World’s Business Leaders Coming to Understand ‘Principles and Profits Two Sides of Same Coin,’ Says Secretary-General, as Global Compact Summit Opens

24 June 2010
ECO/178

World’s Business Leaders Coming to Understand ‘Principles and Profits Two Sides of Same Coin,’ Says Secretary-General, as Global Compact Summit Opens

24 June 2010
Meetings Coverage
ECO/178
Department of Public Information • News and Media Division • New York

Global Compact Leaders

 Summit 2010

Plenary I & II (AM & PM)

World’s Business Leaders Coming to Understand ‘Principles and Profits Two Sides

of Same Coin,’ Says Secretary-General, as Global Compact Summit Opens

 

First Plenary Focuses on ‘Setting the Sustainability Agenda’;

In Second ‘Blueprint for Corporate Sustainability Leadership’ Introduced

Businesses and global corporations were stepping up their efforts to become more ethical, sustainable and responsible at just the right moment, United Nations Secretary-General Ban Ki-moon said today, hailing good corporate citizenship as one of the keys to overcoming complex and interlinked crisis — from financial market meltdown to environmental degradation — and to unlocking long-term growth and development for all.

“Today, the business community is coming to understand that principles and profits are two sides of the same coin,” the Secretary-General told more than 1,200 corporate chief executives, Government ministers, civil society leaders and other participants at the third Global Compact Leaders Summit, held in New York City.  The two-day Summit officially kicked off yesterday at United Nations Headquarters with a ministerial session, chaired by Secretary-General Ban, on what Governments could do to promote corporate responsibility.

The Global Compact, marking its tenth anniversary year, aims to encourage businesses to adopt sustainable and socially responsible policies, and to report on their implementation.  Bringing corporations together with United Nations agencies and civil society, the initiative stresses 10 principles in the areas of human rights, labour, the environment and anti-corruption.  By implementing those principles, businesses, as primary drivers of globalization, can help ensure that markets, commerce, technology and finance advance in ways that benefit economies and societies everywhere.

Secretary-General Ban said that, in its first 10 years, the Compact had become the largest and most ambitious initiative of its kind, with some 8,000 participants.  Corporate sustainability was becoming a byword in companies across the world.  “This realization could not be happening at a better time,” he continued, as this was an era of tectonic shifts in the global order as wealth and economic power were shifting to emerging economies.  Major economies continued to cope with the greatest financial crises in a generation, and business itself, in the aftermath of scandals and mismanagement, faced the need to renew trust.

“The Global Compact can be just the vehicle we need to carry us forward […] to sustainable growth, [to] markets that bring profits and social advancement at the same time,” he said, stressing the importance of investing in developing nations to promote global growth.  “We can’t afford not to invest in the developing world.  We all know that’s where the greatest need is.  But, that is also where some of the greatest dynamism is,” he added.

He also appealed to business leaders to strengthen efforts to help the world achieve the Millennium Development Goals by their 2015 deadline.  “In our efforts to eradicate poverty, create jobs and control disease, 10 years of experience has shown us what works — and what doesn’t work,” he said.  “Our challenge now is to again scale up our commitment.”  He encouraged leaders to take advantage of the 15 partnership opportunities identified for the Summit to advance the Goals, covering areas such as hunger, green energy, and protecting girls from violence.  “Our hope is to create a truly transformative movement.  Our aim is to reach a tipping point towards a new are of sustainability,” he said.

In his opening remarks, New York City Mayor Michael R. Bloomberg said sustainable business practices were needed both for the future of the planet and for long-term business growth.  He maintained that the future would belong to businesses that promoted dignity and diversity in the workplace, in addition to environmental sustainability.

In addition, he pointed to two social/environmental factors that were preventable within a public-private partnership: tobacco use and increasing deaths from automobile accidents, now the fifth largest killer in the world.  The future of the world really was in the hands of the leaders present, he said, concluding that it was up to participants to act, so that their children and their children’s children had a better planet to live on.

The Summit’s work today was divided into two parts.  The morning session featured a plenary discussion on “Setting the Sustainability Agenda”, which was followed by a closed-door round table on the same subject.  This part of the meeting also included the introduction of the Global Compact CEO Study 2010.

