Seeing in the Dark  

Our annual inventory of America’s least transparent big-cap companies.



By Dirk Olin 



Click here to view the 2012 Black List.


A significant number of stakeholders care about corporate behavior. So, information pertaining to that behavior matters to them. It matters to investors when companies offer stock options to CEOs, which is why the Securities and Exchange Commission requires companies to disclose such arrangements. It matters to activists concerned with, say, pollution, which is why the Environmental Protection Agency imposes public fines on violators of toxic dumping regulations. And it matters to customers when the product they’re buying might affect their family’s health, which is why the Food and Drug Administration creates various testing regimes.

But all of that falls under the domain of compliance. That’s the floor. Public companies failing to provide that information are breaking the law. When it comes to the emerging exchange in corporate responsibility, by contrast, voluntary disclosure is the new currency.


Happily, such disclosure has been on the rise for the past decade. A recent report from KPMG revealed that 95 percent of the world’s 250 largest companies now report on their corporate responsibility. Of course, there’s reporting, and then there’s reporting. Material disclosure differs markedly from the cynical public relations campaigns (think: “Beyond Petroleum”) that provide merely symbolic transparency. And our friends at the Global Reporting Initiative (see the GRI Report, page 40) remind us with depressing regularity that European corporations are far more advanced in this regard than their American counterparts. Indeed, out of the 1,360 companies that issued GRI-based reports in 2009, only 130 were companies based in the United States. Still, demand for openness—and objection to opacity—are both very much on the upswing, even in the States.


Which brings us to our third annual Black List. It’s a rogues’ gallery of the least transparent organizations, taken from the Russell 1000 catalogue of the highest capitalized, publicly traded U.S. companies. Please take note: Our compendium has no political cast. It is market-driven. As happy as we have been to champion the most open companies in the U.S., we have repeatedly received requests—escalating after the financial meltdown and global recession—to reveal which companies are the most opaque. That gauntlet thrown down, we felt honor-bound to pick it up.

We are not cavalier about this. This is not “gotcha journalism.” It is a painstaking process. And it generates more than a little discomfort, all around. We have received no shortage of complaints—and, yes, litigious threats—from the companies that we have found dwelling at the bottom of these dark waters. But it really takes precious little action for a Black List company to rise from those inky depths.


As of now, a company can avoid this ignominy by revealing just a few CR-related data points. Answer a couple of questions from the Carbon Disclosure Project, and you’re good. Put your employee benefits policies online. Tell the world whether you do, or don’t, buy carbon offsets.

The point is that, while earning a spot on the 100 Best Corporate Citizens List is a major accomplishment—requiring considerable commitment—executing the minimal transparency to get your company out of it is quite easy. In fact, as the Corporate Responsibility Officers Association notes: If it costs you more, you’re doing it wrong. Oh, and one more thing. Expending the energy needed on this is more than worth avoiding the embarrassment of appearing the “Black List.” Abercrombie & Fitch learned this with our first list, and its CEO wrote our followup cover story pledging to escape such disrepute going forward. (So far, so good.)


As it happens, I recently visited the campus of a company on this year’s Black List—for reasons having nothing to do with transparency, per se. As I walked around the facility and heard details of its commitment to environmental sustainability, bottom-up employee relations, and a meticulous approach to governance and compliance, I recalled that they were about to be on the Black List. I realized that their non-disclosure was completely at odds with their culture and performance.


I shared the transparency criteria with them. “Do you realize,” I added, “that you’re hiding your light under a bushel?” The deadline for reporting this year had passed, and there was nothing they could do to get off the list, so I braced for blowback. But they doublechecked their records and replied, “You’re right. We haven’t disclosed this stuff. We’ll start doing it for next year.” (I’m not going to single them out. You’ll have to compare next year’s list to this year’s.)


Some companies would demand numerical proof of the “business case” for this. (Doable, by the way.) But these folks experienced the epiphany that most—and I want to emphasize most—commercial entities have when confronted with this issue. Clearly showing the world that you are providing goods and services in ways that are sustainable for workers, customers, investors, and neighbors logically inures to the benefit of your bottom line. Oh, and it will help you sleep at night.