Environmental and social transparency under the ... - ClientEarth

62 | Environmental and social transparency under the Companies Act 2006Chapter 4: The business need to engage with environmental and social issues | 63“We believe...that companies with superior environmental andsocial management are likely to be more successful in operatingprojects in the new world.” 203– Goldman Sachs, ‘Global Energy: Sustainable Investing in theEnergy Sector’“However slick a company’s communications, it will sustain a strongreputation only if its actions stand up to scrutiny.” 204– Stuart Lewis, Head of the Ipsos MORI Reputation CentreOne need only look at the case studies in Chapter 3 for evidence of theother side of the coin; the negative impacts that poor management of thesepractices can have on a business.Reporting requirements for environmental and social matters serve twopurposes in this regard. First, transparency is integral to the kind of progressivemanagement culture necessary to succeed in the future (creatinga transparent company in which company management engages withshareholders and stakeholders about these issues). Secondly, effectivereporting requirements act as an incentive for the development of a successfulmanagement culture more broadly (the threat of forced disclosure,and the potential damage that that may do, provides company directorsand management with added incentive to recognise, engage with andmanage these impacts, risks and opportunities).4.2 Nowhere to hide: the information age and pressuregroups“The marriage of the most highly educated generation in historyand the Internet places phenomenal power in the hands of a newlyenfranchised class of knowledgeable citizens and consumers.” 205- Darrel Bricker, President and Chief Operating Officer,Ipsos-Reid Public Affairs North America“[T]he combination of the Internet and new satellite and cabletelevision technologies has made the distribution of information– instantly from virtually anywhere in the world – a part of ourday-to-day lives...NGOs...are increasingly able to uncover things on a new andunprecedented scale – poor employment policies, unethical investments,and environmental exploitation – that companies expectedto be able to keep hidden from public view only a decade ago.” 206– Dale Neef, ‘Managing Corporate Reputation and Risk:Developing a Strategic Approach to Corporate Integrity UsingKnowledge Management’“[C]ompanies wishing to maintain and grow sustainable shareholdervalue on the back of a solid reputation, will need real substance toback up the ‘spin’ of traditional PR and branding techniques.” 207– John Browne, former Director of Reputation Assurance,PricewaterhouseCoopersIt is short-sighted for companies to attempt to hide their negative impactsfrom view. Advances in communications technology and increasinglywell-resourced, organised and driven groups and individuals have increasingpower to investigate, evaluate and communicate the practices of companiesworldwide. These revelations can have disastrous implications forcompanies, as we have examined above.Directors who ignore or downplay the risks and opportunities involved arefailing to deliver management strategies which ensure long-term ‘enlightened’shareholder value , and are failing to fulfil their duties as directorsand stewards of the shareholders’ investments. Similarly, shareholdersand investors who do not ensure that they are informed of and engagedwith these issues are doing themselves and their investment a disservice;it is in shareholders’ financial interests for there to be corporate transparencyaround these issues.4.3 Internal corporate governance: the basis of a companyShareholders should, as a matter of the ideas that underpin ‘the company’,have access to information that has bearing on their investment, so as todecide how they wish it to be protected. In the theory that underpinsthe public company, directors are simply stewards for the shareholders’investments. Many consider that shareholders are, in theory, the primaryregulators of corporate behaviour. 208 Therefore shareholders have legalrights to influence and ultimately determine the behaviour of the company,and as such should have access to all information that has bearingon that future.