
This is why sustainability reporting is so important.
Sustainability reporting allows us to see into a business and evaluate its externalities. One of the biggest externalities is greenhouse gas emissions. Every business has some, and the good sustainability reporters disclose them honestly and completely.,
That means they are being transparent about their greenhouse gas emissions. They can also be transparent about how they treat workers, how they protect biodiversity, how they give back (or not) to their communities, and many other topics that affect the planet.
The tricky thing about transparency is that involves language, which is slippery. People can use words to seem transparent when they are really being opaque.
We recently got a great example of this when a U.S. Congressional report printed language from emails sent to management by Bruno Michel Iskil, the “London Whale” at the heart of the J.P. Morgan derivative disaster in London last year. The report called his language “nonsense,” but don’t be fooled. Mr. Iskil’s language was intentionally opaque, to keep his minders from seeing the risks he was running.
Corporations can do the same thing in their sustainability reporting, and that’s why the Global Reporting Initiative (a.k.a. “GRI”) is so important. It sets out a list of topics for companies to report about, and lets companies self-select what they reveal and what they don’t.
It’s the same with the Greenhouse Gas Protocol (which we’ll get to in a later entry). It establishes a systematic way to report about greenhouse gases, and companies self-select how far they go. If they go all the way, that says a lot about how well managed they are, how committed to the environment they are, and more. If they choose not to reveal anything, that also says a lot.
It should also bring them consequences sooner or later.
For one thing, if a company doesn’t report according to GRI or the Greenhouse Gas Protocol, we can be pretty sure any nice words it uses about “corporate responsibility” are bogus. There are now external standards for corporate responsibility, and they include transparency right at the top of the list.
In other words, companies that are not transparent are not being responsible (even to their own shareholders), so anything they say about being sustainable has to be in doubt.
If companies want to be transparent, there are ways they can prove it, by providing the information that society has defined as the basic minimum for sustainability reporting. If they choose to remain opaque, we can vote with our dollars for the other guys.
Image: IWANT
