AccountAbility has been one of the big names in responsible business but is now in the midst of radical and controversial change. Will its founding...
Many organisations go through tricky moments when they change or grow – but few have as difficult a transition as that currently afflicting AccountAbility. Over recent months, its future has been the subject of a remarkably public and vitriolic row.
AccountAbility began more than 15 years ago as the Institute for Social and Ethical Accountability. It had the aim of “progressing the professional practice of social and ethical accounting, auditing and reporting”.
As the first pioneers were launching the early examples of stakeholder reports, the founding vision was that ISEA should be the professional body for accountability practitioners.
But it was at times a chaotic picture. One early participant says: “AccountAbility stood out because what it was doing was so interesting. But at the same time, it was difficult to say what the organisation actually did.”
It became an exercise in contrasts. It was a small organisation, but one that had global ambitions. It was a membership body, but also a thinktank, and a consultancy, and a creator of professional standards.
What it quickly became famous for were the AA1000 set of standards, covering assurance and stakeholder engagement.
The early versions were hideously complex – but had a core framework that early supporters saw as robust.
One of the first companies that applied the AA1000 framework to its stakeholder engagement was British American Tobacco. At the time, it was beginning its journey to its first corporate responsibility report, and had a greater stake than most in being seen to follow an externally recognised process.
Jennie Galbraith, international sustainability manager at BAT, says the work the company did with the early AA1000 was “necessary and useful, but also painful. But for a company going from zero knowledge, the detailed framework – especially around stakeholder engagement – was immensely important.”
Other stakeholders are in agreement that the early standards were “pretty dire” but are unanimous that the updated versions, evolved through dialogue with a wide network of practitioners and companies, are now strong.
New income streams
But developing standards alone doesn’t pay the bills. So the organisation sought funding streams that would support its overall mission.
It developed a portfolio of projects around the theme of “responsible competitiveness”. It carried out research, being among the first to moot the possibility of integrated reporting, and looking at issues such as what assures consumers.
Former AccountAbility chief executive Simon Zadek, writing in his blog, suggests that the organisation had achieved real influence. For instance, he says: “The founders of what became the Global Reporting Initiative … were hell-bent on a global environmental reporting standard until AccountAbility, with others, succeeded in broadening the scope … and drove ‘stakeholder engagement’ into the heart of the project.”
AccountAbility seemed to be restless, innovative and edgy – hampered only by publications whose style would make the Plain English campaigners weep.
But it was also well known that the hotbed of creativity was too hot at times, and AccountAbility was not a happy workplace. It was hugely ironic, given the organisation’s engagement in the Best Places to Work index, that it scored so low in this area.
In its 2006-07 report it recognised the fact that “poor quality of management” was a key concern for staff. Only 37% of employees agreed that AccountAbility was “a psychologically and emotionally healthy place to work”.
This wasn’t the only challenge. Another tricky area was AccountAbility’s corporate membership programme, which seemed defunct.
One lapsed corporate member, who asked not to be named, said: “There wasn’t any kind of meaningful membership service.”
Jennie Galbraith at BAT concurs. “As a corporate member of AccountAbility we didn’t get anything. We traditionally supported them because we believed in the work. We were not necessarily in it purely to get something back.”
The 2006-07 report also highlights that AccountAbility’s consultancy work was a cause of tension. The stakeholder engagement survey had shown unhappiness over the expansion of services which, the report speculated, were “likely to reflect responses from service provider members concerned about the potential competition of our advisory services”.
So plenty of seeds of conflict were sown before Zadek left the organisation at the end of 2009 and Sunny Misser, formerly of PricewaterhouseCoopers, took over the reins as chief executive.
Misser has big plans. He believes AccountAbility has been punching below its weight, and that it can grow to become a much larger and influential organisation. But he argues this will be an exercise in building on the work done to date, not discarding it.
“Over the last couple of years,” he says, “the work on the standards has been languishing at AccountAbility. We aim to promote greater acceptance and adoption of AA1000.”
But at the same time, it needs a solid base of funding. “The standards business is not financially self-sustaining. It needs to be subsidised by the part of the operations that makes a surplus.”
