|Steering Business Toward Sustainability (UNU, 1995, 191 pages)|
|Part one: Education|
|5. Assessing corporate environmental performance|
Environmental information disseminated by social and environmental monitors impacts corporate environmental practices in a number of ways. Some of the impacts are direct while others operate indirectly through a diffuse network of individuals and organizations. Often individuals in companies, even high officials, are not aware of their own environmental record. Often they are also unaware of what their competitors are doing, and how they compare to their competitors. Social monitors help companies directly to improve their environmental performance by providing subscribers with environmental digests and profiles that enable them to make decisions about their own environmental policies and practices. For these consumers, the information serves both as a report card of their own standing on environmental issues, as well as a benchmark against other companies which they want to emulate or surpass.
When a social monitor lists a company among the worst environmental performers in its industry, the group generally provides the company with recommendations for remedial action. At CEP, for instance, each company is invited to meet with the ratings staff and work out solutions to its environmental problems. The judges communicate to the company the various things it needs to do in order to demonstrate an improved environmental record. CEP therefore directly influences corporate decision makers, and thereby impacts corporate environmental practices.
Much of the advice provided to a firm comes from the expertise of experienced advisors, but it is enhanced by knowledge that other companies in the company's industry have developed and are using in their own environmental practices. In this way, social monitors also act as an industry-level disseminator of information about environmental best-practices.
Companies prefer to avoid bad publicity and are generally quick to react to news coverage that contains environmental information on their companies. News reports will therefore typically prompt firms to initiate public relations efforts as well as to take a closer look at their environmental practices - if only to avoid bad press in the future. The news media therefore play a key role in indirectly impacting business practices. Media reports also influence consumers, who react either by mail and phone campaigns to offending firms or by changing their buying patterns.
Social investors also rely on information from social monitors. They use environmental data to channel their investment dollars and vote their proxies. By reacting to environmental information, they send a message to offending companies about their environmental practices. As a result, environmental information compiled and disseminated by social monitors can also indirectly influence the firm's environmental practices.
In this way, then, social monitors play a key role in collecting and disseminating environmental information, and so stand to affect business practices. Despite these developments, however, much work remains to be done if we are to create a truly responsive and responsible business sector. We suggest some avenues to pursue.