Global Compact Critics

World’s third largest pension fund divests from PetroChina

2012-01-25T13:39:00.002+01:00

The Netherlands’ largest pension fund ABP has divested its interests in PetroChina and blacklisted the company for non-compliance with the United Nations Global Compact Principles. PetroChina is a participant in the Global Compact. CNPC, its parent company, has been criticized for its presence in war-torn Sudan.

ABP had urged CNPC, repeatedly to improve its behavior to prevent complicity in human rights violations in Sudan. CNPC however failed to adequately address the concerns.

ABP’s investment policy is based on the ten principles of the Global Compact. ABP concludes that PetroChina / CNPC, lacks solid policies to prevent involvement in human rights violations in Sudan. Hence, PetroChina does not comply with the second principle of the UNGC, which states that businesses should make sure that they are not complicit in human rights abuses.

According to Thijs Steger, spokesman for ABP Investments, the pension fund has engaged with the local management of CNPC in Sudan and requested that the company would fulfill several demands. These included that the management should:

execute an assessment of the impact of CNPC’s activities on the local community;
be transparent on the working methods of their security staff;
initiate a dialogue with their stakeholders and be accountable towards their stakeholders;
publish a statement on their role in the democratic development processes in Sudan.

CNPC has responded that they do not comment on political situations. Mr. Steger stated that ABP repeatedly urged CNPC to meet the requirements, but that the company did not progress enough. ABP therefore decided to blacklist PetroChina.

In January 2009, over 80 civil society organizations including human rights, corporate accountability, and religious groups from 25 countries, as well as government officials submitted an open letter to the United Nations Global Compact (UNGC) in support of a formal complaint against PetroChina. PetroChina, the publicly traded arm of CNPC, is the leading oil company operating in Sudan, with extensive financial links to the regime. According to the complainants, the company was uniquely positioned to influence the government of Sudan, but failed to act and denying involvement in the humanitarian crisis in Darfur.

In July 2009 the Global Compact Board announced that they maintained PetroChina as a participant in the Compact. The Vice Chair of the Board, Sir Mark Moody-Stuart, said that CNPC had been “active in supporting sustainable development in the country [Sudan] […]." The Board also took note that CNPC "had engaged in Global Compact learning and dialogue activities on conflict sensitive business practices."

ABP is not the first pension fund that has decided to divest from PetroChina. In 2008 PGGM, another Dutch pension investment giant sold its PetroChina shares after their own engagement strategy failed to produce results. At the time, PGGM said: "CNPC has not taken adequate steps to avoid involvement in these human rights violations or to contribute to resolving human rights issues in that country." Moreover, in January 2009 the US pension group TIAA-CREF also sold its PetroChina shares in protest of PetroChina’s business links to the Sudanese government presiding over genocide in Darfur.

As opposed to findings of the Global Compact Board in 2009, ABP and other major pension funds, have evidence that PetroChina is in breach of principle two of the Global Compact. Therefore, one can conclude that the Board would have to reconsider its position on PetroChina's participation in the Global Compact.

Roquette lockout ends after agreement reached with union members

2011-08-04T10:21:00.012+02:00

By Colleen Freeman.

Ten months after Roquette Frères’ subsidiary, Roquette America, locked out 240 members of the Bakery, Confectionary, Tobacco Workers and Grain Millers (BCTGM) Local 48G at its corn milling facility in Keokuk, Iowa, a contract agreement has finally been reached. According to BCTGM Local 48G’s press release, while the contract is less than what they hoped for, one important achievement is the company’s recognition of their union.

Readers of Global Compact Critics will recall from a December 2010 post, “Union federations: Roquette's actions undermine the legitimacy of the Global Compact,” that Manfred Warda, Global Compact Board member and General Secretary of the International Federation of Chemical, Energy, Mine and General Workers (ICEM), wrote to the Global Compact Office about the company’s brazen violation of labor rights.

Mr. Warda, along with his counterparts at the AFL-CIO and the International Union of Foodworkers (IUF), urged the Global Compact Office to immediately contact Roquette Frères and discuss the company’s failure to uphold the Compact’s Principle 3 at its subsidiary in Iowa. Failing a positive outcome, the union leaders stated their letter should be considered a formal complaint under the Compact’s Integrity Measures.

In June, Sharan Burrow, General Secretary of the International Trade Union Confederation (ITUC) also wrote to the Global Compact Office, echoing earlier calls from ICEM, AFL-CIO and IUF to address Roquette Frères and its U.S. subsidiary’s failure to uphold the Global Compact’s labor principles (letter available here).

An OECD Guidelines for Multinational Enterprises’ complaint was also filed by ICEM, AFL-CIO and IUF with the U.S. National Contact Point.

Unions file complaint against Deutsche Post DHL

2011-07-20T19:49:00.021+02:00

By Colleen Freeman.

On June 24, the International Transport Workers Federation (ITF) and UNI Global Union filed a complaint against communications and logistics giant Deutsche Post DHL for breaches to the UN Global Compact’s Principles 1 and 2 relating to human rights, Principle 3 regarding freedom of association and the right to collective bargaining, and Principle 6 concerning the elimination of discrimination.

In their complaint, ITF and UNI detail how DHL discriminated against employees and actively discouraged workers from joining the American Postal Workers’ Union at its now closed Allentown, Pennsylvania facility. The complaint also describes how DHL has subjected workers to emotional and psychological abuse by requiring lie detector tests in Panama, Costa Rica, Columbia, South Africa and allegedly in El Salvador. In India, DHL has refused to engage in good faith bargaining, and has discriminated against and dismissed trade union members. According to the unions, DHL has also violated Indian Labor Law by paying temporary workers who are performing core functions below the prevailing wage. In addition, the complaint notes that a well-known Norwegian trade union activist was recently dismissed for supposed infractions of company rules. The unions also assert that Deutsche Post DHL’s 2010 Communication on Progress “is vague, incomplete and misleading” on human and labor rights issues and indeed failed to mention any of the issues ITF and UNI have been raising with the company for some time.

ITF and UNI have called on Deutsche Post DHL, a Global Compact member since 2006, to enter into a global framework agreement to ensure their employees’ human and labor rights are respected worldwide. Failing appropriate action by the company, the unions have requested that Deutsche Post DHL be expelled from the Global Compact.

On July 14, the Global Compact Office asked Deutsche Post DHL to provide written comments responding to the allegations of ITF and UNI.

The complaint is available here.

Indians believe Global Compact is used to mask human rights abuses

2011-07-05T13:01:00.006+02:00

The UN's flagship business initiative is being used as a tool to mask human rights abuses, according to Ayoreo Indians in Paraguay.

Leaders of the tribe, some of whose members are still uncontacted, have written to the UN Global Compact saying they are "concerned and frustrated" by the inclusion in it of a controversial Brazilian ranching company.

The company, Yaguarete Porá, was charged and fined for illegally clearing the Ayoreo's forests, and concealing evidence of uncontacted Ayoreo living there. The Ayoreo have asked that it be expelled from the Global Compact.

The UN Global Compact was designed for companies "committed to aligning their operations with ten universally accepted principles," including respect for human and environmental rights.

In its reply, the Global Compact has admitted that it has "neither the resources nor the mandate to conduct investigations into any of our participants".

Yaguarete Porá won Survival International's "Greenwashing Award" in 2010 for "dressing up the wholesale destruction of a huge area of the Indians’ forest as a noble gesture for conservation".

While some Ayoreo have been contacted by missionaries, a number remain hidden in the forest. But their land is being quickly destroyed to make way for cattle farming.

Yaguarete has angered the Ayoreo by promoting its membership of the UN Global Compact on its website, which the Indians believe promotes a false image of corporate responsibility.

Survival’s Director Stephen Corry said today, "This makes an utter mockery of the UN Global Compact. If the UN doesn't make sure companies displaying its logos abide by the rules, such initiatives become entirely meaningless. Yaguarete should be forced to leave the Compact immediately."

Source: Survival International (5/7/2011).

Divestment proponents alarmed by recent appointments to the Global Compact Board

2011-06-20T16:36:00.066+02:00

By Colleen Freeman.

In a move that has alarmed civil society organizations involved in divestment campaigns, Secretary-General Ban Ki-moon appointed Sinopec Group's Mr. Fu Chengyu and China Enterprise Confederation's Mr. Li Decheng to the Global Compact Board last month. The appointments are yet another example of the Global Compact nominating board members from companies or business organizations with CSR track records that are unverifiable or inconsistent with the 10 principles of the Compact.

Formerly China Petrochemical Corporation, Sinopec Group has come under fire by Investors Against Genocide and many other organizations that work to persuade pension funds to divest from companies whose operations in Sudan have benefited the regime in Khartoum.

