Globalisation’s reality check

John Elkington
6 September 2004

A love of the sort of tennis played in the Wimbledon finals is good preparation for the knockabout entertainment of openDemocracy’s contest between David Held and a star–studded cast of opponents and semi–sympathisers – from Martin Wolf, Meghnad Desai and Roger Scruton to Maria Livanos Cattaui and Grahame Thompson. At the same time, I can’t be the only reader to have felt increasingly frustrated as the rackets twanged, balls sizzled by and competing line–calls were made.

The ultimate answers to the questions posed seem unlikely to plop neatly into the “either/or” box favoured by the tidy–minded. Instead, they will ricochet across the “both/and” space for decades before any moderately comprehensible – and moderately sustainable – outcome emerges.

For the openDemocracy debate on David Held’s argument for a new global covenant, go to our Globalisation – visions and reflections theme page

Unlike some contributors, I sympathise with much of David Held’s analysis. The old order is demonstrably unsustainable. We are at a turning–point. The more gung–ho globalisers have lost some of their confidence in the historic inevitability of liberalisation, privatisation and, to a considerable degree, Americanisation. There is growing concern that the world is failing to get a grip on a series of challenges in areas such as security, trade and environmental change, particularly climate change. And the United Nations system is radically dysfunctional.

As a long–time student of history, the older I get the more of a believer I become in catastrophism – that is that change comes in sudden bursts rather than gradually. Experience suggests that vested interests ensure that, while specialists and activists may argue until they’re blue in the face about issues like security, ozone depletion or climate change, it’s only when the system has to cope with an ozone hole, 9/11 or some other mega–shock that decision–makers (and ordinary citizens) “get” the need for change.

Such shocks are guaranteed. In fact, creative destruction comes in many forms – economic, social, political, ecological – and the 21st century will see more of it than any previous one. Demographic trends, pandemics, financial crashes, disruptive technologies, the rise of some emerging economies into geopolitical positions unimaginable in today’s world: all these will help create the political conditions in which new forms of global governance will evolve.

The millennium goals: ambition and reality

And there are a number of principles which will likely help shape emergent patterns of global governance. Let me briefly draw on work done earlier in 2004 by my colleagues and I at SustainAbility for the United Nations’ global compact and five sponsoring companies (Daimler–Chrysler, Novartis, Novo Nordisk, Pfizer, SAP).

In contrast to Martin Wolf’s neatly–argued assertions in his article “The case for optimism”, SustainAbility’s report Gearing Up: from corporate responsibility to good governance and scalable solutions concludes that current initiatives designed to achieve the objectives outlined in the Millennium Development Goals (MDG) have little chance of being successful on any meaningful timescale.

This assessment includes the UN global compact. While recent announcements suggest that the compact is trying to address questions over its credibility, there is a real risk that it will devolve to the convoy–adapted–to–the–speed–of–the–slowest–vessel mode operated by so many trade and industry federations, including Maria Livanos Cattaui’s own International Chamber of Commerce (ICC).

There is, moreover, a real risk that the global compact will put the UN’s wider reputation in jeopardy. All such voluntary initiatives are likely to be viewed with healthy scepticism, particularly where their “business models” combine rapid recruitment coupled with a lack of integrity measures for their corporate members or signatories.

More details of SustainAbility’s work on the proposal for a “global compact” can be found in its report, Gearing Up: from corporate responsibility to good governance and scalable solutions

SustainAbility’s Gearing Up report addresses precisely the question of how to help ensure the integrity measures essential in the long term to organisations like the global compact. While scaling up the dialogue is obviously important, increasing the momentum of practical, on–the–ground responses on issues like climate change, HIV/Aids and corruption control is much more important. So, we argue, global compact members should be invited to report regularly on what they are specifically doing to address targets such as those set by the Millennium Development Goals.

We conclude that, despite achieving impressive progress in places, the international corporate responsibility (CR) movement is now bumping up against real limits. Most company initiatives are too peripheral from core businesses, too isolated from one another, and too disconnected from wider systems to make much of a collective impact. Clearly, pessimism can be self–fulfilling, but the debate needs a challenge to the “business–as–usual–will–solve–it” thinking which Martin Wolf’s analysis might encourage in some readers.

