The Global Compact
Building on the Leaders Summit
By Adam Shapiro, for the Chronicle
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On 24 June 2004, Secretary-General Kofi Annan convened the first Global Compact Leaders Summit at UN Headquarters in New York. With approximately 480 representatives in attendance, the meeting was the largest-ever gathering of chief executive officers (CEOs), government officials and heads of labour and civil society on global corporate citizenship. Business leaders made headlines by vowing to combat corruption on a global scale, concluding that “businesses should work together against all forms of corruption, including extortion and bribery”. The adoption of this anti-corruption code marks the tenth universal principle the Global Compact has approved in its effort to improve corporate responsibility.
The Global Compact dates back to January 1999, when it was first proposed by the Secretary-General at The World Economic Forum in Davos, Switzerland. This voluntary corporate initiative aims to remedy the challenges of globalization through a more sustainable and inclusive global economy. It is comprised of various companies, UN agencies—the Office of the High Commissioner for Human Rights, the United Nations Environment Programme (UNEP), the International Labour Organization and the United Nations Industrial Development Organization—and labour and civil societies, all of which have adopted and supported the ten established universal principles in the areas of human rights, labour, the environment and anti-corruption (see box).
Companies involved with the Compact hope to make these standards, along with the newly-adopted code on anti-corruption, part of their business strategies and operations. Likewise, they intend to use these principles to encourage cooperation with other key stakeholders and encourage partnerships. In this way, the Compact has been envisioned as a way to strengthen the global economy through economic and social conventions.
In the four years since its establishment, the Global Compact has seen its lofty goals matched by growth in participation and membership. Since 1999, this initiative has branched out from a group of less than fifty firms to a network of over 1,500 from seventy countries. Additionally, it includes major international labour federations responsible for over 150 million workers worldwide.
In order to integrate business and politics, business leaders are encouraged to adhere to policies that ensure more responsible forms of globalization. They are also urged to increase transparency and demonstrate progress in integrating corporate responsibility into their business operations.
On 24 June, the CEOs took another progressive step in furthering these efforts by adopting the principle on anti-corruption. At the Global Compact Leaders Summit, they approved the UN Convention against Corruption, the first globally adopted measure to prevent graft. According to Peter Eigen, Chairman of Transparency International, corruption has always been seen as a “necessary evil” in business. Fortunately, “there [is] now a solid consensus behind the need to fight corruption”, he said. Secretary-General Annan stated that business leaders must become stronger advocates for the poor and, alongside, President Luis Inacio Lula da Silva of Brazil added that businesses, labour and civil societies should lobby against agricultural subsidies.
The Leaders Summit was also a success on an operational level, as ten stock exchanges announced they would take part in an awareness-raising campaign with their member companies. They have pledged to adopt the Compact’s principles in the areas of investment management, procurement, facilities management and human resources. Likewise, the China Enterprise Confederation declared that it will champion human rights, labour standards, environmental responsibility and anti-corruption in China. And the Growing Sustainable Business initiative, intended to fight poverty in least developed countries by linking business leaders with UNDP staff, received support from many business leaders.
At the same time, however, the 24 June release of Gearing Up, a new report compiled by SustainAbility—a leading specialist consultancy on business strategy, corporate responsibility and sustainable development—warns that even though the corporate responsibility movement has made significant progress, its momentum has been limited of late. The report mentions that “some responsible businesses have scratched the surface of global issues like climate change and HIV/AIDS, but just as many work to maintain the status quo”. Though the Global Compact companies have reduced their carbon dioxide emissions, for example, world output has increased 8.9 per cent since 1990 even though a target of 60-per-cent reduction had been forecast by the Compact.
In spite of the report’s ominous projection, Secretary-General Annan remains optimistic about the future role of the Compact. Pointing to the constructive solutions fostered by the business community over the past five years, he praised the Summit audience in his closing remarks: “We have addressed the challenges facing the Global Compact as partners, transforming our differences and tensions into constructive strategies for action. You have shown that, even in an era of uncertainty and fear, business, labour, civil society and Governments can overcome their divisions, and build on what they have in common.” He went on to say: “Let us not rest until we have truly succeeded in bringing positive change into the lives of people, and laid the foundations for peaceful, well-functioning, sustainable societies, throughout the world.”
If the Summit is any indication, the adoption of the anti-corruption principle is a step in the right direction in terms of improving corporate responsibility and the Global Compact’s longevity.
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| The ten principles which form the backbone of the Global Compact have their roots in the Universal Declaration of Human Rights, the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work, and the Rio Declaration on Environment and Development. Businesses and companies should: |
| On human rights: |
| 1. | support and respect the protection of internationally proclaimed human rights; |
| 2. | make sure they are not complicit in human rights abuses. |
| On labour standards: |
| 3. | uphold the freedom of association and the effective recognition of the right to collective bargaining; |
| 4. | eliminate all forms of forced and compulsory labour; |
| 5. | effectively abolish child labour; |
| 6. | eliminate discrimination in respect of employment and occupation. |
| On the environment: |
| 7. | support a precautionary approach to environmental challenges; |
| 8. | undertake initiatives to promote greater environmental responsibility; |
| 9. | encourage the development and diffusion of environmentally friendly technologies. |
| On On anti-corruption: |
| 10. | work together against all forms of corruption, including extortion and bribery. |
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