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Q&A: “Bluewashing Has Become a Very Risky Business”

Thalif Deen interviews GEORG KELL, head of the U.N. Global Compact

UNITED NATIONS, Jun 3 2010 (IPS) - The Global Compact (GC), which celebrates its 10th anniversary with a summit meeting later this month, has been described as a key initiative of the United Nations to prod private companies and blue-chip corporations to pro-actively address environmental, social and governance (ESG) issues relating to the workplace.

Have companies eliminated child labour? Is there age or sex discrimination in the workplace and board rooms? Are products environment-friendly? And is bribery and corruption a way of corporate life?

Describing itself as a “guide dog” rather than a “watch dog”, the GC has laid down 10 principles relating to human rights, labour, environment and anti-corruption which corporations must adhere to as an integral part of ethical corporate responsibility.

The participation is voluntary but there is a mandatory disclosure framework – the Communications on Progress (COP) – which all companies have to abide by.

Georg Kell, executive director of the U.N. Global Compact Office, admits there are serious implementation gaps.

“Simply put, more companies need to engage more deeply on ESG issues and comprehensively disclose their efforts,” he adds.

Currently, over 5,000 businesses and more than 1,500 non-governmental organisations (NGOs) from 135 countries are active participants in the Global Compact.

Still, it has been forced to remove over 1,700 companies for failure to communicate progress within the COP framework.

As of last week, more than 1,000 leaders from business, civil society, labour, government and the United Nations were expected to participate in the 10th anniversary summit scheduled to take place in New York Jun. 24-25.

In an interview with IPS U.N. Bureau Chief Thalif Deen, Kell said civil society and the media are following corporate behavior much more closely than ever before.

And advances in information technology and communication flows have also helped.

“Today’s grainy cell phone picture of human rights violations in a factory in one country can easily become tomorrow’s headline in another,” he noted. “So, in other words, ‘bluewashing’ has become a very risky business.”

Excerpts from the interview follow.

Q: How would you respond to critics who charge that the Global Compact is also – consciously or unconsciously – legitimising companies accused of abusing worker’s rights, indulging in corrupt practices or violating environmental standards, while taking cover under a protective U.N. umbrella (i.e., “bluewashing”)? A: The Global Compact is neither a seal of approval, nor a certification. In fact, if things go wrong and a company stands accused of violating workers rights or damaging the environment, their participation in the Global Compact puts arguably even more pressure on them. Because joining the Global Compact requires a public commitment, we don’t hide it. And it requires follow-up, transparency, and disclosure.

But in all this, we have to bear in mind: no organization is perfect. What ultimately matters is that the right culture prevails and that effective measures are in place to remedy critical situations.

Q: Has the Global Compact blacklisted or expelled any companies or corporations for violations of ethics or accused of malpractices? A: The Global Compact is a platform for dialogue, learning and partnership. Participation in the Global Compact does not imply perfection. It simply means that an organisation is willing to align with U.N. principles and engage in activities that advance U.N. goals. As such, GC does not make judgments.

We know this has at times caused misunderstandings or invited criticism, but we have always kept the GC’s entry barrier intentionally low, so that those that face serious challenges can join the conversation, learn from others and improve. And we stand by this approach, as long as we can see that there is a sincere commitment to transparency and public accountability.

It is for this purpose that we introduced our mandatory reporting policy, requiring all businesses in the Global Compact to issue an annual, public Communication on Progress. And we are strict about this. Companies that repeatedly fail to disclose their practices are expelled from the initiative – more than 1,700 businesses so far.

Q: How has corporate ethics and corporate responsibility changed since the creation of the Global Compact? How has it impacted on such changes? A: Over the past years, there has been a significant shift in the way corporations look at the role of corporate responsibility. When the Global Compact was launched, corporate responsibility was often seen as a purely ethical issue, largely driven by civil society organisations, activist groups, and so on.

Today, the moral case for acting responsibly remains as strong as ever, of course, but it has been complemented by an equally compelling business case, driven by an ever-growing community of conscious investors, regulators, consumers and others that are placing a premium on environmental and social performance, as well as good governance. And this is not just about minimising risks and thus the costs incurred when things go wrong.

It is also about discovering new opportunities, opening new markets through a commitment to sustainability and responsibility. The Global Compact has often been among the first to spot these trends, and we have invested much effort to help businesses understand that these issues are material to their long-term success.

Q: What are the practical results, if any? A: On a more practical side, the Global Compact has certainly helped ease some of the tensions that often characterised the relationship between civil society and business. Under the roof of the United Nations, in the context of our multi-stakeholder dialogue aimed at constructive dialogue and learning, both sides have discovered that there is much more common ground than previously thought. We have come a long way from confrontation to cooperation, and the Global Compact as a platform has facilitated much of that.

Q: Since the Global Compact plans to celebrate its 10th anniversary, what would you single out as your most significant achievements so far? A: Arguably, the Global Compact has left its mark in many ways throughout the past ten years. Mobilising thousands of businesses around the world, of all sizes and sectors, to take U.N. values as an ethical benchmark, often undertaking significant efforts to operationalise them, has certainly been a major achievement.

That is not to imply that there isn’t anything that remains to be done, quite the contrary, but we see a marked shift in the way in which corporations are now treating environmental and social issues as a strategic priority.

On the organisational level, another major achievement has been helping U.N. organisations to learn how to work with the private sector. It is one thing to recognise that business is a critical partner in achieving the U.N.s mission, but it’s quite another to make these kind of partnerships work.