Collaborative institutions are serving an increasingly important role in setting standards and incentivising voluntary corporate behavior. Are these just a trend, or are they a key mechanism in establishing a more responsible social contract between business and society? The paper looks at the conditions which incentivise individual corporations to participate in collaborative governance. By understanding this structure of incentives, we can hopefully understand how these institutions can be effectively leveraged to create change.
As corporations get larger, their brands and other nontangible assets are becoming increasingly vulnerable. One operation in a worldside network can tarnish the entire company. This tarnish is increasingly visible and actionable over the internet, and as large companies deal increasingly with nonmarket forces in the academic, social and public relms there are steadily increasing points where a bad reputation can be leveraged against a company’s bottom line.
Taken in this view, CSR is not about the discrete, applaudable acts that corporations do, it’s about the way that they integrate social and environmental criteria into their reporting, management and strategic processing. Zadek models this sort of “internal learning”- the extent to which a business integrates sustainability into its strategy- with “external learning”- the extent to which institutions in society hold corporations accountable around those issues.
Zadek argues that as companies begin to integrate sustainability into the decisionmaking at a managerial and strategic level, it is in their interest to elevate the level of “external learning” in the business environment. They will benefit from policies that enforce sustainability and from clear standards that hold their competitors to account, and so it is in their interest to build coalitions to push for those standards. Collaborative governance is an important strategic tool, then, of corporations who see sustainability as a vital part of their competitive advantage.
It is unclear in this essay how such collaborative governance should deal with companies who do NOT so fully integrate sustainability into thier operations. Should they be ignored in the collaboration? Invited to the table as greenwashers? They would seek to water down the collaboration’s initiatives, how can this be avoided?