Delaware is living up to its nickname “The First State” this month as it becomes the first in the nation to offer a sustainability and transparency certificate to corporations. Officially known as Delaware’s Certification of Adoption of Transparency and Sustainability Standards Act, the new law looks to evolve the idea of sustainability from just another buzzword into real business practices and systems that benefit communities.
Under the voluntary plan, companies incorporated in Delaware can submit individually created sustainability programs that are relevant to their business goals and practices. The Delaware Secretary of State office will then issue a certificate denoting the corporation as compliant. To keep the designation, certificate holders will file annual updates on sustainability progress and goals. The law offers transparency across the submission, review and annual updating process.
Why now, and why Delaware? Delaware certainly doesn’t need more or new environmental regulations that would require new key performance indicators and standards. However, what it does need, and intends to do with this law, is to hold companies accountable to the sustainability commitments they make.
Today a company can—and many do—say whatever they want regarding corporate sustainability initiatives. Marketing teams can create clever public relations campaigns around those assurances and promulgate the notion that they’re making a difference. However, there is no real way currently to evaluate those promises as authentic and to find out if they’re being kept. The new Delaware certification demands a new level of transparency.
While each company will set its own specific goals and endpoints, transparency is a key part of the law. Submissions and annual updates will be available for public review through a required link on the company’s website that provides open access at no cost to its standards and assessment measures, as well as the processes used to develop the standards and any relevant third-party criteria. As has been proven time after time across institutions and issues, sunlight is the best disinfectant.
Delaware has a unique opportunity to lead the charge for corporate sustainability as home to a majority of corporations listed on the US stock exchanges. More than half of publicly traded companies, including 64% of the Fortune 500, are incorporated in Delaware. The state’s new law can and should serve as a model for other states looking to advance their own state sustainability goals.
Of course, it’s not just state governments that want to foster sustainable business solutions and products. Consumers are demanding the same. A recent JWT Intelligence poll found that 92% of consumers surveyed are trying to live more sustainably, and 83% would always pick a brand with a better record of sustainability. The need for transparency, and a certified label of sustainability were also important: 86% of consumers said they couldn’t currently make accurately informed choices because there is too little information on product packaging to assess true sustainability.
Delaware’s voluntary certification law offers the definition consumers are looking for in pushing businesses to lay out plans for innovation and growth that include societal benefits. I can see a day when companies might even require suppliers to get the certification from Delaware as a qualifier for doing business in the state.
For now, “The First State” is first again, but hopefully, once other states take a look at the new law, not the last.
By Hugh Welsh, President of DSM North America
