Crown corporations not so shiny at non-financial performance disclosure

THE LIBERAL SPONSORSHIP SCANDAL PUT THE practices of crown corporations squarely in the spotlight of media and public attention in early 2004. Amidst the political acrimony, certain bywords like ‘Transparency’ and ‘Accountability’ poked their way into 96pt-tall headlines.

But what kind of transparency? The tricky thing about transparency is that (pun intended) it’s difficult to see and describe. In this case, people have called for more open communications about transactions and management activities. They want the government to open their books. As it stands, under the Access to Information Act, Crown corporations are granted rights of opacity that other corporations can only dream about. Since we can’t see what’s going on behind the curtain; how can we hold Crown corporations accountable for their environmental and social performance?

As taxpayers, Canadians have invested heavily in our Crown corporations. In fact, we are all shareholders.As such, we have every right to know that our Crown corporations operate not just in a fiscally responsible manner, but in an environmentally and socially responsible fashion as well. Are they contributing to our social and environmental well-being or exacerbating existing problems? Do they use natural resources efficiently? Are their employees treated with respect?

Ever since Enron, corporate transparency and disclosure practices—on financial and non-financial matters—have been the target of regulators, investors, advocates, and pundits. Rightly so, considering the expanding role of business in society, and the recent crises of confidence in corporate responsibility.Transparency is our insurance policy.

But what about Crown corporations? These bastions of the state deliver important public services, but manage them within a commercial context.Why should we let them slack off on the reporting requirements that we expect from most other large corporations?

As extensions of the state, Crown corporations should be role models for other companies to follow.

SUSTAINABILITY REPORTING
Sustainability reporting—covering the triple bottom line of economic, environmental, and social performance—is rapidly emerging as a valuable business practice among leading companies. The trend is likely to accelerate, as governments, stock exchanges, institutional investors, financial analysts, and environmental and social advocates pressure companies for greater non-financial disclosure to help make more balanced decisions and to restore confidence in the markets.

Without objective disclosure of corporate social and environmental performance, investors, consumers and prospective employees are left guessing.

CROWNS WITHOUT JEWELS
An analysis of the sustainability disclosure practices of the top ten federal Crown corporations (based on 2002 revenues) reveals some
disturbing, and all too familiar facts about our state-owned gems.With 80,000 employees and combined revenues of almost $20 billion, Canada’s top federal Crown corporations are a major economic force. As well, these are some of Canada’s oldest corporations—several are more than half a century old. The CBC claims to be Canada’s largest cultural institution.

We assessed disclosure practices by looking at the two most effective media for providing in-depth information—the Internet and annual reports. If Crown corporations are not saying it there, then the public is not being served.

The verdict: Canada’s Crown corporations disappoint at disclosure on non-financial matters. To be fair, their websites often include qualitative information about their social and environmental objectives, and some pleasant stories about their community programs, but quantitative information about actual performance is almost non-existent.

None of the top ten publishes a stand-alone, comprehensive sustainability or social responsibility report.

Surprisingly, performance on labour practices is not effectively elaborated. Quantitative figures on employee diversity, union representation, training, and health and safety are scant. Few provide data on their energy and water use, greenhouse gas emissions, and wastes. Most mention their community outreach programs, but none indicate how much of their considerable goods and services are purchased from Canadian suppliers.

LAPSES IN TRANSPARENCY
Fitting for an organization dealing in nuclear energy and radioactive wastes, Atomic Energy of Canada Ltd. (AECL) produced an environmental report in late 2003. However, where is information about the lost-time injury rates of employees that work at Canada’s major nuclear research facilities? While AECL takes a "trust us" on this issue, Canadians would prefer a "show us."

Canada Post has one of the largest fleets in the country—6,000 vehicles that traveled a mind-boggling 77 million kilometres in 2002. But if you want to know whether Canada Post is reducing their GHGs and other emissions, such as acid rain-causing sulphur dioxide, tough luck.

Commercial banks in Canada with more than $1 billion in equity are required to produce annual Public Accountability Statements, detailing social and economic issues, but most also include descriptions of their environmental programs and performance. Similar reports from the Bank of Canada and the Business Development Bank of Canada do not exist.

SIGNS OF LIFE
The most transparent of the bunch is Export Development Canada. It is a legal requirement for EDC to review the potential environmental effects of projects for which they are considering providing trade finance or risk management services. Their website included the most extensive resources on corporate social responsibility and the environment. EDC even has a disclosure policy and a Chief Environmental Advisor.

THE IN-BETWEEN WORLD
The federal government is moving its operations toward a more environmentally and socially sustainable state. The 25 biggest federal government departments are required to prepare sustainable development plans. Crown corporations are not. Not quite companies, but not quite government departments, our pseudo-corporations could easily fall through the cracks, and not live up to the behaviours often expected of companies or governments.

Each Crown corporation reports to a Minister, but is accountable to all of us as citizen shareholders. These are our institutions. We deserve transparency on all fronts.

Mark Brownlie is Chief Executive of Responsibility Matters, a Calgary-based consulting firm assisting companies and non-profits with sustainability communications and strategies.