A quiet revolution is in the making. The business sector is realizing that the goals of the United Nations are essential prerequisites in achieving its own goals of wealth creation and prosperity. The international community, meanwhile, is increasingly relying upon the private sector for its ingenuity and capacity in generating the economic opportunities that are the prerequisites for peace, environment protection and development. The role of business in creating employment is essential to reduce poverty -- the main cause of environmental destruction and child labour in poor countries. However, business relies on the United Nations to foster the international peace, political and economic stability, and rules-based system of international trade and finance it needs to prosper.

UN Photo

Capitalizing on this growing mutual understanding, Secretary-General Kofi Annan has taken the initiative of developing a "Global Compact" to help companies understand the rising expectations of global corporate responsibility in three critical areas of greatest external pressure: human rights, labour standards and environmental practices. The Compact challenges individual corporations and representative business associations to embrace, support and enact a set of nine core values within their sphere of influence and to advocate for a stronger UN organization in the areas involved. These core values are the most relevant at the corporate level and the global rule-making level. They are widely accepted in already existing international agreements.

This call for a Global Compact is made amidst increasing awareness that the process of globalization has huge positive as well as negative social and environmental impacts. Its negative impacts, and the unequal distribution of its positive impacts, are starting to create a backlash from those who are left behind. As a result, more voices are calling for the establishment of measures that would ensure the proper functioning of the market economy, geared to meeting the needs of sustainable development and the effective implementation of the Rio principles.

The questions over the role of companies in society, which are resurfacing with increasing urgency, revolve around a number of interlinked issues, including:

• Corporate purpose and objectives: Is shareholder value the goal of a company or simply the means to achieve a higher purpose?
• Corporate governance and accountability: What are the responsibilities and obligations of companies to societies?
• Incentives: How can corporate objectives and environmental objectives be more closely aligned?
• National and global governance: How can national governments and global institutions help to unleash the power of companies for environmental and societal ends?

The three Global Compact principles related to the environment require business to support a precautionary approach to environmental challenges, undertake initiatives to promote greater environmental responsibility, and encourage the development and diffusion of environmentally-friendly technologies. For many years, UNEP has worked to stimulate individual companies, and industry associations through their membership, to report on best practices and implementation of their voluntary initiatives. Its work has recognized the contribution of voluntary agreements and initiatives in terms of cost-effectiveness, flexibility, lower administrative costs, as well as collective learning, generation and diffusion of information.

Work undertaken by UNEP in relation to the private sector is structured around six key actions that contribute to the Global Compact. These are:

• Identify and define key emerging environmental issues and trends in various industries worldwide.
• Build consensus on policy responses, in particular develop global and sectoral voluntary initiatives and codes, such as the International Declaration on Cleaner Production and the Financial Institutions Initiative, and promote partnerships with industry sectors, such as mining and oil, tour operators and telecommunications.
• Raise awareness and exchange information on methodologies, guidelines, procedures, management tools, technologies, as well as economic instruments and trade policies used by the private sector and Governments to promote sustainable development.
• Build capabilities of Government and business to respond to key environmental concerns through training workshops, sponsoring tertiary educational activities, producing information systems, including Internet-based discussion fora to promote best practices and encourage dialogue.
• Demonstrate projects which encourage the incorporation of environmental concerns into business priorities.
• Evaluate progress toward sustainability goals and benchmark performance, in particular through the Corporate Sustainability Reporting Guidelines of the Global Reporting Initiative.

. The Global Compact gives corporations a set of inspirational goals. It also provides the business sector with a bridge to closer partnership and dialogue with the United Nations without the pressures of legally-binding obligations of specific international agreements. Ultimately, its success will rely upon the extent to which the business sector demonstrates its commitment to the Global Compact values. Partnerships with the private sector also offer UN agencies the opportunity to strengthen themselves and improve their support to poor countries in the fight against poverty.

The three environment-related principles that are the foundation of the Global Compact are drawn from the 1992 Rio Declaration and are at the heart of UNEP activities. Continuing its cooperation with the private sector and relying on its working relations with Governments and NGOs, UNEP is committed to joining the ILO and the Office of the High Commissioner for Human Rights in contributing its expertise and activities to the Compact.

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