Global Compact Critics

Mango linked to Bangladesh factory collapse?

2013-04-25T16:14:00.001+02:00

On April 24, an eight-storey building collapsed in in Savar, near Dhaka, Bangladesh, causing the death of over 200 people, and injuring more than 1200 others. The building accommodated a number of garment factories including Ether Tex, New Wave Bottoms, New Wave Style, Phantom Apparel and Phantom Tac.. Activists who entered the ruins after the tragedy found labels and documentation linking the manufacturers to various European and US brands and retailers. Preliminary evidence also points to the Spanish high street brand and Global Compact participant Mango. In a statement issued by Mango, the company said that they were in conversation with Phantom Apparel to produce a test order.The Rana Plaza building collapse is yet another tragedy in a series of factory accidents in the export oriented Bangladesh garment industry where sub-standard buildings, poor emergency procedures, blocked fire exits, overcrowded workplaces, and vastly inadequate control and auditing practices are rife.

Discussion: What to do with the bad apples in the Global Compact?

2013-01-15T15:44:00.001+01:00

Response to guest blog by Patrick Haack, by Mariëtte van Huijstee, Corporate Accountability Coordinator and Researcher at SOMO

Photo: Kaptain Kobold

In his guest blog, Patrick Haack raises an interesting question with regard to whether exit criteria for companies in multi-stakeholder initiatives like the Global Compact are beneficial in terms of contributing to sustainable and inclusive development and addressing global governance gaps. He argues that by throwing out the “bad apples” (that is: underperforming companies), the opportunity to inspire and motivate these companies towards better performance in the areas of human rights, labour standards, the environment, and anti-corruption, in dialogue with co-members, is lost.

In the end, he argues, this means the initiative will fail, as it will have failed to turn around the bad apples in to nice and sweet ones.

I agree that one of the main values of an initiative like the Global Compact is that of shared learning between its members: by sharing experiences, dilemmas and best practices, companies can become inspired and learn...
from each other how to address challenges in the abovementioned areas. Another feature of the Global Compact is the low entry barrier, as unlike some other multi-stakeholder initiatives, it allows “bad apples” to enter the initiative, creating the opportunity for these companies to become inspired and change their behaviour. Unfortunately, some companies do not seem to be interested in such learning experiences, but are most of all interested in “blue washing” their image by means of the UN Global Compact logo.

The fundamental debate here seems to boil down to whether punishment or reward is the best strategy to change attitudes and behaviour of big business. Attitudinal and behavioural change, Haack argues, is more likely to be achieved through persuasion, learning and dialogue between business firms, government and civil society organizations then through punishment. I argue we need both: reward the well behaving companies, and punish the ones that continue to lag behind and fail to meet minimum standards time and again. In other words: we need the carrot and the stick. Without the stick, the motivation for behavioural change remains absent.

Haack frames the integrity measure of delisting companies from Global Compact membership as a punishment. I think this is a very mild punishment, and as such, indeed won’t be effective in disciplining the bad apples. Alternatively, I frame the Global Compact membership as a reward: by committing to the ten principles, the company is rewarded with a membership and allowed to use the UN Global Compact logo. In my view, only companies that demonstrably intend to improve their practices deserve this reward. Otherwise, the reward itself degrades and looses its legitimacy and inspirational value.

So while I agree with Haack that the low entry barriers of the Global Compact have beneficial aspects, in terms of exit criteria I would argue the other way around: by keeping bad apples in at all times, the initiative loses its legitimacy and appeal for other companies in the long run. Thus motivating bad apples and providing them with time and resources to overcome organizational barriers may indeed be the preferred route to follow in the Global Compact context, but there has to be a clear timeline for verifiable improvements in performance against the ten principles. Mutual persuasion and learning amongst Global Compact members is indeed an important tool, but if it does not materialise, there must be a consequence at a certain point. By allowing for improvement trajectories and clear timelines, the Global Compact will be able to inspire some of the underperforming companies. And if time and again companies fail to meet the principles, they should be delisted to remain the integrity of the Global Compact.

Join the discussion: What to do with the “bad apples” in the Global Compact?

