Full Disclosure

It’s 2009. Do you know what your company is doing?

by Nina Winham

Remember when you were a kid and you first figured out how to fib? “No, Mom, I did not take that cookie. Honestly!”

You might have done it well (eye contact, relaxed posture) or poorly (shifting feet, mumbling). Of course you might have been the rare kid who never fibbed. (If so, you didn’t live in my house. My siblings and I fibbed our way through a lot of cookies.)

Then, when you were a bit older, you may have flirted with a whole new level of mistruth: the omission.

“Who are you meeting at the mall?” “Suzy.” “OK, then make sure you’re home by 9 o’ clock.” Not disclosed was that you were meeting Suzy at the mall so you could sneak to the party at John’s, whose parents were away for the weekend. But no one asked about that, did they? Very crafty.

Whether or not it officially constitutes a lie, an omission of fact can be extremely relevant—especially if people would make different decisions if they had the full story. (You know your parents would have!) This is where a shift is taking place in the corporate world—toward disclosing all the information stakeholders require to evaluate the comprehensive performance of companies.

Public companies, governments, and charities have always been expected to disclose the details of their financial affairs. In this way, investors, funders, and the electorate are able to make decisions based on good information. But as we’ve learned over the past generation, financial information only gives part of the story, neglecting issues such as human rights, employee relations, climate change, or supply chain impacts.

Those topics are captured by the emerging field of sustainability reporting. It’s less than 20 years old, but it’s catching on fast. This year, more than 3,000 companies are expected to produce reports about their non-financial activities. (You can usually find such reports on a company’s website.) Called by many names—sustainability, accountability, triple-bottom-line, corporate responsibility, social and environmental reporting—they all provide information about an organization’s impact on, and engagement with, its stakeholders. This allows employees, investors, communities, suppliers, and others who are affected by the organization to make informed decisions about more than just financials.

This means you—as a shareholder, company neighbour, or employee—should feel empowered to ask for information you think is important. What is the company doing about fair labour practices? How does it plan to mitigate environmental risk? How does it meet the needs of employees and support the communities where it operates? Which stakeholders does the company consider important, and how are they consulted about things that matter to them? Things are changing: being a responsible company today means being transparent and accountable—it’s not just about the shareholder and the profit margin anymore. (Sustainability reports are produced by leading charities and government agencies, too.)

There are standards for good reporting—and standards for evaluating the quality of reports. Did the company disclose the negative as well as the positive? Give detail about its consultation process? Offer an action plan to address problems? As a consumer of such reports, you should expect to be able to get a clear sense of how a company manages its impacts, builds relationships, and engages in continuous improvement. You should be able to tell if it is worthy of your trust—and maybe your investment. (For a look at an interesting reporting standard, visit globalreporting.org .)

It’s true that companies without accountability reports may be well managed and responsible. And those that do produce reports may try to bend the rules and greenwash. But on average, it’s harder to fib if you’re making an effort to provide full disclosure. The corporate sector, it seems, may at last be leaving its teenage years behind.

Nina Winham is principal of New Climate Strategies (newclimate.ca), helping clients build value through sustainability practices and effective communications. At present she has nothing further to disclose—and is usually in bed before the really good parties start anyway.