Towards New Forms of Governance for Issues of Sustainability: Renewing Relationships between Corporates, Government and Community

Towards New Forms of Governance for Issues of Sustainability: Renewing Relationships between Corporates, Government and Community Suzanne Benn, University of Technology, Sydney Dexter Dunphy, University
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Towards New Forms of Governance for Issues of Sustainability: Renewing Relationships between Corporates, Government and Community Suzanne Benn, University of Technology, Sydney Dexter Dunphy, University of Technology, Sydney The leading theories of democracy and stakeholder inclusion from traditional democratic theory demonstrate major limitations in conceptualising these interactions in terms of inclusion or equity, key requisites for the achievement of sustainability. Leading interpretations of management theory are also limited, either constrained by narrow concepts of economic development and shareholder accountability or lost in a directionless argument concerning stakeholder priorities. However, more critical views from political theory such as radical pluralism and deliberative democracy closely correspond to emergent concepts in management theory. We argue this correspondence justifies the incorporation of these concepts in a model of inter-organisational governance that would have the capacity to provide good governance of sustainabilityrelated issues. Introduction This paper contributes to the development of radical theoretical perspectives on sustainability by bringing together emerging concepts from two largely unrelated literatures: political science theory and management theory. It integrates these perspectives in order to delineate potentially valuable new governance structures that are required to manage issues of sustainability. According to Yencken and Wilkinson (2001), addressing sustainability entails tackling its four inter-related pillars : biophysical systems which provide the life support systems for all life, human and non-human; economic systems which provide a continuing means of livelihood (jobs and money) for people; social systems which provide ways for people to live together peacefully, equitably and with respect for human rights and dignity; and political systems through which power is exercised fairly and democratically to make decisions about the way social and economic systems use the biophysical environment. Corporations and governments are now confronted with managing the expectations of a society that, as a result of globalised information systems, is more alert to the social and environmental risks associated with economic development, and the need to address these pillars of sustainability. Up until recently, much of the risk associated with the environmental and social degradation associated with the economic development driven by corporations has been externalised to communities, and governments have frequently been complicit in this process. The result is the risk society thesis of Ulrich Beck, espoused in his prescient 1986/1992 first work (Beck, 1992). As Beck has continued to argue (Beck, 1999), many of the decisions that increase risk, for example by instituting new technologies or increasing greenhouse gas emissions, have bypassed democratic processes or been concealed within them due to lack of transparency and lobbying by powerful corporations or trade associations. Achieving a sustainable world will be in part dependent upon the equitable distribution and democratic management of these risks. 1 In addition, while sustainability creates new risks, it also creates new options, potentially economically valuable returns and new opportunities. Consider the following examples. The increasing urban water shortage can be solved by constructing a massively engineered desalination plant or by highly localised small scale conservation measures (new options); supply chain reorganisation to increase sustainability can dramatically cut costs (valuable returns); and the development of new markets such as for organically produced food can lead to increased profitability (new opportunities). The choice between alternate futures and the resulting redistribution of potential rewards resulting from such choices also raise issues of voice, participation and equitable distribution of benefits. Fundamentally, the potential risks and rewards related to emerging sustainability issues create requirements for new forms of governance, for they relate to the structures and processes which determine the sharing of responsibilities and the appropriate allocation of power in society (Bresser & Rossenbaum, 2003; Clarke, 2004). Good democratic governance entails not only transparency and accountability but also collaboration between a range of people (Clarke, 2004). As Bertels and Vredenburg (2004) argue, governance in the inter-organisational domain of multiple stakeholders must deal with the complex interdependencies between the people involved. There are two key issues here. First is the necessity to solve complex problems at the level of sub politics (Beck, 1995). By sub-politics we mean Beck s interpretation of local, decentralized decisionmaking and knowledge-sharing arenas that interactions between individual organizations including citizens groups, corporations, various government and quasi-government bodies as well as individual citizens (Beck, 1995; Beck, 1997b). Examples include task forces, community consultation committees, and other temporary, multiple stakeholder structures formed to make decisions about local issues. Currently few if any effective governance procedures exist to resolve issues of sustainability at this level. The second key issue relates to ensuring that new governance procedures not only resolve sustainability issues such as land degradation and other issues in the management of toxic sites or so-called intractable wastes (Benn, 2004) but also do so justly. In the democratic management of the risks and rewards, all parties whose interests will be significantly affected need to have the opportunity to contribute and no one actor should have control over others. We are in agreement with Beck s (1995) argument that sub-political structures are emerging because the closed decision-making of the powerful bureaucracies and corporations of the industrial era is no longer effective, appropriate or acceptable to resolve the major emerging issues of sustainability. The standard body of democratic theory and existing democratic processes are inadequate to deal with these new issues of governance. This inadequacy raises the question of how to strengthen existing governance theory in this regard. We review developments in political theory and management theory that can provide guidance for more appropriate models of governance to foster the transition to a sustainable society. 