2013-01-08T17:04:00.001+01:00

The United Nations Global Compact is the world’s largest voluntary corporate accountability initiative, with the number of corporate members exceeding seven thousand. The Global Compact aims to “encourage businesses worldwide to adopt sustainable and socially responsible policies and practices”. Participants of the Global Compact commit to implement ten principles in the areas of human rights, labour, the environment and anti-corruption. The Global Compact aims to stimulate change by facilitating learning, dialogue and partnerships. It does not “police or enforce the behavior or actions of companies”.

The lack of monitoring and enforcement mechanisms has been criticized by many civil society organisations and other actors. For instance, many have argued that companies that are involved in serious violations of the Compact’s principles should be delisted (see for example the complaints against DeutschePost DHL, Lifosa, Nestlé, Bayer and PetroChina).

Patrick Haack, postdoctoral researcher at the University of Zurich is of another opinion. According to Haack, “delisting and related measures are more likely to “backfire” and prove detrimental to the cause of global sustainability by alienating business participants“. Attitudinal and behavorial change, he argues, is more likely to be achieved through persuasion, learning and dialogue between business firms, government and civil society organizations. “Keeping bad apples and providing them with time and resources to overcome organizational barriers may prove more fruitful than unconditional punishment.”

Click here to read Patrik Haack’s article: ‘Managing the legitimacy commons in transnational governance: Why keeping bad apples, instead of sacking them, can lead to global sustainability’.

Join the discussion!

We are interested in learning the position our readers take in this discussion and welcome you all to participate in it. If you would like to react on Patrick’s article, please send your reaction to m.theuws[at]somo.nl or use the reaction field.

photo: retrieved from http://www.goldcoast.qld.gov.au/library/t_library.aspx?pid=10307

Managing the legitimacy commons in transnational governance: Why keeping bad apples, instead of sacking them, can lead to global sustainability

2013-01-08T16:55:00.000+01:00

Guest blog by Patrick Haack, postdoctoral researcher at the University of Zurich

In the realm of transnational governance, where public and private actors participate in hybrid policy networks and provide global public goods, the United Nations Global Compact constitutes an organizational collective whose participants involve other organizations such as national governments, civil society organizations and private business firms. These actors jointly promote the alignment of business operations with ten principles in the areas of human rights, labor standards, the environment, and anti-corruption. Launched in 2000 by the then General Secretary Kofi Annan, the Global Compact’s current (as of November 2012) base of 7,071 signatory companies makes it globally the largest of transnational organizations.

Notwithstanding this success, empirical research demonstrates that the adoption of the Compact’s principles, reflected in the extent of their implementation, leaves a lot to be desired (Baumann-Pauly and Scherer, forthcoming). The Compact has been criticized for its lack of criteria that measure performance, monitoring and sanctioning. For instance, in 2008 over 80 civil society organizations blamed the Chinese oil company and Global Compact signatory PetroChina for the “systematic or egregious abuse” of the Compact’s principles (Investors Against Genocide 2009). According to the critics, PetroChina failed to use its financial ties with the Sudanese government in order to promote measures that would end human rights violations in Darfur. Furthermore, they argued that the Compact’s unwillingness to critically engage with PetroChina impaired the integrity and credibility of the transnational organization itself. Thus, the signatory’s perceived disregard of the Compact’s principle 2 in particular, which stipulates that businesses ought to “make sure that they are not complicit in human rights abuses,” aggravated by mass-mediated scandalization, damaged the corporate signatory’s standing and also discredited the Global Compact. This illustrative case reveals that, as an emerging transnational organization, the Global Compact is evaluated in conjunction with its organizational constituents.

The idea that social approval for an overarching entity, such as a transnational organization, can be dissipated and ultimately destroyed by the inconsiderate behaviour of its subunits (Barnett 2006) is a consequence of the so-called “legitimacy commons.” The term describes the idea that legitimacy resembles an intangible, collectively owned, non-rival resource that can be impaired by association. Given that new organizations need to acquire legitimacy in order to secure organizational growth and survival (Aldrich and Fiol 1994), it follows that transnational entities have an interest in “privatizing” the legitimacy commons by actively differentiating themselves from discredited participants and encouraging stakeholders to assess accurately the transnational entities in question.

