Heed the Calls for Transparency

As a consequence of the global crisis, financial services executives are preparing for a regulatory overhaul. But probably few have considered how to deal with the intensive scrutiny of their sector that’s now coming from all corners – the public, NGOs, foreign governments, the media, think tanks, and organizations such as the World Bank and the International Monetary Fund. If the experiences of the oil, gas, and mining industries are any guide, such scrutiny will be a long-term force to be reckoned with. In response to outcries against diamond trafficking and corruption in oil-producing and other resource-rich countries, a coalition of organizations has kept extractive companies under a microscope for the past decade, demanding transparency and accountability. This has changed how those companies operate, prompting them to take such measures as appointing sustainability managers to their executive committees and performing in-depth assessments of the societal effects of their operations. Anglo American, for instance, produces a lengthy “Report to Society” detailing the company’s impact on indigenous peoples and its management of human capital, among many other things. With the Extractive Industries Transparency Initiative (which involves NGOs, the numerous national governments, and international institutions) closely monitoring transactions between governments and businesses in those sectors, it’s increasingly rare for resources policies to be formulated in off-the-record discussions between politicians and executives. In fact, many oil, gas, and mining companies have come to recognize that increased transparency can be in their own best interests, especially in corrupt or unstable countries, where requests for bribery can be common. Banks and asset management firms are bound to see the same kind of pressure applied to...