Ethics Body Sees Mass Resignations; Hits Back at Accusations

by | Feb 17, 2011

Critics are accusing business ethics standard-setter AccountAbility of poor governance, shortly after the body’s entire council and standards board resigned.

According to the Guardian, critics allege that AccountAbility’s AA1000 ethical standard for business is being turned into a money-making venture, at odds with its origin as an “open source” standard. But AccountAbility director Karl Pfalzgraf denies that the standard is straying from its open source origins.

He told Environmental Leader, “That’s completely untrue… There’s absolutely no intent to make them proprietary or to commercialize them.”

AccountAbility’s council, standards board, director of standards and other technical committee members have all resigned recently, as part of what the Guardian describes as a “mutiny” over governance.

But Pfalzgraf said the resignations were the result of a new governance structure for the firm initiated by the arrival of a new CEO last year. The new structure will combine the council and standards board into one body.

He acknowledged there has been disagreement within AccountAbility, with the old standards board pressing to split the AA1000 standard off into a new organization. This would not be sustainable, Pfalzgraf said, because AA1000 is subsidized by AccountAbility’s research and consulting activities.

Pfalzgraf said some non-profits don’t like AccountAbility’s engaging in business consulting. But, Pfalzgraf said, “If you’re serious about effecting change in the world and you don’t engage with corporate – who are you kidding? You’ve got to be out there in the trenches, getting your hands dirty.”

The controversy continued yesterday as social auditors, who helped to create AccountAbility’s A100 ethical standard for business, wrote an open letter expressing their concerns.

“AccountAbility’s stewardship up until 2010, while not perfect, was founded on an inclusive and multi-stakeholder governed approach,” the auditors wrote.

“Since 2010 there have been a number of events in relation to governance and management at AccountAbility that have caused us to become deeply concerned for the future and integrity of the standards,” they added.

The Guardian’s Jo Confino said the upheaval has great implications for the future of corporate sustainability reporting.

“While the the Global Reporting Initiative seeks to set a common framework for reporting, AccountAbility’s AA1000 standards are most widely used to drive the processes behind a stakeholder inclusive approach to sustainability – one that ensures that reports speak to stakeholders’ needs,” he writes.

“If the two sides fail to kiss and make-up, the risk is that a new rival standard will emerge which is the last thing that is needed just as sustainability is starting to find its place at the heart of business strategy,” Confino adds.

The newspaper’s own sustainability reports are governed by the AA1000 standard, and its social auditor Two Tomorrows was one of those signing the letter.

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