Governance of the last resort? - When to consider a multi-stakeholder approach

Though there is much to be said for governing “beyond governments,” it is a treacherous area.

This blog was written for the World Bank Institute's website by Jonas Moberg, Head of the EITI Secretariat and Eddie Rich, Deputy Head. The World Bank Institute is running a series of blogs looking at multi-stakeholder initiatives in governance.

“And it should be realised that taking the initiative in introducing a new form of government is very difficult and dangerous, and unlikely to succeed. The reason is that the old order will be opposed to the innovator, whereas all those who might benefit from the new order are, at best, tepid supporters of him.” 

Machiavelli, The Prince

Much is written in development and public policy academia these days about 'multi-stakeholder’ governance. Many governance initiatives seek to engage two or more groups of stakeholders. However, the practice of having civil society actually formally involved in policymaking is surprisingly limited. In short, there is much written about multi-stakeholder governance, yet there is little applicability, and even less practice. Our experience in EITI might help inform why this has been such a difficult area to make progress on and what might be the necessary pre-conditions for progress.

Though there is much to be said for governing “beyond governments,” it is a treacherous area. Just because MSIs are increasingly popular, it does not it mean that they are the better way to govern. MSIs are, to an extent, an expression of crisis: they are borne from the reality that existing models are not sufficient to meet the challenge.

In our view, two conditions must exist before any consideration of taking the collective governance route.

Government failure – Mind the governance gap

It may seem obvious but it is important to recognise that if there is a government solution, then use government. MSIs should only come into play if there is an actual government failure such as the inability to pass or enforce a policy, a regulation or legislation. This is especially likely in contentious policy areas like corruption, human rights abuses, or press freedom. In these areas, there are typically conflicts of interests for the governing elite who might be disproportionately open to influence by companies and their commercial interests. If the government is seeking to address these conflicts of interest, it can start by designing a code of conduct and/or more information, to create an accountability mechanism to address the governance gap.

Even if the government decides to develop a code of conduct or issue verified information to inform, there are many options that need to be considered before exploring whether to develop a collective governance approach. The government may, for example, consider consulting more widely, establish advisory groups, or commission third party monitoring. All of these options stop short of an MSI.

It is also important that the problem requires long term cooperation. Collaboration is much easier if it is not seen as a winner-takes-it-all one-off deal, but as part of an on-going cooperation. This rules out mediation and conciliation around as a specific one-off deal as suitable for an MSI.

Given this, it is no surprise that so many MSIs revolve around information collection and around codes and standards for governments and civil society. These relate to behaviours that even if they are enacted in legislation need third party monitoring to ensure firstly that they are reliably being implemented and secondly that they are informing and improving public policy.

The other area in which such an approach might be fruitful is around shared modelling – e.g. forecasting the costs of infrastructure or the future revenue from commodities. Where there might be lack of trust in the government and companies’ planning or forecasting figures due to potential conflicts of interest, the results of the model could be made public or an independent model developed. Then representatives from government, company and civil society might come together to assess the independence of the model and the implications for public policy decisions.

Conflict as a fuel: something to gain and a lot to lose

Anger, perhaps drawing on investigative reporting and campaigning, leads to a movement which leads to a need for resolution. Perpetual conflict is the fuel that keeps the wheels of an MSI moving. Governments, companies and civil society are organisations (and individuals), with different, and occasionally opposing, objectives, especially on contentious issues.

It may seem counter-intuitive that distrust and conflict are what brings together collective governance, but when the parties realize that they have something to gain, and a lot to lose from not collaborating, it becomes essential. It is the tension between these different stakeholders that brings them to the table. It is the continuing tension that keeps them at the table. If the discussions are not difficult, the group is not discussing the right issues.

Even then it often takes brave and innovative leadership or crisis to accept the need to change an existing way of operating. Many leaders refuse to sit across the table from those actors that they consider are out to challenge, oppose and undermine them.

The business case for collective governance needs to be particularly strong. There are not many cases in which companies will see a reason to come to the table. In principle, they see their role as ‘doing business’ not discussing public policy. The issue must be complex or urgent, fuelled by anger, conflict and campaigning, and the companies must have a lot individually and collectively riding on resolution. For example, collective action is unlikely to succeed if the sector has too many disperse companies for any single company to be under significant reputational pressure.

Conclusion

If the above pre-conditions exist, there is space for an MSI. Even then the journey will not be easy, but these are the areas in which innovative governance is most needed. Leadership, entrepreneurship and adaption will need to guide the way.

Based on over six years of running possibly the most advanced example of collective governance at the international level, the Head and Deputy Head of the EITI, Jonas Moberg and Eddie Rich, are working on a book “Beyond Governance” which seeks to explore what lessons from the EITI there are for MSIs - what works, why it works, and how it works, and perhaps most pertinently, where this approach does not work.