What do bananas, diamonds and palm oil all have in common? They are all commodities that can be certified by multi-stakeholder initiatives, whether because they are “conflict-free”, “fair trade” or “responsible”. What do oil and the internet have in common? Some of the largest global companies in these sectors, such as Shell, Exxon, Facebook and Google, participate in multi-stakeholder initiatives that were established to try to address the human rights abuses linked to these industries.
So what are multi-stakeholder initiatives (MSIs)? MSIs are collaborations between businesses, civil society and other stakeholders that seek to address issues of mutual concern, including human rights and sustainability. To do so, initiatives may work to facilitate dialogue across stakeholder groups, foster cross-sector engagement, or develop and apply standards for corporate or government conduct.
Over the last two decades, MSIs have been established in almost every major global industry. They are now responsible for certifying the production of clothing and food, monitoring the extraction of oil and gas, and establishing codes of conduct for internet companies regarding privacy and freedom of expression. By joining an MSI, companies or governments publicly commit to that MSI’s standards or work towards that initiative’s goals.
So are MSIs effective? That had been our primary research question for the past decade leading up to our latest and most comprehensive report, Not Fit-For-Purpose, which concluded that MSIs are in fact not effective. Despite the growing prominence and prevalence of MSIs, there is little agreement about their effectiveness. To some, MSIs offer an important opportunity to advance protection for human rights and build systems to improve the way businesses address abuses. Others have criticized MSIs for requiring significant investments of time and resources from all stakeholders while producing little change for affected communities on the ground. On one hand, MSIs may be coalition-building platforms to accelerate industry change. On the other, they may be distracting from efforts to create binding human rights standards.
There has been little effort to systematically evaluate the effects of MSIs across different industry sectors or to establish or standardize good practice amongst MSIs. As a result, it is difficult to gauge the effectiveness of MSIs as global governance tools at the field level, and many MSIs have had to reinvent the wheel instead of learning lessons from existing initiatives. There is a need for thorough inquiry into key questions about MSIs: Are these initiatives effective at protecting and promoting human rights, including rights related to environmental sustainability? And what impacts are MSIs having on the local communities they are designed to benefit?
Not Fit-For-Purpose sought to fill these analytical gaps. Ultimately, the report concluded that MSIs have failed as a grand experiment in global governance to protect human rights and hold corporations accountable for their contributions to harms to rights holders and communities. Following the publication of the report, MSI Integrity embarked on a new organizational focus, one that was informed by our analysis of MSI effectiveness: looking beyond corporations and reimagining economic enterprises as centering workers and communities. For more information about our new direction, please see: Beyond Corporations.
HOW DID MSIS EMERGE AS IMPORTANT TOOLS IN THE CORPORATE ACCOUNTABILITY CONTEXT?
Today’s globalized economy creates a major human rights and environmental accountability void for corporations. While businesses are free to conduct their affairs transnationally, they are largely only subject to the enforcement of laws at the national level. This global-national disconnect creates a governance gap, where transnational corporations may be complicit in human rights violations without being held to account for those violations due to inadequate local laws, corruption, or lack of legal or political willingness to enforce the rules.
As the prevalence of business-related violations of human rights and environmental norms has gained increasing public attention, the question of how to prevent and remedy these violations has become ever more pressing. International and domestic law has largely failed to address the full range of negative impacts of businesses, driving many actors to work directly with companies to prevent or mitigate such harms through voluntary compliance initiatives, such as MSIs. Standard-setting MSIs have risen to prominence in the past decade as these initiatives are often seen as tools to “plug” the governance gap that emerges when state actors are unable or unwilling to ensure the full protection and promotion of human rights for their citizens. Moreover, MSIs are frequently perceived as more legitimate regulatory tools than other industry initiatives or public-private partnerships because of their purported inclusion of civil society stakeholders in the initiative’s governance, implementation, and/or decision-making processes.
The contemporary significance of MSIs is unquestionable. They are an important part of the United Nations Guiding Principles on Business and Human Rights and are now central pillars of the human rights and sustainability strategies of many companies and governments. As we continue to learn more about the structure, function and impact of MSIs on a field level, we will be better equipped to understand the capabilities – and limitations – of MSIs in the business and human rights, sustainability, and global governance contexts.
HOW MANY MSIS SET HUMAN RIGHTS AND ENVIRONMENTAL STANDARDS FOR THE PRIVATE SECTOR?
MSI Integrity has a particular interest in transnational, standard-setting initiatives. This is because these initiatives often purport to fill a global governance gap regarding the behavior of transnational businesses. It’s worth noting, however, that MSIs can take a variety of forms. Standard-setting initiatives are just one part of a wide spectrum of formal and informal multi-stakeholder partnerships and initiatives that operate locally, national and globally.
In May 2017, MSI Integrity released the MSI Database, the first publicly available database on transnational standard-setting MSIs. At the time the research was published, MSI Integrity documented 45 different MSIs that address responsible business conduct, with half explicitly addressing human rights issues. These 45 MSIs operate in over 170 countries on six continents. Moreover, these initiatives engage over 50 national governments, over 9,000 companies, and over 65 Fortune Global 500 businesses with combined annual revenues of more than $5.4 trillion dollars.
Importantly, the mapping project only documented transnational standard-setting MSIs that formally involve multiple stakeholder groups in the decision-making processes of the initiative. The number of standard-setting MSIs operating locally, that are dialogue-based, or utilize more informal multi-stakeholder governance structures is unknown, but estimates suggest there are hundreds – if not thousands – of such arrangements.