In October 2003, the global compact asked us to evaluate the extent to which CR initiatives are helping drive the transition to more sustainable forms of development. In particular, we were asked to consider whether good corporate performance can act as a stimulus to bring about the governance improvements that will be necessary to make progress towards realising the MDGs. In our case studies, we focused on climate change, corruption and health, in the form of HIV/Aids and chronic diseases.

Frankly, I’m worried. Despite high–level buy–in to both the priorities and targets of the MDGs, we found growing pessimism about the ability to achieve them within the agreed timescale. For example, the global governance initiative (GGI), hosted by the World Economic Forum (WEF), has concluded that – at best – collective global initiatives to achieve progress on goals like the MDGs are only 30–40% effective.

Scorecards on our case study issues are equally worrying. Total CO2 emissions worldwide have increased by 8.9% since 1990, compared with the 60% reduction the Intergovernmental Panel on Climate Change (IPCC) has called for by 2050. In the poorest countries, less than 10% of the 6 million people who need anti-retroviral medicines currently get them. Chronic diseases, such as diabetes, are rapidly emerging as a global pandemic. Corruption is proving an intractable challenge. In short, the combined actions of governments, business and civil society to address sustainable development issues are being outpaced by the problems.

Also by John Elkington in openDemocracy:

  • “Why I’m going to Davos” (January 2003)
  • “Biotechnology: the case for sustainability” (August 2003)
  • “It’s the system, stupid!” – a World Economic Forum blog (February 2004)

Making “responsibility” real

As ever, there is good news and bad. The good news is that many corporate responsibility initiatives are evolving in the right direction, with a growing variety of companies acknowledging a wider range of stakeholders and acting on an increasing number of key issues. The bad news is that most such initiatives still remain distanced from the company’s core business activities, disengaged from long–term strategy. As a result, even leading companies pursue disjointed and at times conflicting activities, for example lobbying for lower social and environmental standards.

The CR movement has evolved in the context of weak, indeed often weakening, government leadership. It has made real progress, but is constrained by a lack of appropriate links to wider global, regional and national governance frameworks. Equally, few companies have so far sought to create CR–related market opportunities, to evolve relevant new business models or to encourage government policy development and action in line with their stated CR goals.

A small but growing number of bold and visionary companies have made considerable strides and are to be commended for their achievements. But their numbers will remain small as long as the business case for getting in front of the corporate pack remains weak. Here, government involvement will be crucial.

Some of the respondents to SustainAbility’s survey noted, and it is a point we firmly endorse, that the critical task is not to get companies to adopt the responsibilities of governments but to help ensure governments fulfill their own responsibilities. Our case studies all underscore the crucial roles that governments must play: in setting the course, developing incentives and generally helping to create a stronger business case.

Here, I am fairly agnostic between Maria Livanos Cattaui and David Held on whether a “global compact” or a “global covenant” is the more needed. I agree with Cattaui that populism and simplistic solutions are dangerous, that there is no single, monolithic solution, and that – whatever we do – markets and business will be central. I also agree that initiatives like the global compact are networks for change rather than institutions for governance; but this does not alter the fact that a dangerous vacuum exists where global governance should be – and the United Nations, its agencies and initiatives, should be helping us all to focus our efforts in this area.

Yet I also share Held’s conclusion that neo–liberalism and unilateralism offer limited (or at least unattractive) long–term solutions to the global problems the world faces. The global compact is well placed both to help business and other partners to debate and shape the global operating system for 21st century governance and markets. But to do so, and in a legitimate, effective way, it will need to address key reputational issues of its own.

The new focus on governance means that many such voluntary initiatives will need to meet higher levels of transparency and accountability. As they do, external stakeholders will be concerned to ensure that participants do not use voluntary initiatives merely as camouflage or alibis. My sense is that too many companies are currently using initiatives like the global compact as political cover, in the same way that small fish in the vast wastes of the ocean shoal under drifting rafts and other debris.

Both the United Nations as a whole and the global compact have the potential to be much more than that. But they are going to need energetic, consistent and sustained pressure to help them adapt to a new century and its challenges.

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