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Ever since the
Great Depression, corporations have been required by the SEC
to give a true accounting of their assets and liabilities so
the public can gauge the relative financial health of
companies. But according to a 1998 EPA study, 74% of
publicly traded companies violate an important SEC rule
requiring the disclosure of environmental financial debt.
The findings have so alarmed the EPA that the agency
notified the SEC of their national campaign to get companies
to confess their environmental liabilities based on the SEC
reporting requirements.
 For
years the SEC has avoided enforcing the environmental
liabilities reporting rules, having only once enforced the
regulation. Environmentalists say the law is too vague about
what companies have to disclose, leaving the law wide open
to interpretation about what needs to be reported and
opening the door for companies to weasel out of reporting
clean-up costs, pollution fines and other environmental
liabilities.
But pressure is
mounting for companies to be more forthcoming. Not only has
the issue caught the attention of the EPA, but a coalition
of 60 organizations, called the Corporate Sunshine Working
Group, is calling on the SEC to bear down on companies that
don’t report their environmental liabilities. The group
cites many examples of corporate non-reporting. For example,
they say that because US Liquids concealed illegal dumping
activities resulting in a large fine, shareholders were
treated with a rude awakening when the ordeal was made
public and share prices fell by over 50%. Similarly, Friends
of the Earth says Viacom failed to report a whopping $300
million in Superfund cleanup costs to shareholders—a
liability that could reflect poorly on the company’s
financial health.
Perhaps in
light of the ENRON scandal, the SEC will view the
non-reporting of environmental liabilities with more
scrutiny. Then we might very well see companies thinking
twice about trashing the environment.
For more
information on this issue, go to the web site for the
Corporate Sunshine Working Group:
www.corporatesunshine.org. |
