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Web 2.0 and Corporate Accountability

By Bill Baue, Marcy Murninghan, Jane Nelson, Devin T. Stewart | November 25, 2009

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Introductions

DEVIN STEWART: I'm Devin Stewart from the Carnegie Council. Welcome. Today we are hearing a work in progress of a project on Web 2.0 and corporate responsibility. It's a project underway at Harvard's Corporate Social Responsibility Initiative.

We have some old friends here. All three of the panelists today are long-time Carnegie Council participants and players.

I'll turn it over to Jane Nelson, who is Director and Senior Fellow at the Corporate Responsibility Initiative at Harvard University and a Senior Fellow at the Brookings Institution in Washington, D.C.

It's a great pleasure for me to hand it over to her now. Thank you very much, Jane.

JANE NELSON: Thanks very much, Devin. Good evening, everyone. It's a pleasure for us to be here as well to have this conversation, and particularly to be doing it within the context of the Global Policy Innovations Program. I think if one looks at some of the most interesting and, I think, strategically important innovations over the last decade in terms of assuring a fairer and more ethical globalization, the whole area of innovations around accountability and institutional innovations about new mechanisms and modes of accountability, be it public sector accountability or corporate accountability, is one of the most interesting areas of innovation that we are seeing.

Really, what we want to talk about tonight is innovation in two streams. One is just innovation in corporate accountability itself and how companies are evolving in the way that they hold themselves accountable and make themselves accountable to an ever-widening and increasingly complex set of stakeholders; and on the other hand, innovation in technology and information technology, and how that is primarily enhancing, but potentially also can create challenges for, corporate accountability.

Just a little word about corporate accountability before I hand over to our two researchers to talk about the research that we are doing. I think we are seeing three very interesting strands of innovation in corporate accountability, both institution innovation and technology innovation.

One is obviously the dramatic increase in stakeholder activism as it relates to corporate accountability. Whether the stakeholders are investors, whether they are employees, whether they are consumers, whether they are nonprofit organizations, whether they are public and interested citizens, we have seen a growth in the number and complexity of stakeholders that the average company has to deal with, both in sectors and geography, and also their ability to use technology to be that much more effective in calling companies to account. So the whole area of what stakeholders themselves are doing to use technology and accountability mechanisms as a lever to influence change and action within companies is one strand.

The second strand that I think we are seeing is what companies themselves are doing to hold themselves more accountable. We are going, obviously, from the traditional form of accountability, which is the annual general meeting and accountability to shareholders—which itself has gotten increasingly complex and challenging—to accountability to an ever-growing range of other stakeholders. We're seeing companies using new types of mechanisms, from stakeholder panels to stakeholder dialogues in a physical sense, increasingly looking at how they use technology to improve and facilitate that one-way accountability.

Thirdly, we're seeing—and Bill and Marcy will talk about this in more detail—a sense of mutual accountability beginning to emerge and common platforms, where companies and their stakeholders are coming together to co-create new solutions, whether it's on climate change or access to health products or access to financial services. I think there are some very interesting models emerging, which are both innovation models and also another type of accountability that I think we are seeing emerge.

All three of those things are happening in a physical sense—demands that companies become more accountable, they themselves increasing their outreach and transparency and accountability, and then jointly companies and their stakeholders co-creating new types of accountability and problem solving.

If we layer on top of that the impact and the tools of Web 2.0 and all the technology tools we now have, we are seeing some very interesting dynamics emerge, some of which are positive, some of which are challenging, and some of which we simply don't know.

That's really what we are trying to look at with this research. Our Corporate Responsibility Program at Harvard has a strand of work on governance and accountability aiming to understand what the drivers of accountability are that companies are facing, but also what the tools and best practices are that companies themselves are using or working on cooperatively with their stakeholders.

The purpose of this research is to map some of the best practices that are emerging which are enabled by Web 2.0 technologies and hopefully come up, by the end of the research—and as Devin said, it's very much work in progress, so we really value critique, comment, feedback from you and everyone who is listening on the Web as well.

Our aim with this research is to map some of the mechanisms that companies are using and/or stakeholders are using which are Web 2.0-enabled, and from that, not only come up, I hope, with some examples of best practices, but also some tools and recommendations for companies and their stakeholders, and hopefully some thoughts in terms of where we go from here and the implications for accountability.

