Category: Policy/ad.

If you were given 10 million euros and three to five years, how would you go about “changing the role of the financial system to better serve economic, social and environmental objectives”? The EU is asking that question. And that’s something that I’ve been answering with a consortium of more that 20 European universities. Our proposal went in last week.

For me, all this builds on the work of the Global Finance Initiative that I led. Scaling Impact’s Sanjeev Khagram and I were convinced of the need for a multi-stakeholder Global Action Network (GAN) in the global finance arena that would take on the very issue the EU is asking with an EU focus. Starting in January 2008 – just before the financial crisis and with $185,000 from Ford Foundation – we analyzed the global financial arena by further developing mapping methodologies and putting together a stewardship team that came up with a clear action strategy.

But we couldn’t get money for the next phase…because the financial crisis shrank foundations’ budgets and visions!

One exciting aspect about the EU Call is that they clearly want what I’d call a societal learning and change strategy…where financial system stakeholders will work together to (1) gain important new knowledge and perspectives that will change the way they think about the financial system, and (2) develop new social ties that provide for on-going development of new ideas, strategies, structures, and processes with regards to the financial system.

In other words, the goal of the Call is not simply to produce new reports, books and ideas…it’s about making sure the new knowledge is “held” by stakeholders and that they have the vision and relationships to further it.

The Proposal

The proposal to the EU was put together with leadership of the European Academy for Business in Society and Maurizio Zollo, Director of the Center for Research on Organization and Management at Bocconi University in Milan. It proposes conventional research by an inter-university faculty to investigate from a multi-disciplinary perspective the historic financial system dynamics with comprehensive analysis of the reasons for the financial crisis.

But the project also proposes an action research strategy that includes:

1. Mapping social structures and developing a holistic computer model that simulates cross-system (finance-environment-social-economic-political) and cross-level (local-to-global) interdependences. This contrasts with the narrow product- and firm-level simulations used by finance that contributed to the financial crisis.
2. Engaging stakeholders. A stakeholder council will include financiers, policy makers, regulators and social-, labor-, consumer-, and environmental-activists working on finance issues. With the researchers, the councillors will co-lead the project and engage their respective constituencies. This will be supported by an innovative social media strategy.
3. Scenario-building. Through stakeholder engagement with small focus groups around the world and larger European ones, plausible alternative futures will be developed.
4. Experimenting. Working with financial firms and other stakeholders, new approaches to such things as decision-making and product development will be tested.

Each of these four actions will further develop methodologies that will be very helpful to other network change strategies.

This approach, like the strategy proposed by the GFI, builds on the experience of GANs and the World Commission on Dams in particular. The WCD was a 1997-2000 multi-stakeholder process to create comprehensive guidelines for the building of large dams in response to environmental and social disasters associated with large dams funded by the World Bank. Although the diverse Commissioners reached consensus in a final report, it did not translate into agreement among the broader stakeholders‘ community, and responsibility for next steps was delegated to the UNEP that proved incapable administratively or authoritatively to effect pursuit of the Commission‘s work.

The response to the EU Call aims to overcome the WCD short-coming with its more comprehensive activities and explicitly creating stakeholder connections that can carry on the work.

How would you address the financial crisis as a large-system change challenge

When John Ruggie was describing his work with the UN Human Rights Council (UNHRC) to reduce corporate-related human rights abuses, I couldn’t help thinking “do we really need another global network on this issue? Would it be better to think about possibilities of them working together more closely? Is this simply another case of ‘government’ wanting to “be in charge’, and resistant to joining others? Or are the current networks too tied to their own identities to look at the bigger change opportunity?”

The UNHRC takes its definition of Human Rights from the Universal Declaration of Human Rights, adopted in 1948. It presents a broad definition, including rights to education, to work, and to a standard of living adequate for health and well-being.

Competitors?

Is this definition sufficiently relevant to the numerous existing global, multi-stakeholder networks that are working on human rights issues with a particular focus upon corporations? Also in the broad arena are:

• The UN Global Compact, distinguished by its UN leadership, and its focus upon development of a “learning space” for corporations to integrate 10 principles into their operations including human rights and labor standards principles.
• The Global Reporting Initiative, distinguished by the formal absence of government and GRI’s work to create a framework integrating all others, for corporations to report their social, environmental and economic impacts.

In the labor rights arena, there are:

• The International Labour Organization, distinguished by its formal government participation in addition to NGOs, labour and business that make up others;
• Social Accountability International, distinguished by a workplace/plant-level certification strategy;
• The Fair Labor Association, distinguished by a buyer-driven strategy of American universities that want the goods they sell to meet certain standards;
• The Ethical Trading Initiative, distinguished by a strategy focusing upon supply chains of major corporations.

