Thursday, March 15, 2012

Ruminations XXXIX: Transparency As Property

Transparency is coming to be understood as a concept that serves as both norm (substantive rules, instrumental use) and technique (process, method, metrics).  In its dual roles, transparency has both broadened its measuring and expanded its governance effect. Transparency has come to stand for (i) an identifiable set of information (data), (ii) the generation of that data and its mechanics; (iii) the categorization of that data (data grouping) (iv) the generation of assessment metrics through which data is contextualized, (v) the use of that data (and assessments) by data generators, and (vi) the use of that data  (and assessments) by others.  While this basis for theorizing transparency helps explain much, it yet perhaps misses some important nuances.
 (Pix (c) Larry Catá Backer 2012)

These remarks suggest that though it is useful to approach understandings of transparency within this norm-technique matrix, this approach does not fully capture the nuances of the concept.  I would suggest another layer--the notion of transparency as property.

The modeling of transparency in its conventional form as norm and technique have had profound effect on its use in both the public and private sectors.  When applied strategically, that is when understood principally from this instrumental-use perspective, strategically developed combinations of the components of transparency have been applied with the effect, in many instances, of substantially expanding the governance effect of transparency. Backer, Larry Catá, Monitor and Manage: MiFID and Power in the Regulation of EU Financial Markets. Yearbook of European Law, Vol. 27, 2008; Backer, Larry Catá, The Duty to Monitor: Emerging Obligations of Outside Lawyers and Auditors to Detect and Report Corporate Wrongdoing Beyond the Securities Laws. St. John's Law Review, Vol. 77, No. 4, p. 919, 2003. 

The choice of the specific data to identify as such, and to harvest, and the construction of categories, along with the case of both to assess behavior or condition has a strong governance effect on the object of data generator. See,e .g., Backer, Larry Catá, Surveillance and Control: Privatizing and Nationalizing Corporate Monitoring after Sarbanes-Oxley (August 25, 2010). Law Review of Michigan State University-Detroit College of Law, 2004.  Nations adjust their behavior to maximize the likelihood of high credit ratings as universities adjust their behavior to conform their behavior and deploy assets to maximize the chance that the information used can increase their rankings against their peers. Transparency, in this sense can be understood as generating data and information. The generation of information its of reflects management of behavior to the extent information is used to assess. This production of information does not merely affect the information provider. The provision of information and the sharing of data can also provide a basis for state holders and virtually any outsider to participate in decision-making by the data producing entity. This later use of transparency is well understood in the conduct of public governance. This is the essence of public sector transparency initiatives, for example the Rio Declaration on Environment and Development (1992)
Principle 10. Public participation Environmental issues are best handled with the participation of all concerned citizens, at the relevant level. At the national level, each individual shall have appropriate access to information concerning the environment that is held by public authorities, including information on hazardous materials and activities in their communities, and the opportunity to participate in decision-making processes. States shall facilitate and encourage public awareness and participation by making information widely available. Effective access to judicial and administrative proceedings, including redress and remedy, shall be provided.
Logo of UNCED. (Source: West Midlands Biodiversity Partnership)

Thus participatory element has also moved into private enterprise transparency especially in the context of corporate social responsibility grounded in notions of sustainability through stakeholder participation in entity action with adverse economic, social, environmental or human rights impacts.  Thus intertwined in transparency are notions of data (information), the production of meaning, the identification of facts that are privileged as such and those that are irrelevant, the application of assessment metrics, and notions of behavior management through incentives inherent in obligations to produce certain kinds of information (and assessment) and not others along with participation in decision making by stakeholders.  
When transparency is understood from within notions of property, its instrumental and process characteristics become clearer.  When one speaks of property in this context, it is most useful to understand it as control of the production, use and application of information.  Ownership, in this sense, emphasizes control and exploitation.  But it also suggests a power to determine whether or not specific data is itself generated.

The most distinct connection between transparency and property would focus on data. The data generating entity certainly was the data in the sense. But more importantly it controls the decision to generate data―that is to describe or report a “fact” or part of “information”, the matter in which the data is generated and the extent to which it is shared or used. To that extent, the data generator-owner can shape the form, shape and content of transparency. More importantly it controls (and thus it can be said to “own”) the basis on which such data can be used. More specifically, by controlling the size, shape, context and content of data, and the delivery of data to recipients, the owner can affect the “picture” painted by the available data and the ability of recipients to use data to develop assessments grounded in that data. The dimension of property as assigning control, exploitation and generation powers to one party in a context in which information, and the metrics of its assessment are also ment to serve normative purposes and contribute to participation in decision-making both within the institution and between the institution and affected outside stakeholders, produces strong incentives to incoherence in the way data is produced, assessed and distributed.  More importantly, it posits a fundamental asymmetry in the relationship between data gatherers/producers (as owners) and others who may be affected by institutional action reflected in and through the data. 

