Category Archives: Commentary

Why the World Needs More Corporate Transparency

There are powerful social, environmental and economic implications associated with transparency. Corporations are not the only ones that should be concerned about transparency; governments, employees, consumers and the whole of civil society all have a stake. Transparency is about open access to an organization’s activities and this has implications for everything from climate change to the bottom line.

Starbuck’s CEO Howard Schultz effectively communicated the importance of transparency when he said:

“I think the currency of leadership is transparency. You’ve got to be truthful. I don’t think you should be vulnerable every day, but there are moments where you’ve got to share your soul and conscience with people and show them who you are, and not be afraid of it.”

Megatrend

Transparency is a trend that has been gaining momentum in recent years and in 2016 it has emerged as a critical success factor. Corporate disclosure is a key component of sustainability and a salient element in B Corporations. Transparency is imperative that is now being integrated into university curriculums.

As explained by Dr. Chet Chaffee, the Director of Sustainability at FirstCarbon Solutions:

“Many leading global companies today are embracing sustainability practices as they understand that this method is not simply a reporting exercise; they realize that full and transparent disclosure to all stakeholders is crucial for success.”

As reviewed in an Economist article, factors contributing to the rise of transparency include greater demands for corporate accountability from governments, investigative journalism, and NGO activism from organizations like Transparency International (TI) and Global Witness.

We have come a long way in the past two decades. Ben Elers of TI described the journey as follows: “Twenty years ago our work seemed an impossible dream. Now it’s coming true.”

Transparency is now de rigueur in supply chains as fashion start-up maven Laura McCann Ramsey explained in an interview with Apparel Magazine:

“Corporate initiatives around supply chain transparency have become just as essential as a brand’s logo, mission statement and value proposition,”

Bottom line

Sustainability, including transparency, has been shown to be profitable. Investors, employees and other businesses are attracted to firms that engage in disclosure reporting and this contributes to the health and financial well-being of an organization. Corporations are becoming more transparent because they want to keep up with the progressive efforts of their competition and position themselves to prosper going forward. As quoted in the Economist article, George Serafeim of Harvard Business School said, “there is evidence that it boosts the share price by signaling that management is tackling hidden risks.”

Climate action

Transparency may be among the best tools we have to advance climate action. Making climate efforts public enhances a corporation’s self-awareness and invites public scrutiny. This can contribute to corporate mitigation and adaptation efforts. These efforts are aided by reporting initiatives like CDP’s Climate Performance Leadership Index (CPLI).

Sustainable development

Transparency can also advance sustainable development. This is the view of many organizations including the International Institute for Environment and Development (IIED).

“G8 leaders need to see transparency not as an end-goal, but as the means to an end. Transparency needs to increase accountability in natural resource management. It needs to empower local people affected by resource extraction projects,” said the IIED’s Dr Emma Wilson. “People affected by resource extraction projects or land investments need to be able to access the information that the various transparency initiatives gather.”

Consumers

One of the factors driving sustainability and corporate disclosure is consumer awareness. Businesses are also coming to the realization that transparency is an essential part of forging enduring ties with consumers. Consumers are well informed and they are demanding ever more information. More knowledge translates into more responsible buying behaviors. Consumers armed with accurate information have the power to change the world through their patronage, or lack thereof. Consumers are also exerting pressure on companies directly and they also influence stockholders to table resolutions.

Tax evasion and corruption

Transparency combats the kind of secrecy that facilitates tax evasion. The tangled web of corporate subsidiaries makes it difficult to identify tax havens. By aggregating their accounts, corporations commonly obscure their tax avoidance. Country by country reporting would expose this kind of shell game that is sadly altogether common. Transparency is also bulwark against excess and greed. The gaze of watchful eyes illuminates the shadows in which corruption and corporate malfeasance can grow.

Fossil fuels

Nowhere is corruption more rampant than in the extractive industries. However, even here we are seeing signs of change. More than 50 countries and 90 companies have already signed on to the Extractive Industries Transparency Initiative’s (EITI) reporting guidelines.  One of the companies that have backed the EITI initiative is Norway’s Statoil. Hege Marie Norheim, head of Statoil sustainability efforts, argues that disclosure is “better for the company’s long-term stability”.