The recent appointments to the Global Compact Board, which is heavily dominated by business interests, also ignore key recommendations from the recent evaluation carried out by the UN's inspection unit. The evaluation noted the process for nominating board members "is neither democratic nor inclusive," and recommended that the Secretary-General should:

- Encourage local networks to nominate candidates to the Global Compact Board.

- Propose to the General Assembly the participation of Member States representatives and SMEs on the Global Compact Board.

Currently, the Board is comprised of 13 company representatives, 2 business associations, 2 union representatives and 5 civil society organizations. Critics assert the Board needs fewer business representatives and more participation from civil society organizations, UN agencies and member states to be balanced and multi-stakeholder in nature.

© Photo by UN Photo / Eskinder Debebe.

Great news: Global Compact expels company that refuses to engage in dialogue with activists

2011-06-06T23:04:00.020+02:00

On June 2, the UN Global Compact expelled one of its members for failure to participate in the Compact's dialogue facilitation process. Lifosa, a Lithuanian company that imports phosphate from Western Sahara, had refused to engage in dialogue with the Western Sahara Resource Watch (WSRW). WSRW is an international network of organizations and activists that do research and participate in campaigns on companies with interests in occupied Western Sahara. AB Lifosa is the largest producer of phosphate mineral fertilizers in the Baltic states and an industry leader in the European Union. It is subsidiary of Eurochem, Russia's largest mineral fertilizer producer.

Last year, Lifosa admitted that it imported phosphate from Western Sahara on a large scale. The imports never appeared in Lifosa's progress reports submitted to the Global Compact. In September 2010, WSRW asked Lifosa whether it consulted local stakeholders about its activities in Western Sahara. The company responded with a plain “no”. The UN Security Council considers natural resource activity in Western Sahara to be in violation of international law if the people of the territory are not consulted. In December 2010, WSRW sent another letter to Lifosa, asking the company whether it would "follow the example of other ethically oriented fertilizer producers internationally and terminate its imports of phosphate from Western Sahara". WSRW never received an answer to that letter.

According to the Compact's revamped Integrity Measures, a participating company needs to engage in dialogue with a complainant within two months of first being contacted by the Global Compact Office. Otherwise it may be regarded as "non-communicating". If the continued listing of the participating company on the Compact’s website is considered to be detrimental to the reputation and integrity of the initiative, the Global Compact Office can delist the company. This is what happened to Lifosa.

WSRW is very satisfied with the steps taken by the Global Compact. According to Erik Hagen, one of WSRW's representatives in Norway, the Global Compact "deserves to be praised for actually expelling a member that does not communicate". We certainly hope that this case will set a precedent.

© Photo by Steven Depolo.

Updated list of free sources on the Global Compact

2011-05-17T13:30:00.002+02:00

The UN Global Compact Office publishes a list of academic literature on its website. Most of the articles and reports on this list, however, assess the performance of the Compact from a business point of view. The bibliography on the Compact's website omits a great deal of relevant articles published by critical scholars and activists. Moreover, very few of the studies on the list are publicly available and free of cost.

Global Compact Critics keeps a list of free alternative sources, which is updated regularly. This list includes critical academic literature, reports published by civil society organizations, essays, relevant UN resolutions, conference reports, debates and interviews. Here is the latest update of our list:

2011
- Observations on the Final Report of the Special Representative of the UN Secretary General on the issue of human rights and transnational corporations and other business enterprises, John Ruggie (link)

2010
- United Nations Corporate Partnerships: The Role and Functioning of the Global Compact (download)
- CSR, Development (MDGs) and the UN Global Compact (link)

- The UN Global Compact celebrates 10 years of what? (link)

- UN Global Compact: ten years of greenwashing? (download)

- From Global Compact to global impact (link)

- The UN Global Compact and human rights: developing a vision for 2020 (download)

- What if we are failing? Towards a post-crisis Compact for systemic change (download)

- Sustainable dialogue (download)

- Geographic variations in the early diffusion of corporate voluntary standards: comparing ISO14001 and the Global Compact (link)

2009

- Assessing corporate responsibility as a contribution to global governance: the case of the UN Global Compact (download)

- Communicating progress to the Global Compact as a mechanism of regulation of the business activity (download)

- "Global Compact, little impact?": explaining variation in corporate attitudes towards global norms (download)
- Defining the limits of corporate responsibilities against the concept of legal positive obligations (download)
- The corporate social responsibility model developed by the United Nations: the Global Compact (download)
- Is the UN Global Compact useful to companies? (link)
- Critics of the UN Global Compact sound off (link)
- The great Twitter debate: the UN Global Compact (link)

- Revised guidelines on cooperation between the United Nations and the business sector (download)

- United Nations-business partnerships: good intentions and contradictory agendas (download)

- The corporate stranglehold over the United Nations: how big business already wields significant power over the UN Water Agenda (download)

- Human rights, Chinese business: how China's state-owned enterprises fit into international human rights law (download)

2008

- Incorporating labor and human rights risk into investment decisions (download)

- Power, interests, and the United Nations Global Compact (download)

- Network governance in international organizations: the case of global codes of conduct (download)

- The Global Compact and its critics: activism, power relations, and corporate social responsibility (download)

- Debate on the UN Global Compact in Ethical Corporation (download)
- Transnational corporations and human rights: responsibility as an ambiguous concept (download)

2007
- Corporate globalisation, civil society and post-political regulation - whither democracy? (link)
- Comments by UN Global Compact Office regarding the Global Compact Critics blog (download)

- Global Compact Alternative Hearing (download)
- Taming corporations or buttressing market-led development? A critical assessment of the Global Compact (download)
- Corporate complicity in Internet censorship in China - who cares for the Global Compact or the - Global Online Freedom Act? (download)
- Partnering for development? The UN Global Compact's growing Sustainable Business Initiative (download)
- Multistakeholder partnerships: future models of multilateralism? (download)
- Corporate social and environmental responsibility in India: assessing the UN Global Compact's role (download)

2006
- Global Compact: a critique of UN's public-private partnership for promoting corporate citizenship (download)

- Beyond pragmatism: appraising UN-business partnerships (download)

- Teaching private governance: a critical analysis of the UN Global Compact (download)

2005

- The United Nations' Compact with business: hindering or helping the protection of human rights? (download)
- The UN Global Compact: a contribution to sustainable development? (download)

2004
- Precarious "partnerships": six problems of the Global Compact between business and the UN (link)
- Joint civil society statement on the Global Compact and corporate accountability (link)
- Global Compact counter-summit (link)

- Flags of inconvenience? The Global Compact and the future of the United Nations (download)

- The United Nations Human Rights Norms for Business and the UN Global Compact (download)
- Two views of the Global Compact (link)

- Global Compact, little impact (link)
- Public-private partnerships for health: a trend with no alternatives? (download)

2003
- Development at risk: rethinking UN-business partnerships (download)

- The Global Compact: why all the fuss? (link)

- Building on quicksand: the Global Compact, democratic governance and Nestlé (download)

- The development dimensions of the UN Global Compact (download)
- Global Compact is another exercise in futility (link)

2002
- The Global Compact and civil society: averting a collision course (link)

- Greenwash + 10: the UN's Global Compact, corporate accountability and the Johannesburg Earth Summit (download)

2001
- Regulating business via multistakeholder initiatives: a preliminary assessment (download)
- Global Compact with corporations: "civil society" responds (link)
- Global Compact has potential problems, not win-win (link)

2000
- Tangled up in blue: corporate partnerships at the United Nations (download)
- The road to the Global Compact: corporate power and the battle over global public policy at the United Nations (link)

- UN-business Partnerships: whose agenda counts? (download)

- Citizens Compact on the United Nations and corporations (link)

- The United Nations sits in suspicious company (link)

1999
- A perilous partnership: the United Nations Development Programme's flirtation with corporate collaboration (download)
- Alliance for a Corporate-Free UN (link)

Activists lodge complaint against Global Compact participant Vinci

2011-04-11T09:45:00.008+02:00

While much of the debate around the Moscow – St. Petersburg motorway project has centered around the behavior of the Russian authorities, the Movement to Defend Khimki Forest is now targeting French construction giant Vinci and asking the company not to sign an additional agreement with the Russian authorities.

A coalition of Russian NGOs has written a letter to Vinci urging the company once more not to participate in the project. Vinci has also been accused by the group of failing to adhere to the principles of the UN Global Compact. In a letter to the Global Compact Office, the Movement to Defend Khimki Forest and Bankwatch state that the company has violated 3 of the 10 principles, on promoting human rights, avoiding complicity in human rights abuses, and supporting a precautionary approach to environmental challenges.