There should also be more input from companies, Misser believes. This includes a major expansion in services, and the renewal of corporate membership options.
Profit plans
However, it is the proposed coexistence of the standards alongside those “operations that make a surplus” that has lit the touch paper. Furious stakeholders – including some well-known names in the field – have launched public attacks on the group. It has moved from a disagreement over strategy to mutual accusations of bad faith.
The first salvo was launched when AccountAbility’s standards advisory board collectively resigned. It cited its concerns that the AA1000 standards would be “at risk” in an AccountAbility focused on its sustainable business model, and said there was now “loss of trust” with the senior management.
One stakeholder, not a member of the standards board, argues: “The current management have privatised a public-purpose organisation by simply ignoring all of its governance and accountability provisions.”
It is a position that Misser vigorously denies. “We are not privatising a public good institution. We are making it more effective – showing up to meetings on time, delivering what we promise. When people call, we answer the phone.”
After the standards board’s resignation, AccountAbility released its own response. It said the board’s position was “heavily influenced by false, misleading and inaccurate information provided by certain disgruntled former employees of AccountAbility”.
Some of the critics have now found a home on an open-access LinkedIn page for AA1000 users.
Former AccountAbility leading light Alan Knight, writing on the site, makes it clear that only a full split of the standards work from AccountAbility would make dialogue possible. He says: “You cannot have an effective multistakeholder standards development function when governance of that process is subordinated to three legal directors whose primary interest is the development of a commercial consulting operation.”
In truth, it is hard to know how different this is from past practice. The AA1000 standards are described as being “open source”. But, unlike open source software, which is managed under a formal licence detailing legal rights, there is no such provision for AA1000. The original authors seem content to have used the “open source” label as a rhetorical device – a statement of a commitment to consultative working. Such things seem unimportant when times are good.
The conclusion of this is that AA1000 is the intellectual property of AccountAbility. That said, the management there insist they are committed to rebuilding a consultative process for developing the standards. The one thing they won’t consider is what their critics are demanding – a formal split.
The breakdown in trust seems to be in full swing, however, and rumours now abound.
Has AccountAbility set up a for-profit US arm to siphon income into? No, says AccountAbility director Karl Pfalzgraf. It is wholly owned by AccountAbility and was needed to ensure proper taxes were paid on US business.
Is AccountAbility is suing people? No again, says Pfalzgraf, stating to Ethical Corporation that no legal action was currently in process, although there was one matter of misuse of confidential information where action had not been ruled out.
Then there is the fear that the new AccountAbility will, while maintaining its official non-profit status, pay substantial amounts of money to key directors through bonuses or other mechanisms.
Misser is pretty blunt on the subject. He says: “Getting in highly qualified people isn’t cheap. But it probably pays off.” Recent hires include Liv Watson, one of the original developers of the XBRL standard, and Kurt Ramin, former chairman of XBRL International.
Surer footing
Misser also holds a similar view on rebuilding AccountAbility’s governance. “We are building a new structure. In the past there were two and a half times more people on committees than we had employees.” Although this is not an unheard-of ratio for membership organisations, it is clearly not recognisable for the professional services model that Misser envisages.
AccountAbility is building, Misser says, a “reformed, simple council with more senior people from business, regulator and standards-setting backgrounds”. The aim is for this to be a group that “will add real weight to the work we are doing and will give us better governance”.
But will Misser be able to create the new vision for the organisation without leaving all its former supporters behind?
Rob Cameron, chief executive of the Fairtrade Labelling Organisation, is a former member of AccountAbility’s main council. He believes Misser has a lot going for him. “Sunny is extremely good at what he does. He is incredibly focused and professional, exceptionally bright and personable,” he says.
But, Cameron adds: “It is a very sad state of affairs. I have so much respect and admiration for all the actors involved.”
Misser says he wants to focus on the future. “This is also about the evolution of CSR. The vanguard organisations kept talking about the importance of CSR and putting it onto the corporate agenda. AccountAbility is now about the mainstreaming of CSR – making it part of the corporate fabric.”
He says he is excited about some of the companies AccountAbility is working with, and “the difference we can make to how they do business. We would love to see more healthy competition in this area where it can help make a positive impact on the world.”