Opacity

Getting on-board affords a host of benefits while failing to engage entertains a range of risks. Being opaque makes an organization vulnerable to both reputational and financial risks.  Leaks of information are one of the risks associated with opacity. In the digital age, containing these leaks is an impossible challenge.  Leaks are part of a trend that is growing alongside disclosure. As reported in the Economist article, employees now, “see it as their civic duty to leak information if their employer is shady and secretive.”

Government action

Governments are not only a crucial part of the push for transparency they are also a pivotal source of resistance. As explained by George Cazenove of Tullow Oil, “it’s more often the governments than the companies that want the terms kept quiet.” For corporate disclosure to truly come into its own, governments must also be transparent. This needs to be a global effort. In the absence of a truly global initiative, such reporting could offer unfair short term advantages to companies that do not disclose.

Conceptually, the governments of wealthy nations are onboard, as revealed by the G20’s support of central registers. Countries like Britain and Denmark have made it known that their registers will be publicly accessible. While we are seeing movement from governments, there is much work that remains to be done.

Avoiding data fatigue

Data can enable companies, investors and the public to make better decisions. However, too much data can be just as problematic as too little. Corporate disclosures need to focus on relevant clusters of data so that less than honorable activities are discernable and not buried under a mountain of information.

There are also justified concerns that demanding too much data from companies can put unnecessary demands on corporations that do not ultimately contribute to the public good.  As explained by the Global Reporting Initiative’s (GRI) Michael Meehan, large companies have “data fatigue”. Reporting every single data point can be counterproductive to global transparency initiatives.

While open access to raw data is useful, pertinent constellations of data and a review of relevant interrelationships between these clusters of data are needed.  This is the type of work we are seeing from organizations like OpenCorporates. They have done a good job of data-scraping to cut through massive amounts of information to collate important data.

Panacea

On its own, transparency is not a panacea, but if widely implemented, it could significantly contribute to our collective social, environmental and economic betterment. Consider what detailed disclosure could have achieved had they been implemented decades ago.

Transparency could have prevented the kind of tax dodging revealed in the Panama papers. Even more importantly, corporate disclosure could have revealed the relationship between fossil fuels and climate change. Our world would be radically better today if Exxon’s insights into the relationship between climate change and fossil fuels had been made public forty years ago. On its own, it may have been enough to attenuate the climate crisis. At the very least, we may have engaged in climate action much sooner.

As explained in the Economist article:

“The world is still full of murky shell companies. But the direction of travel is clear. In tax and contract transparency, there is general acceptance that change is coming, like it or not.”

Today’s savvy consumers and a growing number of corporations want transparency and tomorrow’s consumers will expect it. The future is calling corporations to weave transparency into their DNA.


Richard Matthews is a consultant, eco-entrepreneur, green investor and author of numerous articles on sustainable positioning, eco-economics and enviro-politics. He is the owner of The Green Market Oracle, a leading sustainable business site and one of the Web’s most comprehensive resources on the business of the environment. Find The Green Market on Facebook and follow The Green Market’s twitter feed.

 

Image credit: FUMIGRAPHIK-Photography, courtesy flickr

This post first published in our blog GlobalWarmingisReal.com

Exxon’s Crimes Against Humanity

It is now public knowledge that Exxon has known for decades that their core business is directly responsible for climate change. Even more damning is the fact that they covered up this knowledge. To make matters even worse, they actively participated and funded a sophisticated campaign to fuel climate denial and delay climate action as long as they could.

As reviewed by InsideClimate News, an 8 month multi-part investigative exposé, Exxon’s own research proves that they were aware of climate change and the salient role played by fossil fuels all the way back in the 1970s.

What Exxon knew and when they knew it

In 1977, Exxon’s own scientist James Black said that there is general scientific agreement that the most likely manner in which mankind is influencing the global climate is through carbon dioxide release from the burning of fossil fuels. At a meeting in Exxon Corporation’s headquarters, Black told the company’s Management Committee that CO2 generated by fossil fuels would warm the planet and could eventually endanger humanity.