2 Drivers of Change Global pressures from above and below It is increasingly evident that a business as usual approach is creating the conditions for widespread environmental and social degradation. Climate change and legacies of toxic waste are examples of issues that threaten the survival of species including our own (Flanner, 2005; Meadows, Randers & Meadows, 2004; Wright, 2004). Human rights abuses and increasing numbers in poverty are examples of issues that discriminate against the welfare of particular groups of humans. An increasing awareness of these threats is mobilising actors at two levels. From above, governments, corporations and NGOs are negotiating agreements designed to enable a more equitable distribution of social and environmental risk within and between the generations. Examples of the so-called globalisation from above (Falk quoted in Beck, 1999, p. 38) include the global Stockholm Treaty for Persistent Organic Pollutants, the UN Global Compact and the Montreal Protocol. How effective these are is debatable 1 but their existence indicates a rising public awareness and concern that action be taken by corporations and governments to create governance structures where none previously existed. Organised by transnational NGOs, assisted by activist individuals and spread on the internet, the globalisation from below movement reflects a re-emphasis on values supporting sustainability, often linked to post-materialist concerns. Both globalisation from above and below are impacting on organisations to open their decision-making structures and processes for perusal and participation, although the extent to which this voluntary form of corporate environmentalism and Triple Bottom Line-style reporting systems go beyond the symbolic is also a subject of debate (Ball & Milne 2004; York & Rosa, 2003). Loss of corporate credibility The recent dramatic collapses of corporations such as Enron confirm belief that unfettered corporate power must be curbed by a new system of governance that ensures transparency, morality and ethics (Clarke, 2004). The passing of the Sarbanes Oxley Act in the US is an illustration of one government's reaction to this perceived need. However, such legislation needs to be accompanied by structures or processes designed to ensure that such legislation is effective. The interconnected phenomena of increased information flows, heightened conditions of risk and uncertainty, and growing mistrust of established institutions, point to new demands for corporate credibility. The fact that the role of governments in democracies has been shrunk, due to the increasing dominance of economic rationalist ideology, means that public participation in the choice of future options is curtailed. The existing structure and operations of capitalist society must be substantially modified if we are to have a sustainable world we cannot afford to stay on 1 Most commentators argue that the Montreal Treaty has been highly successful (eg Harding 1998) while the role and accountability of the UN Global Compact has been the subject of more criticism (eg Bendell 2004) 3 the current trajectory of materially based economic growth as we cannot find the resources of four more earths which it will demand. As we noted earlier, the choices faced are not only about risks but also about opportunities and po tential rewards. Significant restructuring of the economic base of society means some will be significantly disadvantaged and others advantaged. Just who will be in which category and how much they will be advantaged or disadvantaged depends on what future options are chosen in restructuring society to make it sustainable. There is no more important area for public participation in democratic societies than the choice of future scenarios; however many of these scenarios are currently being chosen without reference to those who will be most affected. Themes in Political Theory Traditional systems of democracy The priority of establishing new scenarios for the future brings with it the need for coordination and control: matters for the governance of nations and of all types of organisations. A critical question is how to redesign current systems of governance to ensure that power is exercised inclusively and that the negotiating parties can be held publicly accountable. How well equipped is democratic political theory to deal with these new challenges for governance? In the capitalist world, there are two major constellations of democratic ideologies that are typically seen as in competition with each other: the New Right and Social Democracy. The former is associated with a belief in individual freedom and property rights, free enterprise and market fundamentalism; the latter with a more proactive role for the state whose contract is to intervene in order to protect collective interests. Each ideology has apparent compatibilities and incompatibilities with a system that could support the democratic management of risk and opportunity. The public choice reasoning of the New Right argues that individuals in organisations will always act in their own self-interest, so New Right principles support the devolution of state authority to decentralised decision-making arenas (Bellamy. 1999; Pierson. 1993). Although civil society is privileged, a factor which could be seen to foster more community-based involvement in decision-making, the principles of minimalist government, individualisation and market fundamentalism do not in fact support the protection and management of public goods (Eckersley. 1992; Giddens. 1998; Stewart & Jones, 1993). In the other camp, supporters of social democracy argue that specific policy incentives implemented by an interventionist state are crucial if corporate governance is to take account of the precautionary principle and move industry and commerce to produce only ecologically or socially responsible goods and services (Mol & Sonnenfeld, 2000). On the other hand, critics of social democracy highlight the reliance of its governance systems upon bureaucratic rationality - the dependence of the interventionist state on administrative and planning systems is seen as restricting the sense of community and 4 collaboration necessary for effective participatory risk management (Farrell & Morris, 2003; Goodin, 1992). Given these limitations in both forms of democratic ideology, an increasing number of political theorists now argue that neither system is suitable for dealing with complex decision-making, particularly where it involves social and environmental risks and opportunities. Basically, both views rest on the understandings of liberal pluralism: both aim to reach