The business in the 21st century
Thursday, 28 August 2008
Farooq Sobhan with Shayan S. Khan
HARNESSING the consequences and benefits of globalisation effectively and equitably has emerged as one of the most important challenges facing mankind in the 21st Century. Contrary to what contemporary wisdom might have one believe, globalisation is not an entirely new phenomenon unique to our age (unless you are to discount the linkages brought about by colonization), but its increased incidence during our lifetimes has established it as an irreversible and perhaps the most recognisable socio-economic trend of our times. Its all-pervading nature is such that there exists hardly anyone in the world today who does not fall under its umbrella, from a farmer in rural Bangladesh struggling to find a market for his produce against his massively subsidised competitors from Europe, or a struggling musician in New York's East Village trying to incorporate Eastern influences into his demo tape.
With experience, man has also learnt that globalisation, allowed to roam unimpeded, is ready to trample anything that that stands in its way quite nonchalantly underfoot, whether it be unique national cultures or the earth's atmosphere. Only the global marketplace stands firm. Perhaps most ominously, in its present form globalisation lends itself to a distribution of income that is unjust and exclusive, catering to the whims of a chosen few, mostly the owners of transnational companies. It is widely recognised that the leverage enjoyed by business in general and these transnational corporations in particular is today, at least, on a par with that enjoyed by governments and international organisations. But this often leads to the exploitation of human values at their altar, and occasionally market failures as well can have an adverse impact on the quality of life.
It is with a view towards reconciling these negative consequences with its potential for good that then UN Secretary General Kofi Annan drafted the idea of the United Nations Global Compact (UNGC) in 1999, before it was formally launched at the UN headquarters in New York in July 2000. The most distinguishing aspect of the Global Compact is that it aims to bring together a wide variety of organisations that all have a stake in making globalization more sustainable for the present and future generations. As such, it brings together private sector companies around the world with UN organizations, international labour and non-governmental organisations (NGOs). Mr. Annan memorably said it aims to lend 'a human face' to the global marketplace.
The Global Compact encourages businesses worldwide to adopt sustainable and socially responsible practices that incorporate ten principles in the areas of human rights, labour standards, the environment and anti-corruption. Far from a regulatory instrument, it acts rather as a forum for the dissemination of best practices, and a network for communication between organisations committed to its principles. As a voluntary corporate citizenship initiative, membership of the Global Compact is entirely voluntary. One must only swear allegiance to its principles. After that, there is no effective monitoring and enforcement system, which has come in for criticism from skeptics, but that does not mean that merely declaring their support for the Global Compact ensures them a lifetime membership. They must communicate their progress on upholding the principles to the UNGC office. Those who fail to do even that for a year are named in a 'blacklist' of sorts, that is posted on the UNGC website under the euphemistic title of 'Non-communicating participants'. If that extends to two years, they are labeled as 'inactive'. Inactive participants are barred from Global Compact events, including local network initiatives, till they start communicating their progress again. Once a third year passes with no communication of progress, the organisation gets delisted.
Many NGOs such as Greenpeace, ActionAid, SOMO have expressed concern that these measures are not stringent enough, and that the Global Compact allows companies to use it as a public relations instrument. But to maintain its participatory nature, which is thought to be all-important in bringing different organisations under its umbrella, the Global Compact has been carefully guarded from turning into a regulatory instrument.
The Global Compact is yet to be formally launched in Bangladesh, but that has not stopped 34 Bangladeshi companies such as Rahimafrooz Batteries and ACI from signing up to it anyway. Although that number is still relatively low, it's a start that augurs well for the future given that the Global Compact is expected to receive more coverage in the country in the coming months. From September, the Bangladesh Enterprise Institute (BEI) and the CSR Centre will be holding a series of meetings and seminars with different stakeholders to organise the network of Global Compact participants in Bangladesh into a coherent network. At the same time, work will also go into expanding the network so that it covers all the major sectors of corporate Bangladesh.
The benefits of signing on to the Global Compact can accrue to an organisation in a number of different ways, both direct and indirect. For one, it opens them up to global and local opportunities for dialogue with other organisations who are part of the Compact. Through this, they can share experiences and good practices that provide practical solutions to challenging problems. Membership of the Compact can also provide them an entry-point through which they can access the UN's broad knowledge of development issues, and also leverage the UN's global reach and convening power with governments, businesses and other stakeholders. Indirectly, the organisation can benefit from increased legitimacy and brand value, as well as improved reputation and employee morale and productivity.
The Global Compact is the first forum of its kind that recognizes the pivotal role of the private sector in shaping development in the 21st Century, as the world strives to achieve the Millennium Development Goals. Even beyond the MDGs, it provides a platform for businesses worldwide to adhere to some universal values and principles that consumers are increasingly concerned about, and which it is hoped will ensure a more just and sustainable distribution of the fruits of globalisation all over the world.