A year later, he offered an updated version of the same warning to Exxon scientists and managers. As reported by InsideClimate, his message explicitly stated:

“[A] doubling of the carbon dioxide (CO2) concentration in the atmosphere would increase average global temperatures by 2 to 3 degrees Celsius (4 to 5 degrees Fahrenheit), and as much as 10 degrees Celsius (18 degrees Fahrenheit) at the poles. Rainfall might get heavier in some regions, and other places might turn to desert.”

Black even mentioned the implications for food scarcity, warning that in some places “agricultural output [would be] reduced or destroyed,” Exxon’s research included climate modeling of the greenhouse effect and a tanker that traveled the world to measure carbon dioxide levels in the ocean and atmosphere. The tanker project ran from 1979 to 1982.

Other scientists began to publish their own research linking fossil fuels and global warming. As the public began waking up, in 1988 Exxon ended its CO2 research and unleashed one of the most pernicious and destructive misinformation campaigns ever perpetrated on humanity. Their goal was simple, manufacture an element of doubt into the science of climate change so that they could buy time and bring as much of their climate destroying petrochemicals to market as they possibly could.

As Exxon engaged this diabolical campaign, they knew from Black’s warnings that they had five or ten years to make “hard decisions regarding changes in energy strategies” before the situation became “critical.” ExxonMobil spokesman Richard D. Keil said that the company’s scientists knew that the “risk of climate change is real and warrants action.”

In 1978, Harold N. Weinberg, one of the managers at Exxon Research, wrote an internal company memorandum that read: “This may be the kind of opportunity that we are looking for to have Exxon technology, management and leadership resources put into the context of a project aimed at benefiting mankind.”

As revealed by a 1982 corporate primer on carbon dioxide and climate change prepared by its environmental affairs office, Exxon’s management was well aware of the dangers from fossil fuel emissions. The report was marked “not to be distributed externally,” but it was “given wide circulation to Exxon management.” The report clearly indicated that reducing the impacts of global warming “would require major reductions in fossil fuel combustion.” They further knew that failure to do so would result in, “some potentially catastrophic events that must be considered,” the primer said, citing independent experts. “Once the effects are measurable, they might not be reversible.”

Roger Cohen, head of theoretical sciences at Exxon Corporate Research Laboratories, wrote our “ethical responsibility is to permit the publication of our research in the scientific literature…Indeed, to do otherwise would be a breach of Exxon’s public position and ethical credo on honesty and integrity.”

Willful deception

While they published some of this research in the early 80’s, they soon made a strategic decision to end their greenhouse gas research and pursue a deliberate and willful campaign to sabotage the public’s trust for the science associated with climate change.

In 1982, Exxon knew that fossil fuels would be replaced by renewable sources of energy. As Edward E. David, the president of Exxon Research and Engineering, said: “few people doubt that the world has entered an energy transition away from dependence upon fossil fuels and toward some mix of renewable resources that will not pose problems of CO2 accumulation.” Corporate executives did not share this information with the general public or Exxon’s shareholders. They knew that synthetic oil made from coal, tar sands and shale could significantly boost CO2 emissions, but they did nothing to stop or slow production.

Rather than heed these warnings, Exxon began investing millions in misinformation and they lobbied to block government action to reduce fossil fuel related emissions. Exxon was a founding member of the alliance of large corporations that formed the Global Climate Coalition, to halt government efforts to curb fossil fuel emissions.

In 1988, after James Hansen warned Congress that climate change had already begun, Exxon deployed a deceitful counter-narrative to muddy the waters of climate science. As reported by Motherboard, Exxon poured “at least $16 million dollars into lobbying and advertising campaigns to cast doubt on the scientific evidence about climate change. Exxon brazenly declared that “Victory will be achieved when average citizens ‘understand’ (recognize) uncertainties in climate science.”

Pseudo science and payoffs

Exxon influences the political discourse on climate change

To execute their devilish plan, Exxon used the American Petroleum Institute and pseudo-scientific research from think tanks. As reviewed by Triple Pundit, Exxon has funded climate denial lobbying groups like the Heartland Institute. Exxon gave the institute $765,500 over an eight-year period.

