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May Miller-Dawkins

Researcher, advocate, coalition-builder

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May Miller-Dawkins

The Business of Trust

September 26, 2017 By May Miller-Dawkins

Written for the Open Government Partnership in September 2017. 

The 2017 Edelman Trust Barometer revealed the largest-ever drop in trust amongst four cornerstone global institutions: business, government, NGOs and the media. In the 28 countries surveyed, trust in all four institutions combined fell below 50%. CEOs suffered the biggest dip in credibility, falling to only 37% globally. These numbers should be concerning to all institutions. But for business this radical drop in trust must be addressed if companies are going to continue to operate successful and sustainable companies.

Why is trust important for business?

Trust is crucial for business. It is the glue that binds companies to their customers and to the communities where they operate. Customers are more likely to buy products from a company they trust and citizens are more likely to support business operations within their community if they trust the company. * Companies interested in lasting for the long term understand that maintaining trust translates to stronger brand reputation, a more reliable social license to operate, and an ability to attract and retain talent and capital. From a purely bottom line perspective, trust counts: a 10-year analysis by Fortune.com has shown that public trust in a company and profitability are strongly positively correlated.

Losing trust – by abusing workers and the environment, bribing officials to win deals, using influence to stack the public policy deck in favor of short term business interests, or by not providing consistent and quality goods and services – comes with significant, long term costs that outweigh the short term gains. For extractive companies, losing the trust of local communities can cost roughly $20 million per weekdue to delayed production. The overall financial consequences of bribery can be ten times the settlement costs considering stock price drops, higher costs of capital and shareholder lawsuits. Bribery also leads to drops in staff morale which can have significant impacts on performance (employee morale has been highly correlated with higher returns).

How can business begin to rebuild this trust?

Companies can take significant steps to increase their integrity and build trust. Beyond the fundamentals of providing quality and consistent goods and services and ensuring that a company is behaving responsibly by respecting the environment and human rights, there are some key steps that business leaders and companies can take.

Firstly, they can be pro-actively transparent – about what they do, how they do it and how they contribute to society. Transparency allows investors, business partners, regulators, civil society, and the media to more easily check claims of responsibility or sustainability – and enables them to act as early warning systems alerting brands to problems. And, there are already companies leading the way in key areas – publishing supply chains (e.g. Patagonia, Nike, Puma, adidas and Levi Strauss), disclosing more beneficial ownership information and group structures (e.g. Unilever and Natura and companies who have pro-actively published on OpenOwnership), publishing tax policies, practices and payments (e.g. BHP Billiton, Repsol, LUSH, Vodafone), setting out policies around political engagement (e.g. Visa, GSK), and being public about pay equity (e.g. Salesforce, Buffer).

In all these areas, there is more to do – both on what is disclosed (e.g. political advocacy policies versus actual lobbying meetings, payments and trade association memberships), how useful it is to end users (e.g. is it available in comparable and open data), and how much of the market is transparent. However, the above examples show that transparency in these areas is possible and leading brands believe it benefits them to invest the effort in doing it year after year.

Secondly, companies and CEOs can build trust by putting real support behind efforts to improve the well-being of people and planet. This means going beyond what is expected or minimum standards, to work together, with civil society and sometimes with governments, to address serious challenges. It can mean speaking out, as CEOs have recently done in support of action to end anonymous companies in the US, or making serious commitments to shift business models towards a net zero carbon economy, or standing up for human rights – for example when Tiffany & Co publicly supported investigative journalist Rafael Marques de Morais when he was targeted for a long jail sentence for exposing corruption in the diamond industry. At a time when many countries have restricted peoples’ rights to speak out and associate in civil society, the need for business leadership that supports democracy and civic rights, in particular, is more urgent than ever.

And what about governments…?

Building trust pays, and losing it costs. However, these in-built incentives can be disrupted by markets driven by short-termism – CEOs with short tenures feeling pressure from shareholders who stick around for even less time.

