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The Accountability Challenge to NGOs from Collaborating with Companies

Low, Christopher and Cowton, Christopher J. (2004) The Accountability Challenge to NGOs from Collaborating with Companies. In: The Inter-Disciplinary CSR Conference, 22nd -23rd October 2004, Nottingham, UK. (Unpublished)

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Abstract

Buoyed by increases in membership and in funds available from donors, and supported by sympathetic media coverage, NGOs have become extremely influential. They are now one of the most trusted categories of organisation operating in the public domain. However, the increase in the influence they enjoy has, in recent years, led to calls for NGOs to demonstrate greater accountability beyond their traditional focus on the donors who fund them and the cause which they are intended to address. Thus a range of NGO activities have come under scrutiny including, for example, internal decision-making processes (Gariyo 1995) and the veracity of claims made about company operations (Harper 2001).
The example of the veracity of claims made about company operations is a pertinent one, for NGOs which engage in lobbying have come to play a prominent role in determining which corporate practices are perceived as socially (ir)responsible and in defining the obligations that companies have towards stakeholders. It is perhaps ironic that NGOs have themselves been subject to much less intense accountability pressures than those that they have managed to create for companies.
The aim of this paper is to explore the nature of the accountability of NGOs for their role in influencing stakeholder perceptions and company behaviour. In doing so, two modes of NGO operation will be distinguished.
In the past, NGOs would merely exhort companies to change from the sidelines, thus echoing the CSR1 perspective articulated by O’Dwyer (2003) and others. Taking this outsider position (Grant 1995) allowed NGOs to demand a range of socially responsible policies from companies which, if implemented, would favour their cause. The problem with this approach was that the demands, while probably appealing to an NGO’s supporters, were often unrealistic in their aspirations. In contrast, the current tendency of many well-known NGOs is to collaborate with companies in seeking to change their behaviour. In a manner akin to the CSR2 perspective (O’Dwyer 2003) this forces NGOs to acknowledge the pragmatic constraints implicit in the operations and context of business. Engagement with companies in this insider role (Grant 1995) creates a new set of accountability challenges for NGOs, not only because of the risk of appearing to have been compromised or captured, but also because engagement in this context can be argued to entail new responsibilities and to create obligations to additional stakeholders, including the company and its customers.
In exploring the accountability implications of engagement, the paper identifies two insider roles that NGOs perform for the corporate sector:
1. As advisors to companies on how to change their operations to the benefit of the NGO’s cause
2. As auditors of direct corporate activity or the supply chain
In the advisor role an NGO will offer specialist knowledge on social and environmental issues to companies seeking to reduce the negative impacts, or aiming to improve the positive impacts, of their operations. Many companies feel they lack the necessary skills and experience to address such responsibility issues alone. This organisational deficit found in companies was a key strand of Milton Friedman’s classic articulation of the case against CSR (Friedman 1970). The company is then free to choose whether and how to act on the advice received from the NGO.
The auditor role is more formalised and requires the company to meet standards specified in a code of conduct or similar document drawn up the NGO, either alone or in collaboration with the company. The NGO monitors corporate operations to ensure the standards are met before offering verification to other stakeholders, including the company’s customers, that the company has fulfilled its commitments.
Drawing on several illustrative examples of NGO-company collaboration, the paper offers a conceptual framework that draws upon political theory (e.g. Dunleavy & O'Leary 1987, Richardson 1993) and captures how the roles detailed above give rise to a new set of obligations for NGOs. It is argued that, as a result of their engagement with companies, NGOs are accountable in terms of regulating corporate practices, reporting to customers on relevant aspects of corporate behaviour, while still representing the cause. The implications for NGOs of addressing the challenge of these obligations are explored and proposals are offered for how they might respond in order to retain legitimacy with a range of stakeholders. These suggestions echo many of the demands being made on the corporate sector around disclosure, but where companies are arguably ahead of NGOs. They include the need for NGOs to be open about the terms of engagement between themselves and companies.

Item Type: Conference or Workshop Item (Paper)
Subjects: H Social Sciences > HF Commerce
Schools: The Business School
Related URLs:
Depositing User: Cherry Edmunds
Date Deposited: 10 Nov 2011 16:15
Last Modified: 10 Nov 2011 16:15
URI: http://eprints.hud.ac.uk/id/eprint/11924

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