Preserving the Blue Planet One Industry at a time : an assessment of multi-sector involvement in standard setting in Private Water Governance

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Preserving the Blue Planet One Industry at a Time

An Assessment of Multi-‐sector Involvement in Standard Setting in

Private Water Governance

Master thesis by Nadine Lodder June 2016

Supervisor: dr. L. Fransen, University of Amsterdam Second Reader: dr. P. Schleifer, University of Amsterdam

MSc Political Science

Research Project Transnational Politics of Sustainability Political Science: International Relations

University of Amsterdam

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Abbreviations

AWS Alliance for Water Stewardship CDP Carbon Disclosure Project

EWP European Water Partnership

EWS European Water Stewardship

GEMI Global Environmental Management initiative ICMM International Council on Mining and Minerals ISDC International Standard Development

Committee

ISEAL International Social and Environmental

Accreditation and Labelling

IWSS International Water Stewardship Standard WBCSD World Business Council for Sustainable

Development

WFN Water Footprint Network WWF World Wildlife Fund

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1 Introduction

'Everyone comes to the table when there is a stressed situation around water and that is also the challenge: everyone is at the table.' -‐ Greg Koch, The Coca Cola Company, 2016.

According to the World Economic Forum's Global Risk Report 2015, of the risks that we currently face, water crises will have the greatest impact (UN CEO Water

Mandate n.d. a). The world faces increasing water demand, water stress and worsening water quality. Accordingly, in the last decade the attention of

corporations for the issue of water has increased greatly (Hepworth 2012: 543). Water risks for corporations can take shape in the form of physical risks, such as disruptions in the production process, reputational risks, and regulatory risks concerning legal action (idem: 544).

This increased attention has led businesses to form initiatives together with civil society organizations and governmental agencies to tackle the issue of

sustainable water use in a variety of ways. They are thereby contributing to the emergence of a private water governance regime (Daniel & Sojamo 2012: 637). The business actors engaged in the issue of sustainable water management come from a variety of industry sectors such as agriculture, chemicals, food and drink, textile and energy (UN CEO Water Mandate n.d. b). Freshwater is either part of their end product or part of the production process.

What makes private water governance interesting is the multitude of business sectors that cooperate and are part of these initiatives. This is a relatively new phenomenon in the field of private governance, given that most initiatives have been set up by and for a single sector. Multi-‐stakeholder initiatives always present certain challenges. The actors involved, such as businesses, governments and civil society organizations, simply have different interests that to some level may overlap but not entirely. In private water governance another layer is added given that so many different businesses are involved, which all use water in a different way and thereby encounter different water problems.

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This study aims to address this new phenomenon of multi-‐sector

involvement in private governance initiatives, by looking at the standard setting process of the International Water Stewardship Standard created by the Alliance for Water Stewardship. This is one of the most recent and compelling private water governance initiatives. By looking in-‐depth at this case, the influence of the

involvement of different business sectors in setting up a private water governance initiative can be assessed. In addition, the implications on the further development can be assessed. Hence, the research question is: How and to what extent has multi-‐ sector involvement in private water governance influenced the setting up and further development of the International Water Stewardship Standard of the AWS?

The objective of this study is thus to address this novelty wherein multiple industries cooperate in the setting of a standard in one issue area. This topic is societally relevant given the urgency to tackle the sustainable water management problem. Hence, knowledge on the topic of cooperation in private water governance can aid in increasing effectiveness of these initiatives. In addition, this topic is of theoretical relevance because the take up of research on the topic of corporate involvement in the issue of water management has been relatively slow, and multi-‐ industry cooperation on this scale is a relatively new phenomenon.

This thesis is structured as follows: in the first two chapters the research design and theoretical framework will be explained. The third chapter will discuss the fragmentation that exists between private water governance initiatives and the involvement of business actors, in order to demonstrate how the AWS fits within this group of initiatives and the extent of multi-‐sector involvement. In the fifth chapter the setting up of the AWS water standard will be discussed, indicating how multi-‐ sector involvement has influenced and figured in this process. Lastly, in the sixth chapter, sector involvement in the AWS and the perspectives of leading businesses on their involvement in private water governance and the AWS standard in

particular will be analysed, to assess the practical implications of developing a standard that is applicable to so many business sectors. The chapters on findings will also include more background information. This study will conclude with a further discussion of the findings and its implications.