Charles O. Holliday, Jr., Chairman, Bank of America, moderated the plenary. Panellists included Philip Jennings, General Secretary, UNI Global Union, who presented the position of labour; Donald MacDonald, Chair of Principles for Responsible Investment, who presented the perspective of investors; and Paul Polman, Chief Executive Officer of Unilever, representing the business viewpoint.

Also participating were Mary Robinson, President, Realizing Rights: The Ethical Globalization Initiative, who presented the viewpoint of civil society; Carolyn Woo, Dean, Mendoza College of Business of the University of Notre Dame, who took the perspective of academia; and Arun Maira, Member of the Planning Commission of India, representing civic leaders.

Plenary leaders included Chey Tae-won, Chairman and Chief Executive Officer, SK Group; Daniel R. Katz, Chair, Rainforest Alliance; Hans Küng, President, Global Ethic Foundation; Michael Rose, Chief Executive Partner, Allens Arthur Robinson and Luis Carlos Villegas, Chairman, ANDI.

Prior to the panellists’ brief presentations, Mark Foster, Group Chief Executive of Accenture, which co-produced the CEO Study, called the survey the largest work of its kind, and said its production had only been possible because of the global reach of the United Nations.  He stressed that in a post-downturn world, it was crucial to regain a common direction and rebuild trust to work towards a better future.  Commitment to sustainability was never stronger, he continued.  Business leaders were increasingly convinced that what was good for society was good for business, particularly in the context of sustainability.

Among the many speakers echoing the Secretary-General’s remarks, Mr. Polman said that a tipping point was near — business as usual was no longer an option.  Consumers increasingly wanted to know that the products they bought were sustainably produced.  They were increasingly searching for brands and retailers that they saw as responsible in that way.  He noted that “big-box” stores like Wal-Mart or Best Buy were even under pressure.  Unilever aimed to grow while reducing its environmental impact, which required work throughout the complete process from production to consumption.

In the afternoon, the Summit held it’s second plenary, on “Leading the Change”, which was followed by a similarly themed round table discussion.  It also featured the introduction of the “Blueprint for Corporate Sustainability Leadership within the United Nations Global Compact”.

The plenary was moderated by Mark Moody-Stuart, Chairman, Foundation for the Global Compact, and featured panellists José Sergio Gabrielli de Azevedo, Chief Executive Officer, Petrobras; Wiseman Lumkile Nkuhlu, Member of the Board, AngloGold Ashanti and President, International Organisation of Employers; John Ruggie, United Nations Special Representative of the Secretary-General on the issue of human rights and transnational corporations and other business enterprises; Peter Solmssen, Member of the Managing Board and General Counsel, Siemens AG; and Ashok Vemuri, Executive Council Member, Infosys Technologies Limited.

Leading the plenary discussion were Hans Skov Christensen, Director General and CEO, Confederation of Danish Industries; José Manuel Entrecanales Domecq, Chairman, Acciona, S.A.; Dr. Seung-Han Lee, Chairman and Chief Executive Officer, Samsung Tesco, Homeplus Group; Martha Tilaar, Chair and Founder of the Martha Tilaar Group of Companies: and Robert Greenhill, Managing Director and Chief Business Officer of the World Economic Forum; Jian Liu, Executive Board Member, China National Offshore Oil Corporation and Martin Skancke, Director General, Norwegian Pension Fund.

Introducing the Blueprint, Mr. Mark-Moody said that it was rooted in realties of the coming era: it contained no new commitments, but presented three interlocked dimensions, the first of which presented four key components of the Compact’s 10 principles.  The second dimension related to support for the United Nations broader goals within the relevant business field or beyond, in the area of philanthropy.  The third dimension had to do with engagement with the Global Compact in the most beneficial way, through such means as the local network and common-sector activities.  Cross-cutting components such as transparency and trust tied all three dimensions together.

For his part, Mr. Ruggie said that the internalization of the Global Compact’s principles, and action based on them, was paramount.  Sustainability was not just a technocratic fix, he declared, it was about putting people at the centre of all activities.  Businesses could not take on the role of Government in setting out rules and regulations, but respect for human rights should be a must.

The Global Compact Leaders Summit will reconvene tomorrow morning at 9 a.m. at the Marriott Marquis Hotel, in New York City.

