AHC Group

Lessons from Enron — examining the parallels to environmental governance

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Courtesy of AHC Group

This article discusses five key influences affecting every firm's bottom line with regard to environmental governance and public disclosure.

LESSON ONE: DON'T START BELIEVING YOUR OWN PR.

Gregg Pascal Zachary, a journalist with the Wall Street Journal, professed the need for 'hope journalism' — the need for the American press to find positive stories when reporting on sustainability. When it comes to business management, the messages must be taking hold. Environmental issues have reached a new plateau of calm in the eyes of managers who lived through the 1970s and 1980s, when regulatory issues and 'crisis du jour' were the orders of the day.

Most major corporations support at least one major leadership or excellence program. These get heavy play in the boardroom and in the public relations press kit. I have lost track of the number of self-congratulatory awards given out by various organizations. Industry demonstration projects are heavily showcased by publishers such as Karen Laughlin of Green@Work, who explicitly professes an editorial bent to accentuate the positive.

Based on my own experiences working on the inside of corporations I have found that the outward image projected, more often than not, does not reflect the spectrum of issues that environmental staff members struggle to resolve. I am not suggesting that companies should start airing their soiled green laundry, but officers and directors must have a balanced understanding of both the successes and the weaknesses. If your organization is living in a self-delusional world of positive spin, as Enron clearly was, it is headed for eventual trouble.

LESSON FIVE: THE SECRETARY PROBABLY KNOWS WHAT'S REALLY GOING ON. TALK TO THE PEOPLE DOING THE WORK, NOT THE ONES SPINNING THE STORY.

As reported in the Wall Street Journal, the FBI went after the person who pushed the button on the shredder to find out what really happened. All too often, officers and directors talk to the senior-level managers to find out what is going on. They get answers that are displayed in slick PowerPoint presentations. Jack Welch used to jump six levels and talk to Billy Mack in the extrusion department at the Noryl plant.

For a governance system to really work, the systems must be in place to promote unfiltered information flow. In due diligence reviews with corporations, I am sometimes amazed at the joyous desperation shown by employees who finally get to speak with someone over the issues that have been bothering them. Managers need to 'get real' and get out of the office. Superficial 'team-building,' as engaged by Enron executives, does not reveal the underlying issues. Even when they were in face-to-face discussions, Enron executives ignored the messages that did not fit in with their upbeat message to the directors and financial analysts (review Lesson One).

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