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2 Methodology

This chapter outlines the methodological approach used in this thesis. First, the gap in existing literature and research questions are introduced. Then, the relevance of this research will be discussed in more detail. Subsequently, the case selection of the Alliance for Water Stewardship will be explained. Lastly, the data gathering process and research methods will be explained and the chapter will end with a discussion of reliability and validity.

2.1 Literature Gap

This master thesis focuses on the involvement of different business sectors in the setting up of a private water governance standard. Private governance is defined in a broad sense as: '... as a form of socio-‐political steering in which private actors are directly involved in regulating—in the form of standards or more general normative guidance—the behaviour of a distinct group of stakeholders... (Pattberg 2006: 591)'. The group of private governance initiatives includes, besides private standard organizations, initiatives that provide platforms for businesses to interact on this topic and tools that measures sustainable water use, given that these also form normative guidance for business activities. Multi-‐stakeholder initiatives generally present certain challenges. For example, the Roundtable on Sustainable Biofuel has a seven-‐chamber structure wherein each chamber represents a group with certain interests (Ponte 2014: 267). The inclusion of many different stakeholders may lead to questions about representation. Several roundtables have encountered problems with the inclusion of smaller individual actors (Schouten et al. 2012: 49). In private water governance a layer of complexity is added due to the large variety of industry sectors that are involved, such as agriculture and mining, and their different water uses and issues. In addition, there are significant differences in the corporate social responsibility activities of industry sectors. For example, the existence of strong leading multinationals and a shared reputation problem in the chemical sector has, on the one hand, led to a more cohesive private regulatory organization

(Conzelmann 2012: 198; Fransen & Conzelmann 2015: 268-‐ 269). On the other hand, the food sector has experienced pressure to take up CSR practices because of its

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reliability on natural resources and the impacts thereof on the environment (Hartmann 2011: 310). In this sector the large multinationals have been held

accountable for their impact on society and the environment (Enderle 2004, cited in Hartmann 2011: 310). The different sectors involved are thus also acquainted with different CSR pressures and respond differently to these, depending on specific characteristics of their sector. Given that an attempt to involve different industries on this scale in private governance has not yet taken place before, the topic of multi-‐ industry involvement has not been studied extensively.

Simultaneously, the take up of the topic of corporate engagement on water issues and water-‐related business risks by scholars has been relatively slow in comparison to the growth of the grey literature (Hepworth 2012: 545). In addition, researchers tend to study sectors that are more advanced in their engagement in water issues. Nathaniel Mason, for example, focuses on the food and beverage sector for this reason (2013: 7). The small number of studies that have been conducted focus on the drivers for companies to join initiatives, the type of measurement tools for assessing water use, the risks associated with the

involvement of businesses in water governance, and possible improvements (e.g. Chapagain & Tickner 2012; Daniel & Sojamo 2012; Hepworth 2012; Newborne & Mason 2012; Vos & Boelens 2014). There have also been several case studies

assessing what businesses actually do with regard to sustainable water management (Daniel & Sojamo 2012; Lambooy 2011; Sojamo & Larson 2012).

Overall, this study aims to build upon this existing literature to contribute to the literature on multi-‐sector business involvement in private governance standard setting and corporate engagement in sustainable water management.

2.2 Research Questions

As outlined above, the literature on private water governance and transnational private governance in general falls short when it comes to cooperation on a single issue. This research addresses and aims to make a start in reducing this gap. To do so the following research question has been formed: how and to what extent has multi-‐ sector involvement in private water governance influenced the setting up and further development of the International Water Stewardship Standard of the AWS?

