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Sustainable Companies Want to Be Transparent -- But Not Too Transparent

Sustainability presents company legal departments with something of a paradox.

The movement encourages companies to become ever more transparent with their "stakeholders" -- investors, employees, communities, regulators, customers -- about topics traditionally left unaddressed. These include environmental footprints, records on social issues, and corporate governance protections.

But this disclose-it-all mentality runs up against corporate counsel's traditional preference for conservatism in communication. Don't create evidence, the counsel says, by making promises you can't keep or claims you can't prove.

"U.S. corporate counsel is very reticent about saying anything publicly and voluntarily," said Mike Wallace, managing director at BrownFlynn, a Cleveland-based sustainability consultancy.

That reticence is being tested as sustainability reporting becomes more structured and common. Ten years ago, voluntary sustainability reports were issued mostly by outlier companies. Today, with more than half the S&P 500 filing sustainability reports every year, the outliers are the ones who haven't joined the bandwagon.

"It's no longer responsible to tell your client to stay quiet," Wallace said of corporate counsel. "You're actually in the minority if you don't disclose this information."

Wallace joins BrownFlynn this week after several years running the North American operations of the Global Reporting Initiative , a set of guidelines that helps companies shape their voluntary sustainability disclosures.

Visit www.bloomberg.com/sustainability for the latest from Bloomberg News about energy, natural resources and global business.

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