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January 07, 2004
Film Depicts Environmental and Social Reporting Disappearing in SEC Black Hole
    by William Baue

A documentary film by environmental attorney Sanford Lewis reveals the SEC's failure to enforce its rules requiring companies to disclose environmental and social liabilities.

The documentary filmmaker's dilemma: how to visually represent subjects who refuse to speak to the camera. The typical solution? Film a still photo with voiceover narration. Segments of the film Off the Books! Environment & Human Rights dealing with the US Securities and Exchange Commission (SEC) feature a stock image of the commission's file room because, as the narrator explains, the SEC declined repeated requests for interviews.

Why? The SEC rarely enforces its own regulations that require companies to report material environmental and social liabilities, according to the film's producer, director, and editor, Sanford Lewis, an environmental and corporate accountability attorney. Mr. Lewis began working on corporate underreporting of environmental and social liabilities in 1997, when he prepared a report on such obfuscation by the mining company Phelps Dodge (ticker: PD) for the United Steelworkers of America (USWA).

"The United Steelworkers filed a petition for enforcement with the SEC, and then I began to look at one company after another, filing a whole series of letters with the SEC asking them to take enforcement action," said Mr. Lewis. "The word we got back from the SEC on all these letters was, 'thank you very much, we received your note, our process is secretive from this point on,' and then we never heard back from them."

"The letters fell into the SEC black hole," Mr. Lewis told

The SEC's voicelessness and facelessness in the film underscores this silence.

In contrast, many luminaries of the environmentalist and socially responsible investment (SRI) communities, including Ralph Nader, Domini Social Investments founder Amy Domini, and Social Investment Forum (SIF) president Tim Smith, speak on-camera.

"The film is really intended to galvanize the choir--to get likely supporters to understand this issue and get into gear on addressing it, and it think it has succeeded in doing that," said Mr. Lewis. "I would have made a much different film if I were trying to convince companies to comply with regulations."

Mr. Lewis screened the film in Boston because it is "a big social investing community," as well as at the industry conference, SRI in the Rockies. The film also aired nationally on cable and satellite on Free Speech TV (FSTV), an activist network that reaches 11 million households in September and October 2002, and has been screened in theaters and classrooms nationwide.

"It was shown at the Congressional briefing on corporate environmental and social disclosure in September 2002, and it's been passed around in Congressional offices," said Mr. Lewis. "There's something about a film that brings the issue alive and makes people more excited about the topic than reports."

"I've been struck by how this film has gotten these ideas across to people who would never read the reports, because they're too technical," he added.

Mr. Lewis was inspired to make the movie after Enron and the related accounting crises raised awareness about the issue of corporate reporting and accountability.

"I basically suspended my legal work for a few months and just worked on this film without pay because I felt so strongly that this issue needed to be addressed and a film could be a powerful way to get the point across to more people," said Mr. Lewis.

Indeed, the interview with Mindy Lubber, founder of the Green Century Balanced and Equity Funds (GCBLX;GCEQX) and current executive director of the Coalition for Environmentally Responsible Economies (CERES), crystallizes the business case for improved enforcement. She states that companies with better environmental and social reporting tend to perform better financially, a stance supported by much empirical evidence. However, it is her common-sense argument that is most persuasive.

"I own a piece of that company and I have a right to that information," Ms. Lubber tells the camera.

Whether the SEC will defend this right of investors remains to be seen.

"I've met with the SEC before about these issues, and it basically comes down to what priority they give to how they allocate their resources," Mr. Lewis said. "Their outlook is, 'we've got bigger fish to fry,' and so these issues fall to the bottom of the pond--that's what they say privately."

"I think the commission knows there's increasing scrutiny, and that this issue is not going to go away, but I think it's going to take political pressure to get the SEC to actually enforce its reporting requirements," Mr. Lewis concluded.


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