The constraints of short-termism means we cannot rely upon voluntary action alone. Governments – including all OGP participating countries and subnational entities – have an essential role in shaping markets that prevent abuse and are geared towards long term, sustainable development.

This means ensuring that companies and people know who they are dealing with in the market through beneficial ownership transparency. It means that when governments turn to the private sector to deliver infrastructure, technology and support social services, they ensure – through approaches such as open contracting – that citizens can see that public money is being put to its best use, and that innovative firms can have confidence that they are competing in a fair market. It also means that governments remain committed to the foundations of open government – that citizens can speak up, identify problems, shape public policy and demand rights. Without that, there can be no trust in how decisions are made and who they ultimately benefit.

Trust is good business, but it can best thrive in transparent markets and healthy democracies.

Originally published by the Open Government Partnership at https://www.opengovpartnership.org/stories/business-of-trust-how-companies-can-build-credibility 

Purchasing – big power and big opportunity

May 18, 2017 By May Miller-Dawkins

By Kathrin Frauscher, May Miller-Dawkins and Eryn Schornick for the Open Contracting Partnership blog
If you brought together 400 purchasing and sustainability professionals what would you expect? We were surprised by both their vision and the challenges involved in harnessing the power of procurement to create a prosperous and sustainable future.Purchasing, such as when the federal government spends tax dollars, can be perceived as a means to an end, full of complicated rules that are driven by compliance. The opening of the 2017 annual Summit of the Sustainable Purchasing Leadership Council (SPLC) – a network of buyers, suppliers and experts that promote sustainable procurement – proved that stereotype to be wrong. The key message was that purchasing is big power and big opportunity. If done right, this multi-billion industry can be used to shape the future. Vien Truong, the opening speaker from Green For All, asked purchasers and suppliers to be ‘heros.’ Meaning that the choices we make with each contracting process can determine whether our communities and families have access to safe water or clean air.

This message resonated with us. We believe that open contracting, i.e. transparent, accountable and efficient purchasing, is the bricks and mortar of public benefit. It is where public funds get converted into roads, schools and hospitals through the contribution of the private sector. Here are some of our key takeaways for open contracting and sustainability from the Summit:

  • No sustainability without transparency. Opening up information about who is buying what from whom for what price and under which terms is integral to achieving sustainability goals. With greater access to information about the real people who own bidding companies, who win contracts, and whether they are delivering what they promised, we can ensure that the most capable and ethical companies get business. With access to more information, we can also ensure that it is incrementally easier to understand and communicate the environmental and social benefits created.
  • Transparency helps address market failures. The biggest benefits from transparency are when companies and the public have access to useable, accessible information in markets. Making products traceable, building public open data registers of who owns and controls companies, and clearer information about how government sources and purchases help prevent risk while enabling greater efficiency and accountability. The SPLC community can not only lead by example in this area but also be a key voice encouraging change from national and state governments.
  • Sustainability is core business. We couldn’t agree more. The recent uptake of open contracting, as well as company ownership transparency, shows clearly that transparent and efficient procurement processes can save both buyers and suppliers money and time. Better market intelligence makes it easier and quicker for companies to prepare bids, conduct efficient and accurate due diligence on partners and suppliers, and for public agencies to select the best suppliers.
  • We need hard numbers to make the business case for both sustainability and open contracting. In our session, a representative from a manufacturing company shared that she wanted to make a case for ethical sourcing to her upper management but lacked the hard numbers to do so. We see that too. It is one of our big quests to deliver metrics for how open contracting improves value for money, market opportunity and innovation. We can already point to Ukraine where competition has increased by 50%, but we want more hard data from more places.
  • Cities and universities are at the frontier. We loved meeting so many representatives from cities and universities at the Summit. Cities and universities purchase goods and services on behalf of their residents. Sometimes these residents are left in the dark when it comes to important questions about what is being procured, how sustainable the purchase is and who is being paid. Cities and universities are opening and sharing information about their acquisition needs, contract process, and the performance of their vendors will help to improve their communities and will increase opportunities for potential vendors.

