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Governing the sustainability commons

Effective voluntary programs have clearly defined objectives, indicators, monitoring programs and graduated sanctions.

Managing complexity

GreenBiz photocollage, via Shutterstock

The Supreme Court’s West Virginia decision puts the ball of developing rules for business to contribute meaningfully to sustainability squarely in the private sector’s court. When, as Joel Makower’s disturbing article in these pages points out, there has been little progress in meeting the U.N. Sustainable Development Goals, U.S. leadership is sorely needed.

But as I argued in a previous article, to make real progress in attaining sustainability we need a substructure of rules that creates a level playing field and prevents "free riders" from taking advantage of their rivals’ responsible actions.

The West Virginia ruling will undermine U.S. government regulatory action to do this.

We do, however, have a guide for action in Elinor Ostrom’s Nobel-prize winning work summarized in "Governing the Commons: The Evolution of Institutions for Collective Action" as well as in academic research on voluntary environmental programs. Below I briefly summarize and extend Ostrom’s work with the results of academic research and my own experience.

Effective voluntary programs have clearly defined objectives, indicators, monitoring programs and graduated sanctions.

Ostrom’s eight principles of collective action, described here, were developed working in small communities that relied on a resource subject to the "tragedy of the commons." The communities she studied confronted palpable, immediate loses, but the principles she identified illustrate those we might adapt for sustainability practices where the impacts can be global and long-term. In a World Bank study, Ostrom herself applied her framework to global climate change. For brevity, I have consolidated Ostrom’s eight principles into five and added one, "Define why."

1. First, define "why?" Grandchildren are more effective than Excel spreadsheets. I have added this principle to Ostrom’s list. Years ago, my firm was asked to develop a multiple-use sustainable development framework for an ecologically important region in Peru. We arrived with our Excel spreadsheets and PowerPoints. It was clear immediately that the stakeholders were having none of it; they wanted to express their grievances toward each other.

We changed the subject, asking, "What are your memories of growing up in this region?" It turned out that all of them missed the condors that used to fly over the region. Passing on the natural beauty of the region became the true north that united them all. The process was not easy sailing after that — they still had conflicting interests — but they had a common purpose that united them. For many of us, the true north that unites us is our responsibility to our children and grandchildren.

2. Start small and keep it simple. Define group boundaries to address a clear common problem learn from experience. We may want to solve all the world’s problems at once, but it is more effective to start with small steps. A key lesson from entrepreneurs (and we are all entrepreneurs as we engage new approaches to sustainability) is the value of starting with a "minimum viable product," an initial product that we use to test a concept under real-world conditions. If, as I suggest below, we set up a polycentric network of multiple initiatives sharing a common purpose and framework, we can establish experiments in a "learning organization" where successes and (importantly) failures are shared.

3. Match the rules to local needs and conditions. Ensure that those affected by the rules can participate in defining and modifying the rules. We all need agency in defining our own destinies. It is human nature to abide better by rules we helped develop than by rules that were imposed on us. Social entrepreneurs point to the value of "co-creation." In my own work, developing procedures for companies implementing environmental management systems and developing voluntary programs, I have often noted that those affected by the rules have a much clearer understanding than outsiders of what works and does not work, and that they buy in best to rules they participated in developing.

4. Build responsibility for governing the common resource. Use nested tiers, from the lowest level up to the entire interconnected system. We have a fixation with "reaching scale." This is understandable in a technological economy where the cost of serving the 2 billionth customer is less than the cost of serving the 1 billionth customer. But the sense of ownership and personal involvement that comes of working in a smaller unit is lost in 1 billion- or 2 billion-participant organizations.

Organizational psychologists tell us that the number of possible one-to-one interactions in a group increases exponentially as the number of members increases. Above 20 participants, the number of possible interactions becomes unmanageable. Ostrom’s polycentric approach develops an overarching framework that is implemented through multiple small-scale initiatives.

5. Make sure the rule-making rights of community members are respected by outside authorities. For a decentralized "nested tiers" approach to work, higher-level tiers must respect the rulemaking and enforcement authority of lower tiers. Conversely, lower-level tiers must commit to working within the overarching framework established (with their participation) by higher-level tiers.

6. Develop a system, carried out by community members, for monitoring members’ behavior. Use graduated sanctions for rule violators and provide accessible, low-cost means for dispute resolution. For several years, I worked actively with companies implementing ISO 14001 systems. Eventually, I quit in part because the audit mechanism under ISO was inadequate and because sanctions were seldom applied. In too many (but not all) cases, free riders benefited from the credibility ISO provided, but skirted the actions it required.

The academic literature on voluntary programs confirms this perception: Effective voluntary programs have clearly defined objectives, indicators, monitoring programs and graduated sanctions. Without these mechanisms, they become at best exhortations to do better; at worst, they create an impression, sadly often correct, of greenwashing.

Whatever happens in the aftermath of the West Virginia decision, and I may be too pessimistic, well-designed voluntary environmental programs are a "no-regrets strategy." If I am too pessimistic, they can be a useful complement to regulatory programs that are more flexible, more targeted, and in some cases more effective than regulatory programs. If I am proven correct, voluntary programs provide us a means to meet sustainability goals even as regulatory programs are eviscerated.

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