Transparency after 9/11: Balancing the

by Mark A. Cohen

Governments around the world have embraced a new form of environmental regulation – mandatory disclosure of information. Information disclosure programs have been characterized as a third wave of regulation – following the original regulatory approach and the subsequent introduction of market-based incentives. Perhaps the best-known example of the third wave is the Toxic Release Inventory (TRI) program in the U.S., whereby firms are required to disclose legally emitted chemical releases. TRI has brought about significant reductions in chemical emissions. For example, total on-site and off-site releases of toxic emissions are reportedly down by 45.5% between 1988 – 1999. The effect of TRI disclosure on both firm behavior and firm value has been empirically demonstrated. Other disclosure programs have focused on drinking water safety and risk management plans for chemical releases. In addition to government dissemination, environmental organizations have used this information to provide user-friendly, community-based information sources. Similar programs have been instituted in other countries and contexts, including India, Indonesia, Philippines, Colombia, Mexico and Brazil.

Information disclosure programs have been widely touted by policy makers for numerous reasons. One obvious benefit is the fact that it has been found to result in significant improvements in environmental quality and emergency preparedness. They are generally thought to cost the government far less than drafting and implementing industry wide regulations. They satisfy the democratic belief that the public has a “right to know” how they might be affected by third party pollution.

Voluntary disclosure programs are growing as the number of corporate environmental reports suggests. A KPMG study of the Global Fortune Top 250 companies found that 45% issued reports in 2002, up from 24% in 1999. The Global Reporting Initiative, a voluntary framework for sustainability reporting, reported that over 100 companies worldwide have adopted their new standards. One of the growing trends is Internet reporting. Some sites are beginning to include plant-specific environmental information (eg., http://www.gmability.com).

But disclosure comes at a cost. Prior to September 11, 2001, some concern had been expressed by industry officials and policy analysts about divulging proprietary information that might help competitors about the security risks associated with dissemination of environmental information. Other concerns were voiced about the accuracy and meaningfulness of information disclosure and its high cost.

Since September 11, the concern for homeland security has led to a wholesale retreat from the transparency trends of the past decade. Thousands of web pages and documents at public reading rooms have been withheld as concerns developed that publicly available information could be used by terrorists to target areas of vulnerability and high impact.

For example, a recent article in ASAP, the Bulletin of Atomic Scientists, cited a host of information that has been “temporarily removed” from agency websites and public reading rooms. EPA is not alone in removing sensitive information such as risk management plans. Documents removed from the Yucca Mountain web site include: the draft environmental impact statement; the site viability assessment; lists of once-available technical documents; online databases; elements of a virtual tour of the Yucca Mountain site; and maps.

To date, there is little or no guidance on what should be removed from the public’s view or the review process that should be undertaken to decide what information will be allowed back in the future. There is no consistency across Federal agencies or Federal nuclear sites. For example, much of the information taken off the Savannah River site is reportedly available at the Hanford site.

While policies are not yet formalized, the White House recently ordered federal agencies to “scrub their web sites of sensitive information on weapons of mass destruction and other data that might be useful to terrorists. Agencies are being asked to identify “sensitive but unclassified” information on a case-by-case basis and to weigh the public’s right-to-know against security concerns. Some have called for repeal of right-to-know laws altogether. For example, on October 8, 2001, the Governor of Tennessee wrote to Tom Ridge, Director of Homeland Security, urging him to ask President Bush to revoke or temporarily suspend the SARA Title III “Community-Right-to-Know Act.” Governor Sundquist cited the fact that under current laws, a “determined individual could ask for access to files which could tell exactly how many pounds or gallons of dangerous chemical or biological ingredients were present at an exact location in any of our states … determine from these files when shipments in and out of facilities could be tracked … (and)… know where to deter and stop emergency response personnel and the entire emergency plans which state and local officials would use to interdict their movements.”

BELL Conference Panel Questions
A session at the BELL Conference focused on the growing trend towards corporate environmental transparency and the retreat from that trend since 9/11. Participants included: William Blackburn, vice president Corporate Environmental Affairs, Baxter International; Kenneth Green, Chief Scientist, Reason Foundation; and Daniel Fiorino, Director, Performance Incentives Division, U.S. EPA.

Some of the questions they discussed were:

* What are the benefits of transparency to corporations? Have companies begun to rethink this trend post 9/11? Should the move toward reporting facility-based materials accounting (mandated in certain states) go forward?

* What is the public’s “right-to-know”? Does it include the risks they face from chronic and acute environmental hazards in their communities?

* Does reducing the information available to the public increase or decrease the risk to communities? What about the risk to emergency responders?