The Global Compact’s integrity measures provide the possibility to “delist” corporate signatories in cases they misuse the association with the United Nations, fail to comply with the Compact’s reporting requirement, and refuse to engage in dialogue on “credible allegations of systematic or egregious abuse of the Global Compact’s overall aims and principles” (Global Compact 2011). The possibility of delisting notwithstanding, the question arises whether “sacking bad apples” – discredited participants, that is – is a wise tactic for acquiring legitimacy, boosting the image of a sound and valid entity, and ultimately acquiring resources and influence to address global governance gaps. Delisting undoubtedly pleases important stakeholders, and may enhance the short-term image of the transnational organization in their eyes. However, if transnational organizations wish to safeguard their own integrity and bolster their legitimacy, they also need to foster new models of global management, not exclusively based on the pre-eminence of economic factors, and this requires them to exert normative influence.

Efforts to build and consolidate global institutions will only succeed when organizational actors make sense of the disruption of profit-driven routines and habits, and when unfamiliar and incomprehensible practices become meaningful in a way that they create behavioral support and become enacted. Punishing business firms for failing to align their actions with their commitments will hardly help establish global norms of transnational organizing aimed at supporting principles such as those on which the Global Compact is based. In fact, delisting and related measures are more likely to “backfire” and prove detrimental to the cause of global sustainability by alienating business participants and leading to the entrenchment of pre-existing (i.e. profit-oriented) schemata and habits. Attitudinal and behavioral change is more likely to be achieved through persuasion, learning, and dialogue between business firms, governments and civil society organizations. Troubled companies require encouragement and learning opportunities, not social sanctioning.

This leads to a paradox: on the one hand, the association with “bad apples” can endanger the legitimacy of a transnational organization, which necessitates measures to prevent “negative spillover” that could “contaminate” its reputation. On the other hand, the architects of transnational governance want the problematic companies to join the overarching organization, in order to expose and “enlighten” them with the rationale of global sustainability. In an effort to accommodate both the protection of its legitimacy and the provision of learning opportunities, in 2010 the Global Compact introduced a “differentiation framework” with different performance levels designed “to help all companies in the Global Compact improve sustainability performance and disclosure and to give recognition for progress made” (Global Compact 2010). Furthermore, the Global Compact offered a moratorium for delisting companies from non-OECD/G20 countries, given their difficulties to thoroughly report on their implementation efforts.

Such a “soft” and consensual approach is in the best interest of the Global Compact and transnational governance more generally. Increased participation will help transnational organizations enhance their moral and cognitive validity. The manifest ubiquity and proliferation of best-practice examples will make corporate participants increasingly realize the need to honor their promises, divert resources away from more established forms of organizing, and thoroughly implement the principles of sustainability. In contrast, high entry barriers and more rigorous enforcement mechanisms may slow down the institutionalization of global sustainability or limit it to a small number of organizational actors. Thus, “keeping bad apples” and providing them with time and resources to overcome organizational barriers may prove more fruitful than unconditional punishment. Striking the balance between the detrimental consequences of organizational interdependence and the beneficial impact of mutual persuasion and learning will constitute a major challenge to decision and policy-making in transnational governance.

References:

Aldrich, HE & Fiol CM 1994, ‘Fools rush in? The institutional context of industry creation’, Academy of Management Review, vol. 19, no. 4, pp. 645-670.

Barnett, ML 2006, ‘Waves of collectivizing: a dynamic model of competition and cooperation over the life of an industry’, Corporate Reputation Review vol. 8, no. 4, pp. 272-292.

Baumann-Pauly, D & Scherer, AG, ‘The Organizational Implementation of Corporate Citizenship: An Assessment Tool and its Application at UN Global Compact Participants’. Forthcoming in Journal of Business Ethics.

Global Compact 2010, Global Compact introduces differentiation framework, United Nations Global Compact Website, viewed 17 June 2011, http://tinyurl.com/3gqjumd.

Global Compact 2011, Integrity measures, United Nations Global Compact Website, viewed 17 June 2011, http://tinyurl.com/3nqo9eu.

