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The United Nations Global Compact: The worlds largest voluntary corporate citizenship initiative


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Title: The United Nations Global Compact: The worlds largest voluntary corporate citizenship initiative

The United Nations Global Compact The worlds
largest voluntary corporate citizenship initiative
  • London
  • November 27, 2007

What does CSR mean for you?
  • Take a couple of minutes to write it down
  • Discuss with a partner and come up with a common

Overview of key themes in this session
Why are businesses important to the United
Nations?Different purposes, overlapping
Building Markets
Good Governance Security
Global Health
Poverty Reduction
Social Inclusion
Deepening Interdependencies
Why should business care about peace, security
and democracy?
  • Open markets, steady economic development and an
    open society are the best conditions in which we
    can pursue our business. This is contrary to the
    common belief that companies find it easier to
    support the apparent stability of regimes than
    to manage the uncertainties of democracy.
    Stability built on repression is always false.
    Sooner or later the waters break the dam.
  • Sir John Browne, CEO, BP

Of the worlds 100 largest economic entities, 51
are corporations and 49 are countries
  • 22 Turkey
  • 23 General Motors
  • 24 Denmark
  • 25 Wal-Mart
  • 26 Exxon Mobil
  • 27 Ford Motor
  • 28 DaimlerChrysler

Sources Sales Fortune, July 31, 2000. GDP
World Bank, World Development Report 2000
The Global Compact
A short video
The Global Compact is.
  • A voluntary initiative to promote sustainable
    development and good corporate citizenship
  • A set of 10 principles based on universally
    negotiated international documents (UDHR, ILO
    Declaration, Rio Declaration, UN Convention
    against corruption)
  • A network of companies and stakeholders
  • A forum for learning and exchanging ideas

The Global Compact is not
  • Legally binding
  • A means of monitoring company behaviour and
    enforcing compliance
  • A regulatory body
  • A public relations channel

The Global Compact has two main objectives
  • Make the 10 principles part of business strategy,
    operations and culture everywhere
  • Promote partnerships in support of UN goals

The 10 principles are organized in 4 main areas
Human Rights Principles
Labour related principles
Environment principles
The anti-corruption principle was added in 2003
Using the Global Compact Why and how?
What are some incentives for a corporation to
join the Global Compact?
How can a company join the Global Compact?
  • sends a letter from the Chief Executive Officer
    to the Secretary-General of the United Nations
    expressing support for the GC
  • sets in motion changes to business operations so
    that the Global Compact and its principles become
    part of strategy and culture
  • is expected to publicly advocate the Global
    Compact and its principles
  • is expected to publish a description of the ways
    in which it is supporting the Global Compact

Current participation in the Global Compact
  • Almost 4,000 businesses in over 100 countries
  • Global, large domestic, SMEs
  • All business sectors represented
  • Developed and developing world (5050)
  • Large number of non-business participants
  • 80 country networks

What is the business case for the Global Compact?
(in small groups)
  • 4 stations each covering 1 area of the GC
  • Think through the business benefits
  • Rotate to the next station at the signal
    (carousel technique)
  • Debrief on each groups findings

Debrief from Group Activity
Overcoming criticism
  • Your company has been a member of the Global
    Compact for 1 year but is facing some backlash
    from watchdog do you react?
  • You represent a watchdog NGO what are some of
    your concerns around the Global Compact?

How can business benefit from promoting and
respecting human rights?
  • Improved stakeholder relations
  • Improved employee recruitment, retention, and
  • A more secure license to operate
  • Increased security of investments in countries
    governed by the rule of law and respect for human
  • Reduced risk of consumer action
  • Reduced risk from human rights related legal
  • Reduced reputational risk

Benefits of promoting labour principles
  • Increased retention of employees
  • Higher productivity
  • Improved reputation among consumers
  • Lower training costs
  • Fewer fines
  • A safer workplace
  • Improved relations (with government, other
    businesses, civil society)

How does improving environmental performance
affect business's bottom line?
  • Reduced manufacturing expenses
  • Reduced recruiting costs
  • Increased Productivity
  • Reduced water, energy, and consumables expenses
  • Lower Waste Disposal Costs
  • Resource and Energy Efficiency
  • Reduced risk and easier financing
  • Lower Environmental Fines

Key reasons for avoiding involvement in corrupt
  • Legal risks
  • Reputational risks
  • Financial costs
  • Being 'known as clean' dissuades opportunist
  • Blackmail, and security risks
  • "The one who cheats will be cheated against"
  • Companies have a vested interest in sustainable
    social, economic and environmental development

