Corporate Transparency Reports: Understanding Limitations and Leveraging Opportunities

Lock backgroundRecent revelations regarding surveillance activities by the U.S. Government have raised many questions regarding the balance between privacy and security. There have already been, and there will continue to be, Congressional hearings and other public policy forums regarding the appropriate scope of  government surveillance efforts and the role of private companies in responding to law enforcement requests.

Beyond questions regarding the scope of government under existing legislation, recent revelations have highlighted the need for public discourse regarding the tradeoffs between security and privacy. Effective and meaningful public discourse on this subject requires all parties to have access to sufficient information to be able to understand the nature of the choices being made. The last few weeks have therefore highlighted the role of private companies not only as providers of information to law enforcement officials, but also as providers of information to the public regarding the requests that they receive.

In recent years, and certainly since the launch of the Global Network Initiative (“GNI”), companies in the information and telecommunications (“ICT”) sector have felt pressure to disclose information regarding the requests that they receive from law enforcement officials. Companies that become participants in the GNI commit to

Making disclosures to users regarding the relevant legal and regulatory requirements that may require disclosures of personal information, the types of information that may be subject to such disclosures, and the company’s policies and procedures for responding to government requests.

In this context, a number of companies have published reports regarding certain requests that they receive from law enforcement officials, both in the United States and abroad, and the nature of their responses to those requests. In April of this year, the Electronic Frontier Foundation (“EFF”) published a report, Who’s Got Your Back?, in which it observed that annual transparency reports are “becoming a standard practice for major Internet companies.” EFF cited Dropbox, Google, LinkedIn, Microsoft, Sonic.net, SpiderOak, and Twitter as companies that have published statistics regarding their responses to law enforcement requests for user data.

While many observers of the ICT sector have understood that the scope of these transparency reports was limited to what companies could legally disclose, the extent of what was previously unknown is now becoming more clear. In recent days, several major companies, including Yahoo!, Microsoft, Facebook, have pushed forward with efforts to disclose information regarding data requests received from the U.S. Government pursuant to national security legislation. Companies had previously been prohibited from disclosing this information, and thus these new reports may lead some to question the value of earlier transparency efforts.

Moving beyond a level of understandable cynicism, recent events have also provided a platform for discussion regarding the role of corporate transparency efforts. In recent statements, several major companies have highlighted the role of transparency and the tensions involved in necessarily incomplete disclosures. For example, Microsoft issued a statement urging the government to ease restrictions on what companies can disclose, noting that

Permitting greater transparency on the aggregate volume and scope of national security requests, including FISA (Foreign Intelligence Surveillance Act) orders, would help the community understand and debate these important issues[.]

Facebook issued a statement that implicitly acknowledged the limitations of current transparency reports, stating that

We would welcome the opportunity to provide a transparency report that allows us to share with those who use Facebook around the world a complete picture of the government requests we receive, and how we respond[.]

These statements highlight the reality that the public cannot expect to receive complete information regarding law enforcement requests from companies, just as such information will never be fully disclosed by the government. This, however, does not mean that there is not significant value in corporate transparency efforts.  As Dunstan Allison Hope of BSR noted in a recent blog,

It is thanks to these voluntary disclosures by companies that we now know the true scale of PRISM (answer: much less than we feared) and that, owing to the various narratives and explanations accompanying the reports, we can have a much more informed debate about the law-enforcement process in the digital age.

Ultimately, the best transparency reports are not merely about statistics and cannot be judged solely on whether certain information is missing. It is the “narratives and explanations” accompanying corporate disclosures that often provide the most fodder for discussion. Companies that identify hard challenges, acknowledge limitations, and invite engagement provide real tools for members of the public that seek to foster meaningful dialogue not only with companies, but also with public policymakers. In the coming months, we are likely to see more debate regarding the scope, and limitations, of corporate transparency initiatives. This is a very positive development.

Looking ahead, it is important for all stakeholders to consider a few key characteristics of transparency reporting:

  1. Transparency is inherently incomplete. Perfect transparency may be a goal, but practically it will never be a reality. Meaningful and substantive information has been edited from even the most well-intentioned corporate disclosures. Choices always need to be made regarding what is disclosed, and not all stakeholders will agree with those decisions. In some instances, certain choices are made as a result of legal requirements. The best transparency efforts will support engagement around those choices and requirements and foster debate regarding the appropriate content of future disclosures.
  2. Transparency is less about compliance and more about dialogue. Far too often, discussions regarding corporate disclosures becomes mired in debates about whether the disclosed information is technically sufficient to meet stated mandatory or voluntary standards. Meeting standards is important.  But a compliance mentality can distract from the value of transparency as the initiation of conversation by limiting subsequent dialogue to the question of whether certain disclosures were compliant rather than whether those disclosures provided information that is useful to corporate stakeholders. While disclosing information about past actions, corporate personnel need to see transparency reports as fundamentally forward looking.
  3. Transparency is essentially a multistakeholder exercise. Corporate transparency initiatives not also foster dialogue, but they also play a critical role in engaging multiple stakeholders in important public policy debates. No single company can address all of the significant policy concerns associated with law enforcement requests for user data. Every company that provides some level of disclosure, however, plays a role in strengthening the capacity of all stakeholders, including peer companies, the public, and the government, to engage in meaningful discussions regarding the choices at stake in balancing privacy and security interests.
  4. Transparency is constantly evolving. Tomorrow’s transparency reports will be considerably more comprehensive than today’s. This is the nature of reporting and disclosure. Companies will receive feedback from stakeholders which will cause them to modify future reports. Governments will receive pressure from companies and the public to allow for, or require, greater levels of disclosure. Collectively, our expectations regarding the scope of what should be, and can be, disclosed will change. Ultimately, transparency is always imperfect, but never static. Transparency reports always, therefore, provide opportunities for progress.

One thought on “Corporate Transparency Reports: Understanding Limitations and Leveraging Opportunities

  1. Pingback: Understanding Corporate Annual Reports | WWW.DINFOBLOG.NET

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