Fostering Corporate Responsibility through Self- and Co-regulation

1. The need for policy innovations
1. The need for policy innovations
There is a need for new
governance mechanisms
and policy innovations
at all levels to tackle the
governance challenge.
The governance challenge
Today’s societal challenges, such as climate and
demographic change and the scarcity of natural
resources, have been increasingly shaping
the public debate on sustainable development
and the provision of common goods. Traditionally,
it has been the responsibility of public actors
to deal with such challenges. However, the
latter are complex, interconnected and systemic
in nature and can hardly be addressed by national
governments alone. 2
Firstly, unilateral actions by national governments
through traditional governing approaches
are not effective and sufficient anymore
to solve such complex problems. Secondly,
governments might often need the capacity and
resources of businesses, such as expertise, innovation
potential and financial means, in
order to adequately address these challenges.
Lastly, tackling sustainable-development issues
requires an inclusive and collaborative approach
if it is to foster legitimate governance,
political effectiveness and policy efficiency. 3
Given these factors, there is a gap between
public actors' capabilities to cope with sustainability
issues and the societal expectations. In
order to close this gap, there is a need for new
governance mechanisms and institutional arrangements
at different levels. The latter refer
especially to the inclusion of private actors (e.g.,
companies and CSOs) in alternative governance
structures and processes to address the abovementioned
challenges. At least since the 2002
World Summit on Sustainable Development in
Johannesburg, public-private collaboration has
been identified as a new paradigm for tackling
global societal challenges. 4 Ten years later, the
final declaration of the Rio+20 conference has
emphasised that “the implementation of sustainable
development will depend on active engagement
of both the public and private sectors”.
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Collective business engagement
Empirical observations indicate that the private
sector has been active in tackling sustainability
challenges through responsible behaviour. This
is especially true for companies whose efforts
(referred to as CR) relate to three levels: (1) core
business operations, (2) relations with local
communities and (3) public policy and framework
conditions of business operations. In fact,
companies have been showing more and more
willingness to work for the common good. For
instance, business representatives made more
than 200 related commitments just at the Corporate
Sustainability Forum held in Rio de Janeiro
in 2012. 6
In this regard, there are at least two reasons
why it is in companies’ long-term self-interest
to collectively engage in addressing sustainability
challenges: Firstly, in many cases, sustainable
challenges endanger the enabling environment
of private companies themselves.
Through collaboration, business actors can create
a level playing field or even avoid public regulation.
Secondly, societal expectations related
to business operations are rising. This is due
to the impacts (negative externalities) in the
communities and regions they operate in and
to the increasing involvement of private actors
in the provision of common goods. As a result,
through engagement, companies can increase
the degree of trust within society and ensure
their licence to operate.
Although individual efforts of companies’ engagement
might sometimes be effective, they
often have a limited impact or lead to competi-
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