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Further development is meant in a broad sense, for example, of businesses planning to certify sites in the future and of ideas about the opportunities that it might provide in the future. This inductive research consists of three parts. The first part focuses on the mapping of private water governance initiatives. It consists of a preliminary assessment of the fragmentation of private water governance to gain an overview of the existing international initiatives and the involved actors. This will give an indication of the context that the AWS finds itself in with regard to other initiatives and the extent of multi-‐sector business involvement. Sub questions are how do the goals of these initiatives relate? To what extent do the initiatives overlap? Are they competitive or cooperative? What industry actors from which sectors are involved in what private water governance initiatives? The second part consists of zooming in on the creation of the International Water Stewardship Standard of the AWS to show how business involvement has played a part in this. What does the standard entail? What is its scope and why? Which actors were involved in the setting up of the standard? How was the private sector involved in this? What opportunities and challenges does multi-‐sector cooperation pose? The third and last part consists of a short discussion of the sectors engaged in the AWS and the perspectives of individual businesses that are involved in the AWS. This gives detailed insight into the practical implications of trying to develop a standard that is applicable to so many business sectors. What specific sectors are engaged in AWS? What are the perspectives of leading businesses involved in the AWS on the IWSS standard? And what opportunities and challenges do they perceive in multi-‐sector cooperation in private water governance and specifically in the AWS standard? The focus of this research is thus mainly on industry sectors and not on the effects of industry size and location of the corporations. It is specifically the involvement of the sectors that makes this case unique.

2.3 Theoretical and Societal Relevance

The objective of this research is to address this novelty of businesses from multiple sectors involved in the setting up of a standard in one issue area. Given that this is a new practice it is important to analyse how it works and assess the challenges and opportunities. It does not aim to assess the functioning of the AWS. This topic is

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societally relevant given the urgency to tackle the issue of sustainable water

management. A study led by management consultancy McKinsey has estimated that by 2030 the estimated global water demand may outpace supply by 40 per cent (Barton et al. 2011: 6). It is vital that businesses are involved in working on more sustainable uses, given the large amounts of water that are processed and used by businesses. Agriculture, for example is accountable for two-‐thirds of the global water use (UN CEO Water Mandate n.d. c). Hence, knowledge on this topic of cooperation in private water governance can help to increase effectiveness of these initiatives. In addition, this topic is of theoretical relevance in several ways. First, as mentioned, the progress of research on the topic of corporate involvement in the issue of sustainable water management has been relatively slow. Second, this research makes a start in addressing the gap in the literature on the topic of multi-‐ industry involvement because this is a new phenomenon. Lastly, this research also contributes to the discussion on how large the scope of governance must be to be effective and legitimate. Although all global governance architectures are

fragmented to some degree (Biermann et al. 2009: 17), there is a discussion between academics on what the advantages and disadvantages are of a more fragmented architecture (idem: 24). This research contributes to this discussion by assessing the opportunities and challenges of multi-‐sector involvement in one private governance standard.

2.4 Case: Alliance for Water Stewardship

The Alliance for Water Stewardship (AWS) functions as case study in this research. The unit of analysis is the organization that sets private standards and the

population is private standard setting organizations that focus on water governance. The sample is thus the Alliance for Water Stewardship and the N is one. The

organisation AWS has three programmes to improve water stewardship: a standard and verification system, a multi-‐stakeholder association, and training. Through a combination of these three programmes they try to build capacity and provide a forum to gather and share knowledge on the topic of water stewardship (AWS n.d.a). Water stewardship entails: The use of water that is socially equitable, environmentally sustainable, and economically beneficial, achieved through a

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stakeholder-‐inclusive process that involves site-‐ and catchment-‐based actions. Good water stewards understand their own water use, catchment context and shared risk in terms of water governance, water balance, water quality and important water-‐ related areas; and then engage in meaningful individual and collective actions that benefit people and nature (EWP n.d. a).'