According to the activists, Vinci has failed to condemn the human rights abuses committed against opponents of the project's current routing. Louis-Roch Burgard, CEO of Vinci Concessions, has openly said that he is not worried at all: "We are dealing with tens of projects in France, Europe and throughout the world and sometimes some projects face opposition. It is not the source of concern for us, otherwise we should be changing business."

The activists say that when President Medvedev suspended tree felling works last year, the company even lobbied via the French Chamber of Commerce to move ahead with the construction as soon as possible.

Source: CEE Bankwatch Network (11/4/2011).

UN inspectors blast UN Global Compact

2011-03-28T22:08:00.014+02:00

Earlier this month the Joint Inspection Unit (JIU), an independent external oversight body of the United Nations, published its long-awaited evaluation report of the UN Global Compact. The report had been ready for quite some time, but insiders say that it was withheld due to intensive lobbying efforts to modify its contents. The JIU inspectors remained steadfast and decided to publish the report without any significant modifications.

For advocates of partnerships between big business and the UN, the findings of the JIU may come as an unpleasant surprise. For critics of the Compact, however, the report reasserts concerns expressed by many since the start of the initiative some ten years ago. In the report, the JIU inspectors say that the Global Compact presents a potential "reputational risk" for the UN and that it pursues a "self-expanded" mandate. The report confirms the existence of the bluewash phenomenon. The inspectors believe that "General Assembly direction is needed [...] in order to prevent a situation whereby any external group or actor(s) may divert attention from the strategic goals agreed to promote interests which may damage the reputation of the United Nations."

The report contains 16 recommendations for improvement. Most of them address issues raised by civil society networks such as Global Compact Critics and the Alliance for a Corporate-Free UN in the past ten years. Here is an overview of the most relevant recommendations:

Mandate and mission

- The General Assembly should set a clear mandate for the Global Compact Office at its 66th session and request the Secretary-General to publish within one year a bulletin outlining its functions in accordance with the mandate entrusted to it.
- The General Assembly should request the Global Compact Office to prepare and submit a long-term strategic framework for its consideration without delay. Such framework should outline the long-, medium- and short-term objectives of the Global Compact Office, in accordance with the mandate entrusted to it.

Quantity versus quality

- The Global Compact Office should seek to adopt, after consultation with all stakeholders, a policy decision on the composition of participants by category and geographical region, in order to ensure an appropriate balance between the number of Global Compact participants and qualitative representation, and reinforce the universal application and relevance of the ten principles.
- The General Assembly should call for the institution of a selection process in which business and non-business applicants are screened against pre-set entry criteria, so as to mitigate brand management risk and enhance the Office’s accountability for accepting new participants in the Global Compact initiative.
- The Secretary-General, in his capacity as Chairman of the Global Compact Board, should submit to the consideration of the Board concrete measures to reinforce accountability in the implementation of the Integrity Measures, including (a) closer scrutiny of Communications on Progress (COPs) by local networks and civil society; (b) type and frequency of monitoring of COPs by the Global Compact Office; (c) submission of COPs by non-business participants; and (d) more proactive and transparent handling of complaints.

Governance
- The Secretary-General should encourage local networks to nominate candidates to the Global Compact Board.
- The Secretary-General should propose to the General Assembly the participation of Member States representatives and small and medium enterprises (SMEs) on the Global Compact Board.

Not surprisingly, the Global Compact Office and its Board are doing everything they can to disqualify the report and the research methods used by the inspectors. Last week the Office stated in a press release that the JIU report "is a deeply flawed and inaccurate document which misrepresents both the UN Global Compact's overall work and its long track record of positive impact." On March 8 it had already published a six-page response to the report, which is available here.

Comfía - CCOO has translated this post into Spanish.

© Photo by Lindsay Beyerstein.

Global Compact rejects independent panel's criticism

2011-03-26T21:14:00.004+01:00

By Isolda Agazzi.

GENEVA, Mar 26 (IPS) - An independent UN body has criticized the Global Compact, the largest initiative for corporate social responsibility, for not sufficiently monitoring the human rights and environmental commitments of participating companies.

The Joint Inspection Unit (JIU), an independent external evaluation body of the UN, based in Geneva, echoes a longstanding complaint by NGOs that the Global Compact may just be helping companies to get a positive marketing image.

"On the whole, the Global Compact has been successful in legitimating the progressive and generalized engagement of the United Nations with the private sector, and promoting new partnerships whose effectiveness is yet to be proved. However, it has been less successful in making business participants translate their commitment into real policy change," the JIU says bluntly in a report.

Though the report was published at the beginning of the year, the JIU only drew public attention to it last week, by issuing a press release. The Global Compact reacted with a harsh statement, dated Mar. 24, that rejects the report as "flawed and inaccurate" and asks for corrections.

However, the intricacies of UN policies and the ping pong between Geneva and New York will remain a mystery since Papa Louis Fall, the main author of the report, is apparently not allowed to talk to the press.

The Global Compact is the largest initiative for corporate social responsibility. It was launched by former UN secretary general Kofi Annan in 1999 at the World Economic Forum in Davos, Switzerland. Businesses that adhere to this compact commit themselves to ten principles relating to human rights, environmental and labor standards and anti-corruption practices. In exchange, they can make use of the UN Global Compact logo with a blue globe and a laurel wreath, which is very similar to the UN logo.

The world body's independent inspectors see a threat to the credibility of the United Nations if any company can use its logo simply by subscribing to the Compact. It points to the Alliance for a Corporate-Free UN, an NGO initiative that has long criticized the international organization for "blue washing" companies that use its logo just for marketing purposes.

"It is curious that the report makes reference to that coalition, which ended its activities about five years ago, and not to the more recent articles and reports published on our blog," Bart Slob, senior researcher at SOMO, told IPS.

SOMO is a Dutch-based NGO that monitors companies and does research on supply chains. In 2007 it founded Global Compact Critics, an informal network of organizations and people with concerns about the UN Global Compact.

"The general views of the authors that contribute to our blog correspond to the ones of the JIU," he ensures.

The Global Compact is intended to exhort business to "learn and dialogue", but it has become victim of its own success: in ten years, it has gathered 7,450 participants from 135 countries -- mainly businesses, but also NGOs, business organizations and academia. Large companies make up 35 percent of the total and small and medium enterprises another third.

By region, the largest representation is in Europe (43 percent), with U.S. companies making up only 5 percent of the total, Middle East ones 2 percent, Asian 20 percent, Latin American 24 percent and African 6 percent.

But if quantity has steadily increased, quality is lagging behind. The report suggested more stringent criteria for admission. Presently, the CEO of a company only needs to sign a letter pledging to make the ten principles an integral part of its business strategy, without having to give sufficient guarantees that it will spread them throughout its supply chain and subsidiaries.

"The lack of company monitoring is the initiative's Achilles' heel," stresses the report. NGOs like Amnesty International, Greenpeace, ActionAid and the Berne Declaration have long criticized the initiative for lacking teeth, but companies have always resisted any form of monitoring. Companies self-assess themselves and their reports are allegedly not verified.

The Global Compact rejects this criticism by pointing out that it has excluded more than 2,000 enterprises that did not meet the criteria.

But for the inspectors this is not enough. "There is an absence of adequate entry criteria and of an effective monitoring system and the voluntary nature of the commitments is not a guarantee of future good behavior," they write.

Bart Slob agrees with this point and with the criticism of the governance structure: "There are many business representatives on the Compact's Board, but there is very little space for NGOs and UN member states," he notes.

"I am very pleased with this report because it confirms what civil society has been saying since the beginning: lack of clarity, lack of teeth, lack of follow-up proceedings," Andreas Missbach, joint managing director of the Berne Declaration, told IPS.

The Berne Declaration is a Swiss NGO that co-organizes the Public Eye on Davos, an annual award attributed to the least responsible enterprise.

It does not participate in the Global Compact arguing that it "does not have any effect in the real world, since nobody is policing the companies if they don't abide to their commitments. I have looked at the reports of UBS and Credit Suisse, they are extremely poor," he added.

He points to Barrick Gold Corporation, a mining company that is a member of the Compact "despite having constantly run into human rights and environment problems, like in Papua New Guinea".

So, should the Global Compact be reformed or does it have to be closed down?

"There are mixed views on that," Bart Slob replied. "If the UN is unwilling to take rigorous reform measures, it would be better to consider an alternative course of action, like establishing a code of conduct for large companies, as was suggested by the UN in the 1970s. An idea that unfortunately never materialized."

Source: IPS (26/3/2011).

