Transparency: Too much of a good thing?
Tuesday, March 15th, 2011
Photo credit: Joanna Paterson on Flickr
This may sound counterintuitive, but transparency can be at odds with an effective corporate responsibility report.
Here’s why: To meet rising stakeholder expectations for disclosure, many companies resort to packing more and more information into their CR report. Page counts mount, complexity grows, and the important drowns in the trivial.
The net effect? Fewer readers. Critical information hidden in plain view. Long refresh cycles. All of which translates to less, not greater, transparency.
It’s why transparency has to be balanced with materiality. Before they begin their CR report, companies should establish a threshold for what’s most important to their company and stakeholders. Thresholds will vary by company and industry—and change over time—but the general principle of materiality applies to all.
Materiality is key not only to the integrity of a report as a forum for disclosure and accountability, but also to its effectiveness as a communications platform. Ensuring a disciplined approach to determining what issues to cover and in what detail makes it easier to produce (but doesn’t necessarily guarantee) a clear and concise CR report.
Yet materiality doesn’t receive as much attention as transparency. There’s no real penalty for a bloated report. In fact, it’s often more notable and risky if information is left out than if too much is left in. If something is given short shrift or even absent, critics may question if a company is downplaying or even hiding something.
Plus, according to one study, companies that produce longer reports have better odds of winning awards. Statistical analysis shows that every extra page in a CR report increases the odds of a company winning an international environmental award by 3%. So the overriding incentive is to cover more ground and provide greater detail in the interests of mitigating risk or gaining recognition—and not necessarily informing stakeholders.
Don’t get me wrong. I’m not suggesting that companies smear Vaseline on the lens. Emphasizing materiality—which may trim or shift the scope of a CR report—is not about deflecting scrutiny or tightly controlling the message.
Instead, it’s about first critically assessing and understanding the issues that have the greatest impact on the interests and welfare of your stakeholders and company. And then giving readers the access and tools to make the most of that information as easily as possible.
