Oppose NGO Transparency
by Jon Entine
asks why “progressives” are opposing NGO transparency
Mike Myers, who soared to fame as the creator and star of the baby boomer
spoof Waynes World, has made a career as a cultural icon for the
shagadellic generation. As Austin Powers, he battles evil, or more specifically
Dr. Evil, the nuclear bomb-loving product of the Sixties.
I wonder if NGO activists and social investors, who together have anointed
themselves the ultimate-judge-of-social responsibility, appreciate the
parallels between Austin Powers and their worldviews? According
to NGO/social investing dogma, multinational corporations and Western
democracies, most pointedly the United States, represent evil incarnate.
What the extremist factions of the activist community dont seem
to appreciate is that Wayne and Austin are self-parodies, while some
NGOs and activists take their hysteria seriously. Welcome to Ralphs
Why Ralphs World? Thats the world according to Ralph Nader,
the quixotic consumer advocate. Aside from the debacle of his hubristic
run for the US presidency in 2000 that guaranteed the election of George
W. Bush, and which will forever mar his record as a progressive, Nader-as-gadfly
has played a significant role in forcing greater transparency on corporations
and the government, and long before it was fashionable. Although a late
comer to the campaign for financial transparency, in March he set up
a watchdog group, the Association for Integrity in Accounting, with
intentions to lobby for assuring corporate accountability and
It would therefore seem a given that Nader, activists in general and
especially social investors would eagerly embrace any movement that
would bring more openness and disclosure to public discourse. Think
In early June, I spoke on transparency and accountability along with
eight others at a conference at the American Enterprise Institute, one
of the worlds most influential policy think tanks, jointly sponsored
with Australias Institute of Public Affairs. Rather than focusing
on corporations, however, it examined NGOs and activist groups, including
the socially responsible investing community. Here was the
sensational theme of the conference: While many NGOs
have made significant contributions to human rights, the environment,
and economic and social development, a lack of international standards
for NGO accountability also allows far less credible organisations to
have a significant influence on policymaking. The goal of the
conference was to address what standards of accountability could be
developed so unrepresentative activists do not undermine
the effectiveness of credible NGOs.
That certainly appears a worthy and even admirable subject. How did
Nader respond? Within hours of the conference, Nader and a bevy of socially
responsible apologists issued scathing hysteriagrams, ignoring
the call for accountability and transparency and instead resorting to
the tired tradition of trashing corporations. Trying to persuade
shareholders to press for more corporate responsibility, in the midst
of a corporate crime wave by the managers, is somehow subversive in
his mind, Nader wrote.
That mind he refers to is my mind. Naders screech
was directed at my paper on the anti-science and anti-progressive turn
of the social investment community. Since Ralph did not attend the conference,
perhaps he can be excused for misstating the study. In fact, I criticised
the nexus of NGOs and social investors whose opposition to many progressive
issues, such as agro-biotechnology research, is aggravating world hunger
and the economic depravity of the developing world. My article also
targeted the short shrift social investors and activist NGOs have given
to the issue of corporate accountability. In other words, I was arguing
the exact opposite of what Nader stated. Many social activists appear
more interested in pop ideology than economic development for the poor
Am I overstating the case? I dont believe so. Joan Bavaria, a
seminal figure in the social investing community, issued a similar screed.
Years ago Bavaria founded the Boston-based investment firm Trillium
Asset Management and later the Coalition of Environmentally Responsible
Economies, which goes by the acronym CERES. By conceit, these are respectable
organisations. CERES admirably claims to be dedicated to honest,
meaningful dialogue between corporations and activists on environmental
and social practices. And Trillium fills its website with articles such
as Here Comes the Sun and Show Me the Money
and promotes an initiative called Publish What You Pay that
demands increased disclosure so civil society can more accurately
assess the amount of money misappropriated.
Bavaria, who also did not attend, similarly ignored the proposal that
transparency and disclosure should be the operating ethic for all bureaucracies.
Like Nader, Bavaria played the zero-sum game. She harrumphed that it
was a fine time to scrutinise activists considering the
alleged wave of miscreant corporate behaviour. Much of her article consisted
of snide and tired clichés about the mansions and limos
and helicopters that she demagogically equates with American
corporations (businesses apparently dont provide jobs or produce
products or services, they just build temples to their excess while
she rides around in her forlorn
This over-the-top self-righteousness is all too familiar coming from
the corporation-bashing wing of the activist community. According to
a letter circulated this spring on SRI listserves around the world,
social investors in tandem with NGOs are poised to step up their anti-business
attacks. Global corporations are ravaging the natural environment,
destroying democratic societies and widening the gap between the rich
and the poor, screeched John Harrington, president of his own
socially responsible investing firm. He lambasted corporations
for controlling the media, agriculture, energy, financial services
and other sectors of our economy, propping up authoritarian
governments and undermining civil rights. One might expect this
kind of gibberish from a bin Laden acolyte or a Soviet-era Marxist but
not from a money manager with responsible in his title.
