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My Dialogue with 'Corporate Sustainability Architect' Bill Baue
Tue, 10/15/2013 - 17:10
A few weeks ago I had an extensive dialogue with Bill Baue, a “corporate sustainability architect” who works with corporations and others to design “systemic transformation and company-level solutions.” He had wanted the commons community to engage with the idea of “context-based sustainability,” a system used by some companies to “measure, manage and report sustainability performance.” The whole idea is that there are stocks of financial, natural, and human (or social) capital that can be prudently managed to respect the “carrying capacity” of the capital.
Given my grounding in the commons world, I was profoundly skeptical – but open to a frank exploration of the ideas. Below is a record of an exchange that I had with Baue. My disagreements centered on whether corporations can or should be the primary arbiters of sustainability (that much-abused term), and whether treating nature and social relationships as “capital” is even appropriate. I instead advocated for commons-based approaches that first, would not regard commons as mere resources, but as socio-ecological systems, ans second, that would empower commoners, especially in contrast to market-based systems.
Baue recently posted our dialogue on the website, SustainableBrands.com, as a two-part series. I have copied it all below. To read our entire exchange on the SustainableBrands.com website – along with some comments that have cropped up – here are the links to Part I and Part II.
Sustainable Brands bills itself as “a learning, collaboration and commerce community of over 348,000 sustainable business leaders from around the globe. Our mission is to empower more brands to prosper by leading the way to a better world. We produce content, events, and other learning solutions designed to inspire, engage and equip our community to profitably innovate for sustainability.”
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David Bollier is among the foremost global thinkers and advocates for the commons. #NewMetrics channel co-curator Bill Baue recently had the following discussion with Bollier about the potential intersections between the commons movement and emerging concepts and practices in the corporate sustainability movement.
Bill Baue: I see overlap between context-based sustainability (CBS) and the commons, so let me briefly outline my perspective. CBS is focused on measuring, managing and reporting sustainability performance at the organizational level — primarily, corporations. And CBS is rooted in capital theory, or the idea of multiple areas of capital stocks (natural, human, social, constructed and financial) that yield flows that ideally are harnessed for human well-being and managed to sustainably preserve their so-called carrying capacity. Of course, many (if not most) of these capital stocks are based in the commons as resources shared jointly by diverse individuals and entities.
My sense is that the commons movement could benefit from deeper engagement with the corporate community, including activists who advocate for corporations to take full accountability for their impacts on capitals that are vital to stakeholder well-being. And I know that the sustainability context movement would benefit from expanding its advocacy base beyond the core of the corporate accountability community.
Right now is an opportune moment to mobilize, as there are currently three major new standards being established in the corporate community, and all of them are adhering to capital theory, which arguably compels them to take account of impacts on the commons — or on capital resources that are shared amongst stakeholders. These three are:
International Integrated Reporting Council (IIRC)
Sustainability Accounting Standards Board (SASB)
Global Initiative for Sustainability Ratings (GISR)
David Bollier: I don't think the commons would mesh very well with Context-Based Sustainability, at least so far as I understand it. It sounds as if it is trying to quantify or monetize everything into capital stocks so that it can be put on the same discursive plane. But the commons is precisely about breaking up such "universal grid" approaches to understanding the world, including nature, and eschewing standard economic calculuses. Commoners generally insist upon the inherent diversity and localism of resources, people and social systems, and therefore resist quantitative, top-down, purely scientific approaches to nature (a term that itself connotes that nature is objective and separate from humanity).
From the perspective of my work and that of my colleagues, commons are not simply resources or capital stocks that are shared; they are distinct social communities with their own self-organized governance rules, management practices and cultures that matter, especially in counterpoint to markets and the state. A commons is not the resource alone, in other words. So treating "the commons" as a capital stock would be seen by commoners as a category error and a misunderstanding of what the commons is truly about.
