Madhav Mehra

Global governance has been a rallying call for policy makers worldwide ever since the World Commission on Global Governance issued its report “Our Global Neighbourhood” in 1995.

The rising wave of suicide attacks, deteriorating Iraq situation, increasing financial instability and corporate chicanery, melting of the ice caps, sharpening inequalities, worsening poverty, the progression of AIDS and fear of pandemics show that the world is descending deeper into despair and national governments are ill equipped to handle the threats and challenges facing us in 21st Century.

The outrageous attacks on London on 7 July 2005 reveal the increasingly complex nature of security in an interdependent and globalised world of mobile communications and internet technology. Such acts require a concerted international response. The evil ideologies being fostered whether religious or political need to be dealt with collectively at a global level. Bombing civilians and non-combatants is evil. Its horror and hurt is the same whether it is in Kashmir or Kings Cross, in Edgware Road or Iraq. We have to imbibe new mechanisms of learning that capitalise on dissent, diversity and difference and help decision making through dialogue. Mr Blair is right in saying “In the end it is by the power of the argument to debate true religious faiths and true legitimate politics that we will defeat that threat”.

Unfortunately, national governments, dominated as they are by parochial and short term interest, local pride and party politics and can work to the detriment of global interest. Suicide attacks began in Sri Lanka in 1980s and the world ought to have taken note of their deadly repercussions. They have moved west via Palestine, India, Iraq, Indonesia, Russia, Morocco & Spain. They require resolute action at the global level. The solutions need to be co-created through dialogue between civil society, business and government at a global level.

Global governance does not mean global government. The later would be a threat to democracy. It is a set of rules and institutions for collective and concerted action. As the world is becoming increasingly interdependent, our actions in one place produce counter reactions in another place. Global governance essentially means a system of governance that manages global interdependence.

United Nations systems established over half a century ago has proved ineffective. It is excessively bogged down by burgeoning bureaucracy and compartmentalised thinking. UN institutions are divided into separate entities for security, health, labour, environment and trade and seem unable to address interconnected challenges that face us. The decisions today need quick thinking and agility. The issues of terrorism, poverty, corruption, bribery, corporate malfeasance, drug trafficking, global warming and arming of developing nations are all interrelated and require a concerted assault at global level.

As a global community we must establish a framework that encourages civil society participation in the decision-making. Corporate leaders, social thinkers and academics both should be an essential part of it. The issues facing us need practical action and not just reports. Practical action comes only by creating a buy-in with stakeholders. UN has been excellent in establishing commissions and delivering brilliant reports – Brandt Commission, Brundtland Commission, Agenda 21, Montreal Protocol, Millennium Summit, Millennium Development Goals, just to name a few, but there has been little action in monitoring the progress of their implementation. Consequently, the environment situation is worsening and inequalities are sharpening. Despite doubling of oil prices there is no intensification in efforts to develop more efficient energy sources. Millennium Development Goals were established 5 years ago for halving poverty by 2015. The latest figures available on poverty show that it has climbed up in 2004.

While world should be grateful to Bob Geldoff and Bono for bringing the poverty issue centre stage, very little has been achieved by Live 8. All that the G8 has promised is doubling aid after 5 years. Action is required now. If instead focus was shifted to build civil society and corporate network at the global level to force western governments to bring down tariffs and educate corporations about the benefits of investing in Africa, the results could have been spectacular.

As recent articles of John Varley, Chief Executive Barclays and Arun Sarin, Chief Executive of Vodafone group in Financial Times have revealed African countries have enormous talent and natural resources. Business can contribute by putting these together and creating an opportunity for growth and prosperity for all. Investment in mobile telephone has shown how it has transformed the economy whenever it has been introduced. The number of African mobile subscribers has increased by over 1,000% between 1998 and 2003. It has resulted in vast improvement in productivity, generating incomes and creating employment.

Business can be in the foreground of “making poverty history” by developing new products through POISED (Poor Oriented Innovation for Sustainable and Eco Friendly Development) Poor don’t want to be the begging bowls. The focus of CSR needs to be changed from philanthropy to strategic goal of profiting by engaging with poor markets and improving access by bridging infrastructural gaps and creating transactional platforms.

Similarly despite Sarbanes Oxley and other regulatory measures the public confidence in stock markets is at its lowest. Ironically, SOX has benefited the very auditing companies whose powers it was intended to curb. 77% of those surveyed said they distrusted quarterly reports. 44% say stock markets are a sure way to ruin. Globalisation cannot work unless poor can be brought in the market place and that can only happen if markets are transparent. We have to find a balance between self-regulation and over regulation. That can effectively happen only by involving regulators, investors and stakeholders at the global level.

For creating public confidence in markets we need more effective systems of global monitoring, global accounting and environmental accounting. We have to price the natural and social capital & determine the true value of wealth creation. Sharpening inequalities are a disgrace to our economic system as they create excess capacity and deprive means to those who can use it. Global governance provides us a model that can tap world resources more effectively and help us capitalise the explosion of opportunities offered by new technologies. Never before in its history, humans have possessed such powers that could transform their destiny on this planet. Global governance can be the tool to unleash them.

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Madhav Mehra is the President of the World Council for Corporate Governance