Tag Archives: transparency

“Beyond Governments” – Do transparency initiatives work?

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My review of “Beyond Governments: Making Collective Governance Work” by Eddie Rich and Jonas Moberg (2015)

“Beyond Governments” is a rare thing – a book written on collective governance by practitioners who are still in the midst of practicing the art. In some ways, it is an autobiography of the Extractive Industries Transparency Initiative (EITI) by two of its leading protagonists, and given the endorsements at the start of the book, it is very much an authorized one. The fact that the EITI’s final chapters have yet to be written makes the book more compelling and timely – there is a lot to learn for anyone engaged in collective governance initiatives. This is very timely as we approach the launch of the 2015-30 UN Sustainable Development Goals with governments, business and civil society far from agreeing how they should cooperate in their governance.

As a reader, I found myself banging the table in violent agreement on some of the early key points: that collective governance is irresistible and that accountability has to be a three-way process between governments, business and civil society. There is some openness on the real motivations behind why some governments, businesses and civil society join such initiatives – the fear of ‘resource nationalism’ being high amongst these. My favorite is Chapter 4: “Build Trust through Building Momentum: Just Get on with It” should be on T-shirts and handed out to all collective governance entrepreneurs. There are some real gems here that often never see the light of day in more politically correct writing: voting represents weakness not strength, the voluntary/mandatory divide is a major distraction and that power imbalances need to be accepted. Essentially forward momentum is gold dust for collective governance work, endless years of discussing governance whilst not rolling up collective sleeves to work together on the ground (which has blighted some other multi-stakeholder initiatives) results in few benefits for rights-holders and communities.

Another stand out for me is Chapter 8 on Sunset Clauses – there should be no in-built assumption that new models of collective governance should be permanent. Rich and Moberg are very open about the degree of experimentation that is going on and some of the dangers of co-option or decline, as well as the vigor of having time-bound objectives. “Initiatives need to dismantle themselves or reinvent themselves” – a key point that so many other others have overlooked. Planning for redundancy used to be the mantra of the voluntary sector, before NGOs became part of the status quo, and it is a good default for collective governance initiatives. They might become the “new norm” but we, and especially they, must not assume that they will.

The book raises many questions but cannot fully answer all (because each would need a book in their own right). Firstly, I wonder how much collective governance is an art and how much it is a science. The book gives ample bullet points for those hungry to learn. These are good. But some of the dark arts of collective governance, and the authors are clearly practitioners, are harder to describe in text boxes. John Ruggie, another who practices and analyses in real time (although in his case he is a thinker turned practitioner – the reverse direction), often quotes Bismarck when asked how he achieved what he did with the MDGs, UN Global Compact or the UN Guiding Principles on Business and Human Rights: “If you like the sausage don’t ask how it is made”. There must be a lot the authors had to leave out.

I also wonder if the “Beyond Governments” title is the right one. The content of the book does not suggest this: rather it is more “Helping National Governments and Other Actors to Do Their Jobs Better in a Complex Globalizing World” – but this is a less catchy title. Any sense of moving beyond governments will raise the hackles of many said governments, as well as many in civil society (who are oxymoronic on this point – governments are the main abusers of human rights yet UN Conventions further legitimize them); some of whom are also closing down space for civil society and in particular those that might receive international funding – an important component of how EITI works. Similarly, I wonder if EITI is really an alternative to regulation (as suggested in Recommendation 9). The Dodd Frank Act in the USA would not suggest that initiatives such as EITI delay binding laws, but rather they might make such legislation effective when it comes.

A final thought would be my predicable point on human rights. I guess I see the interrelationship between transparency and human rights to be much closer than the book suggests, or than that Clare Short inferred when Ethiopia joined EITI. The downgrade of Azerbaijan (on Page 60) was a brave move by EITI but the section really still fudges the relationship between freedom of expression, the right to privacy and the right to information (i.e. transparency). This alignment remains a central challenge for EITI moving forward, and is not one that has hindered transparency NGOs such as Global Witness and their recent work with the global Chinese mining sector.