Finally, I am a bit skeptical about the willingness of the corporate community to voluntarily assent to standards that would truly empower commoners to manage resources in the ways they see fit. There would be too many power shifts and "inefficiencies" for most public corporations to accept. For all I know, there may be some constructive middle ground or points of mutual engagement between Context-Based Sustainability and commoners as I know them, but I am skeptical. You can get a better feel for the commons movement and their views from the website of a recent conference that I co-organized in Berlin, the Economics and the Commons Conference.
Bill Baue: You're seeing the multi-capital model as inherently reductionist, an attempt to monetize and financialize the commons, when in fact it seeks to accurately depict the commons in ways that enhance accountability. I appreciate your concern that a multi-capital approach in the capital markets isn’t sufficient to address the need for community governance, but I think we're a long way off from such a world, and we're going to get there faster if we get the corporate community thinking in terms of using capitals borrowed from the commons. Because you are having impacts on capitals that are shared with stakeholders, the companies have an ethical obligation to measure those impacts and make sure they are sustainable. It's a self-accountability mechanism. The next step would be to then engage with stakeholders and see if they agree.
It's true that power is rarely shared voluntarily, but companies are recognizing that these resources are limited and that their social license to operate is also limited. I see you working on the notion of revoking the corporate license to operate — that can be effective, because it brings the issue into the view of companies risk management mechanisms.
But ultimately change happens more effectively when organizations recognize that they have to take accountability themselves, rather than having it imposed from without. Actually, the external imposition of accountability works hand-in-hand with the internal embracing of accountability. In short, I think CBS and the commons can each achieve our goals best by recognizing the overlap in our perspectives, instead of "enclosing" our perspectives off from one another.
David Bollier: While we may aim at similar goals, I remain highly skeptical that the multi-capital model can be transformative either within corporate governance or in the broader body politic.
From my years in Washington, many at the elbow of my Nader friends engaged in regulatory politics — and from my six years with Norman Lear working on a CSR project honoring socially innovative companies — I have a very jaundiced perspective about the efficacy of self-regulating initiatives by business. They rarely have much bite or momentum or staying power. I of course respect such initiatives when entered into by executives of goodwill — but I am only too mindful of the discretionary nature of such schemes, especially when the going gets tough (lower profits, political heat, market competition).
The "enlightened self-interest" approach may motivate some companies, especially privately held companies with visionary founders/CEOs, but they are rarely in the vanguard of an effective transformative force. That usually must come from without. Sorry, but that's what the political and legal history of health, safety and environmental regulation shows — and even the looming environmental Armageddon is not changing environmental policies and practices very fast.
You are quite right that companies do indeed need to learn how to metabolize new norms and practices ("take accountability themselves"). But the impetus for these new practices & norms usually comes from outside, and is generally foisted upon them, usually through politics or law, and not voluntarily embraced, especially when conventional wisdom says that new practices/norms work to the detriment of shareholders (This has changed somewhat in recent years as advocacy groups — recognizing that Congress and regulatory agencies are not fair-minded, evidence-driven arbiters — have shifted tactics toward damaging corporate brands and reputations. It’s more effective.).
I am not working to revoke corporate licenses to operate (although that's not a bad notion in general, where warranted), but on providing competition to the market sector in general by withdrawing from the dependencies and predations that it cultivates, and shifting production & governance to the commons, which functions outside of the direct ambit of both markets and government, and therefore has a relative economic, political and intellectual independence and self-sufficiency.
As I said earlier, I think that the use of the term "capital" to describe non-market resources and social realms — apparently as a bid to win corporate respect and attention? — is inherently misleading and potentially dangerous. Social, ecological and labor-related concerns are not in fact commodities or capital; they are living systems that have their own dynamics. Calling them "capital" can easily lead people to think that one can monetize and financialize these realms — that quantitative languages are more or less "accurate."