The AWS was initially formed in 2008 and the standard was launched in 2014 (AWS n.d. b). In July 2010, the Global Water Roundtable, a consensus based multi-‐ stakeholder process, was instigated to develop the standard. It was based on the ISEAL Alliance's Code of Good Practice for Setting Social and Environmental

Standards. The International Standard Development Committee (ISDC) decided on the content of the standard. The committee consisted of fifteen volunteer

stakeholders that were balanced according to region and actor group (AWS n.d. c). The AWS falls into the category of private co-‐regulation, between civil society and business. These are defined as voluntary programmes that develop certification and labelling schemes (Steurer 2013: 12).

The AWS standard can be regarded as a crucial case (Gerring 2001: 219): it is currently the only case available of an international standard for water stewardship and therefore anything that can be learnt from this case is valuable. It is a compelling case, as it is the first fully international standard to be set up in private water

governance. One of the goals of the standard is to provide global coordination on water stewardship (World Wildlife Fund n.d.). In addition, several other private water governance initiatives have been involved in setting up the standard. The organization responsible for an earlier regional standard in Europe, which is now a regional partner of the AWS, the European Water Partnership, was strongly involved in the setting up of the AWS1. Further, the UN CEO Water Mandate, another private water governance initiative, is also one of the founders giving the standard extra weight (Alliance for Water Stewardship n.d. d). With regard to other standard-‐ setting processes, such as the Forest Stewardship Council, lessons from these earlier

1_{The
AWS
is
regarded
as
the
first
fully
international
standard
here
because
the
European
Water} Partnership's standard is only applicable for businesses in Europe. In addition, it has elements incorporated in its indicators from the European Water Framework Directive and the Blueprint to Safeguard Europe’s Water Resources (EWP n.d. b). Therefore the setting up of the standard was more influenced by regulatory frameworks than the AWS, making assessing multi-‐sector involvement less theoretically insightful.

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processes have been applied in the setting up of the water stewardship standard. However, this water standard is a unique case because of qualities inherent to water, which will be discussed in chapter 5. This leads to the need for rethinking collaboration, in the sense that public and private actors have to work together at a local water catchment level. Most importantly, this demands a well thought out stakeholder representation.

The use of one case study evidently leads to problems with generalization. Yet, the goal of qualitative case study research is to make theoretical inferences rather than to generalize for populations (Bryman 2008: 391-‐ 392). In this research, a qualitative case study approach allows for a detailed analysis of the dynamics at play during the standard setting process and the opportunities and challenges that this brings with it. Therefore it is useful as a first step in the direction of generating knowledge on the involvement of multiple industry sectors in private governance standard setting.

2.5 Data Gathering and Research Methods

To answer the research question several different research methods have been used including document analysis, qualitative interviewing, and process tracing. To map out the level of fragmentation in private water governance the Water for Business: Initiatives guiding sustainable water management in the private sector (2012) report of the World Business Council for Sustainable Development (WBCSD) has been used. This report contains an overview of several of the sustainable water management initiatives and their tools. The initiatives included in this research are all international and all have a specific focus on water. They thus, for example, do not include other roundtables that have several articles and principles on water use. The data from the WBCSD report has been complemented with a content analysis of reports of

initiatives and pages on their websites. This complementary analysis includes a search for mentioned goals of the initiatives, their activities, disclosure of results, cooperation with other initiatives, membership rules and the levels of engagement2_.

In addition, an overview has been made of the different businesses that are involved in these initiatives for the fragmentation analysis. The business actors have

2_{For
a
more
extensive
description
of
the
content
analysis
of
the
reports
and
websites
of
the} initiatives see Appendix 1.

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been divided into industry categories and sectors based on the Industry

Classification Benchmark (ICB) of FTSE International Limited (2012). All the actors have been divided into industries and several selected industries have been further classified into sectors3.

