Although participation by all stakeholders is of course desirable, this is not an essential principle of good governance. The ability of all to participate if so desired is however an essential principle. Participation of course includes the freedom of association and of expression that goes along with this. Depending upon the size and structure of the organisation, participation can be either direct or through legitimate intermediate institutions or representatives, as in the case of a national government (Parliament). Participation of course would involve everyone, or at least all adults both male and female.
This is a corollary of the participation principle and the transparency principle. Responsiveness implies that the governance regulations enable the institutions and processes of governance to be able to serve all stakeholders within a reasonable timeframe.
This principle involves ensuring that all members of society feel that they have a stake in it and do not feel excluded from the mainstream. This particularly applies to ensuring that the views of minorities are taken into account and that the voices of the most vulnerable in society are heard in decision-making. This requires mechanisms to ensure that all stakeholder groups have the opportunity to maintain or improve their well being.
Efficiency and Effectiveness
Efficiency of course implies the transaction cost minimization whereas effectiveness must be interpreted in the context of achievement of the desired purpose. Thus for effectiveness it is necessary that the processes and institutions produce results that meet the needs of the organisation while making the best use of resources at their disposal. Naturally this also means sustainable use of natural resources and the protection of the environment.
This of course requires a long-term perspective for sustainable human development and how to achieve the goals of such development. A growing number of writers over the last quarter of a century have recognised that the activities of an organisation impact upon the external environment. These other stakeholders have not just an interest in the activities of the organisation but also a degree of influence over the shaping of those activities. This influence is so significant that it can be argued that the power and influence of these stakeholders is such that it amounts to quasi-ownership of the organisation. Central to this is a concern for the future which has become manifest through the term sustainability. This term sustainability has become ubiquitous both within the discourse globalisation and within the discourse of corporate performance. Sustainability is of course a controversial issue and there are many definitions of what is meant by the term.
At the broadest definitions sustainability is concerned with the effect which action taken in the present has upon the options available in the future (Crowther 2002). If resources are utilised in the present then they are no longer available for use in the future, and this is of particular concern if the resources are finite in quantity. Thus raw materials of an extractive nature, such as coal, iron or oil, are finite in quantity and once used are not available for future use. At some point in the future therefore alternatives will be needed to fulfill the functions currently provided by these resources. This may be at some point in the relatively distant future but of more immediate concern is the fact that as resources become depleted then the cost of acquiring the remaining resources tends to increase, and hence the operational costs of organisations tend to increase (Aras & Crowther 2007a).
Sustainability therefore implies that society must use no more of a resource than can be regenerated (Aras & Crowther 2007b). This can be defined in terms of the carrying capacity of the ecosystem (Hawken 1993) and described with input - output models of resource consumption. We will consider this principle in detail in chapter 5.
Accountability is concerned with an organisation recognizing that its actions affect the external environment, and therefore assuming responsibility for the effects of its actions. This concept therefore implies a recognition that the organisation is part of a wider societal network and has responsibilities to all of that network rather than just to the owners of the organisation. Alongside this acceptance of responsibility therefore must be a recognition that those external stakeholders have the power to affect the way in which those actions of the organisation are taken and a role in deciding whether or not such actions can be justified, and if so at what cost to the organisation and to other stakeholders.
It is inevitable therefore that there is a need for some form of mediation of the different interests in society in order to be able to reach a broad consensus in that society on what is in the best interest of the whole community and how this can be achieved. As a general statement we can state that all organisations and institutions are accountable to those who will be affected by decisions or actions, and that this must be recognised within the governance mechanisms. This accountability must extend to all organisations - both governmental institutions as well those as the private sector and also to civil society organisations - which must all recognize that they are accountable to the public and to their various stakeholders. One significant purpose of this is to ensure that any corruption is eliminated, or at the very least minimized.
According to ISO 26000, accountability is the state of being answerable for decisions and activities to the organization's governing bodies, legal authorities and, more broadly, its stakeholders. To make it more clear, to be accountable means to provide proof (e.g. reports) on what you are responsible for. Accountability explains that a company is not isolated from its environment and that it is a part of a wider societal network and has responsibilities to all of that network rather than just to the owners of the organisation.
A company has to be accountable both for the consequences of its activities and also for not repeating any negative activity. So it follows from the principle of transparency in that transparency needs to reveal relevant information to stakeholders and accountability is the means to reveal such information. There has not been a consensus generally on how to deal with this necessity. Is it always possible to rely on a company's self declaration? Or should there be third parties to scrutinize on behalf of all the stakeholders? The reluctance of some countries representing their national industries and companies to respect principles of social responsibility, including accountability, and the efforts to lobby against an international standard has impacted the strength of such a document to be implemented. This fact is observable in different parts of ISO 26000.