The Global Compact: different from itself

2011-03-07T13:11:00.009+01:00

By Antonio Vives, Principal Associate, Cumpetere.
Translated from Spanish to English by Tamara Slowik.

On February 25th, 2011, the United Nations Global Compact launched the Differentiation Framework, through which, upon submitting their reports to the Global Compact, companies will be categorized as:

- GC Active: companies must report on their chief executive’s commitment to the Compact, as well as on their policies and activities to implement the ten principles and the results obtained in achieving their goals.
- GC Advanced: in addition, companies must report on the progress made related to 24 advanced criteria (governance, value chain, reporting etc.) and include a statement confirming that their report includes information concerning these criteria as well as a self assessment on how these criteria are covered in
the report.

Companies that fail to meet the minimum communication requirements (it should be noted that the programme does not refer to “action”) will experience a 12-month trial period in the Learner category in order to reach the GC Active category.

The Differentiation Program will enable companies to state that they meet higher requirement levels. It follows GRI’s idea of companies’ self-reporting, by which companies declare a level of compliance with the GRI’s reporting requirements that they believe they meet. However, it should be noted that the GRI not only has three compliance levels (A, B and C) but also allows for the data to be assured by external bodies (which adds a plus “+”) and further verified by the GRI itself (which adds the label “GRI verified”).

The Global Compact’s proposal has only two categories and there is no verification by external bodies or the Global Compact itself.

It is worth highlighting that the requirements for the “Advanced” level essentially seek that the company takes on responsibility over what it reports, as neither the information nor the actions are verified by anyone, although it will be included in the Global Compact’s website. Thus, the motto is “report, assure us that what you report is what you’re supposed to report and swear that what you report is correct”. Obviously, there is a high degree of distrust in what companies report.

This reflects that the participation in the Global Compact is not taken very seriously by many companies, and that the Global Compact itself has doubts about the companies’ sincerity.

The problem is that the Global Compact wishes to be massive and thus sacrifices quality. It does have the capacity to verify the contents of the reports. It merely verifies that a report is submitted every three years. Anyone can be its member; all one has to do is report every three years. Nobody verifies, nor are
any actions required. One can report to have done very little and still meet requirements. No specific levels of action are required, although it is expected that companies that chose the “Advanced” category will take it more seriously and not only commit to voluntary action but actually do it.

In fact, the launch of a differentiation programme itself clearly indicates that a mass approach has not led to progress, which creates the need to establish categories to distinguish those who do something from those who do little or nothing at all. It means admitting that the mass approach hasn’t worked.

In our article "Global Compact: this is it?", published in July 2008, we said that "…for the Global Compact to add value, it must become a more exclusive club, one that implies a 'membership fee', that is, one that demands responsible conduct from all its members…".

Companies try to differentiate themselves from competitors. The Global Compact tries to differentiate itself from itself. Isn’t it preferable to include only the “good” group?

As known, companies may adhere to the Global Compact by sending a letter that expresses the wish and commitment to honor its 10 principles, which enables them to declare they are “members”. Members are required to submit, at least once every three years, information about what they do to comply with the
Compact’s principles. Failing to report is punished with expulsion from the Compact. The only thing that is verified is the submission of the report.

The number of companies already expelled for not even reporting - 2,048 (total members by January 2011: 6,066) – shows us how lightly many companies take their membership. In 2010, the Global Compact even offered a moratorium on expulsions. There is no information on the levels of compliance with the principles by
companies that continue to be members.

Spain has the greatest number of members, 877, the largest number of reporting - 510 - and non-reporting companies – 208 -, as well as the third largest number of expelled companies: 159 (for other countries’ statistics, see the article Spain is world champion!).

All reports are published on the Compact’s website. Civil society organizations and other companies can presumably verify this information and report any mistakes, but this does not happen. There is little interest in seriously analyzing companies’ compliance with the Global Compact’s principles. The Compact is only concerned with the frequency of reporting.

Fortunately, there is some progress now: at least some companies will take it more seriously in order to differentiate themselves from the innocuous mass and thus act as examples.

We reassert the recommendation made almost three years ago in the above-mentioned article: “...As politically complicated as it may be for a multilateral organization to make a value judgment on a company’s conduct, this step cannot be avoided if the Global Compact wants to preserve its credibility. Someone has to do it. It should at least encourage civil society organizations to monitor themselves the Global Compact’s members and inform on companies’ responsible practices. As currently posed, the Global Compact risks becoming irrelevant in ensuring responsible practices...”.

A new Global Compact? Not yet, but at least there is progress. That’s better than nothing.

Global Compact still receives donations from tobacco industry

2011-03-03T17:22:00.022+01:00

In April 2010, Global Compact Critics published an article on the donations of tobacco companies to the UN Global Compact. We pointed out that - contrary to the Compact’s policies - the Foundation for the Global Compact had accepted a donation from the Mansour Group. Philip Morris has a licensing agreement with the Mansour Group to produce, market, and distribute its tobacco products in Eastern Europe, the Middle East and Africa. The Foundation also received an amount between US$ 5,000 and US$ 10,000 from Industria de Tabaco Leon Jimenes, a subsidiary of Philip Morris in the Dominican Republic.

This year the Foundation has again accepted money from the tobacco industry. ITC Limited, India's market leader in cigarettes, has contributed US$ 10,000. According to ITC's website, it has a leadership position in every segment of the market. Its portfolio of brands includes Insignia, India Kings, Classic, Gold Flake, Silk Cut, Navy Cut, Scissors, Capstan, Berkeley, Bristol and Flake.

In 2008, the World Health Organization (WHO) criticized the Compact for allowing tobacco companies to become members. A 19-page report faulted the UN initiative for harboring tobacco companies under its umbrella. "The tobacco industry and corporate social responsibility are an inherent contradiction. It is unfortunate that some tobacco companies have been able to join the Global Compact, which is an important corporate citizenship initiative," the study said.

Another tobacco company that participates in the Compact is Souza Cruz, a Brazilian subsidiary of British American Tobacco. The CEO of Souza Cruz signed a CEO statement on the occasion of the 60th anniversary of the Universal Declaration of Human Rights, even though the Global Compact Office does not permit tobacco companies to make presentations at any of its global events or to use the Global Compact brand in any other way to raise their profile.

Leading PR firm Edelman is expelled from the Global Compact – and reinstated, just like that

2011-03-02T20:53:00.013+01:00

Yesterday the UN Global Compact expelled leading PR firm Edelman for failure to communicate on progress (screenshot available). Remarkably, after an exchange of tweets on the subject, today Edelman was reinstated as a participant in the Compact.

Earlier today, Judy Kuszewski wrote an excellent blog post on the expulsion, based on information provided by Global Compact Critics:

"[…] Yesterday's second news item was a bit of embarrassment for PR giant Edelman – they of the much-vaunted and influential annual Trust Barometer, not to mention the myriad CR initiatives they have built for blue-chip clients. It seems they were expelled from the UN Global Compact for failure to submit their regular Communication on Progress, which was due a year ago. Today, it transpires (via a tweet, mind you, I don't have anything more substantial) that Edelman didn't get UNGC's emails reminding them to update their COP, so weren't aware they were in breach of the requirement until hearing about their expulsion yesterday. So apparently they'll be rectifying the situation post haste.

Let's just have a look at this in more detail:

1. They didn’t know they were in breach. This means nobody at Edelman pays any attention to the UNGC. It also means they aren't monitoring their own reputation, since the Global Compact Critics blog was already flagging their missing COP two months ago.

2. If this sort of thing had happened at IBM, Wal-Mart or ExxonMobil, Edelman would rightly point out it's up to the company to ensure their actions and communications provide a reliable basis for trust, and such mistakes speak to a deeper problem with the underlying issues. As the most recent Trust Barometer highlights, today's trust landscape is: "different and conditional, premised on what a company does and how it communicates… Trust is no longer a commodity that is acquired, but rather a benefit that is bestowed." Physician, heal thyself.

3. Edelman has no excuse. When I looked for further information on this story yesterday, I came upon the rather astonishing fact that the company experienced very nearly the same fate in 2008, when they had also run afoul of the COP requirement, again apparently unawares. Richard Edelman's blog post at the time turns lemons into lemonade by advising companies not to take their "friends in civil society for granted"; to "deal with a problem at the source"; and to "do all of this with speed". Looks to me like they have yet to take their own advice to heart.

Critics will contend that the real issue is with the Global Compact itself and the "fig leaf" factor it provides for companies not genuinely interested in responsible, accountable behavior; I'm not going to address that here. But I am quite dumbfounded that an organization of such expertise in corporate reputation could misunderstand so fully what's at stake with such a program, could manage its affairs so sloppily, and could do it all not once but repeatedly. And I'm afraid it does increase the critics' concern that the whole thing is a hollow exercise."