So that's the genesis of the research. We have been very fortunate to have Bill Baue and Marcy Murninghan working with us just under six months now, undertaking the first part of the research and really asking this question: What are the trends that we are seeing? What are some of the best practices? What are some of the most effective tools?

I think everyone has the bios. Bill is the Executive Director of Sea Change Media and also the co-host and producer of Sea Change Radio, which is a nationally syndicated show and podcast, with a global audience. He also teaches accountability and managing sustainability on various MBA programs. He is the co-producer of the Arc of Change podcast series, which is looking at over 40 years of experience from the Interfaith Center on Corporate Responsibility, amongst many other things that he does to engage citizens and stakeholders in a much more dynamic and rich dialogue.

Marcy has many years of experience in the responsible investment community and was very active in the South Africa apartheid dialogue a number of years ago, and since then, has continued to be very active looking at new modes of engagement around investor accountability of companies. She also comes with a very strong background in education and looking at how web technology is being used to enhance and improve education access. So she brings both an accountability and an investor perspective and an education perspective, as well as a degree from the Divinity School at Harvard and a divinity perspective on how values inform both education and stakeholder, particularly investor, accountability.

Without further ado, what we're going to do is spend no more than 20 or 25 minutes with Bill giving some background about the research and some of the key findings and some good practices, some comments from Marcy. Then we hope to open it up to 20 minutes of questions, feedback, critique, and conversation with the rest of you.

Bill, over to you.

Remarks

BILL BAUE: Thank you, Jane. Thank you, Devin, and to the Carnegie Council and Policy Innovations for hosting this.

Jane, as you mentioned, this is preliminary research, and so we are really appreciative to you for asking tough questions and helping us to shape this research as it moves from its embryonic stage into birth later this year, for publication early in 2010.

The mandate of this research project is to map the existing landscape at the intersection of Web 2.0 and corporate accountability. That takes two basic forms for us.

One of them is to look at the categories or create an overview. We have created a matrix for a theoretical look at what is happening. It also involves identifying and mapping specific examples—there's the matrix right there—both things that are happening that are really early examples of the uses of Web 2.0 for corporate accountability and more advanced uses that we feel are moving the trajectory towards the future.

In terms of the categorical mapping, you see on the matrix there, on the two axes, we have Web 1.0 moving to Web 2.0 on the vertical axis. [Points to diagram.] Web 1.0 is essentially how the World Wide Web worked for about the first decade of its existence. It came into existence in 1991. The ability to be interactive was there throughout, but it wasn't really actualized for about a decade. That was partly for technical reasons, but partly just because the users didn't really know how to use the internet. So it resulted in very static websites, where it was just a presentation of information. It was like posting a brochure on the web.

But latent in the technology was the ability to go both directions or multi-directions. In 1999, the term "Web 2.0" was actually coined, but it wasn't until about 2004 that it really came into usage, primarily from an organization called O'Reilly Publishing and Tim O'Reilly. They created a conference that is now an annual conference on Web 2.0. I just attended it this year in San Francisco, in October.

So, really, the transition from Web 1.0 to Web 2.0 is from a one-way—or what Lawrence Lessig, Harvard professor, called in 2006 a read-only culture—to a read-and-write culture. I have my own critique of using those terms because, in some ways, they are limiting. There's much more happening than just reading and writing. But the idea is that it's multidirectional.

On the corporate accountability side of things, we are proposing a similar terminology of "Accountability 1.0" moving towards "Accountability 2.0." This isn't brand-new.

A lot of places are picking up on the idea of the 2.0 or 3.0 version of practice. But interestingly, accountability in its first incarnation vis-à-vis corporations really started in the late 1960s, when shareholders in particular were going to annual general meetings of companies. The first example is probably Eastman Kodak in 1967, around issues of racism against African-American employees; in 1969, there was the Dow annual general meeting and Agent Orange; and then 1971, the GE general meeting around apartheid in South Africa.

