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Business and Environment Roundtable
Corporate Environmental Performance Measures
by Steve Adams, ELP Fellow 2001-2003
 Shortly after the President's inauguration last year a remarkable editorial appeared in the Boston Globe. Socially Responsible Investing (SRI) guru Amy Domini used the editorial to mark the President's pick for what she called "the most significant environmental appointment" that could be made by an incoming administration: Chairman of the Securities and Exchange Commission (SEC). Domini argued that the SEC's role in enforcing transparency in corporate governance, if broadly construed to include the disclosure of future liabilities caused by poor environmental performance, could in time make many environmental regulations administered by states and by EPA of secondary importance.
This argument is even more compelling today in the wake of the Enron and WorldCom debacles, as the Bush Administration and Congress consider reforms to strengthen corporate accountability. While institutional investors continue to represent a significant proportion of the total financial market, the importance of the small investor is unprecedented. Indeed the political implications of the recent corporate scandals are sharpened by the fact that market equity is more broadly held by the American public than at any time in history. Institutional investors have traditionally had greater access to information, but the current crisis will increase financial transparency for all. The political response to this crisis presents a rare opportunity to enlarge the conversation about corporate responsibility and disclosure to include environmental and social dimensions.
All of this is to say that business does not have a "role" in the environmental movement, but the movement has a definitive role in business if its leaders have the courage and insight to grasp it. Corporations should continue to do what they do best -- provide goods and services to the marketplace while meeting fiduciary responsibilities to shareholders. Activists should advocate for transparency in corporate governance that enables all to evaluate performance on issues from labor to the environment.
These assertions are made not to undermine the business men and women who best express their convictions with entrepreneurial skill working too often against adverse incentives. Efforts to expand corporate environmental reporting through standardized metrics such as the Global Reporting Initiative should be actively supported rather than dismissed. Command and control regulation should give way to market approaches that make clean, efficient production more profitable and information more freely available. In the process, corporate performance will be rewarded and capitalized: consumers and shareholders will use that information in voting with their dollars. And the corporate sector will become a far more potent force for positive change.
Stephen Adams is a policy analyst at the Florida Department of Environmental Protection, now serving a year-long assignment as senior advisor to Governor Whitman's Environmental Indicators Initiative at the U.S. Environmental Protection Agency.
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