Re: State Laws Mandating p2 -Thanks and Reply

["Phillip J. Annis" <pannis@facstaff.wisc.edu>]

Scott,

There are certain SEC requirements by which a publicly owned company with
stock on the market to disclose potential or at least actual liability which
impacts the said value of that company.

I'm not a stocks person. That info was provided during a recent auditing
class I attended.  The SEC will hammer a company if it finds that this
liability was not made public.


Jack



At 08:33 AM 2/12/97 -0500, you wrote:
>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
>
>
Phillip (Jack) Annis
University of Wisconsin-Extension
Solid and Hazardous Waste Education Center
161 West Wisconsin Avenue, Suite 6000
Milwaukee, Wisconsin   53203
Phone 414-227-3371
Fax 414-227-3165
Email      pannis@facstaff.wisc.edu