How Businesses Can Walk the Talk on Social and Economic Challenges

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 A new approach to business regulation is needed to suit the current economic context and address pressing global issues. (Shutterstock)

Businesses are facing increasing pressures to tackle social and environmental challenges like climate change, biodiversity loss and inequality. However, most businesses are failing to meet these challenges head on, and governments have struggled to hold them accountable.

With increased globalization, supply chains for everyday products have become increasingly complex and can span a large number of jurisdictions, making it difficult for governments to regulate business conduct on their own. A new approach to business regulation is needed to suit this changing context and address pressing global issues.

Multi-stakeholder initiatives

One non-governmental approach that has gained significant attention is multi-stakeholder initiatives, like the Fair Labor Association or the Forest Stewardship Council, that are partnerships between businesses and their stakeholders. Stakeholders vary based on the industry, but often include social and environmental non-governmental organizations, labour unions, government representatives and academics.

Multi-stakeholder initiatives develop standards or codes of conduct that address problems created, or reinforced, by businesses, such as pollution or poor working conditions. These initiatives ask for voluntary compliance from the businesses involved, but often have systems in place to monitor compliance and sometimes sanction noncompliance.

A key distinguishing feature of multi-stakeholder initiatives is their involvement of stakeholders in decision-making. For example, the board of directors of the Forest Stewardship Council Canada is made up of eight individuals representing four chambers: Aboriginal peoples, economic, environmental and social.

Falling short of the mark

Multi-stakeholder initiatives were supposed to herald a new era of responsible business conduct by fostering a more collaborative, balanced and bottom-up approach to regulation. Unfortunately, this hope has not materialized. A growing body of evidence points to significant and systematic problems with multi-stakeholder initiatives.

They often fail to meaningfully include all stakeholders and their concerns in decision-making — especially when it comes to members who have been historically marginalized. They tend to prioritize mainstream, business-oriented perspectives in their decision-making processes, at the expense of more radical ones.

Multi-stakeholder initiatives tend to have weak rules, often poorly enforced. For example, the Marine Stewardship Council was criticized for addressing only a small subset of labour abuses and relying on a narrow monitoring program.

It’s no wonder multi-stakeholder initiatives have received significant backlash, with some critics questioning whether they ought to be part of our collective repertoire at all.

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While multi-stakeholder initiatives are by no means a panacea, they do have the potential to tackle social and environmental issues. This potential, however, depends on how effectively multi-stakeholder initiatives can function as democratic organizations that give meaningful voice to all members — something they have long struggled with.

Rethinking multi-stakeholder initiatives

To understand why multi-stakeholder initiatives often fall short of their goals, it’s important to shift how we think about them. In our recent research, we argue that instead of viewing them as single, all-encompassing entities, it’s more useful to view them as deliberative systems made up of five different, though closely related, elements.

Each element is assessed based on criteria, like the extent to which organizations include the perspectives of all stakeholders (inclusiveness) and the extent to which members’ discussions with each other are respectful and non-coercive (authenticity). Doing this allows for a more fine-grained analysis of an initiative’s strengths and weaknesses.

Our research finds numerous deficiencies across these elements. For example, multi-stakeholder initiatives struggle to include all stakeholder perspectives in decision-making because it’s difficult for everyone to have their interests represented. Bodies where collective decisions are made, like boards of directors or general assemblies, comprise what is referred to as the empowered space.

When it comes to engaging in activities like activism and lobbying — also known as transmission — multi-stakeholder initiatives often struggle with authenticity because pre-existing practices tend to be dominated by businesses. Multi-stakeholder initiatives also rarely make the time or space to reflect on changes about how they are governed. This process is known as meta-deliberation.

Using the lens of deliberative systems doesn’t just allow us to provide an analysis of an initiative’s strengths and weaknesses — it also allows us to propose solutions to some of those weaknesses.

Mini-publics are a promising solution

One way to bring more diverse perspectives together in multi-stakeholder initiatives is through the use of deliberative mini-publics, like the ongoing Citizens’ Assembly on Biodiversity Loss or the Citizens’ Assembly on Democratic Expression. Mini-publics, which bring randomly selected groups of citizens together to work on specific issues, are becoming more and more widespread.

Mini-publics’ participants are selected through democratic lotteries. This results in a more diverse array of voices — from custodians to product managers to interns to regional managers — being brought to the table.

Participants have the chance to learn from one another, experts and interested stakeholders. In mini-publics, they deliberate together with the aid of trained facilitators to generate new insights or recommendations on a particular topic.

Mini-publics foster greater inclusiveness and authenticity by making it easier for diverse voices to hear and learn from one another. Ultimately, this more equitable and creative process can help lead to more impactful and better-enforced rules for business conduct.

Improving multi-stakeholder initiatives

It’s worth trying to improve multi-stakeholder initiatives by providing new ways for them to overcome their deficiencies. Our research found that mini-publics are particularly well suited for helping multi-stakeholder initiatives overcome their weaknesses.

For example, mini-publics could facilitate better decision-making by helping initiatives make difficult decisions that current decision-making bodies, like the board of directors, struggle with. They could also encourage these decisions to be more aligned with the interests of all its members. Mini-publics could also be used to help initiatives reflect on governance changes, like whether or not to include new stakeholders in the initiative.

These uses would not only help address specific weaknesses in multi-stakeholder initiatives, but also result in broader benefits for the initiative as a whole by providing members with the skills and capacities needed to effectively deliberate together. Ultimately, this would enhance the impact of regulations on global business activities.The Conversation

About The Author

Simon Pek, Associate Professor, Gustavson School of Business, University of Victoria and Sébastien Mena, Professor of Organization & Governance, Hertie School

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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