Corporate Accountability and the
World Summit on Sustainable Development

By Jeffrey Barber, ISF and NGO Taskforce on Business & Industry

For the seminar on Corporations, Human Rights, Communities and Development

Centre for Energy, Petroleum and Mineral Law and Policy, University of Dundee, Scotland, UK

August 30, 2001

My presentation focuses on the upcoming World Summit on Sustainable Development and the importance of corporate accountability as a key element in the successful outcome of that event.  This focus will be from a civil society perspective, in particular that of the NGO Taskforce on Business and Industry (“ToBI”).

In the coming months, nongovernmental organizations (“NGOs”) will join governments, academics, trade unions, United Nations officials and others in the review of progress since the 1992 Earth Summit.  The World Summit, taking place in September 2002 in Johannesburg, South Africa, will be a meeting of heads of state to assess and act on the global, regional and national needs of sustainable development.  The three key questions of this review are:  What was accomplished?  What constrained progress?  And what needs to be done next? 

ToBI members will focus special attention on the role corporations and industry associations played during this time as well as what is needed to move forward.

Concerns about corporate irresponsibility

During the past ten years, corporations have had both the opportunity and the obligation to become more socially and environmentally responsible in their policies, practices, and products.  They have had the past decade to demonstrate the effectiveness of the voluntary and self-regulatory approaches their representatives promoted so vigorously at the Earth Summit. 

However, now as then civil society groups raise strong concerns about the irresponsible practices they see continuing to undermine the health of people and ecosystems – in spite of the increasing rhetoric of “corporate social responsibility” and “corporate citizenship.”  Shell chairman Mark Moody Stuart describes the aim of the “Business Action for Sustainable Development” network as being formed to “ensure the world business community is assigned its proper place for the Summit” and that business is “seen at the event itself to be playing a constructive role.”  However, according to groups like Corporate Watch, “These are the same discredited companies that attempted to greenwash themselves at the first Earth Summit in Rio, and have been slowing environmental progress ever since." [1]

NGOs also raise concerns about corporate behavior undermining policies meant to promote sustainable development.  The Global Climate Coalition is one example of industry groups aggressively lobbying against the Kyoto Protocol.  Corporate Europe Observatory notes that the World Business Council on Sustainable Development (WBCSD), the International Chamber of Commerce (ICC) and Shell – the three main organizers of the Business Action for Sustainable Development – were “the most visible industry lobby groups” at the recent COP-6 climate change conference in the Hague, arguing against “binding government regulation” and instead encouraging “voluntary action by industry and unlimited use of the Kyoto Protocol's market-based mechanisms.” [2]

NGO Taskforce on Business & Industry

The NGO Taskforce on Business and Industry (ToBI) is a coalition of civil society organizations from different regions around the world working to promote the concept and implementation of corporate accountability. The coalition represents a diversity of civil society organizations and networks from different countries and with different strategies and focus.  However, they are united by a common concern about and commitment to realizing the accountability of corporations to society.

The coalition began in 1996 in preparations for the UN General Assembly Special Session five-year review of progress on implementing the Agenda 21 commitments made at the 1992 Earth Summit in Rio.  This fifth anniversary of the Earth Summit was also the anniversary of the demise of the UN Code of Conduct on Transnational Corporations.  Industry groups justified the withdrawal of the TNC Code of Conduct asserting that business was becoming more socially responsible and could regulate itself through voluntary initiatives.  The Earth Summit, in turn, welcomed and encouraged industry’s movement towards developing their own codes and voluntary initiatives. 

Noting the minimal critical scrutiny of business and industry in the Rio+5 process, NGOs agreed we needed to provide a civil society perspective of progress by business and industry towards responsible and environmentally sustainable practices.   We also realized that we needed to highlight the point that both corporate responsibility and accountability are necessary to implement sustainable development.  Yet accountability was being pushed to the sidelines.  ToBI was created precisely to promote the concept and implementation of corporate accountability.

ToBI’s mission is not to reject the concept of corporate responsibility, but to point out that it cannot function without the support of corporate accountability to address the “free riders” and companies that choose or are impelled to behave irresponsibly.  What seemed to be neglected at Rio and in the Rio+5 process was the fact that even when guided by voluntary codes and enlightened executives, each corporation is obligated to put profit-making above all other concerns -– including the costs to society and the environment.  For the modern corporation, its ultimate responsibility is not to society but to the shareholder.