Background

The Global Compact Leaders Summit 2010, the largest ever United Nations-business event on the issue of corporate responsibility, opened today at the Marriot Marquis Hotel in New York.  More than 1,000 leaders from business, Governments, civil society, academia and the United Nations system are participating in plenary sessions and round tables during the two-day event.  For more information, please visit www.leaderssummit2010.org.

Opening Remarks

BAN KI-MOON, United Nations Secretary-General, welcoming participants to the third Global Compact Leaders Summit, said that, as Minister for Foreign Affairs and Trade of the Republic of Korea, he had seen that smart investment could bring both profits and social advancement in all parts of the world.  “As a boy growing up in a war-torn country, Korea, I saw what business can do to help rebuild a country and transform an entire region,” he continued, adding that, now, as the United Nations chief, he was delighted to have the opportunity to push the Global Compact forward to the next stage and equip it for its second decade.

In its first 10 years, the United Nations Global Compact had become the largest corporate sustainability and responsibility initiative of its kind.  Corporate sustainability was becoming a byword in companies across the world.  Initially, the Compact had been driven solely by morality.  “We asked businesses to do the right thing,” he said.  But businesses now were beginning to understand that principles and profits were two sides of the same coin.

That realization could not be dawning at a more appropriate moment, he continued, saying that “ours is an era of tectonic shifts in the global order”. Wealth and economic power were shifting to emerging economies.  Major economies continued to cope with the greatest economic and financial crises in most of our lifetimes.  Business itself, in the aftermath of scandals and mismanagement, faced the need to build and renew trust.  “The Global Compact can be just the vehicle we need to carry us forward […] to sustainable growth […] to markets that bring profits and social advancement at the same time,” he said.

He highlighted a set of priorities for the way forward, starting with leadership.  “It is incumbent on you, the participants and stakeholders in the Global Compact, to lead,” he said.  All present today were at the forefront of globalization and could and must play a role in emphasizing sustainability across their organizations and investment strategies.  The way forward also required new thinking about “how and where we invest”, as well as thinking differently about creating markets of the future and creating opportunities for growth.

Indeed, he said, the world investment community could not afford to ignore the developing world.  All knew where the greatest need was; but that was also where some key venues for dynamic opportunity existed.  All that meant that foreign direct investment was more important than ever.

He urged the Summit participants to heed the lessons of the current economic and financial crisis: business must move away from slavish devotion to short-term profits.  Ethical culture must be embedded in business practices and distinctions between rights and wrong must not be ignored.  Also, business leaders must support the Millennium Development Goals by joining the wider international community’s drive to eradicate poverty, create jobs and control disease by 2015.  While the United Nations had 10 years of experience with the Goals, now was the time to scale up engagement and partnership.

To that end, the world body had drawn up 15 partnership initiatives in which companies could take part.  They covered a wide range: hunger; disease; green energy; and protecting girls from violence.  They included a Joint Action Plan for Women’s and Children’s Health.  That brought him to his fourth priority — embracing and adopting new strategies and tools.  The Blueprint of Corporate Sustainability Leadership being launched at the Summit would be the cornerstone of efforts as it set out 50 ways for companies to distinguish themselves through new frameworks for, among others, anti-corruption and environmental sustainability, as well as guidelines for sustainable practices in conflict areas.  Combined with the Global Compact’s 10 principles, that Blueprint could help corporations attain a higher responsibility agenda.

While he was asking them to take the lead, they would not be alone: he was urging Governments to build up their capacities to work with the private sector; he was asking investors to promote sustainable and responsible financial decision-making; and he was urging civil society to continue its vital watchdog functions. He said that, 10 years ago, only a small group of business leaders had attended the launch of the Global Compact.  Today, there were more 8,000 present and the goal was to bring in 20,000 by 2020.  The goal was a fully transformative movement aimed at reaching a tipping point towards a new era of sustainability, and to do all that while maintaining the integrity of the initiative.  Momentum had been generated: “Let us all be architects of a brighter and more sustainable future,” he declared.

MICHAEL R. BLOOMBERG, Mayor of the City of New York, welcomed participants to New York, which he called the world’s greenest city, and invited them to base their companies there.  He said that individuals in the city had a carbon footprint one third the size of the average United States citizen and the city was working to reduce that even further.  “We can’t and we won’t wait for others to take the lead,” he said, but government could not do it alone.  Public and private partnerships were vital to meet the challenges of a sustainable future.

