When Transparency Becomes Counterproductive

Attending a customer’s sustainability stakeholder meeting; considering stakeholder input for BT’s sustainability report for next year; looking at reports from analysts, at rankings and at indices….I sense an overemphasis on data points in the name of transparency.

Many indices and rankings compete on who has the most data points. Do you have a climate change policy? yes=1, no=0.  What if I have a policy but my policy is that climate change is not man-made, how are you going to score that?

Lets add an additional data point to make our study more comprehensive.  Do you have a policy on whaling? yes=1, no=0. Tempting for the company to develop a policy so they can say yes and get another point in the index. But my company is in the ICT sector.  Policy on whaling is an important issue for the world but it is not material to my sector, so my position has no value anyway.  And spending time on a non material policy diverts resources from something important.

Of course these examples are exaggerated, but I think they illustrate a real issue companies are facing.

Transparency is an important component of corporate responsibility, but so are materiality and sustainability and ethics. Where the urge to meet a numerical target for transparency supersedes materiality I think we have greenwash, or whitewash.  Provide enough data and you can hide the real issues in a sheen of apparent goodness.

A good corporate responsibility report should always start with a discussion of materiality. Dilemmas should be openly articulated. And only then, when priorities and objectives have been established should data be addressed for material issues. A good corporate responsibility report should be judged first and foremost by its attention to materiality, not by the extent of its data.

Furthermore, the general public, in my view, is not that interested in data. Experts of course want and need data, but the general public wants narrative and passion, anecdotes and values.

I think that the corporate responsibility world would be best served by putting all the data on-line so the right people can explore the pieces that interest them.  In parallel we should produce attractive, accessible booklets that illustrate the real dilemmas our businesses face and articulate how we go about resolving them.

  1. Comments 3

  2. Ladan Manteghi 8:29 am on September 17, 2010

    Your assertion that transparency can be counterproductive I believe is slightly misconstrued. If your intention is to be open with your customers and other stakeholders about your operations, then you should address those points that align with your business vertical and good business practices first and foremost. Being in the communications sector, I could care less about your whaling practices. However, I would care about how you are addressing important social, consumer, and business practices through your products and services in a way that makes me feel better about doing business with you. As a consumer, how are you addressing potentially hidden fees and making your statements easily understandable? As a shareholder, how are you managing the business ethically with stronger consumer confidence and good business practices that will ensure shares don't plummet due to a hidden objective? Don't make your CSR PR window dressing. But as tempting as it may be, don't be driven by the ranking systems either. Many focus purely on green concerns, which are important but not the most important factor for a responsible business. Act responsibly first and foremost in your vertical and differentiate yourself there.

  3. KevinMoss 8:48 am on September 17, 2010

    Ladan, thanks you for your comment. I think we are in close alignment. My concern from sitting in various CSR and sustainability fora is that the opposite is happening. Various organizations produce reports claiming to identify the most sustainable companies. Some compete for prominence based on their analysis covering the most data points and so end up covering data that is of limited materiality. This can drive us in the wrong direction.

  4. Ladan Manteghi 11:01 am on September 20, 2010

    Agree about driving in wrong direction. I'd really like to see a shift in CR/CSR/Sustainability evaluation, a real paradigm shift with much greater emphasis on good and innovative practice within verticals. Perhaps if a group of global corps create a coalition along with some influential stakeholder groups and approach a reputable institution/think tank to create a new lens for evaluation, then something can be done. OECD? World Econ Forum? DG Enterprise with Euro Commission for an EU level approach? Clinton Global Initiative? Other? This is the viewpoint for which I have a rather strong conviction. If I can be helpful, please let me know.

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