Because there was no existing protocol for interacting with companies—even as a shareholder of the company, it's a highly difficult process to get through to the company—what that meant was that it created a very antagonistic atmosphere. If you had a concern, you had to really raise the stakes around it, have a campaign around it. So the early development of corporate accountability was really one-way, where the company was talking about or advocates were talking at the company, but it wasn't really a dialogue.

In this decade, that has changed enough to really notice it. There were seeds of that change happening for a long time, but it started to be really written about in the 2000s. In 2004, Simon Zadek of AccountAbility published a piece in the Harvard Business Review mapping this progression. He didn't call it "Accountability 1.0 to 2.0," but essentially the move to a more interactive and collaborative approach.

That doesn't mean that Accountability 1.0 is going to disappear, just like Web 1.0 isn't going to disappear. We still have static websites.

In 2004, I moderated a panel at the Business for Social Responsibility Conference that was looking at this emergence of a more collaborative approach between stakeholders and companies.

In the research, we have identified some definitions of accountability that recognize that it's inherently relational, in the sense that there is a party who is being held accountable or holding themselves accountable, ideally—in this case, usually it's looked at as the company—and then there are stakeholders who are trying to hold that company accountable. It's a relationship between them, so it's a setup that is inherently interactive.

After looking at Web 1.0 to 2.0 and Accountability 1.0 to 2.0, we noticed that they both hinge on interactivity. We thought, when you place two things on top of each other that are both fueled by the same energy of interactivity, couldn't they create mutually reinforcing positive feedback loops?

That is at least a hypothesis now that we are considering, that there is the potential for Web 2.0's interactive technologies to create spaces for interaction for corporations and their stakeholders, to enhance corporate accountability or even mutual accountability, so that the stakeholders themselves look at their own accountability to, for example, be as accurate in their communications as companies have to be legally.

I think it would help to have some examples of what we're seeing of this laying on top of each other. Marcy, why don't you go ahead and start with the Timberland examples and then I'll do the second one.

MARCY MURNINGHAM: One of the things to keep in mind with this is that generally, as Bill has pointed out, there is a real lag time between when a technology is created, and then when those who are part of its creation start using it, and when it hits the wider world and is adopted by the wider world. If it took ten years for interactivity to even have a name, one would argue that it would take perhaps even longer for large and complex institutions to be able to even know how to use it, even though it has a name.

One of the reasons why there has not been much happening in the last ten years with respect to the use of Web 2.0 tools, at least in the business world, is because, by definition, businesses as organizations really thrive on certainty and routine. You really don't want too much disruption because if you do, then a lot of people are going to be stressed out, you might not be able to accomplish your goals, and you never know whether or not someone is going to come after you in a highly competitive marketplace.

The current environment has changed all of that, because companies—and I think that's one of the primary reasons why businesses have been slow to recognize the power of Web 2.0 interactive tools, which include social media, as you're all familiar with. They have been slow to embrace that because they did not see it having much purpose, other than maybe to communicate with customers. A lot of that is now changing, as companies have begun to realize that we now live in a digital environment, where power is dispersed over a much larger group and access to power is made available almost 24 hours a day, seven days a week, on a global scale.

That's a far cry from having a couple of commercials on one of the major networks for your company and then holding all the power in terms of how you're going to take feedback from people, if you get feedback from people, and how you're going to utilize that, if you utilize that, and how you are going to listen to what people are having to say, as opposed to whether or not you're just going to pretend to listen.

What we have discovered is that not only are there few examples of the incorporation of interactive technology by businesses in terms of their business practices—beyond the more conventional communications office, we are dealing with fans on Facebook or we're dealing with different groups through our Twitter communiqués and so forth—there are few examples of companies that have tried to go the extra mile, which is really to be serious and honest about listening, and be serious and honest about soliciting feedback, and be serious about trying to engage different publics in ways that have true business value, as well as social value.

One example of a company that is doing this—and we believe it is one of the companies that is at the vanguard of seeking to do this, and even so, they are piloting this project and they are now in the process of fine-tuning it and are constantly trying to be reflective about their process—is Timberland Company. Timberland has gone through several sort of identity changes over the years. It used to be seen as a company that made construction boots, a long time ago.

Now it's very popular, it's very hip, it's very relevant. They have cool ads. They do a lot of work with graphics and interactive technology. But they are going beyond that. Their CEO twitters, and there's all this stuff going on.