Judy’s blog post is available here.

Spain is world champion!

2011-01-29T17:29:00.013+01:00

On January 20, the UN Global Compact announced that 2,048 companies from around the world had been expelled for repeated failure to communicate on progress in integrating the initiative’s ten principles into their strategies and operations. The number was reached following the recent expulsion of more than 200 companies. This was at the end of a 2010 moratorium on expulsions in less developed countries. Following the recent expulsion, the total number of active business participants in the Global Compact stands at 6,066 companies in 132 countries.

In October 2010, the Compact introduced a differentiation framework, in a bid to motivate companies “to strive for greater integration of the principles”. The framework categorizes business participants based on levels of progress disclosure.

The list with expelled companies provided by the Global Compact Office forms an interesting basis for analysis. One of the most interesting findings is that about 65 percent of the expelled companies are small and medium-sized enterprises. Another noteworthy discovery is that some of the most efficient local networks are found in Ukraine, Belarus, Panama and Kenya, while local networks in China, USA and Switzerland lag far behind. In this blog post we provide an overview of the best and worst performing local networks. In our evaluation of efficiency, we have disregarded very small networks (with a membership of less than 50 companies since 2000).

Popularity

Spain is the absolute Global Compact champion, with 510 active business participants. France follows with 472 active companies. Other countries where the Compact is popular have a lot less business members. The local network in Brazil is smaller than the network in the United States, although the former has a higher number of active business members. The US has 274 business participants, of which 103 do not communicate on progress. The largest local network in Asia is the Chinese network, with 112 active companies and 48 non-communicating members. The networks in Africa are much smaller. The Kenyan network is the largest in Africa and consists of 44 business participants.

The Danish network is quite large compared to other networks in Northern Europe. This probably has to do with the law that requires the 1,100 largest companies in Denmark to report on their corporate responsibility efforts. It is mandatory for publicly listed companies, state-owned companies and institutional investors to include information on CSR in their annual financial reports. Participants in the Compact or signatories of the UN Principles for Responsible Investment (PRI) can refer to their Communication on Progress in these annual reports.

Most efficient networks

The top ten of most efficient local networks demonstrates that companies in certain developing countries and ex-communist states have been rather successful in complying with the Compact's reporting requirements. Kenya and Panama are very likely to have well-structured and informed local networks. Panama has 56 active and only three non-communicating members. Over 75 percent of the members of the Kenyan network since 2000 are active companies. Japan has the most efficient Global Compact network. 98 percent of the Global Compact members in Japan have complied with the policy on communicating on progress. Only two business members were expelled. Somehow unexpectedly, Belarus and Ukraine outperform Sweden and Denmark when it comes to the ratio of active companies to expelled and non-communicating companies.

Idle networks

Some networks have lost many more members than they have gained over the years. The most striking case is the Philippine network. Since its creation, nearly 90 percent of its business members were excluded. The networks in the Dominican Republic and Mexico have to deal with the same issue. Only 16 percent of the members of the Dominican network are active; over 80 companies have been expelled. In Mexico, 221 companies have been sent packing. Another 40 are failing to communicated on progress. Bulgaria has the most deficient network in Europe, with 35 active business participants, 10 non-communicating members and 48 expelled companies.

Winners in the non-compliance category

Typically, big and popular networks have had many business participants expelled for not complying with the Global Compact’s reporting requirements. France, which has the second largest Global Compact network, champions the list with expelled members. Since the introduction of the policy on communicating on progress, the French network has lost 230 business members. Another 148 French companies have failed to report on progress on time. Spain faces a similar problem. Although the country has the largest number of active Global Compact members in the world, 159 of its business participants have been ejected and 208 are currently not fulfilling the reporting requirements. Other countries with many ousted companies are Mexico (221), the Philippines (105), Argentina (103), China (97) and the Dominican Republic (84).

Poor communicators

Spain and France have the largest Global Compact networks, but also lead the list of networks with most non-communicating companies. The network in the United States stands out for its amount of non-communicating companies (103). Less than half of the business participants the US network has had since 2000 are active members. And by the way: US member Edelman is late again. The PR agency's communication on progress is now 11 months overdue (mirror), according to the Compact's database.

More detailed information on the best and worst performing Global Compact networks is available here and below.

CEO blind spots: revisiting the Accenture study about the Global Compact

2011-01-07T22:36:00.007+01:00

By Peter Utting, deputy director of UNRISD.

The Global Compact-Accenture study, “A New Era of Sustainability”, published on the occasion of the Global Compact Leaders Summit in June 2010, is said to be the largest inquiry of its kind ever undertaken. Some 766 CEOs responded to a survey that sought to gauge the extent of corporate commitment to the principles of sustainability and future prospects…

The study confirms the view that the main achievement of both the corporate social responsibility (CSR) movement, in general, and the Global Compact, in particular, has been their instrumental role in generating global awareness amongst the business community that sustainability matters for people, the planet and profits. It concludes that the key challenge now is not so much that of raising awareness but “execution”. But is this really the case?

With such a large number of respondents, readers of the study could be excused for thinking that the results are representative of the wider business community. The universe for this survey, however, is a particular category of business, namely the approximately 6,000 pro-CSR companies that have signed up to the Global Compact principles. This, of course, is a small fraction of the broader universe of companies that includes some 80,000 TNCs, their 800,000 affiliates, and millions of suppliers or SMEs. As regards the level of commitment to sustainability, other studies tell a more cautionary tale. For example, the world’s largest corporations still remain heavily “inactive” or “reactive”, as opposed to “active” and “proactive” on a range of CSR-related indicators (See Rob Van Tulder, 2008. “The Role of Business in Poverty Reduction: Towards a Sustainable Corporate Story”). The findings of the recent O2 survey of senior executives of 500 large UK companies suggests that embedding sustainability confronts some major hurdles and is not much of a priority in the wake of the global financial crisis (See “Short-term profits put corporate sustainability commitments at risk”, available here.

It is also important to ask what exactly are the CEO respondents to the survey aware of. For the purposes of the study, “sustainability” was defined as “encompass(ing) environment, social and corporate governance issues, as embodied in the UNGC’s ten principles”, which relate to human rights, labor standards, environment and anti-corruption (p.17). But the examples and views expressed suggest that sustainability relates primarily to environmental issues (for example, waste reduction, increased energy efficiency, investments in renewable energy sources). Apart from specific references to the Global Compact principles, the term human rights is mentioned only occasionally in the analysis; the words “labor” and “corruption” don’t even appear; neither do “wage” or “pay”, apart from the observation (p.52) that senior management should be paid for addressing sustainability issues. The “social” part of the sustainability equation is mentioned regularly in a general sense. The specifics, however, lean fairly heavily towards education and training.

Part of the problem may be the use of the term “sustainability”, which in many circles is often equated narrowly with environmental protection, even though the classic Brundtland definition of sustainable development refers to human needs and implies the integration or balancing of economic, social and environmental objectives of development. Another possible explanation relates to the dynamics of issues management. As Rob van Tulder points out, issues tend to come and go, and new or renewed attention to one issue can crowd out consideration of others. The CSR agenda is prone to fads and fashions or media and political concerns that focus attention on particular issues, be it, for example, child labor or, currently, climate change.

The narrow perspective of the CEOs is disappointing in view of the advances that have taken place within CSR thinking, which recognize that CSR is not simply about picking and choosing from a smorgasbord of issues. Rather, one yardstick of progress must relate to the willingness and ability of companies to systematically address a wide range of issues. Various institutions, processes and social pressures have aided this transition, not least the growing attention within the UN and civil society and academic organizations to how business relates to human rights, and the increased involvement of both trade unions and the ILO, with its decent work agenda, in CSR debates and processes.

Another major concern with the study has to do with the lack of data or analysis that allows readers to assess whether the commitment to sustainability and the process of embedding sustainability principles is substantive or skin deep. While 81 percent of the CEOs agree that environmental, social and corporate governance issues are “fully embedded into the strategy and operations” of their company (Figure 2-2, p. 33), it is not possible to gauge what implementation looks like in practice.

As regards “execution”, key challenges from the perspective of CEOs relate to the task of embedding sustainability issues in their supply chains and subsidiaries (Figure 2-4, p.35). To achieve this certain drivers need to be in place. What are the factors that drive CEOs to take action? The results suggest that these relate primarily to the need to protect and build brand, trust and reputation; the potential to increase revenues through cost reduction; personal motivation; and consumer demand (Fig 1-3, p.20).