And then there’re other networks that could easily move into this arena, like Transparency International with its concerns about corporate corruption.

Time to Reassess Development Stage?

The question about current powerful options for reducing corporate-related human rights abuses is related to how the “issue domain” is analyzed in terms of its “development stage”. In this case, its development stage of the “issue domain” (human rights and corporations) rather than the individual networks. The networks began by focusing on distinct “pieces” of the emerging global puzzle…they’ve been experimenting with and developing particular strategies for over a decade (with the exception of the ILO, founded in 1919).

Maybe now is the moment for the networks to reassess their learnings and strategies, and to think how to really scale up for impact. That doesn’t necessarily mean a merger which in many ways is contrary to “network thinking”…it might be best to have relatively distinct strategies and networks, but with a collective understanding of how they relate and their “piece” of the puzzle. This is already happening to some extent with the GRI-Compact relationship.

In an organization world, the interests of organizations as institutions are dominant. In a world of multi-stakeholder global networks, the vision for a field is dominant and the question of “role” is central. What roles do we need played for the human rights-and-corporations domain to be healthy? Undoubtedly the lessons from networks to date would reveal these, and provide the basis for developing a more effective collective strategy. One way to get at this role question is through Value Network Analysis.

As the networks push for membership expansion, the NGOs and corporations in them are going to increasingly raise the questions about why there are so many and why they would want to participate in several networks. That question was the original drive behind the founding of the GRI with respect to triple bottom line reporting.

This suggests that perhaps the key intervention of the UNHRC is to create greater “coherence” and “alignment” of these numerous initiatives. It could convene them around the shared elements of their visions…and be a joiner and part of a greater movement, rather than the old-fashioned “lead and control” thinking that often makes government such a difficult partner.

Core Competencies for Networks: Webinar March 31 9am EST, 3pm CET Global Networks In China: Webinar April 7

We all know that global policy making is pretty weak. Governments sign lots of agreements. But then, more often than not, nothing happens. Networks have a crucial role to play in correcting the situation.

Networks embody two approaches to policy and advocacy. The more traditional is advocating that others change, and urging others to adopt particular policies. Here the network power comes from combining organizations for size and power of voice.

The second approach is to gather diverse stakeholders together as peers who recognize that new approaches are needed, and collectively develop them. Here networks act as laboratories where diversity produces innovative, whole-system approaches that can be quickly disseminated through the participating organizations.

Network for Global Policy Change

Global Action Networks, being multi-stakeholder, emphasize the second approach. Wolfgang Reinicke who introduced me to global multi-stakeholder networks, looks at them through a political science lens. He calls a similar group of networks Global Public Policy Networks (GPPNs) and emphasizes their contribution to resolving issues by producing global public policy and goods. I made a modest contribution to a 2000 report on this strategy to Kofi Annan, where Wolfgang was lead author.

Working with Tariq Banuri of the Tellus Institute, we built upon this work to produce the Figure below. This was first published in an article in Accountability Quarterly. It describes the traditional global public policy making process that produces international agreements and conventions such as the one establishing the UN and the Rio Declaration on Environment and Development.

GANs’ work can be framed as addressing weaknesses in this process. For example, The Access Initiative (TAI) categorically focuses upon giving life to Principle 10 of the Rio Declaration about participation in environmental decion-making; it was an empty commitment for most governments. The Marine Stewardship Council (MSC) is doing the work that many thought should be done by international conventions.

In the national policy-making cycle there are basically four activities. Citizens (1) express their opinions to their elected representatives, who (2) get together in legislatures to debate what should be done. Legislatures pass laws and regulations that the bureaucracy (3) then translates into programs carried out by multiple organizations to (4) educate, enforce and take other supportive actions. If there is some controversy with this process, citizens are then able to go back to their elected representatives for changes.

Four Gaps

At the global level the underlying institutions such as effective legislatures, political parties, courts and regulatory structures are not present. Citizens have almost no options for connecting meaningfully with global decision-making processes, and this is referred to in the Figure as the participation gap. Participants must perceive that the actions of national governments in global policy making is legitimate and incorporates their views. When this does not occur, an ethical or values gap arises. The difficulty of identifying and organizing an effective response to implement international agreements gives rise to the operational gap. The fourth gap, the communications gap, arises as the need to communicate to citizens the global public policy goals and the value of abiding by their norms and rules. This should include incorporation of the global convention decisions into national laws and regulations.

Traditional advocacy NGOs emphasize filling the participation and ethical/values gaps and some communications gap work. They connect and mobilize people to pressure national governments to take specific actions.

The role of GANs is more nuanced. In general, they go about the difficult work of addressing the operations and communications gaps. The MSC is a strategy to address over-fishing, which is the topic of numerous conventions. It does not implement the Conventions, but works to achieve similar goals through certification and labeling of sustainably harvested fish products. Today over 12% of global capture production for direct human consumption has the MSC logo.