What they are trying to do with their Voices of Challenge platform is really take stakeholder engagement to a whole different level of real-time, all-the-time interaction.

They are known for putting their annual sustainability reports online, through the Justmeans platform, and Bill can say more about that. But what they are trying to do now is go the extra step—I suppose you could almost say that was a pun; it was unintended—they're going the extra step by creating a platform for public dialogue, open to everybody in the world, organized around their four pillars of social and ethical value commitment. They have created a platform on their Earthkeeper.com website, which is another part of what some companies are doing. Just as some companies used to set up nonprofits or participate in that, now they are setting up web pages that are issue-specific.

Timberland, on that website of Earthkeeper.com, has created something called the Voices of Challenge dialogue. What it does is to try to stimulate a broad worldwide conversation about energy, about the workplace, about product quality and safety, and about community service. They have drawn upon several experts in those respective fields, much like somebody would do if they were a Carnegie Council for Ethics in International Affairs program coordinator. They have called people in.

They have asked them, "Please provide us with what you think are the biggest challenges that we face as a company. Tell us, in your expert opinion, what you think we ought to do."

These individuals did. They created this space on the platform for people to read that and then respond. Anybody can respond.

That was launched in October. They are now experiencing a lot of the classic birth pains that go along with starting out with great intentions and then opening yourself up to the world and having all kinds of things come back at you. They are now in the process of trying to fine-tune their approach, figure out ways of managing that process more so that certain standards of quality, both affecting the discourse, the conversation, and also relevance, are maintained.

We see that as a wonderful example of where they have tied together several things. They have tied together issues that are core to their business operations. They have made connections among thought leaders in those fields, so that they are able to reflect on how what they do or think might apply to Timberland, what they could do better. They have asked them, "Tell us what you think we could do better." They have provided a platform for networking plain people about those things. They have exhibited what appears to be a real commitment to listen to what people have to say.

What they do with that and how they create spaces for threaded conversations and how much they will emphasize one pillar over another—you work this out and you assess it and you evaluate it and you try to see how it's going to work. But we do believe that that is an important dimension that goes way beyond more conventional forms of communications policy, because it recognizes that, at its core, communication is in service to building community. It's not just PR. It's about building community.

BILL BAUE: The other example that we have actually is very much related to that. It was seeded on Justmeans, which is a website that is built on a Web 2.0 platform. It is inherently interactive. It has a Facebook-like feed on the home page. Timberland does its sustainability reporting on a quarterly basis, which is a new innovation in sustainability reporting, on the Justmeans page. They also host quarterly calls.

In the main space of Justmeans, where it's open dialogue—you can talk about anything you want—right after the settlement was announced involving Shell and Nigeria and the Ogoni activists, Ken Saro-Wiwa most prominently—after that was announced, there was just a brief announcement put on the website that evolved into an ongoing conversation. Christine Arena seeded that conversation and several others joined in. Within a matter of days, there were high-level executives from Shell itself—Nick Welch, who is their head of policy and external relations, and Bjorn Edlund, who is their executive vice president on communications, joined the dialogue and said, "Look, we would like to tell you our perspective. We would like to hear from you."

So this became a threaded conversation that then evolved into a phone conversation, a conference call, where anybody on the Justmeans platform could register and talk directly with these high-level executives.

Here again, there were limitations that we are documenting in the research. The level of knowledge of many of the stakeholders was very low, and so there was a lot of time that had to be spent on bringing people up to speed with very basic issues. That prevents the dialogue from going quite as deep as it could.

The thread is ongoing as we speak. It's up to 170 or 180 comments. It has grown into a very deep and rich dialogue that is there on the Justmeans site. Shell hosts their own webinars or interactive conversations with stakeholders on their own site, the Shell dialogue site. One of the recent ones was called "Doing Business in Nigeria: Challenges and Questions." So they, in their own space that they control, had a dialogue where they opened themselves up to stakeholder questions and input.

These are just two examples that we wanted to lay out in some degree of depth to show you where the trajectory is headed and also where some of the limitations are even in that.