We are thrilled to be part of the sustainability purchasing community, and we are keen to continue working with SPLC and the broader business community to truly harness the big powers and opportunities of purchasing.

Businesses interested in why transparency of company ownership and government purchasing matters and how they can play a leadership role can do three things:

  • Learn more about why company ownership transparency helps business lead with integrity and reduce risk at www.ownershiptransparency.com, and read up on why open contracting can make doing business with government more efficient and competitive in our new publication Opening up public procurement.

 

  • Share your expertise and engage in the conversation by registering for an upcoming webinar or event about how the private sector can drive innovation and change in government purchasing. Or contact Madeleine McCarroll at The B Team on mm@bteam.org if you’d prefer a conversation about how your company can contribute to this growing field.

 

  • Take action by disclosing your ownership or encouraging your suppliers to do the same and be leaders in transparency at www.openownership.org. The OpenOwnershipplatform can help make purchasing more efficient by giving buyers better (free, open and public) access to company ownership information across jurisdictions.

We look forward to hearing from you!

 First published by Open Contracting Partnership at https://www.open-contracting.org/2017/05/19/purchasing-big-power-big-opportunity/. 

A growing call from business for company ownership transparency

October 6, 2016 By May Miller-Dawkins

With the release of its latest Economic Contribution and Payments to Governments Report today, BHP Billiton becomes the latest in a growing list of companies and business leaders highlighting the importance of company ownership transparency, and starting to walk the talk by being transparent about elements of their own company structures, entities and ownership.

The 2016 report includes a policy statement expressing support for

“the introduction of public disclosure requirements relating to beneficial ownership (the ultimate holder of the benefits of ownership of the company)”

This is accompanied by a disclosure of ten subsidiary companies that are incorporated in low-tax jurisdictions (tax havens) and an explanation for why.

The chorus of business voices calling for transparency of company ownership, and crucially, public access to that information when governments do collect it, has been developing for some time. The B20 — the business platform that engages with G20 leaders — has supported beneficial ownership for a number of years now.

The B Team Leaders, including Richard Branson, Arianna Huffington, Mo Ibrahim, Paul Polman, Guilherme Leal, Francois-Henri Pinault, and Ngozi Okonjo-Iwaela published an open letter to the G20 in 2014, and followed it up with a report on the business case for ending anonymous companies in 2015.

More recently, businesses in the U.S. have been voicing their support for action at home in the wake of the Panama Papers. The U.S. is a key jurisdiction for action on beneficial ownership — it is the easiest place in the world to create a company where the real identity of the people who own or control them can be kept secret. It’s also an increasingly desirable destination for hiding the proceeds of crime or corruption.

A proposed bill, the Incorporation Transparency and Law Enforcement Assistance Act is now gaining support from business. Gregory Baer, President of the Clearing House Association, a banking association owned by the world’s largest commercial banks, sent a letter of support to the sponsors of the bill, stating that his members believe the legislation will allow the private sector to better identify suspected money laundering and potential terrorist financing through beneficial ownership disclosure. An additional 24 institutional investors representing more than $740 billion in assets under management also expressed their support for the bill in a letter to House and the Senate in May 2016.

BHP Billiton are not the only company to back up their support for change in regulation on beneficial ownership by voluntarily disclosing more information. In May of this year Unilever and Natura published more of their own company structures and ownership information. Companies are now engaging with a new consortium to be part of discussions to help create a global register of beneficial ownership information.

So why is business so worked up about an issue that requires more transparency of the private sector?