Process tracing and qualitative interviewing have been used for the second part, to analyse the setting up of the water standard of the Alliance for Water Stewardship. In this research the explaining-‐outcome process-‐tracing variant (Beach & Brun Pedersen 2013: 18) has been used: '... a bottom-‐up type of analysis, using empirical material as the basis for building a plausible explanation of causal

mechanisms whereby X (or multiple Xs) produced the outcome (idem: 20). The goal of this approach is thus to assess how a certain outcome has come into being in a single case. The outcome in this case is the International Water Stewardship Standard and the involvement of the private sector is the mechanism that is addressed. An inductive approach was taken, which entails that empirical material was used to build an explanation for the outcome (idem: 20). For this method both document analysis has been done and qualitative interviews have been conducted. The analysed documents on the setting up of the standard were retrieved from the Alliance for Water Stewardship website. Additionally, people of the AWS and the European Water Partnership, including those involved in the Global Water

Roundtable have been interviewed. The interviewed individuals from businesses are all related to the sustainability departments of the businesses. By using semi-‐

structured interviews, there was sufficient possibility to remain flexible and focus on the topics that the interviewees found relevant. Additionally, it also allowed for addressing issues in detail (Bryman 2008: 438-‐ 439). The interviewees have been chosen through purposive sampling and the interviews have been coded through thematic analysis based on a list of topics4.

For the third part, the perspectives of business actors, sustainability and water experts from leading businesses from different sectors that are involved in private water governance have been interviewed. The goal was to gain insight into

3_{For
a
more
extensive
description
of
the
business
actor
analysis
see
Appendix
2.}

4_{The
full
list
of
interviewees
and
set
of
topics
that
were
addressed
in
the
interviews
can
be
found
in} Appendix 3.

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their interests and perspectives on these private water governance initiatives and specifically the AWS standard. Individuals from Nestlé, the Coca-‐Cola Company, and BASF have been interviewed. Those interviewed are all related to the sustainability departments of these businesses or closely active in related departments.

2.6 Reliability and Validity

The qualitative approach to this research undoubtedly leads to questions about reliability and validity. Evidently, each of these methods has minor issues, which have tried to been countered.

With regard to reliability, in the analysis of documents coding can differ per person, making it hard to retrace the steps. In this study the author coded all the documents herself. The codes and the questions that they are based up on have been listed in Appendix 1 to ensure that whomever would want to recreate the coding is able to do so. Qualitative interviewing also leads to questions of reliability. The setting of the interview, the contact between the interviewer and interviewee and many other factors can influence interviews. To counter issues with reliability in interviews, semi-‐structured interviews have been conducted so that a set range of topics has been addressed in all interviews. These topics have been listed in Appendix 3. Lastly, in process tracing it is difficult to determine when all possible pathways have been tested. It is simply an iterative process and the researcher has to make this decision (Beach & Brun Pedersen 2013: 21). Therefore, in the interviews interviewees were asked for clarifications on situations during the setting up process if it was unclear whether business involvement played a role.

With regard to validity, problems may arise in the interpretation of

comments made in interviews and the choice of documents in the content analysis. To better the validity of the interviews, the language used by the research

participants has been kept their own as much as possible. The interviewees have also had the possibility to review whether their comments have been interpreted correctly. This further counters the slight misinterpretations by the researcher that could have been made possible by the fact that the interviews were conducted over Skype without video, thereby not allowing for the interpretation of body language. Furthermore, all documents that have been analysed have been carefully selected,

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they only include documents written by the initiatives themselves. For the fragmentation analysis these are reports on the initiatives and pages from the websites of the initiatives themselves. For the process tracing, documents

concerning the setting up of the AWS standard have been used, which are publically available on their website. Lastly, during the content analysis of the documents and websites, and while coding the interviews, it has been kept in mind that a slight bias is present at all times in the perspective of the business actors on their CSR practices and of the AWS in regard to their standard, possibly leading to a more positive outlook on the CSR activities of businesses and the standard itself.