We have four questions in particular that we are interested in feedback on, and, of course, anything else that you have questions on. In particular:

  • Any examples of corporate use of interactive technology for greater accountability. What are some examples that you know of?
  • Where are there gaps in practice around web 2.0 and accountability? What trends are we missing, potentially, in what you have seen from the materials that were handed out? Again, this is preliminary, so we have time to take input and integrate it into our research. Also it's preliminary in the sense that we have not finished the research yet.
  • Number three is barriers to adoption, deeper integration, scaling, and continued improvement. What are some of those barriers?
  • Fourth is, what are the future opportunities for development and progression? We have outlined what we think some of the future opportunities are, and we would be interested to hear from you.
MARCY MURNINGHAM: May I just insert something here? I want to make an appeal. Because these are questions that we're asking all the time and because they're the sorts of questions that some of you may have thought about—or some of you may not have thought about it until now—please feel free to email us or call us or let us know if you have any thoughts that occur to you. We absolutely welcome that.

BILL BAUE: CChange.net is the Sea Change Radio and Sea Change Media website, and bill@cchange.net is how you can get email to us. We will be hosting a website with the research on it, in addition to the Harvard website.

So your questions, comments, and critiques.

Questions and Answers

DEVIN STEWART: I'll just start out to get the ball rolling here, the electronic ball.

I participated in two activities that you are describing. One is IBM's Jam, which is interesting. I found it fascinating. I was a moderator at one of these Jams. It would be great to hear what you guys have to say.

I understand from my friends at IBM that it took also a lot of human intelligence to go through all this stuff. You would think IBM would be this amazing data-crunching monolith. I would think they would have robots to do this stuff, but apparently a lot of people were involved as well.

The other thing is, during your topic at the SAP Sapphire Conference in Orlando, where we had basically a roundtable of people from corporations and civil society talk about what it will take for accountability to work for corporations. One big theme that came out of this was building trust between the user-generated feedback that indeed is legitimate and the corporations as honest brokers of this information, and that we can communicate with one another as peers.

It was pretty nascent, actually. I blogged about it. I could send you some of those findings.

Before we turn it over to some of the other Carnegie New Leaders here, I have a couple of questions.

One is looking at the so-called convergence that has been talked about quite a bit between public relations, communications, and marketing. A lot has been written about this these days, and I would like to see whether you have come across this as a trend in the use of Web 2.0, for example, to hook someone into a marketing campaign and then have them go down the value chain where they are in the store and they are playing a game and they're hooked for life.

I think it's one of the most important budgetary business opportunities, and even intellectually, in terms of the business literature, one of the big trends out there in the business world.

The second question, from my point of view, would be—some literature also has been written and people have complained about this—when stakeholders, particularly shareholders, are reluctant to become active because they fear getting entangled in fiduciary duties and legal obligations. I think this is especially true for organizations like CalPERS pension fund. The idea is that you have these really good sort of community-oriented investors who are going to say, "We're going to reflect the values of the community." Sounds great on paper; sounds great in theory. But they don't want to get involved with having to actually take an active part in corporate governance, so they actually become quiet.

I was wondering if you might want to talk about any of those.

MARCY MURNINGHAM: Actually, the two issues are related, in the sense that, clearly, the customer side and the equity owner side are key stakeholders for a company. What the company does, does affect them.

The issue of responsible ownership, I think, has ripened a lot over the last 20 or 25 years. Indeed, that was the reason that the Carnegie Council for Ethics in International Affairs used to convene meetings here, back in the 1980s, on the issue of South Africa. They tried to serve as a mediator, a convening agent, to put together groups of companies and institutional investors to talk about whether to stay or to leave or to sell or to keep. All of those issues that often get reduced to binary yes-or-no answers, which are not adequate, were attended to. I love the Carnegie Council for being ahead of its time on that issue.

I think right now there is a lot more shareholder activism than there used to be. The public pension funds are very much in front of it now. The churches were the ones that really began the process. The Interfaith Center on Corporate Responsibility will be celebrating its 40th anniversary next year. Church investors have not been shy about putting their money where their values are.

In the endowment category, the foundations have been sort of the last holdouts in terms of shareholder activism, although the Rockefeller Foundation itself and the Rockefeller Brothers Fund and a few others have been trying to support and cultivate that. Much more work needs to happen.

