HOWARD SCHULTZ, the head of Starbucks, said last year that “the currency of leadership is transparency.” If so, bosses should be feeling ever more qualified to command their troops. Business is being forced to open up in a host of reporting areas, from tax and government contracts to anti-corruption and sustainability programmes. Campaigners are cock-a-hoop, but continue to demand more. Executives are starting to ask whether the revolution is in danger of going too far.

Three forces are driving change. First, governments are demanding greater corporate accountability in the wake of the global financial crisis. No longer is ending corporate secrecy—the sharp end of which is money-laundering shell companies—an agenda pushed merely by Norway and a few others; it has become a priority for the G20. Second, investigative journalists have piled in. A recent example is the exposure by the International Consortium of Investigative Journalists of sweetheart tax deals for multinationals in Luxembourg. The third factor is the growing sophistication of NGOs in this sphere, such as Transparency International (TI) and Global Witness. “Twenty years ago our work seemed an impossible dream. Now it’s coming true,” says Ben Elers of TI.

TI recently published its latest study on corporate reporting, which evaluated 124 big publicly listed companies, based on the clarity of their anti-corruption programmes, their corporate holdings and their financial reporting. Four-fifths of them scored less than five out of ten overall, but there were big regional disparities: seven of the ten most open firms were European; eight of the ten most clammed-up were Asian (see table).

One measure on which the firms were judged was country-by-country reporting of profits, taxes paid and the like. Clearer reporting by jurisdiction would help outsiders spot offshore tax shenanigans and graft. It is seen as the “holy grail” by NGOs, says Raymond Baker of Global Financial Integrity, one of them. Currently most companies aggregate their accounts in a way that makes it hard to see what assets and revenues they have in any given country. But change is coming: country-by-country reporting is on the OECD’s “Base Erosion and Profit Shifting” reform agenda, which is aimed at curbing tax avoidance. The biggest push for greater openness has come in extractive industries. That is not surprising as these (as well as defence) have historically been pits of corruption. Progress has come at the regional level: EU states have begun to pass into law a new directive requiring country-by-country, and in some cases project-by-project, reporting of extractive groups’ payments to governments. America should have introduced similar regulations by now, but these, mandated by the Dodd Frank act of 2010, are still on the drawing board. Publish What You Pay, a campaigning group, reckons these rules would cover two-thirds of the global extractives business by value—not only Western groups, but Chinese, Russian and other firms that are caught in the net by virtue of having securities listed in the West. But there would still be bumps in the playing field: some state-owned producers from the Middle East, for instance, would not be covered. Hence the push for global standards. One may be emerging from the Extractive Industries Transparency Initiative, whose Oslo-based secretariat oversees the development of multilateral standards shaped by a coalition of governments, companies and civil society. The EITI is voluntary, but if a country signs up, all firms operating there must comply with its reporting guidelines. Almost 50 countries (including Iraq and Nigeria) have joined.

The EITI has backing from 90 firms, among them Norway’s Statoil. Its head of sustainability, Hege Marie Norheim, argues that while not disclosing project payments might be better for short-term competitiveness, disclosing them is “better for the company’s long-term stability”.

The costs of opacity

Commodity traders, usually a secretive bunch, are opening up to this way of thinking. Trafigura, a Swiss trading giant, recently said it will disclose oil-related payments in all EITI countries. Its reasons for doing so: change is coming anyway, and early movers will be better placed to help shape the standards. There is a financial motivation, too: banks have reduced funding for opaque trading firms after being hit with fines for sanctions violations.

Oil producers, meanwhile, are starting to publish more details of production-sharing contracts with governments. This is “good for companies because it will show how [the contracts] are weighted, which contrary to common perception is usually in the government’s favour,” says George Cazenove of Tullow Oil. “That’s why it’s more often the governments than the companies that want the terms kept quiet.”

Indeed, though campaigners make much noise about holding multinationals to account, most admit the bigger impact could be on the states they deal with. Publication of what governments receive will increase pressure on them to show how money is spent. They could be held even more accountable if firms were forced to disclose which of their payments go to central governments, which to regional ones and which to local administrations.

Another area of the NGOs’ focus is organisational structure. The more tangled a group’s web of subsidiaries, the harder it is for outsiders to follow the money, including intra-group transfers that might be used to funnel profits to tax havens.