I would like to congratulate Eddie and Jonas on the book and for taking the time to write it. It is a unique book in many ways and there is a reason that EITI is amongst the most successful of all multi-stakeholder initiatives. So read it.

The book is available from   www.greenleaf-publishing.com

* John Morrison is the Executive Director of the Institute for Human Rights and Business and author of “The Social License” (Palgrave MacMillan, 2014). The views expressed here are his own.

 

10 reasons why UK MPs should accept their 10% pay rise

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Defending transparency and accountability is hardest when it is perceived to be in your self-interest.

It is not popular to defend the £7,000 pay increase for MPs that the independent parliamentary body has recommended, increasing their pay from £67,000 to £74,000 a year before tax (just over US $110,000). But there are, I believe, very important reasons for making such a defence.

First to say that their existing annual salary of £67,000 is a lot of money for most people: it is well above what most UK workers can ever expect to earn: the minimum annual salary being about £13,000 and the average being just over £26,000.

Over the past two days, nearly all leading MPs across all the main parties have lined up in the media to state how much against the proposal they are. Many claim that they will not be accepting the increase, donating it to charity or keeping it in a separate fund. David Cameron, the UK’s Prime Minister, has asked the Independent Parliamentary Standards Authority (IPSA) to drop the proposal, although as an independent parliamentary body, this is a request and not an order.

It has, most definitely, become a public relations issue – with no perceived reputational or political pay off for any MP that defends the increase. It is perhaps a reflection on how deep the trust deficit surrounding Westminster has become that MPs should behave in this way. I will argue here that conversely, the legitimacy and trust of parliamentary activity requires better paid politicians. The social licence of MPs and of Parliament, requires some longer-term thinking and political bravery as there are deeper issues at stake – the transparency and accountability of elected bodies in the UK and around the world. And yes, even if this means MPs being accused of standing up for their own financial interests on this one occasion, much better it is done within the antiseptic fresh air of public scrutiny than some of the corruption of the past.

1.  It is true that public sector pay in Britain has largely flat-lined over the past six years whilst the richest in society continue to get richer. This is heavily unfair and speaks to an increasingly unequal society. But the issue of MPs pay has not effectively been dealt with since the expenses scandals of 2009 and, let it be said, before that many MPs had regarded their expense claims to be more or less unofficial salary top ups. So MP pay issues in the UK go back much further in time and were also related to the other income they might receive from other forms of employer, shares or consultancies. The old ways of doing things were opaque, and sometimes corrupt, lets not return to that.

2.  The increase would bring MPs in the UK onto a par with those in Germany (this seems a fair benchmark) but still well below MPs in countries such as Japan, the USA or Italy (some better benchmarks than others perhaps). Other public professions in the UK: head-teachers, senior civil servants and hospital administrators can all earn significantly more. There is never a good time to try and correct this imbalance, now is as good as any other.

3.  Allowing MP salaries to continue to fall behind other professional benchmarks favors rich MPs. A 10% pay increase matters very little if you are independently wealthy, like some leading UK politicians are, but matters a great deal if you started with very little and trying to work 80 hours a week to serve your constituents and tackle inequalities. One shocking indicator are the number of UK MPs that have attended private school – a huge social class indicator in the UK which still surprises many of my overseas friends. Only 7% of the UK population attends private school, but they represent 54% of current Conservative MPs, 41% of Liberal Democrats and 12% of Labour MPs. This is perhaps a better benchmark for representational legitimacy than the pay rise issue.

4.  The issue of trust and legitimacy in the eyes of the public is not just about the amount earned, it has been about the lack of transparency and accountability. The two should not be confused. Now that an objective process is in place, MPs should not pussyfoot around the recommendations of the Independent Parliamentary Standards Authority (IPSA) for reasons of short-term perception. How does this help trust and legitimacy over the longer term?