Investors Against Genocide 2009, UNGC and PetroChina sign-on letter–text, viewed 17 June 2011, http://globalcompactcritics.blogspot.ch/2009/01/ngos-to-further-challenge-un-global.html

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Join the discussion!

Global Compact Critics is interested in learning the position readers take in this discussion. We welcome you all to participate in it. If you would like to react on Patrick’s article, please send your reaction to m.theuws[at]somo.nl or use the reaction field below.

photo: retrieved from: http://funteambuilding.typepad.com/blog/2012/08/index.html

UN Special Rapporteur: “Boycott businesses that profit from Israeli settlements”

2012-10-31T14:08:00.000+01:00

Report includes seven case studies of Global Compact participants

The United Nations Special Rapporteur on the situation of human rights in the occupied Palestinian territories, Richard Falk, calls on the UN General Assembly and civil society to take action against Israeli and international businesses that are profiting from Israeli settlements.

In his report, which was presented to the UN General Assembly on Thursday 25 October, Falk writes that companies that are invested in the Israeli occupation of Palestine, especially in Israel’s settlements, are in direct violation of international law standards, and human rights treaties, including the UN Global Compact and the Guiding Principles of the UN on Businesses and Human rights.

He further states that the businesses that profit from the Israeli settlement enterprise should be boycotted until they bring their operations into line with international human rights and humanitarian law and standards.

The report contains 13 case studies of businesses that either directly or through subsidiaries benefit Israeli communities located in the West Bank. Among them are seven Global Compact participants: Veolia (France), G4S (UK), Dexia (Belgium), Volvo (Sweden), Hewlett Packard (US), Assa Abloy (Sweden) and Cemex (Mexico). The Special Rapporteur calls upon these Global Compact members “to be fully aware of the relevant integrity measures, particularly in the case of allegations of systematic or egregious abuses”.

The report has sparked much discussion. In a statement, US Ambassador to the United Nations, Susan Rice said that “Mr. Falk’s recommendations do nothing to further a peaceful settlement to the Israeli-Palestinian conflict and indeed poison the environment for peace”.

Photo: http://www.unmultimedia.org/radio/english/2012/07/palestinians-embracing-nonviolent-resistance-against-israeli-occupation/

Complaint filed against POSCO for failure to carry out human rights due diligence

2012-10-09T18:07:00.000+02:00

A coalition of Indian, South Korean, Dutch and Norwegian civil society organisations has filed complaints with the South Korean, Dutch and Norwegian governments concerning POSCO’s behavior in India. According to the complainants POSCO has breached the OECD Guidelines for Multinational Enterprises because it has failed to seek to prevent human rights abuses and carry out comprehensive human rights and environmental studies for its proposed iron mine, steelworks plant and associated infrastructure in the state of Odisha, India

The complaints were filed with the Korean, Dutch and Norwegian National Contact Points (NCPs) for the OECD Guidelines for Multinational Enterprises. The complainants allege that POSCO’s efforts to construct a 12 million tons per annum integrated steelworks plant, captive power plant, captive port and other related infrastructure in the Jagatsinghpur District will lead to the physical and economic displacement of more than 20,000 of people, including individuals who have special legal protections under the Scheduled Tribes or Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006. Complainants maintain POSCO has failed to conduct comprehensive human rights and environmental due diligence and has not engaged in meaningful stakeholder consultation with all affected communities to identify the full scope and severity of human rights, social and environmental impacts. Complainants fear that POSCO’s failure to conduct due diligence will mean the company will be incapable of preventing or mitigating significant adverse impacts on thousands of people and the environment should its proposed project proceed.
The complainants also call on the Dutch pension fund ABP and the Norwegian Government Pension Fund - Global to seek to prevent or mitigate the real and potential adverse impacts directly linked to their operations through their financial relationships with POSCO.