For the 1997 UN General Assembly Special Session – or “Earth Summit II” – over 70 NGOs and NGO networks signed the NGO statement “The Role of Corporate Accountability in Sustainable Development.” This statement detailed a list of points we wished the UN and national governments to address as part of their responsibility to ensure the accountability of corporations to society.   This set of priorities is also known as the “ToBI Agenda.”  At that time we asked that governments:

1.  Improve the means to improve monitor and assess corporate practices.

2.  Acknowledge that corporate accountability is an essential element of sustainable   development.

3.  Strengthen public access to meaningful information. 

4.  Eliminate unsustainable subsidies

5.  Hold wrongdoers accountable and liable for their behavior.

6.  Empower and prioritize local communities and local sustainability.

7.  Establish clean production as the standard.

8.  Reduce inappropriate political influence by corporations promoting policies undermining sustainability.

Establishing a critical civil society voice at the UN

ToBI’s efforts at Earth Summit+5 had some moderate success.  We at least achieved some recognition that corporate accountability plays an essential role in sustainable development, and that corporate responsibility and accountability work together.  In the General Assembly’s final report, Programme for the Further Implementation of Agenda 21, language pairing corporate responsibility and accountability was adopted in the section on Further Methods of Work.

ToBI achieved additional success through its participation in the Sixth Session of the UN Commission on Sustainable Development (“CSD”), in the dialogues on Industry and Sustainable Development.  In response to the constant uncritical promotion of voluntary initiatives and downplaying of regulations, monitoring and compliance, ToBI argued the need for an evaluation of the effectiveness of voluntary initiatives.  In the dialogue session we proposed, with trade union support, that the UN adopt a Multistakeholder Review of Voluntary Initiatives and Agreements.   In response, the CSD picked up this idea noting “the potential value of a review of voluntary initiatives and agreements to give content and direction to the dialogue between Governments and the representatives of industry, trade unions, non-governmental organizations and international organizations.” [3]

The CSD then charged ToBI, the International Chamber of Commerce, the International Confederation of Free Trade Unions and the UN Environment Program to begin an exploratory process to identify the “elements” that should be part of such a review.  This multistakeholder body was referred to as the VIAs Steering Committee.

This led to a multistakeholder consultation in Toronto and the creation of a conceptual framework for evaluating voluntary initiatives and agreements. [4]   However, as the actual review of voluntary initiatives has yet to be established, this is one potential outcome of the World Summit.

World Summit on Sustainable Development

As to the World Summit itself, we are again faced with a review process in which the topic of corporate accountability fades behind the strong industry promotion of voluntary initiatives and self-regulation.  Likewise, the responsibility of business and industry in the failure to implement Agenda 21 also slips past the official assessments of progress.

As to the question “what has been accomplished,” there is wide agreement – not much. 

In preparations for the Summit, in the summer of 2001, the UN organized a series of regional roundtable discussions to begin exploring these questions.  According to the report from the Regional Roundtable for Europe and North America, “…the overall implementation of the agreements reached at Rio, particularly on climate change and biodiversity, has been disappointing so far, and is widely recognised as such.”  The Roundtable for Latin America and the Caribbean arrived at a similar assessment, pointing out that “… the high expectations of Rio have not been realised, either globally or within the region.”  Likewise, the East Asia and Pacific Roundtable concluded that despite various efforts to respond to the challenge of sustainable development and the implementation of Agenda 21, these responses “reflected limited progress.”  For Africa, the failure to invest in sustainable development in the region has left the continent with serious problems.  “Poverty is projected to grow in Africa,” the Regional Roundtable on Africa reports, “and in twenty years time some 60 per cent of the population could live in abject poverty.”   

Even the UN General Assembly, discussing the ten-year review of progress, expressed its deep concern that “despite the many successful and continuing efforts of the international community since the Stockholm Conference [in 1972] and the fact that some progress has been achieved, the environment and the natural resource base that support life on earth continue to deteriorate at an alarming rate.”

Who will take responsibility for the implementation crisis?

Many NGOs describe this failure of governments as the implementation crisis.  Despite the “strong moral obligation” for governments to ensure the “full implementation” of the Agenda 21 commitments, this obligation was clearly not strong enough.  The Roundtable report from Europe and North America stressed the urgency of the situation, claiming “the present generation may be among the last that can correct the current course of world development before it reaches a point of no return.”  However, despite some positive changes, governments have not done enough to “change course” which those the Earth Summit agreed was so necessary and so urgent.  If humanity has reached a turning point, as the Earth Summit claimed in 1992, we may miss it.

Why bother?