2.7 Reflection

During the research for this thesis, the biggest challenges were encountered in the interviews and the requesting of interviews. First, given that the AWS is an

international organization, people affiliated with it are located around the world. This is also the case for the sustainability and water experts of the businesses. For this reason, interviews had to be conducted via Skype, making rapport with the interviewees more challenging. Therefore, if interviewees might have misunderstood a question they could have been less prone to ask for further clarification. Second and most importantly, members from other CSOs than the AWS and WWF, and businesses were difficult to contact. Many of those approached either did not respond to interview requests or declined. The result of this is that interviews were only conducted with three businesses from different sectors: food, beverage and chemicals. Analysis of several other sectors that have been pointed out as relevant to the AWS could unfortunately not be included in this study. The challenge of contacting interviewees was furthered by the lack of transparency on who works for the sustainability departments of businesses and the shifting of jobs. Water

stewardship experts in businesses involved in the setting up of initiatives have often either acquired another position within the business or one external to it. However, the individuals that were interviewed from the AWS, EWP, WWF and three

businesses were all highly engaged on the topic of water stewardship, and were able to contribute an initial clear overview of the sectors involved in and the activities of

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the initiatives and, with regard to the businesses, give insights into their business sector involvement in water stewardship.

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3 Theoretical Framework

In this research the new phenomenon in which multiple industry sectors are

involved in the setting up of a private governance standard is studied. Given that this is an inductive research, the preliminary theoretical understandings of multi-‐sector involvement in private governance standard setting come from this research rather than from other tested theories. However, it is worthwhile to point out what similarities and differences there are with other research.

The findings of this study show that the largest influence of multi-‐sector involvement in private water governance standard setting is on the shaping of the standard setting process and stakeholder participation herein. A well thought out stakeholder representation of the private sector in the process provides the opportunity to bridge sector differences. Second, with regard to the further

development of the standard, the experience of businesses from sectors in working on the topic of sustainable water management and the existence of sector

approaches influence the take up of the standard. In addition, it shows that inter-‐ sector differences must not be regarded as having a greater influence than intra-‐ sector differences.

Therefore, in this theoretical framework chapter, earlier research that touches on the topics of the degree of fragmentation in private governance,

participation in the setting up of multi-‐stakeholder processes in private governance standards, and the drivers for corporate engagement in sustainable water

management will be discussed.

3.1 Fragmentation, Parallelism and the Scope of Governance

The businesses engaged in the issue of sustainable water use are currently: 'Through the development, implementation and promotion of water-‐risk accounting and disclosure tools, methodologies and management principles [...] contributing to the emergence of a private global water governance regime... (Daniel & Sojamo 2012: 637)'. This regime will influence the activities of actors that will become engaged in this issue in the future and on how companies engage with stakeholders on the issue of water (idem: 637).

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In the international realm it is theoretically conceivable that one policy domain is governed by one set of agreements that guides all actors. In reality it is more a patchwork of international institutions that: '... are different in their character (organizations, regimes, and implicit norms), their constituencies (public and private), their spatial scope (from bilateral to global), and their subject matter (from specific policy fields to universal concerns) (Biermann et al. 2009: 16).' This is conceptualized as a fragmented global governance architecture (ibid.). The same can be said for the world of private water governance.

Three types of fragmentation of governance architectures can be identified: synergistic fragmentation, cooperative fragmentation and conflictive fragmentation (idem: 20-‐ 21). The fragmentation type is characterized by the characteristics of the institutional integration, the degree of conflict in norms and the actor constellations. The categorization of fragmentation has been applied to assess how private

governance initiatives relate to one another in chapter 1.

Of further interest for this research is the concept of parallelism (Abbott & Snidal 2006). Failure of traditional regulators can push NGOs and in turn businesses to develop alternative standards or self-‐regulating schemes involving a mix of actors (idem: 6). As a result, in parallelism, as defined by Ken Abbot and Duncan Snidal: '... different governance efforts are working in parallel, sometimes cooperatively and sometimes competitively, to achieve similar ends in the same issue area (idem: 5).' Given that these schemes are working on the same goals they can be mutually reinforcing. However, it may also lead to competition (idem: 9). Private water governance initiatives that apply to all business sectors indeed show that mutual reinforcement is possible, given that they are developing complementary

approaches. The study is also in accordance with Abbott and Snidal's argument that potential for conflict is great when businesses set up their own industry-‐based schemes and codes (idem: 11). Industry-‐based sector schemes present themselves as an important source of competition for the assessed private water governance standard.

