Global compact expands, impact still hazy
Monday, 9 July 2007
Nergui Manalsuren from the United Nations
The upcoming Global Compact Leaders Summit this Thursday and Friday in Geneva seems to be getting more attention from various stakeholders in the global community than ever before.
But is it because the initiative has proved to be worthwhile, or simply because of the growing number of corporations that have signed on?
When the Global Compact launched in 2000 at U.N. headquarters, it had 47 business, government, civil society and labour stakeholders. Today the number has soared to more than 4,000 participants, expected at the Geneva meeting.
The Global Compact is the largest single initiative joining private sector firms with U.N. agencies and civil society groups to promote universal principles on human rights, labour, the environment, and anti-corruption.
"It is about trust building, it is about networking opportunities within the global context, it is also about collective learning on how to tackle these issues," Georg Kell, executive director of the Global Compact, told IPS.
"Only few years ago there was hardly any corporation out there which had an explicit policy on human rights," he added.
A new survey of 400 Global Compact member companies by McKinsey and Company found that 70 percent said their CEOs were more engaged on those issues compared to previous years.
Eighty-nine percent said they gave employees greater say in policies on labour standards, more than 80 percent said they had measures against discrimination, while 69 percent allowed trade unions.
Still, according to the U.N. Commission on Trade and Development, there are more than 70,000 multinational companies in the world, plus countless small and medium businesses -- a number that dwarfs the signatories to the Global Compact.
A report released Tuesday on the environmental, social and governance frameworks of the Compact by Goldman Sachs found that its guiding principles were not just socially responsible but also good for business. For example, companies that rated well on social and environmental factors also tended to be well managed in other areas and perform well financially.
"Today, the idea that through engagement you create value, you protect the brand, you build social capital, you safeguard your investment, you motivate your workforce, and you have moral compass when you operate in many different countries is increasingly understood and has truly gone mainstream," Kell said.
One success story is the Sri Lankan company MAS Holdings, which produces textiles and clothing.
The company started with 60 workers in 1987. Today, MAS Holdings employs 40,600 people in eight countries and operates 28 manufacturing facilities.
More than 80 percent of the employees are women, and management realised that they needed to balance their additional roles as mothers, wives and caregivers. In 2003, after MAS joined the Global Compact, it launched an award-winning programme called "Women Go Beyond," that includes special programmes for pregnant employees, education on reproductive health, health, nutrition and domestic violence, and promoting active lifestyles and team sports at MAS.
But not every company is so generous or progressive.
"We have delisted roughly 600 participants so far," Kell said. "The main reason has always been lack of engagement, meaning that presumably the CEO has signed on light-heartedly assuming that it does not cost anything -- therefore [why not] join?"
Matthias Stausberg, a spokesperson for the Global Compact, also concedes that many companies tried to associate themselves with the U.N. and used the Global Compact logo for advertising purposes without really committing to the 10 principles.
"It is a free-rider issue," Stausberg said. "Those companies, especially in the early days of the Global Compact, just signed the letter, sent it to the secretary-general, and became a GC participant. And there was never any follow-up."
The initiative is voluntary and not legally binding, but there is a complaint mechanism to monitor a company's compliance with the universal principles.
"Anybody can approach us and say, we believe that this company has ABC violations of one or several of your GC principles," Stausberg said. "The interesting thing that in a lot of cases, we know of violations and inconsistencies on the side of the companies [but] the complaint is not filed with the GC. Sometimes it is taken directly to the media, or taken directly to the court system if there's enough reason."
And Stausberg stresses that the Global Compact does not need only good performers -- in fact, the goal is to engage the corporate "sinners" and encourage them to reform.
The Leaders Summit in Geneva will focus on how to improve existing strategies, and how to influence local and national governments to better engage the private sector on social and economic development.
IPS
The upcoming Global Compact Leaders Summit this Thursday and Friday in Geneva seems to be getting more attention from various stakeholders in the global community than ever before.
But is it because the initiative has proved to be worthwhile, or simply because of the growing number of corporations that have signed on?
When the Global Compact launched in 2000 at U.N. headquarters, it had 47 business, government, civil society and labour stakeholders. Today the number has soared to more than 4,000 participants, expected at the Geneva meeting.
The Global Compact is the largest single initiative joining private sector firms with U.N. agencies and civil society groups to promote universal principles on human rights, labour, the environment, and anti-corruption.
"It is about trust building, it is about networking opportunities within the global context, it is also about collective learning on how to tackle these issues," Georg Kell, executive director of the Global Compact, told IPS.
"Only few years ago there was hardly any corporation out there which had an explicit policy on human rights," he added.
A new survey of 400 Global Compact member companies by McKinsey and Company found that 70 percent said their CEOs were more engaged on those issues compared to previous years.
Eighty-nine percent said they gave employees greater say in policies on labour standards, more than 80 percent said they had measures against discrimination, while 69 percent allowed trade unions.
Still, according to the U.N. Commission on Trade and Development, there are more than 70,000 multinational companies in the world, plus countless small and medium businesses -- a number that dwarfs the signatories to the Global Compact.
A report released Tuesday on the environmental, social and governance frameworks of the Compact by Goldman Sachs found that its guiding principles were not just socially responsible but also good for business. For example, companies that rated well on social and environmental factors also tended to be well managed in other areas and perform well financially.
"Today, the idea that through engagement you create value, you protect the brand, you build social capital, you safeguard your investment, you motivate your workforce, and you have moral compass when you operate in many different countries is increasingly understood and has truly gone mainstream," Kell said.
One success story is the Sri Lankan company MAS Holdings, which produces textiles and clothing.
The company started with 60 workers in 1987. Today, MAS Holdings employs 40,600 people in eight countries and operates 28 manufacturing facilities.
More than 80 percent of the employees are women, and management realised that they needed to balance their additional roles as mothers, wives and caregivers. In 2003, after MAS joined the Global Compact, it launched an award-winning programme called "Women Go Beyond," that includes special programmes for pregnant employees, education on reproductive health, health, nutrition and domestic violence, and promoting active lifestyles and team sports at MAS.
But not every company is so generous or progressive.
"We have delisted roughly 600 participants so far," Kell said. "The main reason has always been lack of engagement, meaning that presumably the CEO has signed on light-heartedly assuming that it does not cost anything -- therefore [why not] join?"
Matthias Stausberg, a spokesperson for the Global Compact, also concedes that many companies tried to associate themselves with the U.N. and used the Global Compact logo for advertising purposes without really committing to the 10 principles.
"It is a free-rider issue," Stausberg said. "Those companies, especially in the early days of the Global Compact, just signed the letter, sent it to the secretary-general, and became a GC participant. And there was never any follow-up."
The initiative is voluntary and not legally binding, but there is a complaint mechanism to monitor a company's compliance with the universal principles.
"Anybody can approach us and say, we believe that this company has ABC violations of one or several of your GC principles," Stausberg said. "The interesting thing that in a lot of cases, we know of violations and inconsistencies on the side of the companies [but] the complaint is not filed with the GC. Sometimes it is taken directly to the media, or taken directly to the court system if there's enough reason."
And Stausberg stresses that the Global Compact does not need only good performers -- in fact, the goal is to engage the corporate "sinners" and encourage them to reform.
The Leaders Summit in Geneva will focus on how to improve existing strategies, and how to influence local and national governments to better engage the private sector on social and economic development.
IPS