The question of where the trajectory goes on the customer side—people tend to adopt new practices based on what they already know. Not many of us are going to jump into a brand-new thing without some sense that we have some capability, that it's familiar. We need stepping-stones. We need ladders. We need some kind of scaffolding that helps us do the new stuff in the old way or use old theories and assumptions to do the new stuff so that we can't get too freaked out or too upset about the fact that we really don't know what we're doing at all or the blowback is going to be so powerful that we won't know how to deal with that either.

So the comfort zone for most companies now is to wrap all of this up into media strategies. I think that there is good reason for that. Clearly, it's a way of restoring what communications is about in terms of community building and relationship building. The problem that they are running into is the problem of pouring old wine into new bottles. This is a metaphor that I used earlier today. It's almost painful to watch, in some instances, companies try to use new technologies when they haven't really yet figured out what the consequences are going to be when they start using it.

Just as we needed to think through what our exit strategy was going to be in Iraq before we went over there, or anyplace else where we are—Afghanistan or anyplace else—I think for companies that are going to consider adopting these tools, they need to think about what their entry strategy is going to be of the distributed leadership and the distributed networks out there.

The blowback is fast, it's quick, and it can be very powerful, when companies start dabbling in this space. And they need to go slow. They need to really reflect on what they are doing. But most important, they can't just restrict it to that office over there on the corner of the company, and not really recognize that interactive technology, not just social media, will fundamentally challenge all the assumptions of organizational life throughout the organization, not just in a company, but also in NGOs—and investors, I might add.

BILL BAUE: I can just piggyback on that a little bit by noting that a particular intersection of what you are talking about is Shareowners.org. It's a web 2.0 initiative that is from institutional investors, in particular the public pension fund sector. They are trying to create a dialogue about the responsibilities and the power of share ownership. Again here, it's not perfect. It's in beta right now. But it's worth checking out.

A quick example on the convergence of PR and marketing and where that intersects with Web 2.0 is actually where we are seeing a lot of corporate action.

Corporations are all over Web 2.0 if they think that they can create some good PR about it and market themselves and such. In particular, there are contests. The distributive ability of Web 2.0 means that contests can become a very popular way to get people out there to you and then to try to make it "sticky," as you were saying.

So those are two examples. Our own opinion about the value of a contest—it's unclear. If you take that and convert it into a community that you then engage in dialogue, it could be a great thing. If it's just a one-off mechanism in order to harvest their email address or get them onto your platform and then not do anything substantive with it, that's another issue altogether.

QUESTION: In general, it seems that part of the challenge with accountability is understanding or absorbing all of the different interests of various stakeholders, because they can be so broad and diverse. I'm wondering if you have recognized how technology has helped filter that out and maybe just highlight what the most important interests are to the company or whoever is looking for information, or if it still becomes cacophony for them, where they don't really know what they are supposed to focus on, where they are getting so much information and feedback that it's hard to filter that out.

JANE NELSON: Good question. Why don't we take two, because we don't have a lot of time.

QUESTION: I have two questions, which both go to barriers that you already raised in your questions to us. The first is about integration and the second is about scaling.

We are looking at similar issues from a perspective of existing regulation and from a perspective of company law. There you see one of the main debates going on, which I'm sure everyone is quite familiar with, about reporting, and particularly about integration of ESG [environmental, social, and governance] reporting. I'm wondering how this kind of technology exacerbates that, in a sense—that companies go off using it only for that, and not in an integrated way with the rest of their operations, and then actually how they take what they get—for example, Timberland particularly, and Shell in relation to the forums that it runs itself—and what they do with it internally or what they have said about what they promise to do with that internally, or if they make any promise at all in that regard.

The question about scaling is more of a personal one. In the project that I'm involved in, we are actually trying to use this technology to run a consultation. Devin, you can speak to this because you have been a moderator in the Jam context. There's a real issue we are struggling with about how open—and it's a transparency question—you need to be about the rules of engagement and when you are actually soliciting someone to come in and lead the discussion in a different direction if it's not going in a way that the person who owns the forum wants it to go, for example. We are struggling with this.

JANE NELSON: Very important. Related to that, who actually convenes the meeting? Is it the company itself or is it a third-party convener?

