Case Studies in Corporate Transparency 2
This post is the sixth in a series of eight that unpacks the increasing expectation of transparency in business: Why and how to develop authentic, accurate, and thorough communication and reporting on your business purpose, goals, and impact.
For an example of complete transparency and self-policing, consider Walmart’s early adoption of its Sustainability Insight System (THESIS) Index, the independent, science-based, holistic sustainability performance tool that tracks all the company’s SKUs, allowing its brands and manufacturers to judge the “sustainability story” of their products and tell that story clearly and compellingly to retailers, investors, consumers and NGOs.
Such a detailed system allows the world’s biggest retailer to stumble once in a while in some areas by proving its overwhelming commitment to the big picture.
But, are Walmart’s well-publicized sustainability efforts enough to buffet it against a major environmental scandal? In 2021, the California attorney general and 10+ district attorneys filed a massive lawsuit alleging Walmart has dumped 100 or so tons of hazardous waste — not to mention confidential customer information — in the state’s landfills each year over the prior five years.
Dumping implies a covert activity, of course, meaning nontransparent.
A similar question concerns General Electric. Before the US multinational announced in late 2021 that it would break up into three divisions over the next three years, one focused on aviation, one on healthcare, and one on energy, the mega-conglomerate was a staple of the Dow Jones for 117 years.
It stretched and still stretches the tentacles of its numerous business segments into all parts of the world, the economy, and real people’s lives. Each appendage, the company realized in earnest as early as the 1980s, suffers the slings and arrows of the climate emergency in assorted ways. It gets worse every year.
So, anticipating critical environmental vicissitudes that could amputate or at least wither its brands’ impacts, GE launched an initiative in 2005 called Ecomagination. It was a deliberate growth strategy — not a favor to the world — to “enhance resource productivity and reduce environmental impact at a global scale through commercial solutions for our customers and through our own operations.”
Ecoimagination was one of the earliest and most visible — literally published on product labels — corporate transparency experiments. GE publicly set an intention and embedded it through its huge network of LOBs and brands: Ecomagination, the company said, meant “Transforming tomorrow. Because the world can’t wait.” Spot on.
The program continued past the decade mark. It spent $20 billion in R&D on the initiative between 2017 and 2018 alone — and it generated more than 10 times that in revenue.
Today, GE’s green products sell four times faster than its non-eco-friendly offerings, with its eco-conscious revenue 30 percent of overall annual earnings. In its first 10 years, Ecomagination projects and products generated more than $200 billion in revenue — proving “efficiency and economics go hand in hand.”
About half of GE’s sales today come from products that either eliminate greenhouse gasses or prevent future emissions. Even better.
Along the way, GE offered up $200 million in an open innovation challenge, the “GE Ecomagination Challenge: Powering the Grid,” to work with partners on sustainable energy sector solutions to the climate emergency.
Company leadership even leveraged its considerable clout to call on the US government to better coordinate — if not regulate — environmental policy.
Furthering its labeling transparency, GE regularly published internally and externally its progress on Ecoimagination goals — e.g., this appliance uses less electricity and water; this aeronautical fan blade reduces fuel consumption; these fuel cells are even cleaner and more efficient than the prior gen; this facility cuts CO2 and NO2 emissions and noise, etc.
So, what’s the problem?
No problem. Only despite its laudable quest to focus on the E aspect of the ESG points — cleaner tech, essentially — GE drew criticism, increasing by the tenth anniversary of the launch of Ecoimagination, by increasing its interests in “dirty tech,” primarily oil and natural gas.
GE regularly promoted its own mission to develop “alternative water technologies” — but what that means is that it remains heavily in the business of fracking, hardly a darling of environmentalists. Is this ostensible paradox a sign GE’s still putting profits ahead of the environment, i.e., greenwashing? Is it “talking green and acting dirty?” as the New York Times asked?
The point is GE’s more transparent across the board — allowing consumers to decide. Has it proven its intentions of promoting sustainability and ameliorating the climate crisis? Are there business lines from which it should distance itself? Or, if it’s made major strides in say, five other areas, does that allow it to continue unimpeded in others? “By stretching Ecomagination into areas that many people clearly don’t consider very green, GE may be risking a valuable business and brand asset” — a serious “failure of Ecoimagination,” says the Harvard Business Review.
Here’s the thing about that: Next time we’re at Lowes looking to buy a dishwasher, we get to decide whether we want to support GE. Because the future of corporate disclosure transparency is not just a one-way street.
Its transformational capacity depends at least as much upon the responses generated by the public.
So, think of transparency, especially corporate reporting and voluntary disclosure, as a participatory democracy. Consider it an “ongoing dialogue about [our] work and its impact — and the important lessons [we] are learning along the way,” says Paul Massey, president of impact at the global PR firm, Weber Shandwick.
Public disclosure practices should of course extend beyond environmental reporting. In addition to including traditional ESG(&D for data security) metrics, they should include anti-corruption program progress; company structure and holdings data; and, of course, key financial information — from where are profits derived, and how much is invested in Lead With We activities?
For example, “Clif Bar operates in service of five aspirations — sustaining their business, brands, people, communities, and planet. Each one has a defined vision with metrics and measurements that keep the company on track.” The company knows in advance not only what it’s working toward, but in what key areas it’s responsible for reporting to the public.
As we develop and embed our unique Lead With We purpose, we can look to some of these organizations for guidance in the areas that matter most to the world, and work best for our business size, type, and structure. Crystal-clarifying in advance our detailed internal metrics on purpose, goals, and impact “can help ensure [we] maintain transparency, accountability and focus,” according to the Harvard Business Review.