How companies can collaboratively “take the floor” on social and economic challenges

Businesses are under increasing pressure to address social and environmental challenges such as climate change, biodiversity loss and inequality. However, most companies cannot face these challenges head-on, and governments struggle to hold them accountable.

With increasing globalization, supply chains for essential products have become increasingly complex and can span a large number of jurisdictions, making it difficult for governments to self-regulate business conduct. A new approach to corporate regulation is required to reflect this changing context and address pressing global issues.

Multi-stakeholder initiatives

A non-governmental approach that has attracted a lot of attention are multi-stakeholder initiatives such as the Fair Labor Association or the Forest Stewardship Council, which are partnerships between companies and their stakeholders. Stakeholders vary by industry but often include social and environmental NGOs, trade unions, government officials and academics.

Multi-stakeholder initiatives develop standards or codes of conduct that address issues created or compounded by business, such as: E.g. pollution or bad working conditions. These initiatives require participating companies to comply voluntarily, but often have systems in place to monitor compliance and sometimes sanction violations.

A key differentiator of multi-stakeholder initiatives is the inclusion of stakeholders in decision-making. For example, the Board of Directors of the Forest Stewardship Council Canada consists of eight people representing four chambers: Indigenous, Economic, Environmental and Social.

miss the target

Multi-stakeholder initiatives should usher in a new era of responsible business conduct by promoting a more collaborative, balanced and bottom-up approach to regulation. Unfortunately, this hope has not been fulfilled. A growing body of evidence points to significant and systematic problems with multi-stakeholder initiatives.

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

A woman sits head in hand at the head of a group of people.  People around her aggressively gesture at her
Multi-stakeholder initiatives struggle to include the perspectives of all members because they prioritize established, business-centric perspectives over more radical ones.
(Shutterstock)

Multi-stakeholder initiatives typically have weak rules that are often poorly enforced. For example, the Marine Stewardship Council has been criticized for only dealing with a small subset of labor abuses and for relying on a tight monitoring programme.

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

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

Rethink multi-stakeholder initiatives

To understand why multi-stakeholder initiatives often fall short of their goals, it is important to change the way we think about them. In our recent research, we argue that it makes more sense to think of them as deliberative systems made up of five distinct, albeit closely related, elements rather than as single, all-encompassing entities.

Each item is evaluated based on criteria such as: B. the extent to which organizations include the perspectives of all stakeholders (inclusiveness) and the extent to which discussions among members are conducted respectfully and without coercion (authenticity). This allows for a more detailed analysis of an initiative’s strengths and weaknesses.

Our research finds numerous deficiencies in these elements. For example, multi-stakeholder initiatives struggle to include all stakeholder perspectives in decision-making, as it is difficult for everyone to represent their interests. Committees in which collective decisions are made, such as executive boards or general assemblies, form the so-called “empowered space”.

When it comes to engaging in activities such as activism and lobbying – also known as transmission – multi-stakeholder initiatives often struggle with authenticity as pre-existing practices tend to be dominated by corporations. Multi-stakeholder initiatives also rarely take the time or space to consider changes to how they are governed. This process is called meta-consultation.

Using the lens of deliberative systems not only allows us to provide an analysis of an initiative’s strengths and weaknesses, but also allows us to propose solutions to some of those weaknesses.

Mini-publics are a promising solution

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

The participants in the mini-publics are selected by democratic lotteries. This results in a wider range of voices – from janitors to product managers and interns to regional managers – being brought to the table.

A group of people sit around a table and talk
Mini-publics bring different groups of people together to consult with the help of trained facilitators to generate new insights or recommendations on a specific topic.
(Shutterstock)

Participants have the opportunity to learn from each other, experts and interested stakeholders. In mini-publics, they consult with trained moderators in order to generate new insights or recommendations on a specific topic.

Mini-publics encourage more inclusivity and authenticity by making it easier for different voices to listen to and learn from each other. Ultimately, this fairer and more creative process can lead to more effective and better enforced rules of business conduct.

Improving multi-stakeholder initiatives

It is worth trying to improve multi-stakeholder initiatives by giving them new ways to overcome their shortcomings. Our research has found that mini-publics are particularly good at helping multi-stakeholder initiatives overcome their weaknesses.

For example, mini-publics could enable 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 making these decisions more responsive to the interests of all its members. Mini-publics could also be used to help initiatives think about governance changes, e.g. B. whether or not to include new stakeholders in the initiative.

These uses would not only help address specific weaknesses in multi-stakeholder initiatives, but would also result in broader benefits for the initiative as a whole by providing members with the skills and capacity needed to provide effective collaborative advice. Ultimately, this would increase the impact of regulations on global business activities.

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