US firms fail transparency test: study

27 July 2012

NEW YORK: Major brand owners from the US have fallen behind their international rivals in many of the areas defining corporate transparency, a report has argued.

The Conference Board, the insights group, revealed 86% of the Russell 1000, an index of the country's top listed firms, now have formal business ethics policies in place. Ratings on this metric rose to 93% among even larger corporations in the S&P 500.

By contrast, analysis of a global sample of 3,000 enterprises based on information from Bloomberg, the financial news service, pegged this figure at 80% worldwide.

"After a decade of regulatory reforms on corporate governance, US. companies are among the leaders in the adoption of business ethics policies," the study suggested.

Less positively, the analysis stated that America's biggest firms "lag far behind" competitors in Japan and the European Union when it came to the openess of their ecological and social practices.

More specifically, just 10% of players from the Russell 1000 disclosed these details, an amount reaching 19% for the 3,000 operators featured on Bloomberg's database.

In further demonstration of varying performance, some 45% of organisations in the S&P500 published official sustainability reports, this declined to 24% of their peers in the Russell 1000.

Additionally, while 13% of brand owners in the Russell 1000 measured and revealed energy use, this climbed to 47% globally. Such returns stood at 12% and 37% in turn for water consumption.

When assessing whether firms had established risk management procedures to limit the impact of their activity on climate change, readings came in at 16% for the Russell 1000 and 39% worldwide.

Transparency was also found to be lacking with regard to employee turnover, an area which would enhance understanding of relations with a "key stakeholder group".

Disclosure scores here hit 10% for Bloomberg's panel, versus an even more modest 7% of the S&P 500 and 4% of the Russell 1000. The median annual turnover at the global level stood at 9%.

While only 5% of enterprises in the S&P 500 and 3% of the Russell 1000 announced what percentage of their management positions were filled by "minority employees", this beat the worldwide total of 3%.

Finally, a 13% minority of US companies in the S&P500 revealed the dollar value of political donations, as did 7% of the Russell 1000.

Data sourced from The Conference Board; additional content by Warc staff