Here, the picture is mixed. While some firms reveal more, others shuffle into the shadows. Jeffrey Gramlich of the Hoops Institute at Washington State University and Janie Whiteaker-Poe of Baylor University have identified a phenomenon they call “the disappearing subsidiary”. Crunching data at The Economist’s request, they found a sharp increase since 2010 in the number of American firms dramatically reducing the number of tax-haven subsidiaries they disclosed (see chart). In one extreme case Google reported more than 100 divisions in 2009, but just two (both in Ireland) in 2012. “Google wants to know everything about you, but it doesn’t want you to know everything about it,” says Chris Taggart of OpenCorporates, which collects and crunches data on companies.

What’s going on? Use of tax havens may have fallen a bit, but that doesn’t explain such a sharp decline. What does, says Mr Gramlich, is a mass redefinition of subsidiaries as not “significant”. Only material holdings have to be disclosed in America (whereas in, say, Germany all have to be reported). The firms would never admit it, but the likely reason for this redefinition is increased scrutiny of their tax affairs. Their move into the dark coincided with a surge in investigative articles about profit-shifting by multinationals. Not all the redefining is likely to be legal, but the companies are willing to take the risk: the most they can be fined for de-disclosing significant subsidiaries is $100 a day. Companies have wider gripes about the disclosure revolution. Some contend that transparency has natural limits. The argument has three planks. The first is that it can be unfair on those forced to disclose because it hands a competitive advantage to non-Western rivals that aren’t held to the same standards. Simon Henry, Shell’s chief financial officer, argues that EU transparency rules could undermine the EITI because they don’t cover unlisted foreign firms or require governments to account for all payments received. Next, some firms complain that new transparency rules wedge them between a rock and a hard place: abiding by an EU requirement to be open, for instance, could mean breaking the law in a country of operation that forbids disclosure. The first argument underlines the need for global standards. The second is thin: when pressed, whingers struggle to identify countries that lock up executives for complying with Western disclosure requirements. The third argument is stronger: that those trying to make sense of it will be better informed but none the wiser. Debra Valentine of Rio Tinto likens it to the long but unenlightening lists of side-effects that come with medicines. Can country-by-country reporting capture what is really going on in a group that produces in Australia and Canada, markets through Singapore and sells in China, she asks? A firm’s tax payments might be unusually low, not because it is dodging tax, but because of high upfront investments and all manner of reliefs and allowances. Financial restructuring can render the numbers even harder to parse, says John Connors of Vodafone (the only firm to score half-marks or better in all categories in the TI report). Some transparency campaigners acknowledge a risk of drowning in data or of comparing apples with oranges. Britain, for instance, now requires its companies to disclose all foreign payments to governments of more than £86,000 ($135,000)—the equivalent of an individual spending pennies. “Ludicrously granular,” grumbles another oilman.

Michael Meehan of the Global Reporting Initiative, which sets standards for corporate reporting on sustainability issues, says he can see why large companies have “data fatigue”. Their being forced to report every single data point would lead to less transparency, not more, he says. “Responsibility is coming back to civil society and the media to make good use of information they already have, rather than calling for more,” says Jonas Moberg of the EITI.

Private transparency initiatives can help in this regard. OpenCorporates uses data-scraping and other technologies to collate information from national corporate registers and other sources, clean it up and join the dots, so that relationships within and between corporate families become clearer. It now has 80m companies from 100 countries in its database. It sometimes receives threats of violence from those who want their law-breaking firms to remain hidden, says Mr Taggart.

Governments, too, have a role to play. The G20 has thrown its weight behind the idea of central registers, with better policing of information on corporate owners. The most ambitious countries, like Britain and Denmark, plan to make their registers publicly accessible. Some are embracing open-data standards. Britain, already a world leader in accessibility of corporate-registration information, such as financial accounts and shareholder information, will make all that data available free of charge next year.

Let it flow, or suffer a leak

As openness spreads, it would be easy to get carried away. Multinationals will continue to do dodgy deals, and to bury inconvenient financial information in the footnotes of annual reports. Some extractives giants pay lip service to the EITI while dragging their feet. The world is still full of murky shell companies.

But the direction of travel is clear. In tax and contract transparency, there is general acceptance that change is coming, like it or not. And many boards no longer fear that openness is bad for business. In some areas, such as corporate social responsibility, there is evidence that it boosts the share price by signalling that management is tackling hidden risks, says George Serafeim of Harvard Business School. Investors increasingly appreciate the reputational benefits of openness, and employees want to work for firms that are leaders in disclosure—and, just as importantly, ever more of them appear to see it as their civic duty to leak information if their employer is shady and secretive.

Correction: A previous version of this article misspelled the name of Chris Taggart of OpenCorporates.