POSCO, the fourth largest steel manufacturer in the world, is a Global Compact participant. POSCO’s behavior in India is clearly not in line with the UN Global Compact’s Human Rights and Environment Principles, despite POSCO having committed to abide to these. In its recently published Human Rights Supplement to Communication on Progress Guidance, the Global Compact stresses that the commitments expressed in the Global Compact’s human rights principles correlate with the responsibility to respect human rights a defined in the UN Guiding Principles. It further states that the UN Guiding Principles “provide further conceptual and operational clarity for the two human rights principles championed by the Global Compact”. In line with the UN Guiding Principles, companies should carry out human rights due diligence processes to identify, prevent, mitigate and account for how they address their impacts on human rights, and engage in processes to enable the remediation of any adverse human rights impacts they cause or contribute to.

For developments in this case check the case database on the OECD Watch website.

Photo: http://www.thehindu.com/news/states/other-states/article3261507.ece

Contribute to this blog!

2012-09-17T10:54:00.002+02:00

The Global Compact Critics Blog is a platform for discussion and for sharing critical information about the functioning of the United Nations Global Compact.
We are inviting everyone to contribute to this blog. Do you have an opinion or news item to share? If so, please send your contribution to Martje Theuws (m.theuws[at]somo.nl).

About the Global Compact Critics BlogThe Global Compact Critics Blog is hosted by the Centre for Research on Multinational Corporations (SOMO). SOMO started this blog in 2007. It has attracted many visitors ever since. With this blog SOMO aims to provide an online platform where civil society organisations and individuals share critical information on the functioning of the UN Global Compact.

What is wrong with the Global Compact?

The Global Compact is the world’s largest voluntary corporate responsibility initiative. Member companies commit to implement ten principles in the areas of human rights, labour, the environment and anti-corruption.

Companies are required to issue an annual Communication on Progress (COP) which describes the progress made in implementing the ten UN Global Compact principles. However the content of this report will not be checked. Only companies that fail to produce a COP can eventually be expelled.

Due to the weak accountability mechanisms within the UN Global Compact, there are many companies that violate one or several of the ten Global Compact principles. Because the Global Compact does not routinely track or monitor companies’ activities, these companies misuse the UN logo.

Without any effective monitoring and enforcement mechanisms, the UN Global Compact fails to hold corporations to account.

Share your views

We invite you to share your views on the UN Global Compact. Your contribution can have the form of an opinion piece or news article.

The following are some guidelines to consider when preparing your guest post:

Topic related to functioning/ performance of the UN Global Compact and/or its member companies
Language: Englisch
Length: 400 – 1200 words
Include a title and a small introductory text.

SOMO reserves the right to edit your post (punctuation, grammar, lead image, etc…).

Reclaim the UN from corporate capture

2012-06-08T14:22:00.000+02:00

On Tuesday 5 June Friends of the Earth International (FoEI) has launched an e-action that invites people to send a letter to UN Secretary-General Ban Ki-moon in order to urge him to end corporate capture of the United Nations. This follows the joint civil society statement launched by FoEI together with nine other organisations in April which states that institutions and initiatives of the United Nations, such as the Global Compact provide far too much room for influence by private corporations.
There are strong concerns about the growing influence of major corporations and business lobby groups within the UN: their influence on the positions of national governments in multilateral negotiations; their dominance in certain UN discussion spaces, and in certain UN bodies. UN policies that do not serve the public interest but rather support the commercial interests of companies or business sectors are increasing. The UN is captured by the corporate sector.
As of today, more than 335 civil society organisations have signed the civil society statement (which is still open for signature if your organisation has not joined in yet).
FoEI believes that a strong signal from individuals is also needed to pressure the UN into stopping corporate capture! You can support FoEI by adding your voice to this initiative and promoting it among your own networks.
The e-action is available in English at http://action.foei.org/page/speakout/reclaim-the-un

See also: UN Global Compact turns a blind eye to corporate malpractices

Support our recommendation at the RIO+20 Dialogue

2012-05-31T17:32:00.000+02:00

The RIO+20 Dialogue is an online platform which gives participants the opportunity to present recommendations for Rio +20 for discussion and voting. The recommendations with the highest support will be presented to the panelist in the Sustainable Development Dialogues in Rio de Janeiro from the 16th till the 19th of June.

Our recommendation is:
UN members states strengthen the UN Global Compact’s mandate by increasing the accountability of its members through monitoring non-compliance and a selection at the gate.