But just as cost-benefit analysis forces ethical and health issues to be squeezed into an inappropriate epistemology (quantitative, spreadsheet-like thinking), so multi-capital is likely to have similar outcomes, notwithstanding sincere aspirations to be mindful of the "real," more complex dimensions of the situation. What's to stop the multi-capital approach from degenerating into a language of financialization? “Capital” is a financial term, after all.
I realize that one goal is to establish so-called "objective criteria" to facilitate a more honest conversation among stakeholders (which used to be the purpose of government regulatory processes before they were corrupted). But "objective, scientific" criteria are highly susceptible to serious methodological gaming, as the whole history of cost/benefit and risk analysis shows. (See my co-edited book, "Sophisticated Sabotage: The Intellectual Games Used to Subvert Responsible Regulation.") And even with certain "objective" numbers, the social and political significance of those numbers are interpreted very differently (Cf. the climate change group 350.org vs. the Heritage Foundation vs. the US Government).
I don't want to blindly discourage such efforts as the multi-capital approach, and I would be happy to be proven wrong (i.e., that many large companies actually buy into this analysis and find it useful in reducing their externalities, becoming responsive to stakeholders, etc.). But I find even this rosy scenario inadequate because the commons movement seeks a shift in "sovereignty" — control over rules, norms, governance — from corporations and investors, to self-organized commoners. It seeks its own, novel types of commons-based governance institutions, not a squishy, split-the-difference rapprochement with the corporate sector on its economic terms.
Most segments of the commons world that I know have little interest in having their concepts and commitments translated into the language of business because that is precisely what will co-opt and neuter certain core values (the inalienability of common-pool resources; vernacular self-determination, etc). This may be denigrated as a utopian political mission (not achievable in our lifetimes), but I find the contemporary market/state's aspirations for relentless growth to be the real utopian fantasy. The question is how to change the latter fantasy. It is on this that we perhaps disagree.
In principle I see the potential for a common ground to be found between certain business sectors and the commons, as I noted in a blog post the other day ("Social Banking and the Commons"). But a prerequisite is acknowledging the fundamentally different character of the commons and negotiating with it as an independent sector with its own sovereign interests (expressed in its own language). It is not just one among many stakeholders willing to engage in reframing its interests as "social capital." This commons alternative is something that the multi-capital approach can't accommodate, I'm afraid. As a situated form of social governance with non-economic priorities that tend to resist quantification or standardized assessment, the commons proposes a different mindset toward resources, governance and community. Indeed, that’s largely the point: to honor the inalienable, the non-fungible, the unique particulars of a locality and its history and culture.
Sure, businesses must be engaged with to help transform them and society ... But I am interested in finding different, more catalytic terms of engagement and greater bargaining power than what you are proposing.
And here is Part II:
Bill Baue: I agree that change most often comes from outside the entrenched, dysfunctional system, but I also believe it's most likely to take hold if the system's internal functioning has been lubricated for receptivity. Stated slightly differently, there's a whole lot of people I deeply respect working for change from within the system, so I opt to ally myself with them to support the work necessary for transformation, which I see as inevitable, be it voluntary or in response to systemic disruptions.
What I continue to hear from you is a kind of either/or that places the commons movement outside a reality that includes the current capitalist business world — which itself is undergoing transformation both from within (spurred by intrapreneurs applying more holistic thinking and models to business settings) and from without (in response to global crises and constraints that increasingly expose the gap between the theory of perpetual growth, free-market capitalism and thermodynamic realities). I respect your skepticism for a rosy-sounding, voluntary, discretionary relinquishing of power by business, which is exactly why I'm proposing that the commons movement engage directly with the business community, particularly the movements within the business community that recognize the need to change models toward sustainability. In other words, given that the business community is actively considering ways to internalize externalities onto its balance sheets (if for no other reason than self-interest to maintain social license to access common resources), it seems to make sense that the commons community would want to engage in this conversation and potentially influence it toward an outcome that benefits society more broadly, forging a more balanced relationship between commerce & the commons.
