Jun 19

2014

The continuing relevance for corporates of the UN Global Compact.

It has been over a decade since the launch of the UN Global Compact, one of the core sets of international principles regarding corporate social responsibility. Its ten principles address the environmental, social and governance issues such as human rights, labour, environment, and anti-corruption. The Global Compact has garnered much support since its inception in 2000 and currently has over 10,000 participants, which includes businesses as well as various other stakeholders.

The adoption and quickly growing support for the UN Guiding Principles has introduced new questions regarding the relevance of the Global Compact. The Guiding Principles’ due diligence process is seen as offering a clearer and more instructive path forward for companies in respecting human rights, particularly Global Compact Principle 2, which calls upon businesses to ensure that they are not complicit in human rights abuses. So where does that leave the Global Compact?

The answer is that the Global Compact maintains an important role in the increasingly recognised field of business and human rights. That role has not been diminished or challenged by the Guiding Principles, but rather is a complement to them. The Global Compact has established itself as a learning platform. Its 10,000-plus participants include academic institutions, labour organisations, business associations, cities, civil society organisations and public sector organisations, offering companies a wide range of expertise to utilise. This diversity among participants also allows the Global Compact to expand the global understanding of corporate social responsibility through its publications, workshops and tools, and initiatives.

Moreover, the Global Compact has established local networks in 101 countries, the purpose of which are to facilitate the progress of companies in implementing the ten principles. By allowing participants to gather according to their geographic areas, the principles can be implemented in the relevant national, cultural and language contexts. This is advantageous in high-risk countries, such as Iraq, Myanmar, Sudan and Syria, where local networks may help to identify risks that companies should prioritise.

The networks also create opportunities for multi-stakeholder engagement, and very importantly allow companies to easily and openly engage with other members, share experiences and create best practices. These networks, and the Global Compact itself, will surely benefit companies as they develop their due diligence policies pursuant to the Guiding Principles. Rather than starting from scratch and working in isolation, companies will be able to engage with other participants to develop a more robust due diligence policy.

The Global Compact remains active in promoting corporate social responsibility in all sectors. In May 2014, the Global Compact introduced the Food and Agriculture Business Principles, which address food security and sustainable agriculture. Participating Global Compact companies in the food and beverage sector can now report on these principles in their Communication on Progress. In September 2013, the Global Compact launched the Business for Peace initiative, which assists companies in implementing responsible business practices that are aligned with the Global Compact principles in conflict-affected and high-risk areas.

Finally, some argue that because the Global Compact is voluntary rather than binding and lacks an enforcement mechanism it does not have teeth. But there is a counterargument to be made. It is its voluntary nature that makes the large number of business participants so impressive. Companies are obligated to publish an annual Communication on Progress and when a company fails to do so two years in a row it is de-listed from the Global Compact. This is published on the website and can certainly cause reputational damage which companies want to avoid. Because of the voluntary nature, companies can feel free to make mistakes without a formal punishment. They can openly engage with and learn from other participants to remedy mistakes. It should not be forgotten that in 2000, when the Global Compact launched, corporate social responsibility was not as accepted by the corporate world as it is today. A voluntary initiative was the best opportunity to get companies actively engaged.

So the Global Compact remains important in the furtherance of corporate social responsibility and the protection of human rights in business. It will help companies as they work on their due diligence processes and continue to provide a platform for learning and engagement for all relevant stakeholders.

[author: Patricia Carrier, GD intern]