189 Collaborative learning based on scientific methods.

The second general proposal for reform offered by the ecosystem perspective is to improve the capacity for understanding the complex factual circumstances in which the enterprise operates. In my assessment, the ecosystem perspective suggests two general approaches to build such capacity: (i) an introduction of scientific methods into corporate governance and (ii) a shift towards collaborative learning based on a localized, polycentric inclusion of stakeholders.

The scientific methods suggested by the ecosystem perspective aim to provide a solid understanding of the systemic properties of the corporate enterprise in corporate governance.1 Examples of such systemic properties are the possibility of emerging patterns, continuous non-linear change as a result of the internal structure of the corporation’s feedback reactions, and the pervasiveness of uncertainty, unpredictable disturbance and surprising behaviour due to the embeddedness of the corporation in larger ecosystems.2 By understanding these systemic properties, board decisions can be better aligned with the systemic dynamic of the corporation and therefore be more effective in achieving resilience both of the corporation as well as of the planetary ecosystem as a whole.3 In order to achieve such an understanding, the ecosystem perspective suggests two methods: a descriptive method of monitoring and observation and a normative method of reflection and interpretation.4

The first method of monitoring and observation introduces tools from complex systems theory into corporate governance, such as agent-based modelling, scenario planning, and ecosystem mapping.5 These tools aim to identify the various elements operating in the corporate enterprise in order to capture their relationships and to model their future trajectories (for example in various scenarios). With the aid of new technological developments, these tools have become increasingly more sophisticated, equipping corporate boards with the capacity to capture a detailed and accurate description of the multi-dimensional reality in which their enterprise operates. In my view, the current legal development of imposing duties on corporations for supply chain due diligence and systemic risk management reflects this deeper argument by the ecosystem perspective.6

The second method of reflection and interpretation focuses on understanding the emergent properties of the corporation as a self-organized and reflexive ecosystem. These emergent properties of the corporate ecosystem include its common purpose and goals, hidden behavioural rules guiding individual action, and the general culture or mindset from which the system operates.7 These properties are more easily manipulated by human intervention, turning them into effective leverage points for changing the course of the system (for example towards a more resilient trajectory). The central goal of the second method is therefore to interpret the direction of the corporate ecosystem implied in the factual circumstances and to understand what should be done to facilitate the resilient evolution of the corporate ecosystem towards achieving its own, emergent purpose.8 Since this second method involves an interpretation of the direction in which the system is moving, it requires not just objective observation but also a normative reflection on the hidden goals and values implicit in the emergent behaviour of the corporation.9 The first method of monitoring and observation therefore provides the information that is necessary for intervention through the second method of reflection and interpretation.10 The insights gathered by both of these methods function as a basis for corporate decision-making, as well as the conscientious evaluation of these decisions through the corporate conscience discussed above.

The other approach of the ecosystem perspective involves a form of science-based stakeholder governance in which democratic principles are coupled with experimental learning.11 In relation to governing the commons, Ostrom has influentially identified a list of best practices for the sustainable governance of ecosystems.12 Her list includes various principles resembling democratic organization, such as the participation of all individuals affected by an ecosystem in the governance of the ecosystem, the distribution of costs in proportion to the benefits received and local monitoring and sanctioning by the participants themselves.13 The empirical research by Ostrom suggests that the successful governance of ecosystems requires a localized democratic approach in which all elements of the ecosystem are included and decide themselves on the rules governing their participation in the ecosystem.14 Corporate governance is meant to reflect the ecological democracy hidden in natural ecosystems, implying that all elements are recognized for their specific contribution and that authority is distributed polycentrically across multiple parts of the ecosystem.15 This localized and democratic approach fits closely with the need for learning and experimentation in the governance of ecosystems.16 Due to the complex nature of the reality in which corporations operate, the ecosystem perspective considers collaboration with relevant stakeholders to be necessary for achieving an insight into possible interventions to overcome the challenges faced by the corporate ecosystem.17 Corporate governance becomes a practice of learning at various levels of the corporation in continuous collaboration with local communities, civil society and scientists.

Such an involvement of external stakeholders implies a shift from unilateral, one-way annual reporting towards dialectic, two-way collaborative learning.18 This shift involves a change in the spirit of how (integrated) reporting and sharing insights contribute to the accountability of the board. Rather than viewing reporting just as a way of critically evaluating the decisions of the board, reporting becomes a tool in a larger process of working together with corporate boards to find the best avenues for integrating social and ecological interests in corporate governance.19 The process of holding the board accountable becomes a mutual endeavour in which both the corporate board and its broader community of stakeholders acquire a shared responsibility to find workable pathways for overcoming social and ecological problems as they are faced by a specific corporation in its specific circumstances.20 Although such collaborative dialogue may be formalized through forms of ecological democracy (as proposed by the ecosystem perspective) or stakeholder democracy (as proposed by the institutional perspective), the ecosystem perspective suggests that such formalization only works if it is coupled with a change in the spirit of engagement.21