He said that the coalition of global partners had brought civic leaders to New York from all over the world.  The next topic to be tackled in that context was education, which he said had been vastly improved in the city, partly because of the crucial leadership of business.

Sustainable business practices, he said, were needed both for the future of the planet and for sustainable growth of business.  He maintained that the future belonged to businesses that promoted dignity and diversity of the workplace, in addition to environmental sustainability.  He pointed, in addition, to two social/environmental factors that were preventable within a public private partnership: tobacco use and increasing deaths from automobile accidents, which was now the fifth largest killer in the world.

The future of the world really was in the hands of the leaders present, he said, concluding that it was up to participants to act so that their children and their children’s children had a better planet to live on.

Plenary I: Setting the Sustainability Agenda

CHARLES O. HOLLIDAY, JR., Chairman, Bank of America, moderated the plenary and presented the Global Compact CEO Study 2010.

Panellists included Philip Jennings, General Secretary, UNI Global Union, who presented the position of labour; Donald MacDonald, Chair of Principles for Responsible Investment, who presented the perspective of investors; Paul Polman, Chief Executive Officer of Unilever, representing the business viewpoint; Mary Robinson, President, Realizing Rights: The Ethical Globalization Initiative, who presented the viewpoint of civil society; Carolyn Woo, Dean, Mendoza College of Business, University of Notre Dame, who took the perspective of academia; and Arun Maira, Member of the Planning Commission of India, representing civic leaders.

Prior to the panellists brief presentations, MARK FOSTER, Group Chief Executive of Accenture, which co-produced the CEO Study, said it was the largest work of its kind and its production was only possible because of the global reach of the United Nations.  He stressed that, in a post-downturn world, it was crucial to regain a common direction and rebuild trust to work towards a better future.

Commitment to sustainability was never stronger, he said.  Business leaders were increasingly convinced that what was good for society was good for business, particularly in the context of sustainability.  He then presented a video on the study, which showed statistical back-up for those assertions, with a chart that showed that 93 per cent of executives affirmed the importance of sustainability challenges in today’s business-decision environment.  Continuing, he said that progress would require cross-sector and cross-industry dialogue, as well as broader leadership.

Mr. POLMAN said that a tipping point was near; business as usual was no longer an option.  The consumer increasingly wanted to know that products were sustainably produced.  They were increasingly looking for brands and retailers that they saw as responsible in that way.  He noted that “big-box” stores like Wal-Mart or Best Buy were even under pressure.  Unilever aimed to grow, while reducing its environmental impact, which required work throughout the complete process from production to consumption.

Mr. MACDONALD emphasized that their principles of responsible investment were being ascribed to by more and more investors, covering some $20 trillion.  He said it was crucial to mainstream sustainability into communication and evaluation processes involving investment.

Ms. ROBINSON said that civil society would continue to advocate sustainable practices in all sectors, according to the principles of the Global Compact.   She emphasized the “reputational” need for all corporations to respect human rights and sustainability, and the wisdom of companies who were realizing that need ahead of the pack.  Civil society was crucial in being a watchdog and communicator of such progress.

Mr. JENNINGS said that labour should be seen as a partner in solutions, particularly in putting together global framework agreements, linking the boardroom to the workplace and providing a level playing field for the provision of decent work.  Every sector of the global economy was covered by global unions, which wanted to be part of those solutions.

Ms. WOO said that 62 business schools had signed up to promote sustainability principles, and her group was looking for 1,000 more in the near future.  She called on the leaders present to communicate to business schools that responsible business practices were important.  Business was also needed to show the way ahead and to provide a laboratory for academia to develop case studies and best practices.

The last panellist, Mr. MAIRA said that Governments realized that they could not do any of this alone; they needed partnerships with business, as well as with civil society to achieve responsibility and sustainability goals.  He said that one of the interesting things about the survey was that it revealed that a large percentage of the CEOs that participated had called for more Government assistance, especially in meeting the Global Compact’s human rights goals.

Following those statements, the designated plenary leaders took the floor.  That panel included Chey Tae-won, Chairman and Chief Executive Officer, SK Group; Daniel R. Katz, Chair, Rainforest Alliance; Hans Küng, President, Global Ethic Foundation; Michael Rose, Chief Executive Partner, Allens Arthur Robinson; and Luis Carlos Villegas, Chairman, ANDI.

