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World: UN-Backed Effort Seeks To Promote Corporate Responsibility

A three-year-old dialogue between the United Nations and the private sector entered a new phase this week with the establishment of an advisory body that will oversee efforts to promote corporate responsibility. Participants in the initiative, known as the Global Compact, say it appears to be gaining momentum, spurred by growing concerns about the path of globalization and its effects on the developing world. RFE/RL's UN correspondent Robert McMahon reviews the latest efforts to make the Global Compact effective.

United Nations, 10 January 2002 (RFE/RL) -- United Nations Secretary-General Kofi Annan first proposed a compact linking major companies, UN agencies, and the civil society sector at the World Economic Forum in Davos, Switzerland, in 1999.

His call for improving corporate citizenship received encouraging responses from leading companies in the energy, mining, and telecommunications fields. Some projects have already been launched in areas such as investment in poor countries, diversity in the workplace, and environmental protection.

Now, an effort is under way to put this initiative, known as the Global Compact, on more formal footing. The United Nations this week (8 January) convened the first meeting of an advisory body composed of public and private sector leaders who will meet twice a year to review progress in tackling some of the challenges of globalization.

The board is composed of 17 prominent individuals, including Rolf Breuer, chief executive officer of Deutsche Bank, and Irene Kahn, secretary-general of Amnesty International. Another board member, Achim Steiner, is director of the World Conservation Union, a leading environmental group.

Steiner told a news conference at UN headquarters this week that the Global Compact can become an important forum of discussion on globalization issues.

"The convening power of the United Nations around the controversy on globalization is essential because it is one of the few, if not the only, ways at an international level of bringing civil society, the corporate sector, government [and] the labor movement together to have a dialogue that clearly is not happening very effectively at the moment."

The compact calls on companies to commit to nine universal principles in the areas of human rights, labor requirements, and environmental standards. Companies that publicly pledge to follow these principles are asked to provide examples or cite case studies showing where progress has been made. Such examples would be posted on the Global Compact website (, where they could be scrutinized by watchdog organizations like Amnesty International and Transparency International.

The Global Compact advisory group is considering a proposal to require participating companies to formally evaluate their compliance with the nine UN principles each year, possibly as part of their annual reports. This kind of approach would add legitimacy to the process, says Barbara Krumsiek, another advisory board member and chief executive officer of the Calvert Group, a mutual fund and investment company.

"Having this kind of transparency and this kind of publicity and openness about the nine principles and the corporate behavior we think would invite a level of scrutiny that the UN itself would not have to perform. It would be very much reliant on an active NGO [nongovernmental organizations] community."

Dozens of companies have pledged to carry out the principles of the Global Compact, and UN officials say examples of their efforts should soon appear on the Global Compact's website. One company that has embraced the Global Compact, for example, is Norway's multinational energy concern Statoil, which has operations in Azerbaijan, Kazakhstan, Latvia, Lithuania, and Estonia.

In Poland, 60 companies -- including BP and Thomson -- took part in an event launching the Global Compact last spring. A meeting organized by the Polish government and the UN Development Program identified a range of areas where improvement is needed, such as help for people with disabilities in the workplace and providing Internet portals for poor and rural areas.

Bill Jordan is general secretary of the International Confederation of Free Trade Unions and also serves on the UN advisory board. He told the UN press conference this week that most major companies have begun to acknowledge the benefits they can receive in increased prestige and better business by publicly committing to the Global Compact.

"The really big companies in this world, and particularly those in America who have been reaping the economic benefits of the globalized market, ought to now be prepared to stand up and say, 'We also want to want to make sure that as we benefit from this market, we want to make sure that we're not causing suffering.'"

Another board member, Robert Hormats, vice chairman of the U.S. investment banking group Goldman Sachs, says a number of multinational companies already pay higher wages and observe more rigorous environmental standards than local governments.

"We think the direction [of the Global Compact] is consistent with the direction which a lot of companies are already going, but it raises it to a more visible level. It puts nine principles on the line that companies can adhere to."

Board member Steiner, of the World Conservation Union, expressed concern that a disproportionately low number of countries from North America have so far responded to the Global Compact proposal. But he also says there have been encouraging signals from corporations in the United States looking for new approaches to solving global environmental issues.