There are a range of reasons but three stand out:

  1. It is good business: Knowing who you are doing business with is fundamental to productive relationships and joint ventures, and to manage a range of risks in value chains. At the moment, attempts at due diligence are often undermined by the lack of information in the public realm about the ownership of companies.
  2. It creates a good environment for business: Transparency helps create financial stability, and ensure fair competition, whereby companies win government and private contracts on the basis of the quality of their products and services, their sustainability and integrity, rather than based on who they know, bribes or favours.
  3. It is good for society: This kind of transparency can help prevent corruption and the disastrous loss of resources that ultimately belong to citizens, and to reduce impunity by enabling authorities to track down those who benefit from corruption. In BHP Billiton’s case, they support beneficial ownership transparency to support better tax systems by “ensuring assets and incomes are fully disclosed to relevant regulatory bodies” so that countries can ultimately benefit from taxation based on a company’s activities and value creation in their countries. As the world works to mobilise 90 trillion USD over the next 15 years to achieve the sustainable development goals and the targets of the Paris Agreement,the losses from corruption cannot continue.

Most fundamentally, being honest about who owns, controls and benefits from companies can start to restore trust in business and in governments. At a time when trust is declining in large institutions (private and public) creating trust and building accountability is crucial, and business knows it.

First published as a guest blog for Transparency International at http://blog.transparency.org/2016/09/22/a-growing-call-from-business-for-company-ownership-transparency/ and on Medium at https://medium.com/corruption-stories/a-growing-call-from-business-for-company-ownership-transparency-ef6a8a88406a#.ef5yz58ru. 

Blaze of Sunshine on Secretive Offshore Businesses — Time for Beneficial Ownership Transparency

April 17, 2016 By May Miller-Dawkins

This Panama Papers leak has revealed a massive web of illicit and unethical behavior by some of the world’s richest and most powerful people.

The scope of this leak is truly mind-boggling. But the depth and reach of this scandal only confirms what many who have been working to expose these practices already knew: that the existence of anonymous companies, and the resulting corruption, tax avoidance and other illicit and illegal activities that stem from them, were a significant problem, bad for business, and a tremendous drain on socio-economic development around the world. According to some estimates,$7.6 trillion sits in offshore tax havens — equivalent to as much as 8 percent of all the world’s financial wealth according to UC Berkeley economics professor Gabriel Zucman.

The B Team, along with OpenCorporates, The Web Foundation, ONE, Transparency International, Open Contracting Partnership and Global Witness this week announced plans to create the world’s first global public beneficial ownership register to help end this pernicious and unethical practice.

Beneficial ownership transparency is a system where the true owners of companies can be uniquely identified, eliminating the ability to use anonymous shell companies to hide illegal or corrupt activities. The global register will be an easy-to-use web platform for companies to self-disclose ownership information and encourage more companies to adopt this standard of transparency. Where there are public registries, the global register will combine this information, allowing companies to do their due diligence more efficiently on some suppliers and partners.

The importance of corporate transparency has never been clearer. We believe that making company ownership transparent is critical to tackling corruption, and that there is a strong business case for doing so. Over 2015 The B Team worked with businesses around the globe to articulate specific business use cases for beneficial ownership transparent. We found some of the benefits to business of beneficial ownership transparency include:

1. Better knowledge of customers; ensuring compliance with anti-money-laundering and anti- corruption regimes for banks and financial institutions, luxury goods sellers and real estate

2. Allowing companies to identify and manage network and supply chain risks when dealing with 3rd parties

3. Preventing corruption and ensuring fair competition for large scale projects and government procurement

4. Help to overcome some of the significant challenges navigating new markets without a trusted local partner to avoid potential liability.

5. Investors and analysts seeking greater transparency can assess the risk and credentials of entities for ethical investment.

You can read the full business case, with all the benefits identified here.

No global system for beneficial ownership transparency currently exists. The UK, Norway and Netherlands have all announced public registries containing beneficial ownership information. Even where progress is slow on the national level, sector specific projects such as the Extractives Industry Transparency Initiative, local governments such as Sao Paulo, or development bodies such as the World Bank are taking charge and adopting public beneficial ownership requirements. Bit by bit, the world is coming to see that transparency around corporate control and ownership is not just essential to tackle corruption, but a foundation for good business.

