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A New Notion of Global Accountability

John McArthur on why Asia’s local leaders could play a critical role in building new frameworks for global accountability.

By: /
12 August, 2013
John McArthur
By: John McArthur

Senior fellow, Brookings Institution 

The 2008 global financial crisis instigated a cascade of events that still frame many of the world’s foremost political tensions. Simmering beneath the daily headlines lie protracted disputes over which private and public actors caused the problems, and thus who should now pick up the tab.

The scope of debate is enormous, but it likely pales next to the consequences of other global problems like climate change, ocean acidification, air pollution, and even income inequality. Like the financial crisis, these issues call attention to the need for new notions of global accountability across public and private sectors. Much of the resolution will hinge on finding a workable path in Asia.

Two trends underscore why Asia is so important. The first is economic fundamentals. By 2030, Asia is projected to contribute the biggest regional increment to global economic activity and form the biggest single share of the world economy.

According to Organization for Economic Co-operation and Development estimates, the five countries of China, India, Indonesia, Japan, and Korea will alone add more than US$36 trillion in real annual output. This is double the US$18 trillion of growth projected across all the OECD countries of Europe, North America, Australia and New Zealand combined. Short of dramatic changes in technology, these leaps will hugely intensify humanity’s ecological footprint.

Second, private sector actors are playing an ever greater role in affecting global policy outcomes. Firms have lobbied governments to negotiate good terms on international deals. But corporates are increasingly seen as outright partners in tackling global challenges.

In some cases, global companies are even willing to fill political leadership gaps, which was evident in the lead-up to last year’s UN Rio+20 sustainability summit. Some of the most prominent summit-linked announcements came from firms, such as Microsoft’s commitment to achieve carbon neutrality. Of course, many companies resist needed intergovernmental reforms to protect vested interests. But citizens around the world are asking global governance to keep step.

World leaders have roughly two years to figure out new rules of the game. By September 2015, all countries are slated to set new targets to guide international economic, social and environmental efforts.

Political leaders including Britain’s David Cameron, Liberia’s Ellen Johnson Sirleaf and Indonesia’s Susilo Bambang Yudhoyono recently put forward their recommendations through a high-level UN panel. It rightly underscored public sector responsibilities in tackling “last mile” challenges of extreme global poverty. But the panel also drew attention to the fundamental role of private investment in driving the development process.

The challenge is therefore to develop global accountability structures that frame standards across both public and private actors. I call this “360 accountability”, an approach whereby all global development stakeholders, including non-profits and academics, too, hold themselves transparently accountable to minimum agreed standards. Since so much of the world’s imminent economic change will take shape through Asia’s private sector, it is a matter of logic that new global approaches will need to incorporate circumstances in this region.

It will be a huge task to identify and implement appropriate metrics. On the business side, four starting points stand out. First, business leaders and independent experts need to identify industry-by-industry accountability standards that can be commonly applied across firms.

Second, performance standards need to be promoted from the top of the business food chain, starting with capital allocation. Sovereign wealth funds and other large pools of capital can have enormous influence in establishing new norms amidst their investees.

Third, large companies should face mandatory “comply or explain” regimes on environmental and social indicators, as recommended by the UN panel.

Fourth, policy metrics need to include local and municipal levels, where so many key decisions between business and government take place.

Ultimately, a 360 notion of accountability implies a new conception of even the term “world leaders”. Heads of government still have enormous responsibilities, but power networks are diffuse. Many CEOs and local government leaders will make pivotal decisions on frontline global issues – from labour markets to energy systems, environmental services, and citizen feedback mechanisms.

Asia is home to nearly three-fifths of humanity, so many of its local leaders will be de facto global leaders. It is both daunting and exciting to think about how many people can contribute. In the end, the world’s success depends on it.

This article first appeared in the South China Morning Post

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