The difference in experience of sectors in working on the issue of sustainable water management and sector industry-‐based schemes leads to less take up of the private water governance standard as well as to more fragmentation.

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Of further interest, is the discussion on the scope of governance for it to be effective. The advantages and disadvantages of more fragmented governance with smaller n-‐size initiatives can be discussed in terms of the aspects of speed, ambition, participation and equity (Biermann et al. 2009: 24). The case in this research shows that an additional problem with regard to the speed of setting up an initiative applicable for multiple sectors is maintaining momentum. It takes several years to establish this type of broad initiative and in the mean time businesses can lose their interest. This research however counters the argument that has been made that smaller initiatives in comparison to broader ones increase equity by offering solutions tailored for specific regions (idem: 29). The private water governance initiative in this case has incorporated regional affiliates and programmes.

3.2 Setting up of Standards and Multi-‐stakeholder Participation

Other research that touches on aspects of this study focuses on participation and democracy in multi-‐stakeholder processes that have been set up to create private governance standards. This study shows the importance of shaping the process and the effects that this has on a private governance standard. Stefano Ponte states that: 'The governance setup of SRs [sustainability roundtables and stewardship councils] is meant to ensure (if not just signal) a degree of professionalization, participation of relevant stakeholders in key decision-‐making processes, and transparency. As a result, SRs are becoming ever more sophisticated in how they facilitate formal participation of relevant stakeholders, manage deliberation and use technologies that ensure some provision of input even from more marginalized actors (2014: 261).' This also features in this study on multi-‐sector involvement in private water

governance initiatives. The case in this research demonstrates the importance of shaping the standard setting process as a way to bridge sector differences.

Earlier research on the democratic potential of roundtables (Schouten et al. 2012) is of further interest here. The democratic quality of the Roundtables on Responsible Soy and Sustainable Palm oil has been tested based on the three elements of deliberative capacity. The first element is inclusiveness, including both the scope and quality of participation (idem: 43). The second is authenticity, which assesses to what extent the processes featured actual deliberation (idem: 44) and

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the third is consequentiality, entailing whether the deliberative process determined the out put of the roundtable and the effect that a roundtable has on regulating the market (idem: 44). The authors argue that both the roundtables fall short on

inclusiveness, because technical knowledge and a pragmatic approach is favoured to local input, and outcome consequentiality, meaning to the extent that it influences the market (idem: 49).

The roundtable that created the private governance standard in this study attempted to incorporate local input more, but shows the boundaries of this. In addition, it demonstrates how important it is to assess stakeholder representation. By clearly researching which stakeholders from the private sector are most

important to the standard and choosing representatives that could speak on behalf of a range of business sectors, the roundtable could create a standard that can be applied to all business sectors across the world. This case thus shows the effects of good inclusiveness. It is challenging to determine the outcome consequentiality of this case given the wide range of actors that it is applicable for.

Also of interest is, an earlier study that tests whether democratic legitimacy, in the sense of balanced representation and roles of actors, enhances effectiveness in rule-‐setting organizations. It has found that a focus on inclusiveness and

participation will lead to more stringent standards but will also decrease take up business actors (Kalfagianni & Pattberg 2013). The case in this research underlies this, although it is not necessarily the stringency of the standard that leads to less take up but the complexity of understanding the situation in a water catchment and the knowledge that is needed for this.

Another study of interest for the insight into the further development of a private water governance standard focuses on the logic that founders of private governance initiatives start of with (Auld et al. 2015). This can either be a logic of control, where the initial concern is to develop a credible institution that can enforce rules for participants, or the logic of empowerment, which seeks to improve the situation for marginalized actors of the global economy. The case in this research has followed the control then empower pathway. It indeed demonstrates that only companies that are engaged in this topic at a high level tend to participate because of the costs of meeting the high standards and the complexity of the actions that

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have to be undertaken. It does not show signs of spatial discrimination in the sense of companies facing greater barriers in developing countries. Where the standard will be applied is highly related to where water scarce areas around the world are situated. Also, even though this case started of with a logic of control, from the start there were mechanisms in place to try to engage more marginalized actors based on experience of earlier roundtables. This shows that the founding logics might not be as separated as the authors demonstrate it to be.

