Rory Sullivan offers some tips on how to work out whether voluntary measures for more responsible business make a real difference and offers a challenge
Rory Sullivan offers some tips on how to work out whether voluntary measures for more responsible business make a real difference and offers a challenge.
One of the recurring questions in the corporate responsibility debate has been whether non-governmental organisations and other stakeholder groups should support voluntary corporate initiatives such as the Global Compact.
Interestingly, as many of the major corporate responsibility initiatives and organisations reach a level of maturity, companies are asking similar questions: are collective initiatives still relevant?
Are they capable of delivering real benefits to the participants? Are they capable of driving the transition to a more sustainable economy?
Unfortunately, it is not possible to offer a simple ‘yes’ or ‘no’ answer to these questions, as the relevance of such initiatives to a specific organisation are critically dependent on the outcomes (social and environmental) that result from the initiatives in question.
In broad terms, the analysis of any self-regulatory initiative involves two stages.
The first stage is to understand how the initiative has been designed and what it is trying to achieve. Specifically, it involves understanding:
• What are the issues addressed? What issues are not covered?
• Is the initiative focused on processes (e.g. encouraging the adoption of management systems and reporting) or on performance?
If it is a performance-focused initiative, what are the performance targets to be achieved, what baselines are being used to assess progress, what are the intermediate targets, what are the key milestones and what are the deadlines?
• How is compliance enforced? Are there guarantees regarding the performance that will be achieved?
• Who is involved and who is not involved?
• How are the interests and concerns of stakeholders taken into account?
• Are there credible and reliable monitoring processes including independent performance auditing, auditor certification and formal verification processes?
The second stage is to assess the outcomes that have been achieved (or are expected to be achieved), and to decide whether these are appropriate in the context of the specific issue in question.
Taking climate change as an example, the voluntary programmes that have been established have taken a whole variety of approaches.
Some (for example the Carbon Disclosure Project) have focused exclusively on encouraging companies to report on their greenhouse emissions, on the basis that the process of gathering and analysing information will enable companies to make better business decisions.
Others (for example, the Cement Sustainability Initiative) have made reducing greenhouse gas emissions per unit of production or turnover the central goal; the risk is that total emissions may increase if the growth in turnover or production overwhelms the efficiency savings.
A small number (e.g. many of the Climate Group’s signatories) have gone further requiring signatories to reduce their total greenhouse gas emissions in line with the targets being set by governments (e.g. the EU’s 20% target by 2020) or with the scientific consensus that emissions reductions of the order of 60 or 80% are required by 2050.
Initiatives such as the Institutional Investors Group and the Corporate Leaders Group on Climate Change have actively lobbied for governments to set this type of long-term target and to implement the appropriate policy frameworks to deliver these targets.
As a final reflection, the practical reality is that evaluating the outcomes from voluntary approaches is difficult.
In many ways, the questions that are being asked about the continued relevance reflect the fact that most of these initiatives do not provide sufficient information to enable an assessment to be made of whether or not they have met their targets, let alone – reflecting the common focus on process rather than performance measures – the social and environmental outcomes that have resulted.
The burden inevitably falls on stakeholders or non-governmental organisations to demonstrate that a particular self-regulatory initiative is not delivering on its objectives or is being ineffective.
It is, therefore, timely to suggest that the burden of proof should be reversed.
That is, the onus should be on the coordinators of or the participants in voluntary initiatives to demonstrate the contribution the initiative has made to the delivery of better social and environmental outcomes.
Rory Sullivan is Head of Responsible Investment at Osmosis Investment Management, and the author of Rethinking Voluntary Approaches in Environmental Policy (published by Edward Elgar). He is a member of Ethical Corporation’s editorial advisory board.
Ethical Corporation’s Guide to Industry Initiatives in CSR is available by clicking here