More specifically, I see the inevitable need for common resource pools to be measured in order to manage their use within their carrying capacities. The term, which you use prominently in your recent interview with Francesca Rheannon, is perhaps best illustrated by the Ecological Footprint methodology, which is predicated on measuring and managing natural capital. CBS extends this same thinking to the organizational level, measuring whether individual companies are operating within the carrying capacities of various common capitals— or resource pools, if you will.
I'd be interested to hear what methodologies the commons community is using to measure and manage the carrying capacities of common resource pools, and how it allocates resources rationally and fairly amongst various users.
David Bollier: Yes, let’s “lubricate” the system to make it more receptive to a commons-oriented approach. This is quite evident in the surging interest in the “sharing economy” now emerging, at least in tech sectors. The value of open network platforms that host social sharing and collaboration is becoming highly generative — and often quite lucrative (e.g., Google, Facebook, etc.). But for me the question is whether commoners will retain a basic sovereignty over the social value that they create, or will it be captured, privatized and monetized by clever entrepreneurs and investors with capital?
You are certainly correct that more companies are starting to understand the holistic dimensions of ecosystems, and many are taking innovative, pro-active steps to make their companies “more green” and more community-responsive. That’s quite positive. Companies may claim that they are doing these things because (as you say) it is in their “self-interest to maintain social license to access common resources.” I consider this a high-minded posture. The political reality is that serious accountability for abuses of common resources is a remote risk that many, many companies are all too willing to take. Penalties and deterrents are embarrassingly small; the “social license” for the corporate form is not in danger of being revoked any time soon despite plummeting public trust.
My point is that so long as “socially responsible innovation” takes place within the existing macro-structures in globally integrated capital markets, in societies dependent upon ceaseless economic growth and consumerism, there will be strict limits to what can be achieved. The corporate form and public markets as constituted are straitjackets.
The appeal of the commons as a vehicle for dealing with many social and ecological issues is that the commons integrates production, consumption and governance into a single institutional (yet socially grounded) form. This greatly reduces the incentives to externalize costs. It cultivates an ethic of sufficiency instead of consumerism and growth. It nourishes shared moral and social commitments to collective goals that market culture cannot nourish. It integrates economic concerns with social and moral values. Spreadsheet-like calculation as a way of allocating resources becomes almost gauche.
How then do commons allocate resources in rational, fair manners? It depends in part upon the resource (digital resources can be copied and shared for virtually no cost; natural resources tend to be finite and depletable), and it depends upon the particular community. But once the imperatives of growth and consumerism are replaced by a different governance structure and cultural orientation, many things become possible.
The hallmark of a commons is that ability of members to devise their own constitutional, collective-choice and operational rules, based upon the dynamics of the specific resource, its ecological context, community norms and history, and so forth. These are among the key “design principles” discovered by the late Professor Elinor Ostrom, who won the Nobel Prize in Economics in 2009 for her painstaking fieldwork and theorizing about successful commons. Her work notably refutes the claims of Garrett Hardin and his “tragedy of the commons” parable, which describes an open-access free-for-all, not a commons with community, rules, monitoring, sanctions for free riders, etc.
There is no standard, off-the-shelf methodology for commons, even though there are some general principles that seem to recur. Land trusts, community-supported agriculture, the acequia irrigation systems of New Mexico, the lobster fisher commons in Maine, and the indigenous tribes of Peru who manage 900 potato varieties each have different systems. But this is precisely why commons tend to work: they are adapted to local circumstances and draw upon the moral commitments and creativity of participating commoners. They do not need to rely upon external administration that uses Soviet-style central planning and calculation, which may or may not take account of local conditions or be respected as politically or morally legitimate. Commons leverage and mobilize energies on the ground.
This is why it is important to distinguish a common-pool resource (CPR) from a commons. We’re not just talking about expert-driven management and administration of “resources” that simply need to be “rationally” allocated. We’re talking about highly distributed social systems of governance that engage people’s social practices, cultural identities and moral commitments — that elicit locally responsive approaches, rule-sets, social norms, etc. These are far more powerful and creative than most economists care to acknowledge.