(Farooq Sobhan is Chairman, CSR Centre and Shayan S. Khan is Operations Manager, CSR Centre, Dhaka)
HARNESSING the consequences and benefits of globalisation effectively and equitably has emerged as one of the most important challenges facing mankind in the 21st Century. Contrary to what contemporary wisdom might have one believe, globalisation is not an entirely new phenomenon unique to our age (unless you are to discount the linkages brought about by colonization), but its increased incidence during our lifetimes has established it as an irreversible and perhaps the most recognisable socio-economic trend of our times. Its all-pervading nature is such that there exists hardly anyone in the world today who does not fall under its umbrella, from a farmer in rural Bangladesh struggling to find a market for his produce against his massively subsidised competitors from Europe, or a struggling musician in New York's East Village trying to incorporate Eastern influences into his demo tape.
With experience, man has also learnt that globalisation, allowed to roam unimpeded, is ready to trample anything that that stands in its way quite nonchalantly underfoot, whether it be unique national cultures or the earth's atmosphere. Only the global marketplace stands firm. Perhaps most ominously, in its present form globalisation lends itself to a distribution of income that is unjust and exclusive, catering to the whims of a chosen few, mostly the owners of transnational companies. It is widely recognised that the leverage enjoyed by business in general and these transnational corporations in particular is today, at least, on a par with that enjoyed by governments and international organisations. But this often leads to the exploitation of human values at their altar, and occasionally market failures as well can have an adverse impact on the quality of life.
It is with a view towards reconciling these negative consequences with its potential for good that then UN Secretary General Kofi Annan drafted the idea of the United Nations Global Compact (UNGC) in 1999, before it was formally launched at the UN headquarters in New York in July 2000. The most distinguishing aspect of the Global Compact is that it aims to bring together a wide variety of organisations that all have a stake in making globalization more sustainable for the present and future generations. As such, it brings together private sector companies around the world with UN organizations, international labour and non-governmental organisations (NGOs). Mr. Annan memorably said it aims to lend 'a human face' to the global marketplace.
The Global Compact encourages businesses worldwide to adopt sustainable and socially responsible practices that incorporate ten principles in the areas of human rights, labour standards, the environment and anti-corruption. Far from a regulatory instrument, it acts rather as a forum for the dissemination of best practices, and a network for communication between organisations committed to its principles. As a voluntary corporate citizenship initiative, membership of the Global Compact is entirely voluntary. One must only swear allegiance to its principles. After that, there is no effective monitoring and enforcement system, which has come in for criticism from skeptics, but that does not mean that merely declaring their support for the Global Compact ensures them a lifetime membership. They must communicate their progress on upholding the principles to the UNGC office. Those who fail to do even that for a year are named in a 'blacklist' of sorts, that is posted on the UNGC website under the euphemistic title of 'Non-communicating participants'. If that extends to two years, they are labeled as 'inactive'. Inactive participants are barred from Global Compact events, including local network initiatives, till they start communicating their progress again. Once a third year passes with no communication of progress, the organisation gets delisted.
Many NGOs such as Greenpeace, ActionAid, SOMO have expressed concern that these measures are not stringent enough, and that the Global Compact allows companies to use it as a public relations instrument. But to maintain its participatory nature, which is thought to be all-important in bringing different organisations under its umbrella, the Global Compact has been carefully guarded from turning into a regulatory instrument.
The Global Compact is yet to be formally launched in Bangladesh, but that has not stopped 34 Bangladeshi companies such as Rahimafrooz Batteries and ACI from signing up to it anyway. Although that number is still relatively low, it's a start that augurs well for the future given that the Global Compact is expected to receive more coverage in the country in the coming months. From September, the Bangladesh Enterprise Institute (BEI) and the CSR Centre will be holding a series of meetings and seminars with different stakeholders to organise the network of Global Compact participants in Bangladesh into a coherent network. At the same time, work will also go into expanding the network so that it covers all the major sectors of corporate Bangladesh.
The benefits of signing on to the Global Compact can accrue to an organisation in a number of different ways, both direct and indirect. For one, it opens them up to global and local opportunities for dialogue with other organisations who are part of the Compact. Through this, they can share experiences and good practices that provide practical solutions to challenging problems. Membership of the Compact can also provide them an entry-point through which they can access the UN's broad knowledge of development issues, and also leverage the UN's global reach and convening power with governments, businesses and other stakeholders. Indirectly, the organisation can benefit from increased legitimacy and brand value, as well as improved reputation and employee morale and productivity.
The Global Compact is the first forum of its kind that recognizes the pivotal role of the private sector in shaping development in the 21st Century, as the world strives to achieve the Millennium Development Goals. Even beyond the MDGs, it provides a platform for businesses worldwide to adhere to some universal values and principles that consumers are increasingly concerned about, and which it is hoped will ensure a more just and sustainable distribution of the fruits of globalisation all over the world.
(Farooq Sobhan is Chairman, CSR Centre and Shayan S. Khan is Operations Manager, CSR Centre, Dhaka)