GLOBAL COMPACT SHOULD SPIN OFF FROM UN

By Hazel Henderson and - - Reprint | | Print |

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NEW YORK, United Nations, Jul 1 2004 (IPS) - The UN Global Compact brought together over 400 leaders of corporations, labour unions, and civil society at its June 24th Summit, writes Hazel Henderson, author of numerous books on global sustainability and financial reform and is founder and president of Ethical Marketplace, a global media company. In this article, Henderson writes that what is now a global network of 1,500 signatory companies began in 2000 as a challenge in a speech by UN Secretary-General Kofi Annan to corporate leaders to adopt nine principles of good corporate citizenship — regarding human rights, labour standards, and the environment. The Compact, initially a system of voluntary \’\’engagement\’\’ with little monitoring or accountability, became a mutual peer-pressure association at the Summit. However, civil society organisations led by the Earth Rights Foundation asserted that the Global Compact is a distraction from the real task of the UN and governments, which is to establish effective inter-governmental frameworks for corporate accountability. They urge that the Compact be disbanded. The wisest course would be to spin off the Compact as an independent organisation, Henderson concludes.

The UN Global Compact brought together over 400 leaders of corporations, labour unions, and civil society at its June 24th Summit.

What is now a global network of 1,500 signatory companies began in 2000 as a challenge in a speech by UN Secretary-General Kofi Annan to corporate leaders to adopt nine principles of good corporate citizenship — regarding human rights, labour standards, and the environment. The Global Compact (the UN designation has all but disappeared) has spawned national chapters and members in 70 countries.

Conspicuously absent are US companies, which comprise less than five percent of the group. Embarrassingly, their fears of litigation and accountability have now been assuaged by a document drafted with the help of the American Bar Association and intended to limit the liability of signatory companies. No non-US firms demanded such protections.

The recent Global Compact Leaders Summit endorsed a 10th Principle on Corruption with unanimous pledges to fight this problem as a precondition for good corporate citizenship. Other resolutions filled the air from the fifty roundtables, all concerned with implementation of the principles.

The Compact, initially a system of voluntary ”engagement” with little monitoring or accountability, was turning into a mutual peer-pressure association at the Summit. Many CEOs supported implementation, greater performance, and accountability, citing not only public relations motives but also business reasons for corporate social responsibility.

The participants most seriously dedicated to corporate social responsibility were the large group of Brazilian companies, led by the Sao Paulo-based Instituto Ethos de Empresas e Responsabilidade Social and its president, Oded Grajew, and Raymundo Magliano Filho, President of Brazil’s stock exchange. The BOVESPA has its own index of socially-responsible companies and even a new ”Social Stock Exchange” listing 30 of Brazil’s vital charitable foundations in which anyone can ”invest”.

Brazilians have embraced the Global Compact and recruited so many companies that their influence on the Summit was substantial. Brazil’s president ”Lula” da Silva made the keynote speech.

The innovative format of the Summit was also Brazil’s initiative and provided the self-challenging, peer group reinforcement that elicited so many new pledges to improve accountability, accelerate implementation, and take responsibility for full financial support of the Compact through membership dues.

Many proposed that each company pledge to sign up at least one new company; others pledged to require their suppliers to become signatories. Following BOVESPA’s lead, nine more stock exchanges signed onto the Compact.

Towards the end of the afternoon, Summit participants shared their visions for what they hoped the Compact could achieve by 2015. Many focused on a call for addressing poverty from Lula. The UN’s Millennium Development Goals, particularly for poverty eradication, now seem to be a part of the Compact’s agenda.

Will the spirit of these pledges become reality? Will the Global Compact really spin off and become a fully self-funded, global organisation moving corporate social responsibility to full accountability? Only time will tell.

The joint civil society statement, holding its own ”counter-summit”, called for rule-based, full corporate accountability in a legal framework. The civil society organisations led by the Earth Rights Foundation asserted that the Global Compact is a distraction from the real task of the UN and governments, which is to establish effective inter-governmental frameworks for corporate accountability.

The group cited numerous signatories of the Compact, including Shell, Total, Rio Tinto, Nestle, and BP, as violators of the Compact’s own principles and asserted that the Norms for Business adopted by the UN Human Rights Commission in 2003 were an important step towards such a global legal framework. They urged that the Compact be disbanded as a threat to the UN’s credibility.

The wisest course would be to spin off the Compact as an independent organisation. This would test the commitment of its corporate signatories and the governments, UN agencies, labour unions, and NGOs that are participants. It would also protect the UN’s global reputation while giving impetus to better corporate performance and self-policing, so as to enhance the Global Compact’s own reputation. (END/COPYRIGHT IPS)