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US companies ‘fail to tell it like it is’

December 2007

One of the biggest barriers to the spread of corporate social responsibility in the US is the lack of openness among companies about the problems they face, a leading socially responsible investment specialist has said.

Elizabeth McGeveran, vice-president of governance and sustainable investment at F&C Management, the global asset management company, where she leads engagement in North America, says that many US corporations do not admit to problems in the social and environmental sphere – in marked contrast to their European counterparts. She told the recent Business for Social Responsibility annual conference: ‘In the US there’s a corporate culture that “we’ve got it all under control”, and that’s just baloney.’

McGeveran complained that during a recent F&C research project into artisanal mining in Indonesia, ‘the European companies said they were having terrible problems, but the US companies essentially reported that everything was fine’. She said investors preferred companies to acknowledge their difficulties rather than brushing them under the carpet. ‘It is remarkable how many US corporations claim to have social responsibility built into their DNA,’ she added.

However, Matthew Arnold, director of the Washington DC-based investment consultancy Sustainable Finance, told delegates that many US corporations were reluctant to disclose more than the bare minimum because this risked litigation. ‘When you tell it like it is in this country, you open yourself up to potential lawsuits,’ he said.

Greenhouse gas emissions are an emerging focus of litigation in the US, with Edison International, Xcel Energy and a third unnamed utility currently embroiled in climate-related lawsuits, along with the auto maker Ford.




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