Reporting on progress
  • Our goal in writing this report has been to be
    as accurate, complete and honest as we can be
    about how Nike performs. Just producing this
    report proved to us that the value of reporting
    goes far beyond transparency. It becomes a tool
    for improving both our management of business and
    in giving us clues about what we need to do
  • Phil Knight, Chairman and CEO, Nike Inc., 2004
    Sustainability Report

The nonprofit world has been experiencing
significant changes too
  • Increasing privatization of government services
    (education, health care, social services, the
  • Increasing financial pressure on nonprofits
  • Increasing concerns about the efficacy of
    traditional charities
  • Source Social Enterprise Private Initiatives
    for the Common Good (Harvard Business School)

The era of convergence is upon us
  • Creating Value social and economic value
  • Managing Stakeholders both are broadening their
    definition of stakeholders
  • Restructuring Organizations for-profit and
    non-profit subsidiaries (e.g. Pura Vida coffee)
  • Mobilizing Capital social venture capital to

Austin J, Gutierrez R, Oliastri E, Reficco E.
Capitalizing on Convergence. SSIR (2007).
  • The leaders of nonprofits and businesses would
    be wise to shift their current mind-set from one
    of us and them to one of we.

Austin J, Gutierrez R, Oliastri E, Reficco E.
Capitalizing on Convergence. SSIR (2007).
On Complicity
  • Direct Complicity
  • Occurs when a company knowingly assists a state
    in violating human rights. An example of this is
    in the case where a company assists in the forced
    relocation of peoples in circumstances related to
    business activity.
  • Beneficial Complicity
  • Suggests that a company benefits directly from
    human rights abuses committed by someone else.
    For example, violations committed by security
    forces, such as the suppression of a peaceful
    protest against business activities or the use of
    repressive measures while guarding company
    facilities, are often cited in this context.
  • Silent complicity
  • Describes the way human rights advocates see the
    failure by a company to raise the question of
    systematic or continuous human rights violations
    in its interactions with the appropriate
    authorities. For example, inaction or acceptance
    by companies of systematic discrimination in
    employment law against particular groups on the
    grounds of ethnicity or gender could bring
    accusations of silent complicity.

Source Global Compact
Doing Good Business
  • We believe that the winning companies of this
    century will be those that not only increase
    shareholder value, but increase social and
    environmental value.
  • Carly Fiorina, CEO, Hewlett Packard

Why should a company join the Global Compact?
  • Helps organize a CSR strategy
  • Availability of implementation tools and guidance
  • Multi-stakeholder dialogue and problem-solving
  • Trust-building in societies
  • 10 Principles are universal social legitimacy
  • Manage globalizations new risks/opportunities

Socially Responsible Investments (SRI)
  • Sustainable investment, also known as 'socially
    responsible investment (SRI), has grown
    enormously in the past decade. The amount of
    money invested in 'sustainable' funds has
    increased dramatically, and many of the large
    financial services firms have begun offering
    their clients a 'sustainable' option.

The GC Principles
Corporate Social Responsibility
  • CSR refers to business practices intended to have
    a positive impact on society not just the
    companys financial bottom line.
  • Source Institute for Global Ethics

Corporate Social Responsibility 2
  • Corporate social responsibility is the continuing
    commitment by business to contribute to economic
    development while improving the quality of life
    of the workforce and their families as well as of
    the community and society at large.

Source World Business Council for Sustainable
Some drivers moving business towards more
socially responsible practices include
Demands for greater disclosure
Growing investor pressure
Employee retention
Some of the benefits experienced by businesses
adopting CSR measures
  • Enhanced brand image and reputation
  • Increased sales and customer loyalty
  • Greater productivity and quality
  • More ability to attract and retain employees
  • Better use of renewable resources
  • Community relations
  • Product safety and decreased liability

Improved Financial Performance
There is a growing number of players in the field
of CSR over 300 different instruments are
  • Business Initiatives
  • CERES The Coalition for Environmentally
    Responsible Economies. The 10 CERES Principles
    deal exclusively with environmental matters.
  • International Chamber of Commerce The ICC
    charter sets out 16 principles for environmental
  • The Global Compact sets out 10 very broad
  • The International Institute for Sustainable
    Development integrates environmental stewardship,
    economic development and the well-being of
    peoplenot just for today but for countless
    generations to come.
  • The Global Reporting Initiative has developed
    voluntary guidelines for use by organizations for
    reporting on the economic, social, and
    environmental dimensions of their activities.
  • Area of Focus

Environment Social Economic
The many concerns with CSR
  • Businesses could just enhance their public image
    by signing up with the GC vs. actually changing
    practices (Blue washing). CSR can become
    merely a branch of PR.
  • What does the Christian Aid article advocate to
    address this?