State Laws Mandating p2 -Thanks and Reply

[Robert S Butner <butner@battelle.org>]

A half a dozen or so studies have come to my attention in the last year that
all reach a similar conclusion: publication of environmental performance
information has a material effect on firm financial performance.  The
measures used vary from study to study--stock price, intangible asset value,
cost of capital, debt ratings, etc.  If one believes the findings of these
business school and economics profs. (which I guess I tend to), then it
seems like an effort should be made within the company to examine two
things: (1) the mechnaisms which make environmental information public
and/or how the company can keep information private (2)opportunities to
manage that flow of information where it cannot be made private.

          A couple of related thoughts, in a sense playing devil's
          advocate (though I always thought THAT was the whole purpose
          of business school):

          - despite the academic theorizing on relationship between
          green ink and black ink, the "green" mutual funds have
          largely underperformed.  Is it possible that empirical data
          are not living up to the theory?  Economists faced with such
          a dilemna will usually tell you to disregard the data, but
          in any event it could probably be explained by the metrics
          used to select stocks, which may not actually measure
          "green-ness" in the same way P2 people like to think of it.

          - remember that formal publication (and listing as a
          liability) of environmental data including legacy
          wastes/clean-up duties, may in fact penalize firms that have
          come to "see the light" and are making significant strides. 
          A good example might be a Dow or Monsanto (to pick
          arbitrary examples), both still high on the TRI list
          in some regions, despite what I think most would agree is a
          pretty serious committment (and action) towards P2 and
          sustainable development.  Would the environment be served if
          their stock values dropped due to SEC listing of their
          clean-up liabilities, perhaps forcing a reduction in their
          clean technology R&D efforts?


          - market forces don't address a number of broader social
          needs/issues that simply aren't reflected in the price
          signals which zoom around us constantly.  There's a great
          article in the Better World 'Zine, an online
          socially-responsible business journal who's URL escapes me
          but can be found easily via web search, which poses the
          question:  which is better to invest in; an environmentally
          progressive company like Ben and Jerry's that makes what is
          ultimately a resource-intensive luxury item but does it in a
          nice way, or a chemical company which makes (pick your own
          "necessity" commodity) and invests in cleaning up THEIR
          product or process?  

          Remember, the free market gives us "USA Today" as well as
          the NY Times, McDonald's as well as the corner deli, and (to
          quote Bruce Springsteen -- another product of market forces
          -- "53 channels and nothing on.").  As it should.  But it
          can be dangerous to presume too much predictability or any
          sense of optimality when relying on these forces.  Any
          student of evolutionary theory knows this -- evolutionary
          systems (and arguably the economy is one of them) do not
          proceed according to a design; they adapt with little sense
          of purpose, creating wonderous things along with monsters
          (OK, perhaps no monsters, but certainly cockroaches and toy
          poodles, which are almost the same thing).

          Does the above mean I don't think market signals are
          important.  No.  Do I disagree with the notion of more
          public disclosure of environmental data?  Heck no!  But
          I do think that this IS a can of worms, and opening it is
          not without its consequences, both good and bad.  It is also
          dangerous to assume that more information will ALWAYS lead
          to a more socially optimal state.  


          Just some food for thought.  All in all this has been a very
          interesting thread.

          And before I get flamed by the toy poodle owners of this
          list, I own one.  I'm entitled!

          Scott Butner
          butner@battelle.org