Much of the corporate sustainability and responsibility agenda has been propelled since the '90s by the idea that voluntary action on the part of corporations is more effective than regulation. It has been a celebration of market dynamism over moribund regulation, the latter of which would provide only for the lowest common denominator. At any rate, liberalization of markets outpaced our ability to develop an effective governance model to tackle issues such as climate change in a joined up way so many were happy to go a long with an approach that at least delivered incremental improvements.
Now there are signs that the principle of voluntarism is under pressure. There are two striking examples this week.
First, the UN Global Compact, the world's largest corporate citizenship initiative dedicated to 10 voluntary principles, withdrew its support for the ISO26000 standard for corporate social responsibility now in the latter stages of development. This was announced in a terse letter from the UN Global Compact to ISO last week, since leaked by Global Compact Critics:
We are disappointed that neither in the body of the standard nor in the annex is there any recognition of the world's foremost social responsibility initiative, and have concluded that the current reference to the UN Global Compact does provide the UNGC with the prominence it deserves.
It appears the UN GC is upset that its voluntary code is not more prominently embedded into the emerging ISO26000 standard as best practice. Incidentally, Intel announced that it has just this month signed up to the UN Global Compact principles. For the record, the UN Global Compact is a great initiative for what it is - a general voluntary CSR code based on an honour system of voluntary compliance. The only obligation is for members to submit annually a 'communication on progress' report. The danger is to expect perhaps too much more than that of it.
The second example is more tragic. The Independent reports today that Ian Smillie, the original architect of the Kimberly Process, a certification scheme to guarantee that diamonds associated with conflict are kept out of trade, has withdrawn his support. The Kimberly Process is a UN backed multi stakeholder initiative which aims to end the 'blood diamond' trade which has blighted the development of countries such as Angola, Liberia & Sierra Leone. I say tragic because there is a real danger of apathy becoming a self fulfilling prophecy. As the Independent reports on the Kimberly Process:
....if the process loses credibility, experts say criminals will re-enter the trade with conflict diamonds quickly reappearing in shops in London, Paris and New York.
It isn't regulating the rough diamond trade. It is in danger of becoming irrelevant and it's letting all manner of crooks off the hook.
Its a cruel irony that just as the technology for effective traceability is coming to maturity confidence in voluntary schemes such as Kimberly seems to be weakening.
The credit crisis, collapse of the auto industry and the recession has shaken the confidence of activists stakeholders that the market can come good on corporate social responsibility. It hasn't helped that the private sector has tended to drink just a little too much of its own Kool Aid on sustainability performance. As Aron Cramer, BSR CEO commented recently on his impressions of the World Business Summit on Climate Change held last month in Copenhagen:
There continues to be altogether too much pride taken in small initiatives taken by individual companies, and the opening plenary featured lots of credit taking for initiatives that are not exactly game changers. And when Adam Werbach of Saatchi & Saatchi Ssuggested that some CEOs might not match their words with actions (a very reasonable claim, in my view), Martin Sorrell of WPP fired back a blistering response that led me (and many I spoke with) to think Sir Martin doth protest too much…
Certainly the voluntary principle is down but by no means is it out not least because we still have the same serious governance gaps out there that continue to require a pragmatic approach & solidarity across stakeholder groups. That said, maybe a correction at this time is perfectly in order. Voluntary actions of corporate citizenship need to be held to closer public account if they are themselves to be sustainable.