3.3 Drivers and Corporate Engagement in Water Issues

Research has been undertaken on the topic of drivers for businesses to engage in sustainable water management. This study shows that with regard to multi-‐sector involvement both intra and inter-‐sector differences must be taken into account when discussing involvement of sectors in private water governance standards. Several drivers for companies to engage on water issues have been identified. The UN CEO Water Mandate recently published a list of reasons for companies to engage on water management in their Guide to Water-‐Related Collective Action (UN CEO Water Mandate 2013: 5). They suggest that companies engage in this to: 1) ensure business viability by preventing or reacting to water crises, 2) to retain their legal or social license to operate or to gain a competitive advantage, 3) to assure investors, financiers and other stakeholders that water risks are being mitigated and 4) to uphold corporate values and commitments in relation to sustainable development.

Nick Hepworth (2012) further discusses research findings on these drivers. Firstly, the financial services industry is expected to play a significant role in shaping corporate response by requiring due diligence and funding assessments for water risk. Corporate engagement is, secondly, conditioned by features such as the corporate structure (private versus public), the number of stakeholders and the visibility of the company. For global brands the reputational risk is a more important driver to protect, whereas local, physical water risk seems to be an important driver for those companies that are known through local brands and rely on local water supplies (idem: 550). The results of this study underlie these drivers for corporate engagement. Mitigating risk, hence ensuring access to sufficient and good quality

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water, is mentioned as the most important driver for corporate engagement in this private water standard.

This study further shows that even though differences in involvement per sector can be discerned, for example because of a higher reputational risk, experience and industry based approaches, nonetheless, intra sector differences must also be taken into account. One can think of the size of a company, linked to its ability to apply for certification, and the geographical location and the business model.

In addition, there are differences in types of engagement. Nathaniel Mason (2013) has devised a typology for assessing different types of forms of engagement at different levels. These four forms range from interventions in internal operations, mostly to do with per-‐unit water efficiency and wastewater control, to interventions at the basin to national scale, wherein companies engage themselves in broad water-‐resources management decision-‐making (idem: 9). This typology is used in chapter 1 to assess the engagement that different private water governance initiatives promote.

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4 Fragmentation in the World of Private Water Governance

Initiatives

Currently, a multitude of private water governance initiatives exist. One can for example think of the UN CEO Water Mandate, the Water Footprint Network and the Alliance for Water Stewardship amongst others. In this chapter an introductory overview of the fragmentation of the existing private water governance initiatives will be provided as well as an indication of business involvement per sector in these initiatives. The sub questions that will be answered are how do the goals and activities of these initiatives relate? To what extent do the initiatives overlap? Are they competitive or cooperative? What industry actors from which sectors are involved in what private water governance initiatives?

Before we dive into the case of the International Water Stewardship Standard of the AWS in the next chapter, it is important to assess what

fragmentation looks like and get a sense of how the AWS fits within this bigger network of initiatives. Further, it will show the extent to which the initiatives are really multi-‐sector. Even though sustainable water management is relevant to all business sectors, this does not necessarily mean that they are all involved. In

addition, this is helpful to understand the insights provided by the business actors in chapter 3, whom are members of multiple of these initiatives.

The argument will be made in this chapter that there is cooperative

fragmentation between these international private water governance initiatives and that there is indeed broad engagement of sectors. The chapter will start with an explanation of the different concepts that are commonly used in connection to sustainable water management. Subsequently, the findings of the content analysis of the documents of the initiatives on fragmentation will be explained, as well as the involvement of business actors from multiple sectors in these initiatives. The chapter will end with a discussion on the type of fragmentation of the initiatives and

Preserving the Blue Planet One Industry at a time : an assessment of multi-sector involvement in standard setting in Private Water Governance