In the 2019 UN Global Compact – Accenture CEO Study, corporate leaders were asked which stakeholder groups would have the greatest impact on the way they manage sustainability over the next 5 years. NGOs — and also surprisingly the investment community — were seen as having little influence. Consumers are the stakeholders that business leaders most care about — the ones seen as holding companies to higher standards.
This may reflect a current reality as citizens become not only more engaged in the sustainability performance of the products they buy but also in greater numbers take to the streets to protest injustice. SustainAbility’s 2019 Trends identified that citizen-led activism will keep the pressure on governments and companies to deliver a more equitable and sustainable society.
However, it is a risky strategy for CEOs to take their eyes off the organizations that have historically been the corporate watchdogs and who have done much, over the last couple of decades, to hold companies accountable and shape the business sustainability agenda.
NGOs have a long history of influencing corporate behavior — especially calling out injustices in supply chains. NGOs have set the pace on environmental and social issues in the supply chain and to some extent the corporate responsibility and sustainability approaches of the companies targeted. Early campaigns to Save the Rainforest arguably gave rise to much of today’s environmentalism. Rainforest Action Network’s campaign against Burger King and its “rainforest beef” was successful and the company, likely as a result of the action, cancelled its contracts with Costa Rican ranchers.
NGOs have set the pace on environmental and social issues in the supply chain and to some extent the corporate responsibility and sustainability approaches of the companies targeted.
Following child labor and sweatshop campaigns and boycotts, Nike’s then CEO made a public speech promising change and in 2005 it became the first company to disclose a complete list of contract factories. It then published its first corporate social responsibility report, disclosing pay and working conditions in factories.
After the 2013 Rana Plaza factory collapse in Bangladesh, which killed over 1,000 garment workers, NGOs held accountable the brands that had been sourcing from the building. #whomademyclothes and Fashion Revolution week were instrumental in further raising awareness of the need for greater transparency in apparel supply chains. Brands such as Marks & Spencer, ASOS, H&M group, Primark and Levi’s subsequently began to disclose much more information on factories and suppliers.
Oxfam’s Behind the Barcodes is a bold campaign that ranks supermarkets on transparency and accountability for human rights and how they ensure workers’ rights are respected, women are treated fairly and small-scale farmers equitably. Earlier this year 21 human rights, environmental and development NGOs, the UK’s biggest union and the TUC called for legislation to make UK multinationals accountable for human rights abuses and environmental damage linked to their global operations and supply chains.
Questions continue to be raised about the effectiveness of some NGOs and campaigns. But for CEOs to turn away from NGOs and civil society organizations is an oversight.
Campaigns may not always add up to sustained behavior change, and there is no doubt that working conditions in many global supply chains are far from ideal. The ILO estimates 21 million people remain victims of forced labor. Burger King is once again being targeted by Greenpeace for its role in sourcing soya and meat from Brazil, and along with KFC and McDonald’s is being linked to the Amazon forest fires. Questions continue to be raised about the effectiveness of some NGOs and campaigns, but for CEOs to turn away from NGOs and civil society organizations entirely is an oversight.
Campaigns Influence Consumers
Companies may call them consumers, but those customers will see themselves as many different things, primarily citizens and increasingly campaigners. The person who buys a product from a multinational is equally likely to be member of, and/or a donor to, an NGO. They may be supporting their child taking to the streets in a Climate Strike, sympathetic to the activities of Extinction Rebellion or involved in their local community to address social and environmental issues in the absence of strong local and central governance.
Consumers can easily lose patience with companies, and the growth of campaigning organizations such as Avaaz and the Sum of Us that empower individuals to act and advocate for higher standards towards the environment and workers are making it easier to target companies and governments that are seen to be acting irresponsibly.
Companies may call them consumers, but those customers will see themselves as many different things, primarily citizens and increasingly campaigners.
Accountability in the “decade to deliver”
CEOs are candid on how business contributions to the Sustainable Development Goals are falling short. Just 21% of leaders interviewed believe that business is playing a critical role in advancing the Sustainable Development Goals. Assessment of progress towards Goal 8: Decent Work and Economic Growth finds that gender inequality in earnings “is still pervasive.” In many countries the hourly wages of men are on average higher than those of women. The 2018 IPCC report stated the need to deliver significant carbon reductions by 2030 if we are to avert 1.5C warming, yet just 44% of CEOs believe a net-zero future is likely for their company in the next 10 years.
For business to act it needs market incentives, policy signals and to be held accountable. Issue-focused NGOs can help internal change-makers demonstrate to many different parts of the business the need to change operations and business models. Being held to account can be an unwelcome pressure for companies but ultimately can help the corporate professionals that are having to integrate and balance financial and sustainability decision-making. Some even openly welcome the pressure from NGOs and how it helps them embed sustainability further into the business.
Trust in advocacy
All In: The Future of Leadership’s exploration of what leadership might require through 2030 identifies the need for companies to take positions and advocate for change on global inequality — including in-work poverty. As CEOs increasingly choose or are expected to speak up on social and political issues, they need to be responding to the concerns of their customers as well as continuing to look towards a broad range of stakeholders to inform their positions. CEOs may be comfortable speaking out on traditional business issues but companies advocating for critical social issues such as diversity, inclusion and immigration must work collectively with organizations that are experts on the issues.
And it is the NGOs that are seen as trusted and effective. According to the 2019 Sustainability Leaders Survey, NGOs continue to be seen as the institution making the largest contribution to sustainable development. They are the organizations with deep understanding of the issues and the reach into communities affected by environmental and social injustice. Their insights and intelligence are essential for building trust in advocacy.
According to the 2019 Sustainability Leaders Survey, NGOs continue to be seen as the institution making the largest contribution to sustainable development.
Companies have long understood the need to engage a broad range of stakeholders. The upsurge in consumer engagement on a broad range of environmental and social issues is heartening, but consumers can remain fickle, and good intentions don’t always translate to purchasing decisions. If CEOs are really committed to making progress in the next decade — and 88% believe our global economic systems need to refocus on equitable growth — then they should be making sure they continue to look to, and engage, the organisations that for decades have been deeply committed to a more environmentally sustainable and socially equitable society.