This ownership/exploitation characteristic can thus add a substantial dimension to the understanding of transparency.  That dimension helps better explain some of the tensions and difficulties of transparency as norm and process.  It also explains the intractability of those tensions and the strength of obstacles to their resolution in a number of ways:

1. In the absence of an audit-like facility there is virtually no way to test the authority and completeness of data generated, much less conclusions based on data.

2. The generation of data does not suggest the extent of its distribution. Ownership here is revealed in its most proprietary aspects → trade secrets and other business secrets represent sometimes critically important data the ownership relationship of which can determine the extent to which it must be revealed.

3. The potentially large divide between internal and external transparency has strong effects on the ability of outsiders to assess corporate activity or participate in decision-making. Where this decision-making affects the interests of these outsiders the ownership power can substantially affect the ability of these outsiders to defend/advance their interests. Ownership notions provide a powerful basis for resisting transmission of information.

4. Outside transparency actors―governments, assessment agencies, product/process certification organizations, civil society actors producing standards and the like― may by their assessment or governance roles provide a basis for supplying information, but they have no real control over the generation of information and little power to audit. As a consequence, ownership is split between the data generators and the data assessment entities, the former owning data, the later assessment matrices.  As a consequence, ownership is split between the data generators and the data assessment entities.

5. Where entities provide data and make assessments on the basis of self-generated standards, their ability to manage the data-driven realities of their operation grows appreciably. Ownership makes it difficult for outsiders either to challenge data or to develop a different analytical assessment, precisely because the access to methods of verification or additional data generation is not in their control.

6. Data ownership may itself limit the ability of outsiders to exploit data for their own profit. It is possible that data, even data supplied through processes of transparency, may like the words in books or images transmitted, belong to the producer who may acquire rights to control additional exploitation. It is possible that data, even data supplied through processes of transparency, may like the words in books or images transmitted, belong to the producer who may acquire rights to control additional exploitation.  It is possible that data, even data supplied through processes of transparency, may like the words in books or images transmitted, belong to the producer who may acquire rights to control additional exploitation. 

7. Data may be preserved or destroyed by its owners. At the same time, the data generator also bears the cost of generation, preservation and distribution. Public reporting limits post-production control of data, but where data serves only internal purposes that limitation may not be present. State and market intervention in the form of rules and best practices may manage but not change the character of this relationship between data and its owner and international soft law frameworks touch on this lightly at best. That affects both the willingness of the generator to harvest data and to preserve harvested data in any useable form.  It also affects the willingness of data gatherers to distribute data to to others, the control over which is lost upon distribution.  This ownership power and its distinct effects relating to control based on whether data is used by the entity or by others tends to substantially enhance incentives to treat distinctly data (and assessment made available to outsiders and internally used data and assessment. A property regime will always produce incentives to produce substantially more data for internal use than for external distribution.  Where external distribution is important for participation by stakeholders impacted by corporate activity, this creates a tension that is ameliorated either through governmental regulation or market (consumer or investor) pressure.

8. Ownership notions deepen the asymmetric relationship between data generators and outside data recipients and solidifies the uneven nature of that relationship through the disciplinary power of the state and law. Where the objective of transparency is to enhance participation (in corporate decision-making or in public participation) the quality of that participation can be managed by the quality of the data produced. Ownership consequences, then, requires the information of the state (laws requiring and managing disclosure) or incentive/market structures (no inclusion in ranking or certification), “naming and shaming” etc.

 (Pix (c) Larry Catá Backer 2012)
Understood from the perspective of ownership, many of the criticisms of transparency, especially in soft law systems, becomes easier to understand. Also clearer, however, is the power of the concepts that make reform difficult.

It becomes more apparent, then, the way that ideologies, deeply embedded in the way issues are considered, but difficult to expose because of its character as background, can significantly shape the way in which issues of transparency are understood and the structures within which solutions can be realized. The ideology of property not only helps shape the presumptions from out of which transparency is defined and its limits understood, but also shapes the framework within which transparency can be reformed or its structures changed.  As long as transparency operates under foundational principles of ownership, and ownership in the entity that generates the data as the building blocks of transparency, neither the normative nor participatory aspects of transparency's potential will substantially change. It suggests both the reasons for the policy and governance incoherence that is the hallmark of transparency in  fields such as environmental impacts.  See, Backer, Larry Catá, Transparency and Business in International Environmental Law (January 12, 2012). 

1 comment:

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