If you are interested in getting involved in this project, as a government, funder or NGO, please drop hera@opencorporates.com a line.

First published on the Huffington Post at http://www.huffingtonpost.com/may-miller-dawkins/blaze-of-sunshine-on-secr_b_9620050.html. 

Have those hard-won accountability reforms had any impact?

January 6, 2016 By May Miller-Dawkins

First published on From Poverty to Power at http://oxfamblogs.org/fp2p/have-those-hard-won-accountability-reforms-had-any-impact/. 

Many readers of this blog may have spent part of the 1990s and 2000s campaigning for increased transparency and accountability from the World Bank and other development banks in. Under often intense external scrutiny and pressure a range of development finance institutions have since acknowledged the need to answer for their decisions to an expanding group of ‘stakeholders’ outside their organization, to promote adherence to their internal policies and in some cases to provide access to grievance procedures for those affected by their lending.

Was it worth the effort? Have relationships of accountability, which we understand as “moral or institutional relation[s] in which one agent (or group of agents) is accorded entitlements to question, direct, sanction or constrain the actions of another”, actually shifted? And if so, has it really made a difference to people’s lives?

  • We pulled together a special collection of articles for The Global Policy Journal to explore these questions. Lidia Cabral and Iara Leite on accountability in Brazilian development cooperation in Mozambique.
  • Samantha Balaton-Chrimes and Fiona Haines on the engagement of the World Bank International Finance Corporation’s independent accountability mechanism, the Compliance Advisor Ombudsman, in the Indonesian palm oil sector; and
  • Susan Park on the evolution of accountability mechanisms in the Asian Development Bank.

Here are some of the insights they generated:

Downwards accountability mechanisms oriented towards affected communities have been enthusiastically embraced by many lenders, but with mixed results

Accountability arrangements now look different, with more explicit commitments to strengthened accountability to affected people. This is particularly true of the multilateral development institutions.

The studies on Indonesia and the ADB find that the new accountability mechanisms have indeed enhanced the capacity of communities to air their grievances. In some cases they have also enabled communities to access compensation for project impacts, such as loss of livelihoods, or to negotiate other improvements to their conditions.

However, the potential for these mechanisms to prevent or redress harm in the first place remains limited.

The new accountability mechanisms can usually only ameliorate social or environmental harms resulting from a project, rather than stopping or fundamentally reconfiguring contested projects.

Multilateral accountability mechanisms are still influenced by the power and interests of powerful creditor governments, and governments of borrowing countries in which controversial development projects are located.

Notable differences are evident between the accountability practices of bilateral development cooperation programs, and those of multilateral institutions like the World Bank or ADB, reflecting the differing political environments that each must navigate. Bilateral aid is dominated by accountability practices answering to domestic political constituencies on the use of public funds, and to recipient governments with regard to broader policy frameworks. They have often placed less emphasis on direct accountability to citizens of host countries affected by lending projects.

Local, national and cross border campaigning is an important driver of donor accountability. Particularly in cases where community grievances relate to whether or not a project goes ahead in the first place, or to more fundamental transformation of the terms of such projects, protest and opposition by people’s movements seems more effective than reliance on institutionalized accountability mechanisms that lenders themselves have established.

For example, a coalition linking protest movements in Mozambique with like-minded organisations in Brazil and other countries has fundamentally challenged the premises of a Brazilian funded project in Mozambique, which many of them view as imposing a paradigm of large scale commercial agricultural development, threatening the livelihoods of both peasant farmers and the environment.

So has it all been worth it…?

New accountability systems can serve as useful political channels for marginalized social groups affected by Big Aid. Downwards accountability practices have sometimes achieved modest but significant shifts in the norms and power relations underpinning decision making.

