Paul Hohnen Sustainability Strategies
This article was published in Ethical Corporation on June 12, 2009.
A new global architecture for corporate responsibility
Governments meeting in Paris this month will discuss what they can do to improve ethical standards in markets. Paul Hohnen assesses the significance of this development.
Over the last couple of decades, governments showed a distinct lack of appetite for international institutional reform or innovation. This was evident in many areas, but included the activities of the private sector.
Intergovernmental organizations were given a limited mandate or capacity to engage with the private sector, much less monitor its activities. By and large, the setting of standards on environmental, social and many governance aspects was left to business and civil society.
That may be changing.
While the financial crisis has prompted soul searching about what is an appropriate level of government oversight of business, concerns about rebuilding trust and stability, creating a level standards playing field, and the need to better harness the power of business to address sustainable development issues are closely intertwined.
The evidence? This month, members of the Paris-based Organisation for Economic Cooperation and Development (OECD) will consider an "Inventory of Possible Policy Instruments".
This blandly named document is nothing less than a menu of existing economic and social instruments that may be used as building blocks in the development of a "Global Charter".
Reflecting inputs from the ILO, IMF, OECD, World Bank and WTO, the paper is a response in particular to recent calls for a new approach to how to create "a stronger, cleaner and fairer world".
At this year's World Economic Forum meeting, German Chancellor Angela Merkel waxed Churchillian about the need for "a charter for sustainable economic governance".
Pointing to a number of key principles, she sketched out the case for a new international approach to "combine freedom with social justice, growth with sustainability", saying that this "could take the form of a world economic council at the United Nations".
More recently, Italian Finance Minister Giulio Tremonti launched an initiative to promote a worldwide "Global Standard" for business conduct.
A meeting held in Rome last month considered a set of basic legal rules addressing issues such as anti-bribery, corporate governance, standards of transparency, and principles for disclosing financial and non-financial information.
Dilemmas
The OECD meeting faces a number of major dilemmas. Two key ones relate to the process for taking thinking forward, and the scope of the project.
The process question is possibly the hardest, and reflects the heavily siloed and politicized intergovernmental structures constructed after World War Two.
Current political consultation mechanisms are either too small (such as the G7, European Union, or the OECD itself) or too large. In the Goldilocks taxonomy, there is — sadly — no forum that is "just right". The former are often seen as too elitist and the latter too cumbersome.
This polarization has meant that some excellent potential "building blocks", such as the OECD Guidelines for Multinational Enterprises, are caught in the political cross-fire and are not given the attention they merit.
This was one of the reasons for the creation of the so-called G20 group, which last met at head of government level in London in April. Here, it will be recalled, the twenty countries bridging North, South, East and West also spoke of the need to "strengthen financial supervision and regulation".
Specifically, they pledged to "take action to build a stronger, more globally consistent, supervisory and regulatory framework for the future financial sector, which will support sustainable global growth and serve the needs of business and citizens".
Under represented
While the five major intergovernmental bodies that have contributed to the "Inventory of Possible Policy Instruments" undoubtedly belong at the table in identifying possible building blocks for a new approach, there are obvious gaps.
With a world feeling increasingly panic-stricken by the prospect of runaway climate change, for example, bodies responsible for that issue and the environment need to be involved.
So too, do business and civil society groups that have provided innovative approaches to the challenges and opportunities of globalization.
Governments should not overlook either the experience and products of a range of privately developed multi-stakeholder initiatives which have helped profile, disseminate and embed higher standards of responsibility.
How might initiatives such the Global Reporting Initiative (GRI) be built on and improved to ensure higher standards of transparency on issues of sustainable development?
How might the Earth Charter or the emerging ISO Standard on Social Responsibility be used to help create greater awareness and offer a common global platform of principles?
Equally, how might the work of UN Special Representative on Human Rights John Ruggie be embraced by the process?
These are questions that should to be considered to optimize learning, policy coherence, and partnerships.
Opportunity
Which brings us to issues of scope. As calls for a "New Green Deal" have underlined, there is a strong sense that a return to a business as usual global economic system is not an option. This is unlikely to be sustainable in political, financial or ecological terms.
One can already detect in the early materials on a "Global Charter" or "Legal Standard" a tension between the desire to get the economy moving again at any price, and the desire to balance the people, planet, profit objectives.
Even if this means hastening slowly, this is not a balance we can afford to get wrong.
While the answers are not yet clear, the right questions are, finally, being asked.
Amsterdam-based, Paul Hohnen consults, speaks and writes on sustainability and CSR issues. Hohnen is a member of Ethical Corporation's Advisory Board.www.hohnen.net.