The MSC does not have formal government participation. However, another GAN called the Kimberley Process Certification Scheme (KPCS) began as a joint government, industry and civil society initiative to stem the flow of conflict diamonds. Today the trade in conflict diamonds is essentially stopped by the Kimberly Process, without offices or staff. It is an unusual approach because governments are not acting within a global inter-governmental convention, but they are acting with the support of the UN.

TAI’s approach is to create learning partnerships with governments, that use an assessment tool to analyze how governments are performing and can improve fulfillment of the Principle 10 commitments.

Networked governance is greatly increasing in importance and influence.  That’s highlighted in a recent report to the United Nations Industrial Development Organization (UNIDO) titled Networks for Prosperity:  Achieving Development Goals through Knowledge Sharing.  And what are the implications for government?

“Government” comprises the structures that are distinguished by their access to “legitimate” coercion – the police, courts, regulators – and their responsibility for ensuring societal “order”.  Within this structure the governance processes are associated with politicians, ministers, presidents and prime ministers.

“Governance”, however, relates to any apex decision-making structures, processes and bodies.  “Corporate” governance, as related to boards of directors and senior management, is a hot topic.

The UNIDO report identifies four manifestations of this shift to networked governance with the rapid increase in:

• Multi-stakeholder policy development
• Multi-stakeholder regulatory approaches
• Cross-functional (Ministry/department/local-to-global) government
• Non-coercive (‘soft’) policy instruments (norm/standards development)
• Adaptability and constant learning

Governments come from a “ruler” tradition – it was only a century ago that European nations were dominated by royalty.  In this tradition the mindset is that “the royal “we” (the king/government) have the right/power/responsibility” to do what we want, and the role of others is to obey.  This is still reflected in many government workings, which is an enormous hindrance to the emerging networked governance model.

In the networked governance tradition, stakeholders in an issue are brought into the decision-making process.  This can range from “consultations” to full-fledged peer decision-making roles.  In the latter, the government is a co-participant, often convener and a co-decision-maker.  It brings in views from the government apparatus such as what the government bureaucracy is capable of doing, potential impacts on other government issues, financial and other resources, etc.  And it plays its particular role in implementing the collective decision – often through policy and legislation.  Other stakeholders play a similar role with respect to their distinctive capacity, expertise and resources.

The report points to four types of governance networks:

Network 1:  Inter-personal networks – In her seminal work, A New World Order, Anne-Marie Slaughter points to the growing importance of linkages across national boundaries, such as lawyers and judges who meet in their international professional associations to share knowledge about their practice.  The US in particular emphasizes relationships between military personnel.  This is having great influence on decision-making content, processes and standards.

Network 2:  Intra-governmental networks – These are multi-level (local-to-global) and across levels – the archetypes of the latter being the UN and World Bank.  These define rules and agreements across governments’ distinct jurisdictions, for “harmonization”.

Network 3:  Inter-sectoral partnerships (the report refers to these as “embedded” networks”) – These are modest groups of organizations that have a stake in addressing an issue or develop an opportunity and get together to do so.  These are usually “task” oriented – they have distinctive roles, resources and interests that must be combined to realize a goal.  Often these are referred to as “private-public” partnerships, a term I dislike as reflecting a government-oriented mindset (the UN classifies “businesses”, technically quite accurately, as “non-governmental organizations”);  I prefer business-government-civil society or intersectoral partnerships (“sector” refers to the three organizational sectors, not industries).

Network 4:  Inter-sectoral networks (the report refers to these as “arms-length” networks) – These are networks of partnerships, including Global Action Networks.  They are networks of organizations taking partnership action that are connected to share knowledge, develop power through collective strength, mobilize resources and gain scale.  They are having an increasing impact on setting norms and standards globally, such as the Forest Stewardship Council and forestry standards and the Global Reporting Initiative and corporate reporting practices

Of course there are other networks, such as industry associations and civil society advocacy ones.  (These network types can be further understood in another blog.) But in terms of networked governance as in making societal decisions, these other networks usually participate in networks type 3 and 4.

There are many potential positives about this trend, but a big negative is that the power and responsibility become very opaque and confusing.  We need more tools to make these networks “visible”, such as the mapping ones we did with the Global Finance Initiative.  And we need more clarity in how individuals and organizations can actively particulate.

This all leads to the interesting question about the future of networked governance.  Ten or 20 years from now, will we associate type 4 networks more with governance than governments?  Certainly that seems to be happening in the global sphere, given the lack of global government. UN summits, such as the environmental ones, are more successful as global coherence generation events to spur and support others to take action in a common direction, than as places where global agreements are reached.