But while such institutional changes have benefited some project-affected people, they have failed to make a difference for many others. The unevenness of such impacts reflect the inescapable ways in which accountability institutions (like all institutions) remain constrained within broader relations of social power.

Whether we think all the hard won claims have been worth it perhaps depends then on the level of ambition or modesty of our initial expectations. Learning from the successes and failures of the new accountability approaches is crucial, both to inform future campaigns or reform efforts, and to allow project-affected people and their allies and supporters to think critically about how they can best seek justice, remedy or change in the future.

2015 may be important but it’s the long haul at the national level that counts

April 2, 2015 By May Miller-Dawkins

Much ink and sweat has been spilled on the subject of the content of the Sustainable Development Goals (SDGs) and their accompanying targets. It is only more recently that more attention is being paid to their form: the ways in which they will be made real in particular places around the world.

As it happens, when you look at which international agreements have had certain effects, and under what conditions, it can make you question some of the current wisdom about what needs to be reflected in the goals for them to be effective.

For example, there is much talk of the need in the final stages of negotiation to make sure that goals are practical. This reflects an underlying assumption that the SDGs are a “project” to be implemented, and that such a project requires SMART goals. This thinking builds on rich veins of technocratic thinking in development, as well as reflecting the more technocratic origins of the MDGs.

However, the SDGs are a distinctly different exercise to the MDGs. They are universalist, ambitious, and grounded in international human rights law. In fact, they resemble international human rights and environmental law more than the MDGs themselves.

The experience of past international agreements and initiatives that have had significant effects – in the form of political commitment, compliance and policy change; normative shifts; and diffusion of approaches – points to two particularly salient lessons for the final negotiation stretch of the SDGs.

Firstly, the effects of the SDGs will be highly contingent on domestic political and policy processes. When I reviewed 150 pieces of literature on the effects of international agreements and initiatives at the national level, the most consistent factor was how those agreements were used in processes of national mobilisation and problem solving.

As the effects of international agreements are “highly contingent” on the dynamics of domestic social mobilisation and existing institutions, it is better that both goals and targets are not overly prescriptive as to how they should be achieved (although it would be good to have well formed global targets and national targets that are set in each country). Successful national problem-solving requires intensive debate and dialogue amongst diverse stakeholders to create a platform for experimentation, not just “implementation”. These national processes will need time and should be built into the timeframe for “implementation” and “results”.

Secondly, high ambition could prove to be a strength of the SDGs. In both human rights and environmental law, high ambition yet low enforcement agreements can sometimes lead to greater change than lowest-common denominator high enforcement agreements. This is particularly the case when governments are committed to action but face uncertainty about what they are capable of achieving (for example, in the case of hazardous waste). This point is clearly linked to the first, in that ambition is useful when it emboldens, enables, or legitimises national groups who can engage in mobilisation or collective problem solving to achieve change. Moreover, the majority of aspirations that the SDGs articulate present complex, even wicked challenges to achieve. As such, it is local problem solving and experimentation that has the best chance of mustering the political, social and economic resources that may be needed to make such aspirations real.

If the SDGs are to be made real country-by-country, and ambition is a strength, what does this mean for the negotiations over coming months? It will mean holding the line while refining the goals and targets to make sure that they are meaningful, grounded in human rights and environmental law, and ambitious but not overly prescriptive as to implementation. Moreover, it means that we need to shift focus to the national level soon, and pay attention to what kinds of platforms and processes are set up for engaging citizens about how to adapt the SDGs to their aspirations, and realise them.

As the rhetoric ramps up about how critical a year 2015 is, we shouldn’t forget that the hardest work will take place step-by-step over coming years in countries around the world.

Originally published at http://practiceforchange.org/2015/04/02/2015-may-be-important-but-its-the-long-haul-at-the-national-level-that-counts/

If x, then y… or maybe not

September 12, 2014 By May Miller-Dawkins

Have you ever been in a meeting or planning session that goes something like this – we want to change x, let’s do y and z and that will lead to x…? Have you found that y and z are frequently the same y and z that your organisation always does, whether that is high level lobbying, a petition, or community-based organising?