Exxon continues to take advantage of its deep pockets to provide “contributions” to politicians in a bid to buy their cooperation. Exxon funds members of Congress, like Jim Inhofe, who deny climate change. They also use their control over legislators to kill legislation like the American Clean Energy and Security Act (aka the Waxman-Markey Bill). Exxon’s influence extends to the most powerful office in the world. According to the Hill, in 2001, Exxon Mobil lobbyists helped convince President George W. Bush to pull out of the Kyoto Protocol.

In addition to paying off politicians and funding a number of front groups, Exxon also does their own lobbying. Exxon paid researchers to publish papers questioning established climate science. One such researcher is Wei-Hock Soon, he has received extensive funding from fossil fuel companies including Exxon Mobil. Exxon also supports ALEC, a free-enterprise group that has opposed government mandates, subsidies and other efforts to force or encourage companies to develop and use more renewable energy sources.

Exxon scientists like Cohen and David who had been pioneers of climate research began to publish views that cast doubt on the veracity of mainstream climate science. This prompted the Royal Society, the United Kingdom’s science academy, to send a harsh letter to Exxon in 2006 accusing it of being “inaccurate and misleading” on the question of climate uncertainty. Bob Ward, the Academy’s senior manager for policy communication, demanded that Exxon stop giving money to dozens of organizations he said were actively distorting the science.

Through deliberately misleading campaigns like the so called “climategate” scandal, deniers sought to discredit the scientists who contributed to climate research. Michael E. Mann, Director of Penn State Earth System Science Center; author of ‘Dire Predictions’ and ‘The Hockey Stick and the Climate Wars’ was one of the scientists that Exxon’s disinformation illegitimately sought to discredit. Exxon is also trying to discredit the journalists who exposed the company’s systematic obfuscation.

A November 2015 New York Times article indicated that New York attorney general Eric T. Schneiderman was exploring the grounds for legal action against Exxon. Schneiderman issued a subpoena to Exxon that demands financial records, emails and other documents. A New York statute known as the Martin Act may make it easier to secure a conviction than under financial regulations.

Set back all of humanity

Others are also calling for legal action including Democratic presidential contenders Hillary Clinton and Bernie Sanders. Environmental Defense Fund President Fred Krupp and 49 leaders from environmental, indigenous and civil rights groups signed a public letter asking US Attorney General Loretta Lynch to launch a probe into Exxon. They specifically want Lynch to determine whether Exxon knew about the dangers of climate change as it funded efforts at climate denial and systematically misled the public. Sharon Eubanks, a former Department of Justice prosecutor who helped win racketeering convictions against tobacco industry execs in 2006 is also among those calling for a criminal investigation. She specifically suggested that Exxon should be investigated under Racketeer Influenced and Corrupt Organizations Act (RICO) action.

In a Guardian article, Bill McKibben succinctly explained Exxon’s historic misdeeds describing them as, “treachery” and “unparalleled evil.” He went on to say, “No corporation has ever done anything this big and this bad…”this company had the singular capacity to change the course of world history for the better and instead it changed that course for the infinitely worse. In its greed Exxon helped more than any other institution to kill our planet.”

As explained by the Hill, “a single company may have set back all of humanity.”

Exxon’s malfeasance has succeeded in slowing climate action and this will have calamitous repercussions. There is a parallel between Exxon’s subterfuge and the tobacco industry’s criminal culpability for their failure to disclose its own research about the serious health dangers associated with smoking. However, there is a powerful difference, unlike big tobacco’s lies, Exxon’s deceit imperils all life on the planet.

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Richard Matthews is a consultant, eco-entrepreneur, green investor and author of numerous articles on sustainable positioning, eco-economics and enviro-politics. He is the owner of The Green Market Oracle, a leading sustainable business site and one of the Web’s most comprehensive resources on the business of the environment. Find The Green Market on Facebook and follow The Green Market’s twitter feed.

This post first published in GlobalWarmingisReal.com

 

Photo by Steve Snodgrass

Remembering Berta on International Women’s Day

On International Women’s Day 2016 we mourn the loss of Berta Cáceres, a truly heroic environmental organizer. On March 3rd she was gunned down in her hometown of La Esperanza, Intibuca in Honduras. Her assassins are still at large and unlikely to ever be brought to justice.