Mr. CHEY supported regional cooperation as a key driver of global corporate sustainability and responsibility.  He said that regional groupings could meet a wider array of needs and provide better monitoring mechanisms.

Mr. KÜNG said that overcoming the global economic crisis and meeting the aims of the Compact required a “surge” in global ethics to promote sustainability and responsibility worldwide.  Such a surge was needed to counter the irresponsible behaviour and lax standards that had led to the crisis in the first place.  Such global ethical principles must also be used to boost individual ethics.  They were not meant to replace internationally agreed norms, but to complement them.

Next, Mr. KATZ said that consumers really wanted to trust corporations, but that they were living in an era where business practices routinely abused advertising principles and environmental sustainability laws.  Indeed, companies regularly misused words and phrases like “organic”, “green” or “free range” when advertising their products.  Civil society had taken up the challenge of making ordinary citizens aware of such practices and, as that awareness spread, consumers began making better decisions.  That was now beginning to resonate with corporations.

On law and regulatory norms, Mr. ROSE said lawyers had a role to play in making clients aware of the regulatory environment.  Lawyers also had a role to play in pressing for a new era of supply-chain management.  They also helped clients in reporting and compliance.  There was a broad range of stakeholders that needed to interact with each other, and lawyers constantly moved through all those spheres — government, business, consumer groups — and could bring them together.

Mr. VILLEGAS said business associations had important roles as staging grounds for business sustainability: they were the right place to showcase emerging sustainability ideas and they were the most effective way to move the corporate responsibility and sustainability initiatives along to small- and medium-sized enterprises.

In the brief discussion that followed, the participants stressed the need and desire for broad engagement from all the stakeholders — business, civil society and Governments.  One speaker said global agreements should not just exist on paper and they should not be discussed only in meeting rooms.  If there was a “compact” to reach certain goals, then all the key players must work hard, and work together, to achieve it, whether it was linked to environmental sustainability, anti-corruption or decent work.  Another speaker agreed, saying that, as the wider world become more and more aware of sustainable practices, consumers were beginning to vote with the only weapon they had against businesses — their wallets.  Corporations were beginning to “listen up”.

Plenary II: Leading the Change

The afternoon plenary was an introduction to the “Blueprint for Corporate Sustainability Leadership within the United Nations Global Compact”, which calls for integration of the principles of the Global Compact into strategies, operations, value chains and disclosure, as well as a closer alignment with United Nations goals.

Mark Moody-Stuart, Chairman of the Foundation for the Global Compact, served as moderator of the plenary.  Panellists included José Sergio Gabrielli de Azevedo, Chief Executive Officer of Petrobras; Wiseman Lumkile Nkuhlu, Member of the Board of AngloGold Ashanti and President of the International Organisation of Employers; John Ruggie, United Nations Special Representative of the Secretary-General on the issue of human rights and transnational corporations and other business enterprises; Peter Solmssen, Member of the Managing Board and General Counsel of Siemens AG; and Ashok Vemuri, Executive Council Member of Infosys Technologies Limited.

Mr. MOODY-STUART, introducing the Blueprint, said it set out a sustainability pyramid, with the newly entered members of the Compact forming the base and leading-edge members challenged and inspired to deliver more.  Differentiation and networking were critical factors.

He said there were no new commitments in the Blueprint.  It presented three interlocked dimensions, the first of which presented four key components of acting on the 10 principles.  The second dimension related to support for the United Nations broader goals within the relevant business field or beyond, in the area of philanthropy.  The third dimension had to do with engagement with the Global Compact in the most beneficial way, through such means as the local network and common-sector activities.  Cross-cutting components such as transparency and trust tied all three dimensions together.

Mr. GABRIELLI said that the three dimensions provided important guidelines for action and for engaging more entities.  It was particularly important to be careful with reporting on progress, with external auditing of information that was reported, and to use procurement activities to lead a company’s entire supply chain towards commitment to the 10 principles.  Without reinforcement of the local networks, it would be difficult to strengthen sustainability efforts.

Mr. RUGGIE said that the internalization of the principles and action based on them was paramount.  He stressed that sustainability was not just a technocratic fix; it was about putting people at the centre of all activities.  Businesses could not take on the role of Government in setting out rules and regulations, but respect for human rights should be a must.