What gets downplayed in this analysis are other institutional and political drivers of CSR related, for example, to regulation and civil society pressures. Indeed, in the view of the CEOs, NGOs are said to have declined in importance as a “stakeholder” driving businesses’ approach to sustainability (Figure 1-6, p.23). Given that the role of NGOs in the burgeoning CSR service industry and standards-based initiatives appears to have increased significantly in recent years, what might explain this observation? It may simply be because CEOs feel less hostile pressure from civil society campaigns, watch-dog organizations and the media spotlight. Indeed the report notes and praises the shift from confrontation to collaboration and partnership. It could also be because activism and advocacy organizations have engaged in “forum-shifting”, channeling their energies more towards strengthening institutions associated with corporate accountability rather than urging particular companies to adopt voluntary CSR initiatives. Such institutions connect CSR with law and public policy; oblige corporations to answer to or negotiate with different stakeholders; pay some sort of penalty in cases of non-compliance; and / or allow those whose livelihoods, rights and environment have been negatively affected by corporate practices to seek redress through judicial and non-judicial grievance procedures. Initiatives such as the UN business and human rights (Ruggie) process, International Framework Agreements promoted by the Global Union Federations, the current review of the OECD Guidelines for Multinational Enterprises, and the Asia Floor Wage Campaign are relevant in this regard.

On the question of regulation, the study projects a note of realism, revealing that CEOs expect more intervention from governments in the coming years. This is not surprising in the context of the global financial crisis (and the BP disaster), which exposed the dangers of excessive voluntarism, de-regulation and, indeed, what might be called cosy capitalism where relations between governments and big business had become too close for comfort. There is now wider agreement that national and international law and public policy have a crucial role to play in regulating markets. Interestingly, the CEO respondents appear to approve of such developments: 60% said their company would welcome increased government intervention (Figure 2-5, p.37). This rose to two-thirds in the case of CEOs from the smallest corporations (revenues below $250 million). The CEOs of the largest corporations (revenues over $10 billion), however, were of a different opinion. Whereas 81% in this category believed more government intervention was on the way, only 37% said they welcomed it. Since these are the players with considerable political, ideological and policy influence, this is a worrisome finding, albeit not particularly surprising.

What do CEOs want the Global Compact to do to assist them with the task of moving from awareness to execution? At the top of their list are learning about best practices and guidance on implementation. The above concerns suggest that the Global Compact learning networks may first need to go back to basics to remind CEOs of what sustainability is really about and the multiple drivers involved.

To read the Accenture study, click here.

Source: United Nations Research Institute for Social Development (7/1/2011) / © Illustration by Ross Orr.

Union federations: Roquette's actions undermine the legitimacy of the Global Compact

2010-12-10T09:11:00.008+01:00

The AFL-CIO has joined with the International Union of Foodworkers (IUF) and the International Federation of Chemical, Energy, Mine and General Workers’ Unions (ICEM) in a global call to action against France-based Roquette Frères. Some 240 workers, members of The Bakery, Confectionery, Tobacco Workers and Grain Millers (BCTGM) Local 48G union have been locked out of their jobs for more than two months at Roquette’s corn milling facility in Keokuk, Iowa.

The federations are urging the United Nations Global Compact to hold Roquette accountable for failing to comply with the third principle of the Global Compact, which reads “Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining”. Last year Roquette signed the Compact and in 2010 the company submitted its first communication on progress.

According to the unions, Roquette locked out the workers after they rejected company proposals that would cut wages, eliminate or reduce key benefits and undermine employee rights to bargain over other important terms and conditions of employment.

IUF, with the assistance of the European office of the AFL-CIO, has launched a global campaign asking union members around the world to support the Keokuk workers. Supporters can send an e-mail to Roquette’s management and urge Roquette to treat the Keokuk workers fairly.

In a letter to George Kell, executive head of UN Global Compact, AFL-CIO President Richard Trumka said:

"We believe that Roquette Frères actions undermine the legitimacy of the Global Compact: a company should not be able to claim in international fora that it supports the Global Compact while in reality it is systematically violating fundamental human rights."

More information about the lockout at Roquette America is available here. The letter to the Global Compact Office can be read here.

Source: AFL-CIO Now Blog (9/12/2010).

CSR in emerging economies: style still trumps substance

2010-06-23T19:21:00.005+02:00

By Hugh Williamson, Financial Times.

A global business summit starting on Thursday in New York will be a showcase for companies from emerging economies looking to highlight their credentials in promoting ethical corporate values. But there are questions about whether there is real substance behind their glossy presentations.

Over a thousand people are expected at the June 24-25 “leaders’ summit” of the United Nations’ Global Compact, the world’s largest corporate social responsibility initiative, including hundreds of executives from emerging economies, where CSR has been catching on in recent years.

The Global Compact promotes good business behaviour based on ten principles concerning human rights, the environment, labour and anti-corruption and has over 6,000 companies as members. Just under half of these are from non-OECD countries, a sharp increase from the Compact’s launch a decade ago, when western multinationals dominated.

Even critics agree that the Compact has helped spread the word on business ethics to countries where conditions are tough, and has helped build the bottom-line case - rather than just the moral or philanthropic one - for better behaviour.

But critics question whether the surge in membership actually means more companies are behaving better, or whether many polluters and abusers see the Compact as an opportunity to polish their image while doing little to fulfil the ten principles.

The Institute for Human Rights and Business, a London-based think tank, notes in a study this week on the Compact that it is too often seen as a “talking shop”. The initiative should “raise the bar” by expecting much more measurable commitment from companies.

The role of Chinese companies highlights the dilemma facing the Compact. Around 160 are now members (similar to the British total) including four big state-owned enterprises - Petrochina, China Development Bank, China Minmetals and China NTG Gas Group - that are among the summit’s main sponsors, together paying $300,000 to buy some good PR.

The Compact argues that it’s better to have such key players “inside the tent” of global efforts to improve standards rather than outside. Yet as the FT’s Beijing correspondent Jamil Anderlini notes: “The explicit role of these companies is to support and extend Chinese state policies and carry out the policies and directives of the ruling Communist Party”. Some of the sponsors are “associated with shocking levels of pollution within the country and numerous environmentally questionable projects abroad” and could not meaningfully implement the principles on trade unions or human rights as they violate Communist policy. He concludes: “CSR has become a hot topic in China in recent years but the debate often centres around the need to introduce this concept for foreign consumption as China’s “national champion” state enterprises expand abroad.”

Georg Kell, the Compact’s executive director, counters that despite Chinese politics, it is possible “within such companies to establish value-based frameworks” compatible with the Compact.

It would be helpful if any commitments such companies made to the Compact could be tested, but they cannot. Companies must submit statements saying how they are complying with the ten principles but there is no system for checking they are doing what they say.

Companies can be “delisted” for not submitting these statements, and over 1,800 have been ejected, many of them from non-OECD countries, suggesting the rate of non-compliance with Compact standards is high.

Yet, oddly, the Compact recently suspended for 12 months the process of delisting non-compliant companies from non-OECD countries, giving breathing space to rule-breakers, because, says Mr Kell, too many were being thrown out.

Irene Khan, until recently the global head of Amnesty International, a Compact supporter, says “the strength of the Compact, in encouraging many companies around the world to join, could become its weakness unless it really has an honest look at what impact it is having on its corporate members’ behaviour”.

This week’s New York jamboree would be a good place to start.

Source: Financial Times (23/6/2010) / © Photo by UN Photo / Eskinder Debebe.

Water corporations use United Nations to bluewash abuses

2010-06-23T12:42:00.013+02:00

By Corporate Accountability International.

New York, NY – Corporate Accountability International released a report today, “Water governance: for the people or for the bottom line?” examining how a joint United Nations-corporate initiative threatens the way water resources are managed globally. Its release precedes the tenth anniversary gathering for the United Nations Global Compact this week. The Compact’s CEO Water Mandate is a voluntary initiative addressing the human right to water by partnering with corporations contributing to and profiting from today’s global water crisis.

“The United Nations is in a state of conflict. On the one hand, it tries to promote democratic water governance as the key to solving the global water crisis,” said Kelle Louaillier, Corporate Accountability International executive director. “On the other, it partners with corporations that profit from water scarcity and commodification. It’s a recipe for millions going thirsty to satisfy the thirst for profit of a handful of corporations.”

For the last three years, civil society has called on Secretary-General Ban Ki-moon to withdraw United Nations support from the Mandate. This week a “transparency framework” will be released in an attempt to placate the Mandate’s critics. But as Corporate Accountability International’s report points out, the problem with the Mandate is rooted in its very structure.

