Professor Andy Gouldson Sustainability Research Institute University of Leeds and Professor Jan Bebbington Centre for Social and Environmental Accounting Research University of St Andrews Experiments with New Forms of Corporate Environmental Governance: Evaluating the Transformative Potential of the UN’s Global Compact

Structure of the Presentation Introduction/Context −The Emergence of New Governance Frameworks Interpretations of New Governance Frameworks: The Case of the UN Global Compact Understanding New Governance Frameworks: The Concept of Governmentality Conclusions

Contextual Aspects – Governance Traditional forms of policy intervention restricted by the limited capacities of the state (technical, economic, political, social) The changing role of the state (away from controller, towards facilitator or enabler) The emergence of new forms of governance (of the self, at a distance)

The Nature and Influence of New Governance Frameworks? Concerns about the capacity of the different actors to govern, and the potential for these forms of governance to do anything more that legitimate existing forms of corporate activity. A key issue is whether new forms of engagement between corporations and stakeholders are likely to lead to transformations in the governance of environmental impacts and risks.

The Case of the UN Global Compact Launched in June 2000, the GC is an exercise in the politics of the possible. It is based on a tacit recognition of the limited ability of the UN either to regulate corporations directly or to build the consensus amongst its members that is needed if new protocols are to be adopted, applied and complied with. As a result of its limited capacity to regulate, the UN has experimented with an alternative form of governance that attempts to enlist corporations and civic actors in securing social and environmental objectives.

Requirements of the Global Compact (1) The GC relies on companies to voluntarily endorse ten broad principles on environment, labour standards and human rights and then on processes of collaboration and social learning between signatory companies and their stakeholders. With regard to environment, it states that signatory companies should support a precautionary approach, undertake initiatives to promote greater environmental responsibility and encourage the development and diffusion of environmental technologies.

Requirements of the Global Compact (2) Companies that sign up to the Compact do not have to show how they operationalise all of these principles, there are no particular standards to be complied with and there are no formal mechanisms for monitoring or enforcement. Instead, faith is placed in the potential for social learning, both between firms as information on ‘best practice’ is transferred between firms and as companies and stakeholders learn about their different perspectives through engagement and dialogue within learning networks.

Understanding the Influence of the Global Compact How should we view the transformative potential of new governance processes that are based on engagements between corporations and their stakeholders? Two distinct views can be discerned: −one optimistic view based on social learning and communicative rationalities −one pessimistic view based on strategic action and instrumental rationalities.

The Optimistic Perspective (1) The GC enhances transparency and creates opportunities for new forms of engagement and accountability that can in turn lead to more legitimate decision making processes and to more socially desirable outcomes. Such a view draws heavily on the Habermasian concept of communicative rationality. The nature and influence of engagements are shaped more by the persuasiveness of the arguments than by the power, resources and strategies of the different actors.

The Optimistic Perspective (2) “the UN Global Compact is an historic experiment in learning and action on corporate citizenship. By promoting the idea that companies earn their licenses to operate not only by being profitable but also by improving practice in line with globally determined core principles and engaging in meaningful dialogue on human rights principles, labour standards and environmental protection, the Global Compact redefines corporate citizenship... To be successful, the listening and talking inherent in the operating principles of the Global Compact must lead to real – and responsible – actions, actions that constructively engage stakeholders in all realms of the societies within which companies operate” Source: Mcintosh, Waddock and Kell (2004, p13)

The Pessimistic Perspective (1) The GC and the associated discourses constitute reality in ways that reflect prevailing power relations and that assign particular roles, responsibilities and levels of influence to different actors. Such a view emphasises the instrumental rationalities that are brought to bear in such engagements The discourses which constitute reality therefore enable powerful actors to legitimise themselves without obliging them to transform their activities.

The Pessimistic Perspective (2) The GC `does more to enhance the image and legitimacy of big business than to raise social and environmental standards’ and the social learning theory and best practice approaches which underpin the GC `divert attention away from ‘bad practice’ and ignore fundamental structural and other factors that encourage corporate irresponsibility’. Source: Adapted from Utting (2002), p645.

Middle Ground? Both companies and stakeholders are likely to open-up and engage in discursive struggles partly to further their own interests and partly to learn about the underlying issues and how they might be addressed. As their engagements in such processes are likely to be experimental, these new forms of governance are likely to be in a constant state of flux Some processes will evolve over time, and others are likely to collapse and be replaced in time with more viable alternatives. We need heuristics or frames of reference that enable these evolutions to be understood and evaluated.

The Foucauldian Concept of Governmentality Concerned with the `conduct of conduct’ (Dean, 1999). Three key elements: i.the problematization of some form of human behaviour as requiring a governing influence. ii.the detailed regimes through which activities are governed (defined along the axes of: visibilities; knowledge; techniques and practices; and identities) iii.an assumed utopian ideal. These variables allow us to characterise and evaluate the influence that different forms of governance can play in diverse governance frameworks.

i. Problematisations The significance of formative events and ideas The importance of processes which generate the recognition of a problem which needs to be addressed The importance of processes which lead to the diffusion of governance practices – for example if corporations should be accountable, shouldn’t NGOs also be accountable?

Regimes of Governing characteristic forms of visibility, ways of seeing and perceiving (indicators, accounts); distinctive ways of thinking and questioning, resting on definite vocabularies and procedures for the production of truth (auditing, engagement); specific ways of acting, intervening and directing, made up of particular types of expertise, and relying upon definite mechanisms, techniques and technologies (corporate governance, private/social regulation); and constituting identities ways of forming subjects, selves, persons, actors or agents (corporate citizens, stakeholders, insiders/outsiders, pragmatists/radicals).

The Goals of Governance Notions of futurity, governance has ‘a strangely utopian element... government is not only necessary but possible’ (Dean, 1999, p.33). But the goals are constructed through on-going evolutions in governance. Shift from state-centred to de-centred governance frameworks is one manifestation of this. Reflexivity, modernisation – self-conscious, self-critical patterns of social learning that highlight failures/limits of existing approaches and create a basis for the emergence of new forms of governance.

Conclusions There have been changes in the way that corporate environmental impacts and risks are problematised and made visible, and changes in the way that societies think about governing them which rely on the emergence of new `governmental technologies’. These technologies have moved on in recent years, but they are still unlikely to enable either a)`governance at a distance’, for instance by creating opportunities for new forms of engagement and new spaces of accountability, or b)`governance of the self’, for example by instilling values and developing technologies which allow corporations to govern their own activities more effectively.

Conclusions Thus, current experiments with new forms of governance are bound to fail to some extent and that as a result there will be an on-going search for new of ways of governing. This observation may have particular relevance for the Global Compact. Concepts of governmentality provide a useful lens through which we can examine and understand these evolutions.