The UN Global Compact has more than 8000 participants . There is no selection at the gate; companies can become a member of the Global Compact with a commitment by the company’s Chief Executive Officer, and the support of the highest-level Governance body of the organization. They have to commit to the implementation, disclosure, and promotion of its ten universal principles and to a financial annual contribution.

Companies are required to issue an annual Communication on Progress (COP) which describes the progress made in implementing the ten UN Global Compact principles. However the content of this report will not be checked. Only companies that fail to produce a COP can eventually be expelled.
Companies can also be expelled from the UN Global Compact if their actions are detrimental to the reputation and integrity of the UN Global Compact. However, this hasn’t happened more than once or twice.

Due to the weak accountability mechanisms within the UN Global Compact, there are many companies that violate one or several of the ten Global Compact principles. Because the Global Compact does not routinely track or monitor companies’ activities , these companies misuse the UN logo.
To advance the sustainable development agenda, there should be a selection at the gate of the UN Global Compact and the participating companies should be more accountable for their sustainable development impact. This can be realized by introducing requirements regarding the format and content of the COPs and multi-stakeholder verification of the progress claims made.

We have little time: untill the 3rd of June but we hope you will support our recommendation!

Remarkable change of discourse in the Global Compact

2012-04-25T15:28:00.000+02:00

The executive director of the UN Global Compact, Georg Kell, always seemed to be an exponent of the reactionary forces within the Global Compact. However, currently he is on a mission to clean up the organisation. More than 750 businesses are likely to be removed from the Global Compact in the next six months with hundreds more to follow. In an article of the Guardian March 26, Kell stated that he is dealing with "free riders who joined but had no intention to stay engaged."
Let’s hope that this is not just a change in discourse inspired by a new PR strategy, but that it signals an actual change in direction.

For more information, see also the second article of the Guardian of March 26.

Siemens criticized on its commitment to the Global Compact Principles

2012-03-21T16:06:00.001+01:00

According to Western Sahara Research Watch (WSRW) Siemens’ plans to construct and maintain a wind mill farm in occupied Western Sahara are in violation with the UN Global Compact Principles. WSRW expressed its concerns in a letter to Siemens, dated 6 March 2012. As Siemens is a participant to the Global Compact, a copy of the letter was sent to the Global Compact Board.

The Foum El Oued Wind Farm Project includes the construction and operation of a wind farm by NAREVA Holding (a Moroccan industrial and financial group) and Siemens. The location of the wind farm is inside the international recognized borders of the territory of Western Sahara, which is occupied by Morocco.

WSRW has three concerns about the Foum El Oued project.
•    The Saharawi people have not been consulted for the development of the project. 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.
•    Building infrastructure in occupied territory by Morocco strengthens Moroccan occupation and gives the appearance of legitimizing the illegal occupation.
•    The Saharawi people in exile at refugee camps inside Algeria will practically see no benefit of the Foum El Oued Wind Farm Project.

The Global Compact asks companies to support the ten principles “within their sphere of influence”. Surprisingly, Siemens’ PR officer, Rasmus Windfeld told Danish news service DanWatch that “Siemens’s attitude is that Siemens supplies windmills, and it is the customer who decides where they are to be placed”. This statement reveals that Siemens’ interpretation of its sphere of influence is very limited.

In June 2011 the Lithuanian company, Lifosa was expelled from the Global Compact due to similar violations of the GC Principles in Western Sahara and non-communication in the Compact's dialogue facilitation process.

Delta Lloyd excludes 38 companies for violating Global Compact Principles

2012-02-02T15:12:00.000+01:00

Almost half of excluded companies are Global Compact members

Dutch investment company Delta Lloyd has published a list with companies it has excluded from its investment portfolio. Delta Lloyd excludes companies for their involvement in controversial business practices. Delta Lloyd’s exclusion criteria are based on the Global Compact principles. A company that violates these principles repeatedly or seriously is excluded from Delta Lloyd’s investment portfolio.
The recently published list features 38 companies. Almost half of these companies are Global Compact members, including BP (excluded for severe environmental pollution), Goldcorp (excluded for violation of human rights) PetroChina and Total (both excluded for violation of human rights in Birma & Sudan).

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.