“The core problem is that the Mandate’s presence within the United Nations is itself a fundamental conflict of interest,” said Louaillier. “The United Nations’ sponsorship trades accountability for ‘partnership,’ blurring the lines between the private and public sector. This institutionalizes – rather than guards against – relationships with corporations that pose real and potential conflicts of interest, which is particularly dangerous when it comes to water.”

“Water governance: for the people or for the bottom line?” draws attention to recently adopted, strong guidelines protecting against such corporate conflicts of interest in the global tobacco treaty—one of the most quickly and widely embraced treaties in United Nations’ history. Corporate Accountability International is calling on the United Nations to establish clear and enforceable standards across U.N. agencies that protect the public interest from corporate conflicts of interest.

“Issues like the global water crisis are too important to be shaped by the corporate bottom line – the world’s people, not the world’s largest corporations should be in the driver’s seat,” said Louaillier.

Key recommendations

Governments must safeguard against conflicts of interest, including avoiding situations when voluntary initiatives or partnerships undermine governments’ effectiveness, objectivity and credibility.

The United Nations should have stronger standards and safeguards throughout the institution as a whole to prevent and address corporate conflicts of interest. The U.N. should not be the institutional home for initiatives that are conceived of and driven by corporations.

Swift and concrete action by the U.N. is needed to address the concerns raised in this paper. Our recommendations for such action are as follows:

- Have the United Nations establish clear and enforceable standards preventing corporate conflict of interest, based on the principles set forth in Article 5.3 of the Framework Convention on Tobacco Control that guard against conflicts of interest and preserve and protect the primacy of human rights over commercial enterprise.
- Have the United Nations withdraw its institutional support from the CEO Water Mandate.

Contact

Christina Rossi
crossi (a) stopcorporateabuse.org

What if we are failing? - towards a post-crisis Compact for systemic change

2010-06-19T18:39:00.007+02:00

By Dr. Jem Bendell, Griffith Business School, Lifeworth and the Journal of Corporate Citizenship.

Has the UN Global Compact failed? This question deserves as much attention as the search for evidence of success, if we are to be rigorous in our evaluation. Success or failure depends on what one seeks to achieve. There are multiple aims for the UN, its member organizations, the corporate participants, and the individuals involved, but the stated objectives of the UNGC are:

1. Mainstream the UNGC principles in business activities around the world

2. Catalyze actions in support of broader UN goals, including the Millennium Development Goals (MDGs)

The UNGC has become the largest and most international of voluntary responsible business and finance initiatives, with over 5000 members. It is normal for people involved in innovative and well-intentioned activities to gather information to demonstrate the worth of what is being done and recruit more people to the cause. Yet growth should not be confused with success. And growth brings with it the need for more critical introspection. In this essay I argue that experience of the Western financial crisis makes it even more imperative that economic governance issues, hitherto peripheral to the focus of the Compact, must now become central to its future.

Considering the first goal, we remain far from the Compact's principles on the environment, labor, rights and corruption becoming mainstream in the operations of any business sector, in any nation. Global indicators on the state of the environment, labor practices, human rights and corruption are heading in the wrong direction. Statistics about increasing carbon emissions, rates of deforestation, and forced labor, for instance, are also statistics about the effects of irresponsible or unsustainable enterprises.

Considering the second goal of the Compact, it is sad to note that poverty still persists. Apart from a few successes, including Rwanda, Mozambique and Bangladesh, progress towards the Millennium Development Goals is slow, or even in the wrong direction. At the current rate, sub-Saharan Africa will probably not meet the sanitation portion of the MDGs until 2105. Beyond the MDGs, the role of UN in other world affairs has been shaken in the past decade. On security issues, controversy surrounded the invasion and occupation of Iraq.

This downbeat summary reminds us that the overarching objectives of the UN Global Compact, to mainstream the principles and galvanize business to support UN goals, currently appear unmet. Clearly these are aspirational goals, and it would be impossible to reach them in one decade alone. If we consider them unachievable, we could recall Sir Winston Churchill's comment that "success is the ability to go from one failure to another with no loss of enthusiasm." Yet let us for a moment believe these goals are indeed achievable. For if we do that we can assess how current activities are likely to achieve those goals, or what else could be done. That invites us to reflect on and discuss our strategies for creating the scale of change embodied in the goals. For instance, is the strategy for the Compact to do much more of the same, with 5,000 companies growing to 5 million companies? On current rates of recruitment the Compact would have that many members in 10,000 years. But even if the rate of membership increases exponentially, that would not necessarily translate into achievement of the goals. Other change-strategies are required, ones that address the systemic causes of why enterprise and finance does not always embody the goals of the UNGC.

To read the whole essay, click here (PDF).

Global Compact on BP: "Big accidents happen all the time"

2010-06-15T21:34:00.015+02:00

Yesterday Georg Kell, the executive director of the UN Global Compact, presented the 2009 Global Compact Annual Review, at a press briefing at the UN headquarters in New York.

Journalist Matthew Lee from Inner City Press used the occasion to ask Mr. Kell several critical questions about the functioning of the Compact. Mr. Kell's most remarkable answers were related to BP's participation in the Global Compact. In response to one of Mr. Lee's questions, Mr. Kell said: "BP hasn't been active in the Compact for the past two years. That is a fact. They haven't been active. I think their current status is non-communicating. They have not done a communication on progress.”

The executive director of the Compact got it wrong here. BP has in fact always been an exemplary Global Compact participant. It was one of the first multinationals to join the Compact in 2000 and has ever since complied with all of the (loose) requirements of the initiative.

Later during the press briefing, when Mr. Lee further inquired about BP's participation in the Compact, Mr. Kell tried to minimize the impact of corporate wrongdoing: "Generally speaking - and that sounds a bit initiative-selfish - big accidents and things happen all the time. It's the nature of modern life. Whenever things happen and whenever human beings are involved, the key is to learn from it and to make the right lessons. We have a whole history now of major corporations which at some point in time claimed: 'we are best in class', and the next month or so they are confronted with a major, major debacle. Then they go back to the drawing board and discover that indeed, in the first phase, they were not as serious as they thought they were in being prepared. Our contribution as a voluntary initiative is always to learn from these examples."

More information about the press briefing is available here and here.

Update (June 17, 2010): In response to this blog post, the UN Global Compact Office sent us a clarifying statement in which it expresses its "great concern over the environmental, ecological and economic crisis occurring in the Gulf of Mexico". In the statement, the Office also corrects the record and notes that BP is, in fact, a communicating participant in the Compact. According to the statement, BP's engagement in the Compact has been "lagging in recent years". BP is therefore asked to "re-commit to the Global Compact principles and strengthen its engagement in the initiative". The statement is available here.

© Illustration by Lyon Burke.

Global Compact and Prof. John Ruggie try to explain relationship

2010-06-09T11:47:00.027+02:00

The UN Global Compact and the special representative on Business and Human Rights, Prof. John Ruggie, have issued a memo to explain the relationship between the Compact and the policy framework for business and human rights developed by the special representative of the UN secretary-general.

Mr. Ruggie's framework is organized around three foundational principles of “protect, respect and remedy”: the state duty to protect against human rights abuses by third parties, including business; the corporate responsibility to respect human rights; and the need for more effective access to remedies.

The authors of the memo explain that the policy framework for business and human rights "provides further operational clarity" for the human rights principles of the UN Global Compact. Principle 1 calls upon companies to respect and support the protection of internationally proclaimed human rights; and principle 2 calls upon them to ensure that they are not complicit in human rights abuses.

Curiously, the memo introduces a distinction between respecting and supporting human rights, as if the latter were not equally important as the former. According to the memo, companies have a "responsibility to respect" human rights, while the "commitment to support" them is voluntary. Hence, in theory, a company that respects human rights could either support or not support them.

Making such a distinction is not helpful to most businesses. In the guidance on principle 1, the UN Global Compact Office acknowledges that "in practice, respect and support for human rights are often closely interlinked in terms of the management steps that can be taken to enable and ensure respect and support for human rights."

Why should “respect” for human rights be required and “support” be optional?

What happened with the complaint against Nestlé?

2010-05-29T15:55:00.004+02:00

In June 2009 a coalition of organizations registered complaints regarding Nestlé S.A. to the Global Compact Office and the Swiss National Contact Point (NCP) for the OECD Guidelines for Multinational Enterprises. Both stressed that they are responsible for voluntary initiatives and that they are only prepared to promote dialogue. Although the UN Global Compact Office has powers to exclude companies, it stated: "Of course, abuses of the 10 Principles do occur; however we believe that such abuses only indicate that it is important for the company to remain in the Compact and learn from its mistakes."