Participants at our recent theory of change training at Netroots Nation in Detroit told us that the most interesting, useful and maybe even confronting thing about trying to use theory of change is that you can realise how limited your strategising about change has been in the past.
presenting---netroots

At our Netroots training, four generous participants shared their current campaigns as the basis for a theory of change exercise with fellow conference goers. The groups worked to develop theories of change for achieving efficient and accessible public transport in Detroit (after being there we can tell you the city needs it!), enabling access to fair re-servicing of all student loans in the US, achieving a sustainable union movement in Michigan, and all pregnant women in the US being protected from discrimination.

For each of these, the groups determined a long term outcome and then worked back through the outcomes that would need to be in place to achieve the long term goal, and their relationships to each other.

netroots workshopping

What participants found, and what we often find is that our natural defaults are to think about activities rather than outcomes – people were putting things down like “engage young people” or “get media”. But, of course, these aren’t outcomes and don’t tell us about what needs to be in place to achieve change – they tell us more about what we are used to doing or assume works. The beauty of the theory of change approach is that it helps you step back and look more broadly at what is needed, before you then ask what can we do to contribute within this. What that can reveal are distinct pathways of change, and your role within a much bigger network of actors.

Ideally you would create a theory of change with people with a stake in the issue and after doing preparation through research and analysis. Still, participants fed back to us that this helped challenge how they normally think about change – and helped reveal how limited our strategising is when we work from what we’ll do to what we think will happen in the world. That kind of thinking puts us at the center, often just replicates the tactics we’ve used before and doesn’t help us see new potential pathways or the contributions of other groups or actors. As one participant shared: “this was harder than I thought and yet so crucial to really think about what is needed”.

You can read more about theory of change methods through the resources provided by our friends at the Center for Theory of Change (http://theoryofchange.org/). Our recent report analysing dominant theories of change for engaging people on global issues is still available at corelab.co/theoriesofchange. If you’d like to talk about how to use this method and what it can do for your campaign, you can always get in touch – hello@corelab.co.

First published at http://ideas.corelab.co/if-x-then-y-or-maybe-not/

How can you tell whether a Multi-Stakeholder Initiative is a total waste of time?

March 10, 2014 By May Miller-Dawkins

Have you ever had to decide whether or not to join a multi-stakeholder initiative? When I was at Oxfam there was a disagreement about whether or not to join a fledgling MSI. Some staff believed that the industry was going to use the process as greenwash while others thought this was a real chance to influence the private sector, when other strategies had led to stalemate.

As MSIs proliferate, NGOs face these decisions more frequently. In the absence of a crystal ball or a track record, how can NGOs distinguish between the potential (ethically sourced, of course) diamonds, and the misleading twinkle of a cubix zirconia?

One familiar way in for NGOs is to look at the forms of participation that are being proposed – asking the same questions as in so many development programs. Who gets to participate? Who gets to decide?

As it turns out MSIs tend to legitimate their enterprise on the basis of participation. A study (ungated version here) by Phillip Pattberg and Klaus Dingwerth found that even in their own communications, MSIs emphasise their multi-stakeholder composition and the participation of particular groups even more than actual results. Of course all MSIs have “participation” (at a minimum of the private sector and civil society) as a key feature. But digging deeper, you see that the types of participation vary in important ways.

First off there are “representative” forms of participation. These focus on stakeholder representation (for example into the common chambers structure seen in Forestry Stewardship Council (FSC), Roundtable on Palm Oil Sustainability and Roundtable on Sustainable Biomaterials) and internal representation of the scheme’s members through elected Boards  (e.g. 4C Association, FSC, and many others).