* Are there differing “publics”? Should those who live near a facility be given selected access to information upon proper identification? How can secrecy be maintained?

* Will the heightened terrorist threat pressure companies to find alternative chemicals and processes?

* What affect do security concerns have on the Global Reporting Initiative?

Discussion: Seeking Common Ground
While different opinions among panelists obviously exist, the discussion had a surprising degree of commonality and agreement. Does the public have a “right-to-know” the environmental risks they face? That is not an easy question to answer. While most would agree the public has a right- to- know about significant risks to health and property, it is not obvious where to draw the line between “significant” and other risks. As Kenneth Green noted, “We’d like to know all kinds of things, but gathering data has costs, revealing information has consequences, and the meaningfulness of information that is disclosed can be tricky.” The well-known concern over the difference between raw TRI emissions and actual risks posed to populations is but one example of this concern. He further noted that “simply ‘liking’ something doesn’t constitute a right to it, nor justify imposing obligations on others to take actions that not only cost them money, but leave them at more risk.”

Much of the value – and the risk – around reporting appears to be at the facility/ community level. People who live and work near a facility are obviously concerned and interested in their chronic exposure and risks posed from an accidental discharge. Similarly, if a terrorist is interested in locating a vulnerable chemical facility that can do maximum damage, he or she needs access to very detailed information about local facilities. Thus, aggregate chemical usage for a multinational company, for example, will unlikely be of much value to either local community or terrorists. Thus, there appears to be less concern for broad corporate environmental reporting and more concern for facility level data.

One potential solution being discussed is to allow limited access to facility-level data that is sensitive. Thus, for example, local community leaders or other carefully screened individuals might be given on-site access to detailed information on a need-to-know basis.

Is the concern over security real or perceived? While there is no doubt a real threat of terrorist attacks on chemical, biological or nuclear facilities, the real question is whether any of the environmental information dissemination programs in place add to this threat. Is it too late to put the cat back in the bag as some agencies are trying to do? It was noted that popular newspapers have recently reported on attempts to breach security at chemical facilities and how lax security is. They have reported on specific chemical facilities. In a country with freedom of press, how can we expect restricted flow of government-mandated environmental information to have such an impact?

Members of the audience expressed concern that as researchers, they will lose a valuable source of information that is providing much needed evidence on factors that contribute to improving the environment. while much of the published research focuses on corporate-level data, significant information has been gleaned from facility-level data. It was noted there is some precedent for allowing researchers to have limited access to sensitive business information (eg. Census Bureau data on facility level production). Thus, if restrictions are ultimately imposed on information dissemination, it might be possible to allow access to researchers under the proper confidentiality and security safeguards.

For many of the larger companies that have embraced voluntary reporting, there is little question that they will continue down the road of disclosure. According to William Blackburn, “More and more companies are beginning to see there is real business value to transparency, that there is much information of interest to the public that can be communicated without running afoul of security concerns. Transparency can help build credibility with the public, creating an asset of special value when times are tough. But more important, transparency can shine a bright light on issues internally and serve as a powerful agent for change in the direction of good corporate citizenship.”

A potential outcome of heightened security concerns will be renewed voluntary attempts by industry to find alternative manufacturing processes that do not require chemicals that are as hazardous. As the risk of security breaches increases, so does the cost of protecting against those breaches, the cost of insurance, etc. Thus, firms might now have an added incentive to find more benign production processes.

One of the questions posed to the panel was whether the post-9/11 era will reverse the growing trend toward voluntary reporting mechanisms. Would security concerns roll back these voluntary efforts? Somewhat surprisingly, the consensus seemed to be that on the contrary, voluntary efforts will become more important. As Kenneth Green noted, codes of conduct such as Responsible Care, CERES, GEMI, ISO 14000 and Global Reporting Initiative assure risk management, but preserve privacy.

Previously, the biggest threat to private EMS systems was the governmentalization of “right-to-know.” Now, the security steps taken since September 11 may return the “right-to-know” focus to voluntary EMS systems. Of course, this might result in less detailed information being disclosed than under mandatory governmental approaches.

Concluding Remarks
The general consensus of the panel and attendees was that information is a powerful tool for the public, policy makers and researchers. In spite of the recent curtailment of information availability and concerns over security, there is a legitimate need for environmental information. The key questions focus on who should be entitled to what type of information.

As one participant noted, we should not underestimate the benefits of a free society where individuals have access to important information about the institutions that affect their daily lives. The one plane that did not hit its intended target on September 11 was the plane in which passengers had access to information about the intent of the hijackers and their ultimate fate. This is a powerful lesson in the value of information.

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FROM Corporate Environmental Strategy, Vol. 9, No.4 (2002), a SustainableBusiness.com Content Partner.