Paul Hohnen is an Associate Fellow of the Royal Institute for International Affairs (Chatham House)
The attention which the 2009 G8 Summit gave to a Global Standard is to be welcomed.
First, because it is and will always remain the final responsibility of government to shape standards, whether legally binding or voluntary. Second, because the process offers an opportunity to review existing principles and standards and to identify how well these are implemented. Thirdly, to be effective, any new standards need to be legitimate and practical. This will require a high level of consultation with stakeholders, offering opportunities promote partnerships and learning.
Government responsibility: In the last two decades, governments have largely left standards making in relation to responsible business conduct at the global level to the private and civil society sectors. A notable exception was the OECD Guidelines for Multinational Enterprises (MNEs), which were developed by OECD governments jointly with representatives of the business community and of employee organizations and enjoy a level of NGO support. The Guidelines have a number of characteristics that make them attractive. These include the fact that they: were specifically crafted to provide guidance and recommendations on what constitutes good business practice (covering issues such as disclosure, employment and industrial relations, environment, consumer interests, and combating bribery); have global application (they have also been endorsed by a number of non-OECD countries and are used by a wide variety of companies in developing their own approach to sustainable development and corporate social responsibility); and have a mediation mechanism.
There are now hundreds of general or sector specific standards offering guidance on what it is to be a good company. Some of these help companies understand what to do, and others how to do it. Many specifically reference or embrace government-agreed principles; others don’t. Most represent an attempt to fill a gap in guidance on what is expected of business. While healthy in terms of public participation, this development represents a challenge for governments. For example, private standards might redefine agreed government policy or displace government-agreed instruments. In still other cases, sensible standards might simply not be applied.
If governments want agreed international principles on responsible business practices to be widely respected, they need to go further. They need to build greater awareness of existing standards and to make improvements needed to ensure increased uptake. Government participation and leadership in this process has often been a missing element in global standards-making, and its return is timely.
Build on Existing Foundations: Many organizations have the sense that there are already too many standards in the market place. Others aren’t aware of the standards that already exist, including governmental ones. As a first step, the Global Standard process needs to define:
• what its specific goals are
• what organizations and/or sectors it will apply to
• what standards already exist and their strengths and weaknesses
• how a new Standard would complement existing standards.
Experience with privately-developed standards over the last decades suggests that standards that are too broadly defined do not meet the needs of modern organizations, which may need recognition in the form of assurance or certification. Experience also suggests that governmentally-developed principles and standards, including OECD and ILO guidance, have not been as fully promoted as they could be. Indeed, the G8 has committed to promoting such instruments as a high priority. (For a more detailed discussion of this point, see: http://www.oecd.org/dataoecd/18/56/40889288.pdf)
Above all, experience shows that unless governments take a close and consistent interest in standards implementation, implementation is patchy. This has been the reason that some organizations have called for legally binding rules.
The Importance of Stakeholders: Partnerships of business and non-profit organizations – sometimes with government involvement - have developed a wide range of standards. These include: the general guidance being developed by ISO on what it means for an organization to be ‘socially responsible’; the UN Global Compact’s ten principles, and the Global Reporting Initiative’s (GRI) sustainability reporting framework. Organizations such as these have immense experience in the development. With the proposed expanded role of governments in the standards-making space, it will be crucial to engage the business and other organizations that will be using the Standard to ensure that it is practical, measurable, and implementation beneficial.
The Lecce Framework opens a Pandora’s box of questions and challenges. But in doing so, it offers the opportunity for a new level of global discussion on how best to harness the powers of the market to achieve a more sustainable and equitable globalization.