Bill Baue: I welcome the vision you articulate of a commons community that (re)claims its sovereignty. In fact, the more organized the commons community is, the more efficient its engagement with business becomes, the better the ultimate outcomes are. As you point out, some commerce will arise (or re-establish itself) from the commons movement, as in the sharing economy. That said, I still see a long future of engagement between existing business forms and their stakeholders, and this is where I see overlap between the commons and context-based sustainainability. CBS is predicated on the notion that companies have ethical duties and obligations to support stakeholder well-being, primarily by sustainably managing their impacts on what you call common-pool resources and what I call common capitals. In the end, it doesn't really matter as much what we call them — I believe what matters most is that the resources serve human and ecological well-being first and foremost.
So the more you describe the particular dimensions of the commons, the more I see the commons community as perfectly suited to engage with existing companies to shift their practices toward taking accountability for their negative impacts — and optimally adopt new business models that generate positive impacts exclusively, designing negative impacts out of the system. This engagement would complement the existing trajectories of grassroots development of commons-oriented commerce (that you describe so eloquently) and the shift of the corporate community toward greater sustainability and accountability.
I realize there's potential risk in the commons community engaging with existing business, for fear of being co-opted. But I believe there's greater risk in not engaging, and thereby leaving the business community to find its own way on how to handle common resource pools.
Ultimately, I think you're right that we differ on the question of “how to change the fantasy of the market/state's aspirations for relentless growth” — but we don't disagree. I completely agree with you on the need for the commons movement to pursue its own work on creating a parallel alternative economy that will eventually supersede and thereby replace the current insanity of perpetual growth capitalism. I simply augment your vision of change from outside the current system with a vision of change from within the current system — a kind of Trojan Horse theory of change that embraces spreadsheets as a tool for change precisely by replacing the calculus of monetization with an economics that embeds respect for ecological thresholds and social foundations at its core. Given the urgency of our current environmental and social crises, I prefer multiplying the angles from which we approach the problems, not subtracting or dividing them.
Here’s a final word from me that was not included in the published exchange, but which I had shared with Baue directly after our exchange was published:
I'm all for corporations learning how to metabolize new ecological and ethical norms, and of course these things don't happen automatically. It's just that I am keenly aware of the structural limitations of a business and the need to ignite (external) fires in order to catalyze and advance such processes. It is difficult for a company to transform itself, let alone invent different organizational forms that do not depend upon relentless growth.
I don't propose a "separatism" for the commons vis-a-vis business, but I do insist that commoners not become the domesticated junior partner that merely legitimates the least-painful, most market-friendly changes (as many market-oriented environmental groups do). Non-engagement, or oblique engagement, can be plenty effective. The organic food and re-localization movement have had a tremendous impact on industrial agriculture and major food companies merely by building their own alternatives, rather than trying frontally to get Coca-Cola and Kraft to change their ways. One might even trace this thread back to Gandhi and the spinning wheels.
The other point is that commons-based alternatives can de-legitimate high-handed, self-serving corporate “solutions,” and move the political culture to entertain a whole range of new possibilities. Withdrawing from the market for superior, more socially benign and constructive alternatives is a powerful message. Look how major food companies have chased after the banner of “organic” and “local” (often engaging in greenwashing and cynical cause-oriented marketing).
I agree with McElroy's comment [on the SustainableBrands website] that substituting "resources" for "capital" is an improvement that is more or less okay with me. But I still have my qualms about the limitations of his discourse. While it may make sense and resonate to people of goodwill within corporations (especially smaller ones that are privately held), I fear that such word-substitutions do not speak to the realities of changing the structural political and power relationships that lie at the heart of market enclosure and neoliberal economics. But that's a longer discussion which we've already covered in part.