5.  IPSA was created with the very mandate to place the pay increase decision, as well as other related issues, outside of political considerations and benchmarked against external indicators. To not implement this recommendation undermines the ability for objective oversight of such procedures within Parliament.

6.  Creating ‘ring-fencing’ schemes for the increase will cause chaos and the kind of lack of transparency that IPSA was created to avoid. If an MP wants to give some or all of the salary to a charity, fine, but it should not be linked to the pay increase issue. They should also make sure that the name of the recipient charity is publicly declared, as such external interests are indeed an issue of public concern, particularly when it is in effect public money which is being re-routed.

7.  We want the best MPs we can across the three countries (England, Scotland and Wales) and one province/region/country (Northern Ireland) of the UK – not just the richest, privately schooled Oxbridge educated middle-class or a Parliament dominated by the zealots. If it is true that Sepp Blatter earned $10million a year, and some UK bankers and CEOs do still not earn much less, shouldn’t UK MPs earn the equivalent of 1% of this, especially when they are meant to rein in the corrupt?

8.  Giving a pay rise to MPs might create a stronger moral argument for ending public sector pay restraint elsewhere, particularly those professions blighted by poor pay such as residential care.

9.  IPSA have clearly stated the pay award can be funded by the savings in MP expense claims and so there is no negative impact on the parliamentary budget.

10.  If the IPSA recommendation is rejected by parliamentarians it will send a very perverse message on the UK’s commitment to transparency and accountability. Lets not forget that other parliaments around the world – some of which pay MPs more even in less developed economies – do not have similar oversight bodies. IPSA was very late in coming in the UK but, unless its work is supported by MPs, it will be undermined at home and is unlikely to be a model for reformers elsewhere around the world.

Yes, this is an instance where political bravery means an extra £7,000 a year before tax and where each MP (how ever uncomfortable it might be) will need to look their low-paid electorate in the eye during constituency surgeries and justify why it is in the longer term interests of the country. Not according to them but according to IPSA. Isn’t that what independent oversight is mean to be about?

A naïve wish for 2015

 

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Radically transparent supply chains

Once upon a time, in a far away land, the people decided to find out who made all the wonderful things that appeared in the town shop every morning…

As we approach 2015 there is perhaps a small opportunity for some wishful thinking upon a star. The coming year looks like being a tough one. Whilst we might expect good news on US-Iranian relations, tensions between the West and Russia could well deepen and extremists of various kinds are likely to inflict more horrors on the innocent, as recently took place in Pakistan. Europe looks like it will continue its walk towards increasing populism and xenophobia. We can only hope that enough multilateralism will prevail for forthcoming agreements on Climate Change and the Sustainable Development Goals. But what on business and human rights?

We all wish there will not be another incident of the scale of the Rana Plaza factory collapse in Bangladesh (which killed over 1,100 in April 2013) or the Turkish mine disaster (which killed over 300 in May 2014). Globalisation has lifted millions, if not billions, out of abject poverty over the past thirty years but it has also widened national inequalities and increased the power of non-state actors such as business. We can and should work for stronger laws, stronger enforcement and greater accountability but will it be enough? The social contract that binds our societies is shifting and national governments are struggling to keep up with the demands of communities and the wider population.

There perhaps has not been a time in history when democracy has been so widespread but also so undervalued. There are also signs that some governments want businesses to play an increasing role in the social contract itself, be it in terms of internet governance, on the one hand, or public-private partnerships to realise the Sustainable Development Goals, on the other. Given it will take years, if not decades, to respond adequately to these changing power dynamics, what are the essential steps we take in the meantime?

Greater transparency is clearly an essential step and this will not be news to any reader. Over the past ten years, there have been a range of important initiatives between governments, business and civil society on issues such as extractive sector revenue and tax, conflict minerals, timber or even the social audits of ICT, apparel or food companies. But we have a problem. These important initiatives, or laws that mandate transparency, operate outside of wider public awareness or scrutiny. And this lack of public interest limits the political prioritisation given to human rights by governments, the responsiveness of business and the resources available to NGOs.