Mr. VEMURI spoke of the timeliness of the Blueprint, as well as its uniqueness.  He said that the second dimension was particularly critical, as it was about proactive action.  At Infosys, they were looking towards the future as embodied in children’s education and were engaging in positive works, as opposed to just refraining from doing harm.

Mr. SOLMSSEN said that the most important leadership role was communicating, in order to stimulate collective action, which was particularly critical.  Siemens worked in 190 countries and saw the effects of corruption, and ridding business of that element was crucial for the progress of all the other principles.  In endeavouring to work as cleanly as possible after certain experiences with corruption, Siemens had been able to advance in many ways.

Mr. NKUHLU said his group had been active in promoting the principles from the beginning, particularly those that dealt with rights in the workplace, providing tools to make progress in those areas.  It was critical to build sustainability on a sound relationship with labour, where his group emphasized safety, accountability and trust.

The plenary leaders for the session were Martin Skancke, Director General, Norwegian Pension Fund; Jian Liu, Executive Board Member, China National Offshore Oil Corporation; Hans Skov Christensen, Director General and CEO, Confederation of Danish Industries; José Manuel Entrecanales Domecq, Chairman, Acciona, S.A.; Seung-Han Lee, Chairman and Chief Executive Officer, Samsung Tesco, Homeplus Group; Martha Tilaar, Chair and Founder of the Martha Tilaar Group of Companies; and Robert Greenhill, Managing Director and Chief Business Officer of the World Economic Forum.

Mr. SKANCKE said that investors were beginning to understand the links between sustainability and profitability.  He said the Global Compact model provided a good yardstick for company dialogues and made acting collectively with other investors easier.  His Fund had incorporated the Compact’s aims in its strategic policy documents, including the principles for responsible investment.

Mr. JIAN said that globalization would drive more and more investment in conflict and other high-risk areas.  Of course, such expansion meant that investors would be confronted with serious challenges and, in that context, the 10 social- and human-rights-based principles of the Global Compact would be more important than ever.  The principles, when combined with on-the-ground involvement with local communities, would be vitally helpful in training and sensitizing staff to ensure that sustainable and responsible practices were carried out in high-risk areas.

Taking the floor again, Mr. RUGGIE said that, when it came to human rights, especially when considering risks to communities, it was necessary to move from words to integrated action.  That was to say that corporations must scale up their due diligence and they must integrate socially responsible actions, from the very beginning of their operations.  He added that another overlooked duty was the setting up of adequate and responsible grievance mechanisms.  Such mechanisms were extremely helpful to local citizens, as it provided a space to raise concerns, as well as an avenue for following up.

Mr. CHRISTENSEN said it was important for companies to keep moving forward on the principles, “or else we all will begin to lose ground”.  He urged corporations to base their actions on human-rights norms.

Speaking again, Mr. SOLMSSEN said the Compact’s reporting mechanism was crucial, “because it’s a way for citizens to know that we are keeping our promises”, especially in the area of corruption.  Mr. NKUHLU added, in that context, that it was very important to ensure consistency not only in reporting, but in setting standardized guidelines for gathering information and defining misdeeds.

Mr. LEE said that the Homeplus Group had been placed in the “Sustainability Hall of Fame” in the Republic of Korea.  It had consistently based its corporate practices on love: the love of environment, community, neighbours and family.  Indeed, sustainability could be achieved by following such a path, he continued, stressing, by example, that love for the environment had led his company to purse environmentally clean, safe and “green” projects.  “Love of community” had led to broad interaction with local populations from the start of a project.

Also highlighting her company’s socially responsible strategy, Ms. TILAAR said that her group of spas and spa training centres aimed at maintaining human rights at all times.  She had been a strong supporter of the Global Compact from the very beginning, as former Secretary-General Kofi Annan had invited her to be a founding member.  She had based her business philosophy on the vital need to replace whatever was taken from nature.

Mr. GREENHILL said that the principles of the Global Compact “were essentially in the DNA of World Economic Forum”.  Global corporate leadership was really at the heart of the Forum’s work.  The Forum was very excited about the Blueprint, because it would add momentum to the drive to promote sustainable and responsible behaviour throughout their organizations.

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For information media • not an official record
For information media. Not an official record.