Bill, do you want pick up those?

BILL BAUE: The question about integration is a very interesting one. Marcy and I and Caroline Rees, with the Corporate Social Responsibility Initiative, were called in to a consultation with a Harvard Business School professor, Bob Eccles, and Mike Krzus around some research that they were doing to write a book on the integration of financial reporting with sustainability reporting.

What we brought to the conversation was a triangulation of the integration with Web 2.0, that the future is towards integration of financial and sustainable, but that it will be increasingly happening in Web 2.0 platforms, or at least that's a potential. There's a potential for the stakeholder engagement to happen on the reporting site. Most reports have stakeholder engagement behind them, sustainability reports.

To your question about how you determine it, most sustainability reports start with a materiality analysis. The company works with external stakeholders to identify what the issues are that are most material to those stakeholders and then they vet it internally and also have external experts look at it. So the stakeholder issues that they focus on are determined by an analysis, an analytical view of that.

The other area around reporting that is interesting when you look at the technological question is what's called XBRL, which stands for "extensible business reporting language." Essentially what it means is tagging. It takes a report and breaks it down into its issues that are covered and tags each discrete element. It was mandated by the SEC [Securities and Exchange Commission] for that to happen on all financial reports. As the corporate world transitions into that, it's certainly feasible for them to also tag the sustainability information.

As Sanford Lewis, who is here in the audience, pointed out in a conversation earlier today, what that creates is the ability for both the company and external commentators to look at a report in a very systematic way and comment back on that report, to basically annotate the report, and, in fact, compare reports across sectors and across industry, across the entire economy.

That is an area where technology has the potential to really drive positive change in the way that reporting and transparency happens.

JANE NELSON: We have time for two more before we finish.

PARTICIPANT: I actually had the chance to talk to one of the IBM corporate social responsibility people in my interview. He has been talking about the sustainability gap, in terms of stakeholders understanding what the needs are and then, based on those needs, how they are going to map the strategy or methods. That depends on the company and their needs and what they need to do, just leaving their traditional way of running the business and just going into a new direction.

I think everyone has touched this, the sustainability gap, which is the information gap between the stakeholders and the people who are creating this strategy and these methods.

BILL BAUE: If I'm understanding your question right, I just came back from the Business for Social Responsibility Conference. I had a three-day marathon session, where I went to the Justmeans Social Media for Sustainability Conference and then the Web 2.0 Summit and then the Business for Social Responsibility Conference.

MARCY MURNINGHAM: But you didn't Twitter.

BILL BAUE: I did tweet on the Justmeans one. There wasn't web access at the BSR one, ironically.

Essentially, one of the main takeaways from the BSR conference was that sustainability is now becoming integrated into the core business model of companies. They are recognizing that sustainability is something that they have to attend to. They have moved from an early stance around sustainability, environmental, and social issues being an expense or an add-on, and moved it into something that they actually see can create business opportunity for them or reduce risk.

So they are now seeing it as a business imperative to have a sustainability strategy that isn't a tack-on, that's actually integrated into their curriculum, which is what is also happening in the educational sphere, where educational institutions, MBAs in particular, are having to address sustainability issues. They are tacking it on from the outside and others are evolving that have it built in at their core. I teach in a sustainability MBA program at Marlboro that has done that. It's one of a handful of others.

To bear in on your question a little bit more, that has all been driven by stakeholder input. Really, the sustainability agenda coming to companies was largely not from them discovering it on their own. It was largely from stakeholders coming in and saying, "Look, you need to attend to these issues because they're impacting us. You are a corporation. You have your charter from us, essentially. We are your customers. You have your license to operate from us. So you have a responsibility to attend to our concerns, where your operations impact on us."

JANE NELSON: One final question and then closing comments from you both.

QUESTION: I know we're focusing on corporate accountability, but I'm wondering if there are lessons or examples from non-corporate organizations that may have similar issues with accountability, such as international organizations, government, large NGOs, and whether they are utilizing this technology as well to communicate with their stakeholders.

JANE NELSON: Very good question.