Fundamentally, there is a lack of sufficient incentives within most value chains for lasting systemic change. For example, this week’s BBC Panorama undertook another documentary on a leading brand, this time Apple, and allegations of the abuse of migrant temporary workers in the supply chain including excessive overtime. In previous years it has been other brands with allegations of  child labour and so on. The issues raised are very serious but they are often, but not always,  systemic in nature. If you might think that such media attention would lead to changes in consumer behavior, well think again. The BBC journalist fronting the documentary on Apple admitted at the start of the piece how much he loved the product, as do I, and many people I know. Just looking at the number of iPhones and Macbooks evident at the recent United Nations Annual Forum on Business and Human Rights – that says it all – we all love to buy quality brands if we can afford to, perhaps feeling that even experts do not have the knowledge they need to make consumer choices either way.  Let me be clear – we don’t yet have the objective benchmarks to make such a decision about any ICT company and this is part of the problem and well as the frustration every time such a documentary is made.

If companies do change, and some are making big efforts, it is not driven by consumer behaviour or investors at the moment. Just think how much more we could achieve if we brought consumers and investors with us!

There are clearly not enough incentives and disincentives in the system for fundamental change. Law should provide more of these – particularly laws that capture the “submerged” actors who are not brought into the debate by public or political commentary. Conflict mineral legislation is one example of this and we can hope in 2015 to see more binding law relating to modern day slavery and the incorporation of the 2014 ILO Forced Labour Protocol into national legal regimes. And, yes, there might well be a case for a binding international treaty on business and human rights (more on this in 2015). But it would indeed be naïve to think that law alone will really drive the behavioural change we need amongst consumers and investors.

Also needed are market-based drivers. That is why many of us think that the public ranking of companies performance against human rights benchmarks is critical and we have recently launched a broad-based initiative to achieve this over the years ahead. Investors have a critical role to play: few companies will want to be bottom of their sector’s league table in terms of their human rights impacts. But consumers are also a critical factor that can no longer be over-looked.

So here are two radical fairytale endings.

The first possible ending: imagine that we in our fairytale town and when we go to the large furniture store (well known for its wonderful flat-packs) and you have the chance of interacting with a human being at the other end of the value chain. Through the magic of information technology and an image projected onto a screen, you would be able to pose questions to a worker representative at that week’s featured supplier on the other side of the planet and ask whatever question you liked (through an interpreter) about working conditions, the worker’s concerns and aspirations. Within the next ten years, one of the major retail brands will do this and, by doing so, begin to change the whole dynamics of corporate responsibility. It is nonsensical that consumers currently carry no responsibility for their own purchasing behaviour, this can and will change if consumers are given an opportunity to engage in the “kingdom of the supply chain” as Auret Van Heerden once called it.

A second possible ending: imagine a chain of fairytale theme parks in major cities such as Los Angeles, Orlando, Paris, Tokyo and so on and who currently spend many millions of dollars on supply chain auditing for the soft toys and other items sold therein. Imagine that they decided that supply chain auditing alone was never going to end the eternal risk of being caught out should some wicked goblin decide to scrutinise the supply chain with the hope of finding something, anything, that might embarrass the magic kingdom. Given that the theme parks touch hundreds of millions of people at some point of their lives, then they have an unrivalled opportunity to bring visitors into some state of awareness about supply chain conditions. Imagine that in every theme park there is a “supply chain interactive museum”, full of wondrous information about the real world.

Over time, consumer awareness of the complexities of supply chain management would increase and they would begin to ask the right questions of their own buying behaviour, and begin to reward those brands trying to do the right thing. This would save millions if not billions of dollars currently spent on auditing across industries, and instead some of this money into consumer awareness. Auditing would still have an important role to play – but disclosure and reporting would be more meaningful and be much more accessible to the most important stakeholder for any retailer – the consumer (or as we used to call them, the customer).

Sorry for the wishful thinking, but it is that time of year. I hope we will all live happily ever after, or at least until 1 January.