There’s a natural antipathy within companies to accountability and transparency. Greater openness can only mean bad news gets out, surely, and anyway we are a private institution with private owners, so our affairs should properly remain private. At least, that’s the traditional view and, if we are frank, still the mainstream feeling.
Readers of Briefing will know that’s no longer sustainable. Wiser companies have already embraced NGO accountability. They understand that in today’s world genuine dialogue and real involvement can reduce risks and ultimately enhance performance. But too many still see ‘accountability’ as being about managing NGO relationships, in other words a purely communications issue.
Actually, accountability should really be an investor-driven issue. At its most basic, for example, bribes and improper payments divert value away from shareholders. The bigger question is how to know whether management is running the business for long-term sustainable value creation. Already investors battle to hold management to account on things like excessive executive pay, and this should be an extension.
The biggest proponents of the sorts of accountability and transparency initiatives we report here ought to be the stockmarket. If and when that happens, we’ll know CSR has truly reached the mainstream.
RELATED NEWS
Accountability counts
Vodafone was ranked number one in this year’s Accountability Rating, narrowly overtaking BP, which has been ranked top since 2004. Meanwhile, Royal Dutch/Shell was third in the ranking, released on October 23 and covering the world’s largest corporations. The rating is managed by AccountAbility, the global think-tank on organisational and corporate accountability, and csrnetwork, a corporate responsibility consultancy.
According to Simon Zadek, chief executive of AccountAbility, business has shown overall improvement over the last year. “It is gratifying to see business becoming better at engaging with stakeholders. Yet there still remains a great deal to be done in implementing [corporate social responsibility] policy into everyday business practice, and in particular gaining third-party assurance to verify a company’s stated actions,” he added.
Although BP and Shell continued to demonstrate commitment to accountability, this year’s findings show that the average score for the oil sector as a whole has dropped significantly, compared with last year. The sector now ranks bottom of the five-sector industry ranking: a combination of poor performance from companies such as PDVSA, Valero, China National Petroleum and Sinopec, combined with tougher criteria in this year’s analysis, prompted the slippage. www.accountabilityrating.com; www.csrnetwork.com
Managers sign up to EITI
The world’s largest investment institutions are supporting a campaign to stop corruption in the energy and mining industries. The investors are concerned that legitimate payments by companies to governments in the developing world could be open to abuse. The investors made a statement in support of the Extractive Industries Transparency Initiative (EITI), that seeks greater transparency and improved governance in resource-rich countries. Launched by Tony Blair in 2003, the EITI is now supported by the G8 as well as 20 developing countries. Examples of the institutions that have signed up are Merrill Lynch, HSBC and UBS, representing $12 trillion in combined assets. www.fandc.com; www.eitransparency.org
Extracting transparency
Governments and oil, gas, and mining companies must make industry revenues more transparent, Publish What You Pay said on October 11. In Eye on EITI, the coalition of anti-corruption activists and charities examined progress made in the 21 countries that endorsed the agreement four years ago. Nigeria and Azerbaijan have made significant progress in implementing EITI, but in many countries governments have failed to match their rhetoric with tangible measures. The report identifies the challenges for the realisation of the EITI, such as the intimidation of anti-corruption activists. www.publishwhatyoupay.org
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