 Email
 Print |
What we know can't hurt us
Why the world needs the right data.
The Massachusetts shore has lured visitors and new residents to its fabled beaches and healthy lifestyle for generations. There you find bicyclists along the paths, older folks practising tai chi on the village squares and strong swimmers plying the waterways. In this wholesome spot, women kept noticing that their friends were getting sick, dying. Breast cancer is practically epidemic on Cape Cod. Some women began asking why. The cancer zones seemed to follow water sources. These women gathered data on the release of poisons in the region and began to trace them. They were able to gather this data because of an unusual law. The Toxic Release Inventory mandates that facilities track and report on their release of certain hazardous materials.
This story is still playing itself out, but if the women learn why their friends are dying, it will be because of disclosure. Transparency is essential. Once the Sullivan Principals mandated reporting on progress toward equality in South Africa, it became obvious that there was no progress and civil society took action.
Yet today, virtually no mandatory non-investor-driven disclosure exists. Particularly in the U.S., corporate disclosure has grown out of reforms that date back to the 1930s, when it was essential that investors be reassured that they were being treated fairly.
This simple notion has led to unanticipated consequences. An industry of enormous proportions grew up with the sole purpose of allowing investors to evaluate the prices of financial instruments and trade them, with the idea that corporate interests must supersede the interest of other stakeholders. Financial impacts on the taxpayer, for example, are hidden. Today, society finds Wall Street pitted against Main Street about where to allocate costs and where to realize benefits.
This takes us to the role of responsible investors. We recognize the importance of mandated disclosure and seek to demand it wherever we can. But the failure of government to move quickly to institute it is no reason for us to sit still. We are not value-neutral about what will benefit us but demand our investments meet at least basic stakeholder standards indicating progress.
By moving forward ourselves, we have built the template for future legislation, while establishing the databases that even today help grassroots organizations sift through suspected causes of harm and pinpoint their sources.
The application of social criteria to investments is widely misunderstood but all-important. We cannot know today what needs it will meet, but we do know that the world needed data before it brought so much pressure to bear that 27 million people were given the vote in South Africa. We know that the toxic data that the women of Cape Cod are studying may save lives for centuries to come.
And we know that when accountability is mandated, behaviour improves. Nothing has been as powerful as socially responsible investing in moving disclosure standards forward. It is a legacy of which we can be proud.
| Tools:
Discuss
| Email
| Print
| RSS
| Weekly Newsletter Save/Share: |
I really liked this perspective piece from Domini. Back in the 1980's, I think it was, a couple of law firms began specializing in derailing mergers and acquisitions where the companies involved carried massive potential environmental liabilities which were not fully disclosed, especially in the form of hazardous waste contamination. All of the sudden, other companies were paying more attention to their contamination problems because they would greatly affect the value of the company. It was no longer about ethics - but about profitability and liquidity.
Of course, the government had been busy requiring inventories of toxics and documenting permits and contamination back in the day when it was their mission to protect human health and the environment. But these requirements were taken more seriously when corporate officials started leaning on their managers to be sure there weren't any major hidden liabilities lurking.
A similar phenomenon swept through the real estate world regarding toxic contamination outdoors, and radon, asbestos and even formaldehyde in building materials indoors. Buyers and lenders became aware of serious risks that threatened to nullify real estate transactions and this became serious business. So, for the sake of predictability (something that businesses are willing to make huge trade-offs to attain), new requirements were mandated.
The common elements, here, are related to mindfulness, which is not the same as ethics, but is functionally a major part of the process. Environmental contamination, indoors and outdoors, was historically considered an "externality" in the business world. Essentially, the earth and human health were generally considered "free goods" for companies to exploit and use to their advantage. Until "science" developed the ability to detect and measure contaminants, and health effects began to be studied, there were no adverse consequences for businesses to be unmindful and unethical in their dealings with the environment.
Today, the interconnections are more visible and it is clear that a clean environment is good for business and for the security of investors. The challenge is to force companies to shift into a longer-term view of profitability. There are businesses that help with these processes - to educate and transform the cultures within bussinesses so that consideration is given to long term planning and economic health and not only the short-term quarterly profits.
posted by Earon on 9/ 4/2007 11:37 am