The organizations that submitted the complaint, led by British civil organization Baby Milk Action, alleged that the reports posted by Nestlé on the Compact’s website “were misleading and that Nestlé was, in truth, responsible for egregious violations of the Global Compact Principles”. Baby Milk Action cited the Integrity Measures that accompany the Principles and called for Nestlé to be excluded for the violations and for bringing the initiative into disrepute by using it in its public relations campaign to divert criticism so that violations may continue.

The complaint was presented in the publication Nestlé's UN Global Compact cover up, which included information from various civil society organisations alleging violations in the areas of:

- aggressive marketing of baby milks and foods and undermining of breastfeeding, in breach of international standards;

- trade union busting and failing to act on related court decisions;

- failure to act on child labour and slavery in its cocoa supply chain;

- exploitation of farmers, particularly in the dairy and coffee sectors;

- environmental degradation, particularly of water resources.

In response, the Global Compact Office stressed that the initiative is voluntary and that it “is not a mediation, dispute resolution, or adjudicative body, nor is it an enforcement agency. Rather, its integrity measures are designed to facilitate communication and dialogue.”

Baby Milk Action pointed out that they were already in “dialogue” with Nestlé and that the company was refusing to make necessary changes, or had made promises that were not being delivered. According to the organization, Nestlé’s response to the complaint showed that its position was unchanged. Baby Milk Action asked the UN Global Compact Office to review the evidence submitted and its communications with Nestlé as called for under the Integrity Measures, with a view to excluding Nestlé. The Global Compact argued it was not its role to conduct such a review and commented: “Of course, abuses of the 10 Principles do occur; however we believe that such abuses only indicate that it is important for the company to remain in the Compact and learn from its mistakes.”

Baby Milk Action informed the UN Global Compact Office that, while it would continue to copy the Office into its ongoing “dialogue” with Nestlé and encourage the Compact to exclude Nestlé, “the correspondence with the Office had demonstrated that it was incapable or unwilling to take any action to stop the violations and that far from improving corporate behavior it was, in this instance at least, complicit in allowing violations to continue by providing legitimacy to misleading reports - which it refused to evaluate - and public relations cover.”

BP shows the need for a rethink of regulation

2010-05-27T22:32:00.006+02:00

By David Scheffer*, the Financial Times.

One thing at least is certain after BP’s makeover of the Gulf of Mexico into a sludge pit: corporate self-regulation and public oversight have failed. We need to rethink how companies operate in a fragile world and how governments monitor them.

During the past 15 years a fresh perspective on the behaviour of multinationals has taken hold in multilateral organisations, in the European Commission and, at least rhetorically, in thousands of companies. “Corporate social responsibility” refers to a company’s duty beyond the technical requirements of national laws and regulations to comply with global principles of human rights, fair labour, environmental protection and corruption-free management. The United Nations Global Compact, which enshrines and promotes these principles, has garnered the “active” support of many companies worldwide including, for a while, BP but not its Gulf partners, Halliburton and Transocean, or its rival Chevron.

As a result, a new regime of self-regulation guided by voluntary principles has emerged with the blessing of the UN and many governments and trade bodies. But egregious assaults on civilian populations, the environment and workers’ rights continue, often with the assistance of corporate funding and contractual relationships that sanction others to ignore Global Compact principles. The pursuit of maximum profit seems destined to prevail.

BP is exhibit A. For years it has promoted its “green” credentials to the point of transforming its logo, advertising and website into celebrations of the environment. The public relations division trumpets the company’s commitment to human rights and fair labour standards. Like some other companies, BP issues annual sustainability reports attesting to its compliance efforts in these fields. But BP’s catastrophic gusher shows how corporate hype can peddle an illusion at the expense of the oceans.

President Barack Obama’s declaration that “we will trust, but we will verify” sounds reassuring. But for some time the assumption has been that companies would regulate themselves and be competently monitored for the public good. Nothing could be further from the truth.

Government officials doubtless were seduced by rhetorical embraces of CSR. While officials of the US Minerals Management Service were betraying the public’s trust in them, they could point to all that green publicity of BP and other petroleum giants and sit back.

So trust has died south-east of New Orleans. But BP’s gusher is only one example of a bigger problem. Litigation in federal and foreign courts continues to reveal corporate malfeasance against the human rights of indigenous peoples, labourers, vast stretches of the environment and anti-corruption rules. The archaic notion that companies should serve the public’s interest merits revival. We desperately need companies that pursue the common good, not only through contributions to free markets but also through CSR.

BP has broken the mould of self-regulation. With all companies now operating in its shadow, we need tougher enforcement of CSR. Manipulation of objectives by PR departments has to stop. Congress should mandate that multinationals incorporated or operating in the US should create professionally staffed divisions to uphold Global Compact principles and core duties set forth in more enlightened codes of conduct. In a move beyond feelgood ethics and anaemic committees, compliance divisions should report directly to chief management and the board of directors, and periodically file public sustainability reports to regulatory bureaux in Washington ramped up for rigorous oversight.

Compliance divisions should act with independent authority (like police departments’ internal affairs offices) to enforce CSR and compel planning for worst-case scenarios. Conventional risk assessment reports focus on what risks might impair investors’ confidence in a company. Future ones should also examine the catastrophic risks that would undermine society’s confidence.

The advantages of a vigorous free-market economy compete now with the risks that corporate behemoths pose to core societal values, not least the integrity of the ecosphere and our common survival. With trust dead and buried, it is now a case of “comply and verify”.

* The writer is a professor at Northwestern University School of Law in Chicago.

Source: Financial Times (27/5/2010).

How "sphere of influence" was introduced into the Global Compact

2010-05-08T20:10:00.034+02:00

In an widely circulated e-mail sent to the French ambassador for CSR in April 2010, professor John Ruggie wrote: "I should begin with a confession: it was Georg Kell and I who introduced the concept 'sphere of influence' into the Global Compact when we first created it. Our aim at the time was quite modest: to provide companies with an analytical device, a metaphor if you will, to begin thinking about corporate responsibility issues beyond the workplace. […] as a first approximation the concept seemed appropriate to the task."

Things are different now. Mr. Ruggie, now as the Special Representative of the UN Secretary-General on Business and Human Rights, is skeptical about using "sphere of influence". He believes that the concept of impact is a more objective basis for attributing responsibility than influence. According to Mr. Ruggie, "impact" doesn’t presuppose any geographic or spatial formula. In Ruggie's Framework for Business and Human Rights, "impact" has replaced "influence". In his framework Mr. Ruggie also introduces the concept of due diligence, which is the process whereby impact is identified and addressed.

A close look at the UN Global Compact reveals that the concept of sphere of influence was originally part of the first principle. Later it became an overarching concept, applicable to all of the ten principles. It was then included in the preamble of the Compact.

When the Compact was launched on January 31, 1999, UN Secretary-General Kofi Annan asked world business to "support and respect the protection of international human rights within their sphere of influence." This phrase became the text of the first principle of the Global Compact. By 2005, the phrase "within their sphere of influence" was excluded. The first principle now reads: "Businesses should support and respect the protection of internationally proclaimed human rights ~~within their sphere of influence~~". In 2006, the phrase was reintroduced in the first principle. A year later, apparently it was dropped for good. The concept "sphere of influence" was moved to the preamble, which currently reads: "The Global Compact asks companies to embrace, support and enact, within their sphere of influence, a set of core values in the areas of human rights, labour standards, the environment, and anti-corruption."

Curiously, the Compact now seems to use two different versions of the first principle on its website. On this page it still uses the version with the phrase "within their sphere of influence", while on this page the principle is just "Businesses should support and respect the protection of internationally proclaimed human rights ~~within their sphere of influence~~". (note: the Global Compact Office made changes to these pages after noticing there was an inconsistency - 20/5/2010)

It will be interesting to see whether "sphere of influence" will be kept as a key concept in spite of Mr. Ruggie's recent criticism on its usefulness in the context of human rights and business.

Consumers International: Global Compact supermarkets not up to scratch

2010-05-07T17:11:00.008+02:00

Checked out: Are supermarkets taking responsibility for labour conditions in developing countries?, a new report from Consumers International (CI), was presented to the UN on 30 March, and some of the companies scoring lowest turned out to be members of the UN Global Compact, through which companies claim to sign on to labor rights principles.

The Checked out report looks at European supermarkets' policies on corporate social responsibility (CSR), labor conditions and fair trading relations in developing country food supply chains. Catherine Nicholson, senior project coordinator with CI, said: "We don't feel these companies are doing enough to [stock or promote] products that consumers could buy as sustainable alternatives."

Despite some good policies, the report found many supermarket policies on working conditions did not apply throughout developing country food supply chains - they had limited policies to ensure their trading relations were fair and there was a pervasive lack of information and transparency.

Read more at Consumers International's website.