So, why should NGOs bother with the World Summit?  Many are skeptical that it will accomplish little or nothing.  Many are cynical about the failure of governments to make good on their commitments at the Earth Summit, that the World Summit will simply be a repeat of empty commitments and much high posturing, especially by the industry lobbyists who have become more sophisticated in learning to use the rhetoric of sustainability.  With the implementation crisis comes the question of the credibility of our leaders.

While the anger and frustration with corporate globalization has been dramatically expressed in Seattle, Prague, Washington, DC, and recently in Genoa, the World Summit in Johannesburg offers an opportunity to specify clear actions which governments can take to help restore some of the credibility that has been lost – if there is the political will.  Nonetheless, civil society has an obligation to spell out what we want.  For ToBI, we need to clearly articulate what we believe is needed to ensure the accountability of corporations for those policies and practices undermining sustainable development. 

In short, the World Summit offers an opportunity to raise the case for global governance mechanisms to promote corporate accountability.

ToBI Campaign for Corporate Accountability

Although discussion about strategy and objectives is still taking place, some of the elements of the proposed ToBI Campaign for Corporate Accountability at the World Summit are as follows:

1. Making accountability a priority.  The concept of corporate accountability needs to be integrated into the WSSD discussion, especially the topic of governance and institutional capacity.  The goal of corporate accountability should be one of the commitments and in the follow-up plans of the Summit.   These plans should include a process for examining the issue of accountability and transparency and the development of the institutional mechanisms needed to achieve accountability.

2. Monitoring and evaluating corporate performance.   Without information about corporate performance, there is no way to determine whether voluntary codes and initiatives such as the Global Compact, the OECD Guidelines on Multinational Corporations, and others work or not.  A system for collecting, analyzing and disseminating information about the performance of large corporations is needed.  The UN can help to explore and coordinate the integration of different information sources and access to that information.
3. Corporate sustainability reporting.  Governments need to set the stage for transparent business practices by requiring more than financial information from corporations.  Information related to the social and environmental impacts of company practices and products need to be a part of annual disclosure requirements.   Efforts to integrate research and discussions on sustainability indicators, measurement, reporting and verification are also needed.  The UN can help with this coordinating role, building on efforts such as the Global Reporting Initiative, social accounting, and others.  Governments need to develop appropriate standards and legal requirements.
4. Steps towards advertising reform.  Governments and the UN must lift the taboo against talking about the destructive impact of mass advertising on the world.  The G77’s call for studying the impacts of advertising on developing countries needs to be answered.  Instead of polite but ultimately weak requests for advertising firms to include material “promoting sustainable consumption,” the advertising industry must also be held accountable for the damage it causes.  Governments should take leadership in this by following the example of countries such as Sweden which regulates the advertising targeting children. The UN can help by fostering dialogue and research on this topic, especially on appropriate legislation. 
5. Addressing obstacles to subsidy reform.  For ten years the UN and governments have talked about the need to reform subsidies, yet they are continually blocked by private interest groups with the political power to sidetrack reform efforts.  The UN needs to lift the taboo on talking about the obstacles to reform, inviting NGOs who have more freedom to “name and shame” than do government and UN officials.  One step can be creation of a multistakeholder working group on subsidy reform, respecting the diversity of opinions including NGOs critical of obstructions by corporate lobbyists.
6. Regulating inappropriate corporate influence on policy.  One of the main constraints responsible for the failure of governments to implement Agenda 21 has been the influence of corporate and industry lobbyists.  One example is the influence wielded by corporate lobbyists – especially from the US -- in watering down the terms of the Kyoto Protocol as well as blocking its ratification.  In some countries, such as the US, corporate lobbyists are legally permitted to mobilize huge financial contributions to political campaigns.  In addition to being one of the main obstacles to implementation, it is also one of the major taboos at the UN.  Governments and UN officials tend to be timid in addressing the problem of corporate lobbyists.  Therefore a space must be provided allowing NGOs to help raise this critical issue.
7. Stronger civil society alliances for corporate accountability.  NGOs also need to be better organized and to increase our understanding of the interrelationship of social, environmental and economic issues.  Too often we are divided and competitive regarding what we perceive as the importance of our individual issues – human rights, community development, environmental protection and so forth – rather than uniting around the cross-cutting issues and problems affecting all our issues.  Since many of the obstacles and taboos in implementing Agenda 21 will not be directly addressed without strong civil society pressure, it is up to us to accept this responsibility.

For continuing updates on how this Campaign takes shape, please see the ToBI website at www.isforum.org/tobi

Finally, despite the increasing discussion about accountability and transparency, we can expect strong resistance from those sectors of the corporate community who claim to be increasingly responsible but clearly do not want to be held responsible.