Secondly, many schemes are “deliberative”. These schemes focus on dialogue and frequently make decisions by consensus (for example, the Roundtable on Responsible Soy “aims to facilitate global dialogue”, the Hydropower Sustainability Assessment Protocol was developed through dialogue amongst a forum and then moved to an ongoing chambers structure). Some recognise the particular experience and knowledge of marginalised or oppressed groups and try to ensure that they are heard and respected  (the World Commission on Dams, an early form of MSI, invested in getting the testimony of dam-affected people as well as having them represented on the Commission).

A third strand of participation is more decidedly “functional”. Here the focus is on solving problems, drawing on expertise (whether narrowly or widely conceived), or resolving conflict (for example the Alliance for Water Stewardship and theInternational Seafood Sustainability Foundation). The extreme of functional forms of participation would be co-option that defuses opposition without delegating real authority.

Lastly, it is important to note that participation in MSIs is not limited to those who voluntarily choose to join. Groups participate in schemes as “outsiders” in a range of ways – by refusing to join, campaigning and monitoring (for example, the Bank Information Center’s monitoring of the Extractive Industries Transparency Initiative, or campaigning against the Fair Labor Association). In fact, some experience from social change campaigning demonstrates that civil society are more effective at influencing change in corporate practice when different groups play insider and outsider roles in MSIs.

So, how can better understanding the types of participation in MSIs guide decisions about joining or starting MSIs? Here are a few ideas:

– If the most important principle to your organisation is that people who are likely to be affected by a scheme are involved in its creation then you’ll want to have a representative design, but one which pays adequate attention to who actually participates. This can mean minimum proportions of “chambers” or voting rights to particular groups (eg producers or workers – for example the Fair Labelling Organization has 4 Producer seats on the Board) and adequately resourcing the participation of southern civil society and groups that directly represent workers, producers, Indigenous peoples and other constituencies.

– If you think the conflict between an industry and civil society is a fundamental clash of world-views, then a deliberative approach may work, provided that the process allows adequate time and respect for the kinds of knowledge and expertise that sit on either side of the divide. This may require going beyond international meetings and technical documents, to include visits, immersions, testimony and ensuring a balance of participants and presenters from all sides. Deliberative schemes can be a way to get an industry that is highly reluctant (and maybe battle weary) around the table. However, a lack of focus on the process of deliberation and decision-making in the beginning can lead to a situation where NGOs become locked into a process they have sunk significant time and energy into. To avoid this, NGOs should at least have their own exit strategies – potentially agreed with their partners or allies – if the dialogue does not produce sufficient results.

– Where you think there is genuine commitment to change in an industry, a collaborative approach may be the way to go – by starting small on pilots and programs, and agreeing to stay focused on solving specific problems. The dangers of the collaborative route can be overlooking the political dimensions of the issues at hand – including disagreements between different groups within the amorphous categories of “civil society” and the “private sector”. The fights between the NGOs and companies that get involved in MSIs can pale in comparison to the disagreements between civil society groups about the right strategy.

– Problems with scientific dimensions – such as sustainable fisheries – require expert advice. The terms of expert advice are important (is the expert committee’s advice binding on the decision-makers?). However, be wary of schemes that construe civil society input itself as “expert” input or relegate it to an expert committee with no decision-making authority. This can show that sustainability is being seen as a technical problem to be solved and different views of what sustainability may look like could be brushed aside.

– If you want to work inside a scheme but also understand that it is important that other groups are able to campaign and monitor from the outside you’ll want to make sure that the MSI is fairly transparent – that documents, minutes of meetings, and results of assessments (if they exist) are published, that there is regular consultation, and that reporting and monitoring can be verified by third parties unaffiliated with the scheme.

There is no perfect design for an MSI. However, with a couple of decades of MSI experience under our collective belts and a better understanding of their potential and limits, careful attention to the different forms of participation at the front end can hopefully lead to better results at the other.

MSI veterans and observers – what’s your experience? What forms of participation do you think means that MSIs are more likely to deliver?

Originally published by From Poverty to Power. 

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