10 of top 100 publicly traded firms pass transparency tests

Standard awards points for publication of annual corporate social-environmental report, discussion of social-environmental policies and more.

April 29, 2010 05:03
3 minute read.
bank leumi 298 88 aj

bank leumi 298 88 aj. (photo credit: Ariel Jerozolimski [file])

Ninety percent of Israel’s top publicly traded companies do not meet transparency standards, according to a new analysis by the BeyondBusiness consulting firm. The report analyzed the transparency of the companies whose stock is traded on the TA 100 index. Of those 100 companies, only 10 achieved a passing grade according to the transparency standard.

The standard awarded points in four areas: publication of an annual corporate social-environmental responsibility report on the company’s Web site; discussion of social-environmental policies and actions on the site; how easy it was to find that information, and how understandable it was.

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Social-environmental policies include disclosing company management, as well as the company’s code of ethics, environmental policies, suppliers and supply chain, community involvement and other similar issues.

The study was conducted in February of this year and released Wednesday. The list of TA 100 companies was taken from the stock exchange site in February.

The top 10 companies that passed the test were: Bank Hapoalim (96%), Bank Leumi (93%), Strauss Group (86%), Partner (75%), Bank Discount (73%), Cellcom Israel (60%), Elbit (55%), ORL – Oil Refineries (53%), Ness Technologies (51%) and Blue Square Israel (50%).

Sixty-five percent of companies scored between 10% and 50%. Thirteen percent scored between zero and nine percent, while 12%, or 14 companies, scored a zero.

Interestingly, while Blue Square Israel scored 50%, Blue Square Real Estate, a subsidiary also traded on the TA 100, scored zero.

Liad Ortar, co-CEO of BeyondBusiness, drew attention to which sectors were leading the push for transparency. In Israel, the banking and communications sectors were at the forefront of Corporate Social Responsibility (CSR) reporting, he wrote in the report. That was rather unusual, as in other parts of the world, the energy and chemical sectors were usually the most open, with banking coming in third.

Speaking to The Jerusalem Post Wednesday, Ortar pointed to the sector that had no transparency whatsoever: the oil and gas exploration companies.

“Whereas in other parts of the world, energy companies are the leaders in transparency, here it’s the opposite. One would expect them to report on how they operate at sea, what they do with the sand they displace, and other issues – but they don’t,” he said.

The bottom line is that Israel is very far behind in transparency reporting, Ortar summed up.

“We did a study two years ago on reporting around the world of countries with similar GDPs to Israel, and Israel ranked around the same as countries like Bahrain and Bangladesh.

“Corporate social responsibility reports are very common in Europe, North America and the Far East, but Israeli companies still don’t really get what it is all about. Our motto is: You can’t have responsibility without transparency. Some countries are even turning voluntary reporting into mandatory obligations under law,” Ortar told the Post.

The transparency standard focused first and foremost on whether a company produced a CSR report of some sort. Half the company’s score consisted of the report.

“We focused on the Internet as the main communication channel to the public these days. So, for instance, if a company said it had a report but it was only available in the main office,” well, that wasn’t good enough, Ortar explained.

Similarly, if a company published its CSR report on its Web site but didn’t include any information about social responsibility policies and actions on its Web site, it received no points for transparency on its Web site.

“The whole idea behind corporate social responsibility is to engage the stakeholders and provide them with information,” according to Ortar. These days, that is best accomplished through the Internet, the report stated.

This is the second year that the transparency standard has been compiled. The overall score of 33% this year was only two points higher than last year.

Seventeen new companies joined the list this year.

Two companies dropped out of the top 10 and were replaced by two others. Teva dropped to the 15th slot, and Matrix dropped to the 24th. Ness jumped straight into the ninth slot on its first time in the index, and Tower Semiconductor jumped into the top 20 in its first year in the index as well. Blue Square rose four places, 14 to 10.

Bank Hapoalim stayed in the top slot for the second year running.

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