MARCY MURNINGHAM: Great question. That's a really good question because basically we are talking about organizations here and human community. I'm one of those people that does not see a whole lot of difference between the public, private, and nonprofit sectors when it comes to the reality, the day-to-day reality, of the organization. You have similar sets of challenges, similar leadership issues, all kinds of internal politics and external challenges that are there, no matter what kind of tax you pay. So I think what we are talking about has real implications for other organizations, too.

I do not see any exemplary models, to the extent that there has been adoption and adaptation of new media tools by civil society. It's still very new. That's the first thing.

Stepping back and looking at this from the balcony, as Ron Heifetz talks about, I think there are two or three things we need to keep in mind about this, as this train keeps moving down the track.

One is that this notion of community is at its core and that, really, these tools are in service to a larger purpose. That larger purpose is really to help foster a deeper understanding and bringing to reality a more sustainable, just society that really will work for us and our common human future. So a larger set of values of public virtue that Michael Sandel talks about so eloquently, I think, lies at the core of this.

Secondly, the notion of stakeholder tends to be a divide-and-conquer framework in this day and age. It's quite ironic that we will have an explosion of borders and a flattening of the world, as Tom Friedman writes about it, and yet we're still using language that divides people into different groups. The truth is that you can be a stakeholder wearing multiple hats. You can be a shareholder. You can be an employee. You're certainly a member of the community. You are concerned about the quality of life.

Therefore, I think what we are called to is to create a different vocabulary for talking about accountability, for talking about what we mean by a stakeholder. Is there another language that might help us recognize that we are all interconnected, that the web by definition is the connective tissues that holds the promise of holding together our body politic.

BILL BAUE: Interesting. Thank you.

One of the things that we looked at in talking about accountability was the notion of self-restraining action. One thing that I'm looking at that is interesting is the degree to which corporations can take the energy that has been coming at them, of being held accountable externally, and actually start to hold themselves accountable instead.

There are, I think, disincentives for them to do this because of the capitalist structure of profit maximization being what is at least perceived as the primary or only goal of a corporation. Of course, that's shifting right now, as there is research done into the actual legal responsibility to uphold other interests besides just the financial maximization.

So I think that Web 2.0 is actually an interesting space, a kind of Wild West space right now. There has been discussion where, for companies, it's almost like the risk is on either side. If they don't get into the space, they are still vulnerable from the Web 2.0 world holding them accountable. So it's a space that they can come into and navigate the risks, but also have exposure to conversations where they may be able to reflect on their own actions and join together with others to recognize their accountability and enact it.

Again, this is potential. I don't know if that's what is going to unfold, but there is at least the possibility there that this is a new space for increased corporate accountability.

JANE NELSON: Thank you.

Just to finish off for me, building on that point a bit, and coming to your question about how other actors are being held accountable or engaging in this dialogue, I think we are seeing, as I mentioned at the outset, this interesting trend of external stakeholders using different mechanisms to hold companies accountable, companies themselves increasingly looking at a self-correcting, ethically driven way of holding themselves accountable and using various Web 2.0 and other mechanisms, as well as technology, to do that.

Thirdly, where I think one of the most interesting areas is evolving is this mutual accountability. One example would be the Extractive Industries Transparency Initiative, where you have governments and companies coming together with nonprofit organizations, as part of an emergent governance and accountability structure. They are not using Web 2.0 yet as a means of engagement, but it's actually as a new way of thinking about how we achieve a more just and ethical globalization. I think we are going to see some very interesting new models beginning to emerge, which may or may not be enabled by web-based technology, but which will fundamentally, I think, redefine what we mean by accountability and who is accountable to whom for what.

But the fact that we are now having both some of these structures emerging and these conversations—as Marcy said, if we want to move towards a more ethical, sustainable globalization, for some of the biggest challenges that we face, whether it's climate change or the food crisis or poverty alleviation or human rights, it is now increasingly a mutual responsibility, not only of government, but business and civil society. If we recognize that, then we need new types of structures, as well as modes of communication, to make that possible.

So I think we are going to see some very interesting new institutional innovations emerging, which may or may not be enabled by technological innovations, and then some very interesting combinations between the technology innovations and the institutional innovations.

MARCY MURNINGHAM: And maybe some new institutions as well.

JANE NELSON: And potentially some new institutions as well.

Thank you very much for being with us. Thank you, Devin, for hosting us.


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