Mind you, Harrington is a social investing bigwig, and his call for
jihad was published to much approval in Business Ethics magazine. Its
sad, and frankly bizarre, that leaders in the often integrity-challenged
activist community cant rise to the challenge of the cleansing
sun of openness in their own backyard.
Heres a simple question for those who piously claim to support
accountability: Do you believe that NGOs and activist organisations
should be as transparent in their funding and lobbying as they rightly
demand of corporations and governments? After all, the reality is that
today NGOs operate as businesses. Like corporations, they compete fiercely
for their customers (consumers for corporations and activist-donors,
including foundations, for NGOs) who, as the source of cash flow, determine
what business marketsor social campaigns will be pursued.
The biggest NGO are huge multinationals. Taking just one issue, agro-biotechnology,
based on public documents for 2001, anti-biotech activists spent more
than US$341 million. Unlike corporations, however, which face demanding
disclosure rules, NGOs are not subject to the sunlight that Bavaria
and others rightfully deem so essential to ensure the publics
right to know.
When I sent an email to Bavaria asking her whether she supported disclosure
for social investors and activists as well as corporations, I was not
surprised that she responded with silence.
Why is it so critical for NGOs including social investors to fully embrace
accountability rather than to use it merely as a tactic to bludgeon
Corporate America? As the AEI conference acknowledged, most
NGOs are essential. Consider Poland. According to a recent study, it
has more than 18,000 NGOs, which focus on community development, social
services, cultural, and educational programmes that often fall through
the cracks in a country with relatively undeveloped government and business
sectors. Yet even in Poland, third sector NGOs recognised
the need for transparency and recently drafted an enforceable code of
ethics as part of an initiative to develop and popularise accountability.
Echoing the theme of the AEI conference, genuine progressives are embracing
the accountability challenge to combat widespread mismanagement. A Danish
study in 1994 found that many NGOs performed in an unprofessional
and irresponsible manner that resulted not only in duplication and wasted
resources but, in a few cases, in unnecessary loss of life. Seven
years later the first self-regulated accountability mechanism for humanitarian
NGOs, the Humanitarian Accountability Partnership International (or
HAP International), became official. Accounting standards is often
just lip service in the NGO community, noted HAP.
The liberal One World Trust, which believes in a UN-type world government,
agrees. It recently examined eighteen NGOs in its first Global
Accountability Report: Power Without Accountability? According
to OWT, Individuals and communities who are affected by these
organisations actions should be able to hold them to account.
However, few mechanisms have been identified at the global level to
enable these stakeholders to exert such a right. The result is a growing
sense of disenfranchisement and even a tendency among some groups to
resort to violent methods to be heard. These organisations need to become
more transparent and accountable. If AEI had swapped out its summary
paragraphs and substituted OWTs, it would have been condemned
by Nader and the like for being inflammatory.
What did OWT find? NGOs including the World Wildlife Foundation, Care,
Oxfam and the International Confederation of Free Trade Unions ranked
low in online disclosure and/or member control of the organisations.
On some issues, they ranked below organisations they have long criticised
including the WTO and World Bank and such multinationals as Rio Tinto,
Shell and Microsoft. WWF, arguably the most influential green NGO in
the world, ranked low on both criteria of accountability and transparency.
The social investment community and the reflexively anti-business extremists
that it enables need to look in their Alice in Wonderland mirror: you
are in danger of becoming the anti-progressive establishment. According
to a study released in late June by SustainAbility, most NGOs are choosing
constructively to engage with business and governments to reform market
systems, in sharp contrast to the dated confrontational style that Nader
still peddles. Over the past decade, activist factions that represent
the tiniest slice of the NGO community have turned increasingly alarmist,
particularly on development, environmental and science-related issues.
Greenpeace, Friends of the Earth, animal rights fanatics, anti-globalisation
protesters and the like are moving out of the idea business
altogether, existing almost exclusively as obstructionists. As a consequence,
they paint all NGOs with the grim brush of irrationality and intolerance.
That makes it extremely difficult for reformist NGOs to be taken seriously
by decision-makers in government and business.
With the public so sympathetic to the movement for reforming bureaucracies
of all kinds, apologists are squandering a rare opportunity for legitimising
tighter scrutiny of corporations, government and NGOs.
This is Ralphs World, and its not a place where any truly
liberal person would want to reside.
Jon Entine is scholar-in-residence
at Miami University (Ohio) and adjunct fellow with the American Enterprise
Institute in Washington, DC. Jon is also an award-winning freelance