Corporate Perspectives and Governance Models

The business sector has an important role to play in the future of sustainable development, which will require large-scale changes in business practices. Some pioneering companies are already on the path toward sustainable development solutions (for instance in the area of renewable energy). (See Chapter 19.) But current business participation in the post-2015 process raises concerns that corporations may have undue (and unchecked) influence on policy making. The risks and side effects of corporate influence relate, on the one hand, to the messages, problem analyses, and proposed solutions, and on the other hand to the promoted governance models.

The corporate sector is feeding into the post-2015 agenda through a variety of reports emerging from business-led initiatives (such as the Global Compact) and from processes that have given an important space to business (such as the SDSN). The corporate sector reports, and to a large extent even the reports of the HLP and the SDSN, are striking for their lack of historical perspective on what caused the problems that the post-2015 agenda is meant to tackle. The SDSN report, for example, notes that “the business-as-usual (BAU) trajectory is marked by a failure of international coordination and cooperation.” It does not acknowledge, however, that powerful economic actors have benefited substantially from BAU, and thus have a strong interest in resisting far-reaching structural transformation toward sustainability—as is illustrated by the rising number of cases in which corporations are suing governments to weaken environmental, health, and social policies. A 2013 Global Compact report to the Secretary-General claims that “business is at the heart of virtually any widespread improvements in living standards,” ignoring the pivotal role of governments in providing public goods and the role of unions and social movements in pushing for adequate standards and regulations. (See Chapter 21.)

The various business reports present growth as the main solution for poverty eradication and as an indispensable condition to the realization of sustainable development. But growth alone has never had such unambiguously positive impacts. As the civil society initiative Participate notes, “inequality and distorted power relations prevent the dividends of economic growth from reaching the very poorest.”

The business discourse promotes a market-based approach to sustainable development, which assumes that incentive-driven voluntary commitments are preferable to binding commitments or “command-and-control” regulatory approaches. The HLP report, for example, promotes a limited form of corporate accountability based on the assumption that market forces will favor companies committed to sustainability over those that are not. But it is not clear that such an approach will yield the fundamental changes in consumption and production patterns that are needed and that many in civil society are calling for.

Making the business case for sustainable development may be seen as a pragmatic approach. The 2013 report of the HLP strongly suggests that progress must be monetarily quantifiable and provide a good return on investment. This begs the question, however, of what to do when necessary efforts for the public good do not constitute a good investment for the private sector. This type of analysis conveys a vision of the world in which everything is seen through an economic lens, and in which people are foremost regarded as consumers or entrepreneurs, but less as multifaceted citizens. The Participate initiative, in response to the HLP report, argues that “economic democracy is as important for poverty eradication as political democracy.”

From a governance perspective, it is important to note—and also worrisome—that some of the key channels for corporate influence on the post-2015 agenda were not established through regular intergovernmental processes, and thus do not respond to usual intergovernmental mechanisms for accountability. Both the Global Compact and the more recent SDSN were initiatives of the UN Secretary-General. The Compact was launched without a mandate from the UN General Assembly, and was granted recognition only after the fact. It also falls outside of regular UN processes because of its extra-budgetary funding from the corporate sector and a small group of member states. This was flagged as problematic by the UN's internal watchdog, the Joint Inspection Unit, in 2010. A lack of transparency also surrounds the creation of the SDSN. Its sources of funding are not made public, and no clear criteria were established by which to select the corporate participants (who, with business associations, represent 21 of 73 SDSN Leadership Council members).

There is concern that corporate influence in the post-2015 process is shifting the balance of power to the detriment of civil society. Part of the problem stems from a lack of clarity in UN processes around the concepts of “civil society” and “stakeholders,” which come to encompass both nonprofit and for-profit entities. Yet direct participation in policy processes is only one of the many ways in which corporate influence can manifest itself. Access to policy makers, officially or behind-the-scenes, is also a key element of political influence. Through contributions to political campaigns and lobbying, some corporations have built tight connections with local and national policy makers, which can translate into influence in global policy processes.

Although UN processes tend to refer broadly to the participation of “business”or“the private sector,”in practice, large multinational corporations rather than small and medium-sized enterprises (SMEs) are the primary representatives of “business” in the post-2015 process. The Global Compact does offer some channels for SME participation. For example, SMEs are well represented in the Global Compact Local Networks, which are an important part of the organization's activities. However, the Compact gives big business special access to the post-2015 process through its LEAD initiative. When the Global Compact LEAD organizes a luncheon with the Secretary-General and other high-profile events, it provides a privileged access to political processes where small enterprises have no place at the table.

Corporate-sector involvement in the post-2015 process also reflects an imbalance between different types of industries. The mining industry is particularly over-represented in both the Global Compact LEAD and the SDSN. Out of more than 30 corporate representatives involved in the SDSN

White roof and skylights on a retail store in Las Vegas help reduce energy use and have a lower heat-island effect than a darker roof.

Leadership Council or thematic groups, 6 have ties to the mining industry, accounting for about 1 in 5 business representatives in this process. It could be argued that these companies are precisely the ones that should be involved because of their important impact on development, human rights, and the environment. However, the mining and oil and gas sectors also have the most incentive to delay or limit the transition to sustainable development, so as to protect their profit sources and ultimately their existence. (See Chapter 20.)

The multi-stakeholder model of global governance rests on the assumption that the interests of governments, business, and civil society ultimately align, and that all stakeholders work together to achieve common goals. A report by the co-chairs of the SDSN (affiliated with Novartis and the WBCSD), for instance, states that “the international community, multilateral institutions, national governments, academia, civil society and business have got to work together towards a common agenda.” Similarly, a joint report by the Global Compact and the WBCSD notes that “healthy societies and healthy markets go hand-in-hand.”

There is merit in—and considerable need for—fruitful cooperation. Yet such a model, with its emphasis on partnerships and consensus, can negate the existing conflicts among stakeholders, in particular between large multinational corporations on the one hand and social movements on the other. Labeling all participants“stakeholders,” as if all were equal and had the same interests, can obscure the power imbalances between various sectors and the vast differences between their agendas. This creates the illusion that “win-win” solutions can be found if only all stakeholders sit at the table for a rational debate, and promotes a depoliticized model of governance that does not address the power structures inherent in the global economic system. The numerous cases in which corporations are suing governments on the basis of bilateral investment treaties, alleging that social, health, and environmental regulations harm profits, also challenge the notion that “we are all in this together.”

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