Berta was an indigenous women who championed land and resource rights. In 1993 she co-founded the National Council of Popular and Indigenous Organizations of Honduras (COPINH). She was a dedicated protector of the natural world who bravely stood up to powerful corporations, corrupt governments and police with ties to death squads.

This powerful Lenca women challenged Sinohydro (the world’s largest dam builder), and the World Bank and succeeded in stopping the Agua Zarca Dam from being built. For this and other accomplishments Berta was awarded the Goldman Environmental Prize in 2015.

In an interview with The Guardian after she won the award, Berta vowed to keep fighting and she urged others to join her:

“We must undertake the struggle in all parts of the world, wherever we may be, because we have no other spare or replacement planet. We have only this one, and we have to take action,”

Berta was repeatedly threatened yet she was undeterred by the risks to her personal safety. She persisted knowing all too well just how dangerous it was to speak truth to power in Honduras. Berta’s friend and fellow COPINH leader Tomás García was killed by a military officer in 2013.

A 2014 Human Rights report sites corruption, intimidation, a weak justice system and killings committed by security forces as some of the issues in Honduras. There have reportedly been over 10,000 human rights violations by state security forces and the nation is the deadliest country in the world for environmentalists. According to Global Witness, more environmentalist activists are killed in Honduras than in any other nation on earth except Brazil. Between 2002 and 2014, 111 environmental activists were killed in Honduras, many of whom were indigenous people.

The United Nations special rapporteur for indigenous rights, Victoria Tauli-Corpuz said:

“This shows the high level of impunity in Honduras. Beyond the high homicide levels in society, there is a clear tendency for indigenous campaigners and human rights activists to be killed.”

The killing of environmentalists in Honduras continued in 2015 and into 2016. If the past is any indication of the future, almost all of these murders will go unpunished.

Honduras may be among the worst countries for extra-judicial killings of environmentalists, but Brazilis the worst with 457 killings between 2002 and 2014. There are also many other countries thatpersecute environmentalists. In places like Peru and Cambodia environmentalists are routinely murdered or silenced by the courts.

It is assumed that Berta’s murder was connected to the COPINH protests in defense of the River Gualcarque and against the construction of a hydroelectric project by a Honduran company called DESA.

Since the military coup of 2009 there has been a dramatic increase in the number of mining operations this has resulted in a significant spike in energy demand which led the government to approve hundreds of dams. These dams destroy the land, poison the waterways and uproot entire communities. Those who challenge this authority risk being eliminated by a Honduran death squad.

There is complicity at all levels. Police told local reporters that the motive for Berta’s murder was robbery.
People know better and they are demanding an independent international investigation. They are also vowing to continue the struggle to honor Berta.

Thousands of Berta’s supporters gathered in front of her home yesterday to pay their last respects. According to Democracy Now, one of those present said:

“I’m saying goodbye to her for the last time, but the truth is that Berta hasn’t died. Berta lives on in our hearts. They haven’t actually killed Berta; they haven’t killed her. Berta is a seed that we’ve been left with. For us, that seed will germinate day after day, and we, as women, will continue the fight. We are not scared.”

David Gordon, executive director of the Goldman Prize, said:

“Berta’s bravery in the face of overwhelming repression will be a rallying call for environmental activism in Honduras.”

A powerful comment on the original Guardian said:

“It is not enough to be sorry for her friends and family — we need to think of ways large and small to step into the vacancy left by her murder. We need numbers to begin to make a dent in the arrogance that brings someone to believe that they can kill someone who stands in their way for more profit and power.”

In this video Berta makes a prophetic speech as she receives the Goldman Prize. She pledges her life to the cause, and calls us to join her in defense of the earth and its resources. Reviewing the tremendous arc of Berta’s life we are pulled by the gravity of the realization that if we fail to act we are complicit in the murder.

This post originally published in The Green Market Oracle
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Richard Matthews is a consultant, eco-entrepreneur, green investor and author of numerous articles on sustainable positioning, eco-economics and enviro-politics. He is the owner of The Green Market Oracle, a leading sustainable business site and one of the Web’s most comprehensive resources on the business of the environment. Find The Green Market on Facebook and follow The Green Market’s twitter feed.

Image credit: Prachatai, courtesy flickr