a fair and efficient compromise between differing individual points of view (Miller, 1993, p. 74). Limitations, such as the difficulties in ensuring individual preferences are aggregated fairly to the principle of fair and reasonable assessment of individual preferences, are well-recognised (Miller, 1993, p. 80). These limitations are compounded when powerful actors such as corporations have considerable economic resources and strategic costs at stake in the management of risk. In addition, the ideal of reaching consensus between interest groups leads to an emphasis on short-term social stability, rather than the longer-term solutions needed to create a truly sustainable society. The short-termism of democratic decision-making by parties with their eyes on the next election runs counter to the long-term perspective required for effective environmental governance. However there are other problems with both types of traditional liberal pluralism. The key principle of the pluralist tradition is the balancing of competition between interest- or pressure-groups, each of which is seen as composed of coalitions of like-minded citizens. An underlying assumption is that all citizens have similar capacity (such as time and information) to form interest groups and that, when they form interest groups, they will all share the same views. Many minorities are effectively excluded because they do not have the time, knowledge, skills or resources to participate. Nor does pluralist theory give consideration to the potentially diverse makeup of the interest group homogeneity within the group is assumed. These issues become even more problematic when voter alternatives involve highly technical and interdisciplinary areas of knowledge associated with high degrees of uncertainty. The dependence of many environmental decisions on knowledge of this kind further compromises the capacity of a pluralist system to ensure all interest groups are equally equipped with the resources needed to fully understand and then defend their interest position (Eckersley, 2004). These limitations underpinning the traditional systems of democracy have prompted the development of a number of more radical theories to cope with emerging issues including sustainability. Emergent political theories Reflexive modernisation Reflexive modernisation theorists argue in post-industrial society the processes of globalisation are parallelled by processes of individualisation (Beck, 1992, 1995, 1997 & 1999; Beck & Beck-Gernsheim, 2002; Beck, Giddens & Lash, 1994; Lash 2002). The effect is the emergence of an increasingly self-critical, reflexive society termed the risk 5 society (Beck, 1992). Since the transition from industrial to post-industrial society involves new and often incalculable forms of risk financial, social and environmental, the argument is that we need new institutions, new practices, new relationships, structures and processes in order to provide adequate governance (Backstrand, 2003; Beck et al., 1994). According to Beck (1992), the individualisation of politics resulting from the retreat of traditional institutions will lead to more inclusive decision- making in a new subpolitical, extra-parliamentary arena. In this arena, it is argued that temporary and multiple stakeholder networks operating as decentralized, self-determining, flexible arenas for decision-making will enable new and more democratic ways of decision making around areas of risk (Beck, 1992; Beck et al., 1994). A key factor in this challenge to established political systems is growing recognition that traditional systems of authority, be they political, administrative, legal or scientific have facilitated and legitimated modernisation processes associated with an institutionalised underestimation of risk. Reflexive modernisation theorists argue that these new political structures will not only be more inclusive but will allow the entry of new forms of knowledge. As Tsoukas (1999, p. 509) points out, the ongoing reflexive monitoring of action will have major implications for both individuals and organizations. Arguably, however, as the theory stands, application of the 'sub-political' model still relies upon communication and reaching of consensus between competing interest groups. Unless the reflexive modernisation model is redefined and the associated method of decision-making addressed more specifically, the model shares the limitations of liberal pluralism (Schlosberg, 1999). Ecological modernisation Some of the challenges raised by reflexive modernisation theory have been addressed in ecological modernisation theory. Ecological modernisation rests on the optimistic principle that neither the economies nor the polities of advanced capitalist systems are necessarily in conflict with environmental concerns (York, Rosa & Dietz, 2003). The argument is also based on the assumption that a concerned public will ensure institutional change. These scholars argue that further modernisation involving innovation and knowledge development can reduce environmental impacts and lessen the likelihood of complex issues of risk management arising (Mol & Sonnenfeld, 2000). In this view, current economic systems can be modified to make them sustainable if principles such as the precautionary principle are built into governmental policymaking in such areas as planning, product warranty, corporate regulation and procurement. Ecological modernisation is a systems-based approach that looks to the interconnections between policy formation, the economy and the natural environment. Partnerships, cooperation and the building of social capital between stakeholders, such as corporations and governments, are crucial to the ecological modernisation platform (Dryzek, 1997; Lulofs, 2003). So-called weak ecological modernisation (Christoff, 1996), the dominant understanding of this theory, has come under considerable criticism for not addressing 6 perceived inherent contradictions between techno-economic development and sustainability and for an excessive focus on techno-scientific solutions. From the perspective of this paper, the weak version of the theory does not address the issue of inclusiveness raised previously in our analysis of the limitations of liberal pluralism. Disparities in power between and within the cooperating organisations and sectors of society are not addressed. Nor does ecological modernisation accept that the treadmill of production is inevitably intensifying the forces that make capitalist society unsustainable despite modifications of the kinds advocated by the ecological modernisationists (Gould, Pellow & Schnaiberg, 2004). Deliberative democracy Deliberative democracy is another attempt to resolve decisio
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