Scaling Pains at AccountAbility

The TakeAway: AccountAbility Standards Board resigns en masse, while the UK standard-setter for sustainability assurance and stakeholder engagement pledges to stay true to its mission.

Last week, the voluntary Standards Board (SB) at AccountAbility resigned en masse in a letter voicing disappointment over “mission creep”, another seismic shift after the late 2009 departure of founding CEO Simon Zadek, followed by advisor and staff leave-taking throughout 2010.  Last Friday AccountAbility posted an open statement responding to the SB, stating it was going to maintain its core identity.  Late yesterday, AccountAbility provided further information on structure, governance, “profits”, and ownership.

AccountAbility, a registered non-profit in the UK, was founded in 1994 by Zadek, an innovative leader in sustainability standards, collaborative governance, and responsible competitiveness.   Zadek, described as a “Buddhist economist”, left AccountAbility due to “fundamental disagreement with [his] senior colleagues over its future direction”, he blogged last Thursday.  Sunil Misser, AccountAbility’s current chief, took over last summer.  In November Ethical Performance described Misser as “a stereotypically hard-nosed New Yorker who learned the sustainability ropes at PricewaterhouseCoopers and is steeped in the world of management consultancy.”  Misser’s goals, according to the EP interview, are to reinvent AccountAbility as “the pre-eminent global CSR professional services firm” and increase its professional workforce.

According to the January 11th Standards Board letter to AccountAbility’s Board of Directors, its resignation was “in no way prompted by a lack of confidence in the future importance of the standards”, but stemmed from a “lack of trust among the parties”.  Of specific concern:

• the nature of the AA1000 standards as a “public good”;
• the need for multi-stakeholder governance; and
• clear independence of standards from AccountAbility’s “commercial activities”.

“Come back to the table, we want to collaborate.  There’s no reason to build walls,” Liv Watson, AccountAbility’s incoming director and head of global research and development told the Murninghan Post in an exclusive interview.  “Too much work has gone into this.  Having lost a moment, we have to unite and move forward.”

Watson, who assumes her responsibilities February 1^st, was referring to the importance of stakeholder engagement to support and grow the AA1000 – a multi-party, open-source framework for sustainable responsibility – as a public good.

“There is no doubt about it: the AA1000 standard is going to be open and free.  AA is never going to be providing services on assurance,” Watson said.  “We’ll continue to do research and create educational materials” in keeping with AccountAbility’s organizational objectives.

Meanwhile, AccountAbility soon will announce three February “open stakeholder outreach webinars”, she said, to propose short-term strategy and solicit “feedback from everybody.  Over the next six weeks, we’re going to look at all the different [consortium] governance models and follow global best practices.”  She said attorney Andrew Uptegrove of Gesmore Uptegrove LLP will advise AccountAbility on this, as well as a workable open-source infrastructure.  (Uptegrove also contributes to a consortium standards blog.)

Watson noted that AccountAbility will work to raise AA1000’s profile worldwide—particularly with governments and the G20, regulatory groups, and stock exchanges.

The Standards Board letter sparked a stream of online commentary, nicely curated and summarized by German blogger and corporate sustainability / CSR (corporate social responsibility) expert Fabian Pattberg, a former AccountAbility employee.  Included in the roundup:

• Simon Zadek’s recent review of AccountAbility’s history and belief that it’s gone from a “change-making non-profit to a market-taking consultancy”;

• Maya Forstater’s  and Mallen Baker’s posts, taking issue with AccountAbility’s handling of events and citing its tarnished image among prominent CSR leaders who contributed to AccountAbility’s work;

• Ethical Corporation‘s Toby Webb’s initial and follow-up posts, which reiterated questions sent directly to AccountAbility’s Board involving strategy, governance, ownership, and reporting.  AccountAbility’s open responses were, in large measure, directed to Webb’s queries.

“I’m sorry they resigned, and will reach out to them individually.  I hope they come back and allow me to have a constructive dialogue about best practices and standards,” Watson said, referring to the Standards Board.  “I understand their concerns.”  She was referring to her multi-stakeholder experience with the development and growth of XBRL International, a nonprofit consortium aimed at scaling adoption of XBRL language.  Kurt Ramin, also a pioneer in global reporting languages and standards, worked with Watson while chairman of XBRL International and XBRL Europe.  Like Watson, Ramin becomes an AccountAbility director and head of global standards on February 1^st.  (XBRL stands for eXtensible Business Markup Language, a method for electronic data reporting, both financial and nonfinancial.  As we’ve written before, XBRL takes the business world a giant step into the Semantic Web—and eventual on-demand, verifiable reporting.)

She’ll have her work cut out for her, because the Standards Board resignation ”follows on from a year of departures, starting with Simon Zadek’s ousting, followed by the departure of all of the Governing Council members and most of the international Country Representatives,” says Maya Forstater.  And AccountAbility’s response late last week did little to reassure some knowledgeable observers who considered it incomplete, inappropriate, and condescending—particularly in its references to former employees and so-called “propriety” and “competing business interests” of  “certain Board members and others in leadership positions”.

The issue goes beyond differences in personality styles and corporate culture.  At issue is AccountAbility’s response to the exploding market for reliable, comparable and accessible information; sustainability reporting assurance; and guidelines for stakeholder engagement.  As information becomes digitized – that is, as it gets broken down and repackaged – all kinds of questions emerge regarding its validity, comparability, and use.  The temptation for AccountAbility to fill this need is understandable – particularly as it seeks to expand – but doing so may introduce irreconcilable conflicts of interest.  At issue, too, is the fine line between “educational consulting” and “assurance consulting”—in addition to AcountAbility’s work developing standards.

The user implications for electronic reporting are staggering and will continue to grow.  So, too, will expectations of what reports are supposed to do: provide a valid accounting of performance activities to stakeholders and a wider public, with an eye toward constant improvement and value creation—however “value” is defined.

Citing the advent of integrated reporting, the push for more stock exchanges to require XBRL and environmental, social, and governance (ESG) reporting, and other accountability developments, Watson has this message: “This is an umbrella under which everyone can play a part.  These challenges can’t be solved overnight.  Please come back.  Let’s have a dialogue.”

Over the years, many people have dedicated not only their talents but their hearts and souls to the cause of sustainable prosperity and justice, a commitment that’s unlikely to change, whatever their institutional affiliation.  That’s why, if you look at the larger ecosystem in which everyone is working, you begin to realize that perhaps they never really left at all.  What matters is how scaling up AccountAbility’s impact can occur without scraping away its integrity.

Editor’s Note: Bill Baue contributed to this post.