Global Policy Forum

UN: Let's Talk Business

Foreign Policy in Focus
October 24, 2000

Kofi Annan, UN secretary-general, has spearheaded a UN-NGO-Business partnership called the Global Compact that has sparked strong criticism from anti-corporate nongovernmental organizations (NGOs). Just as attempts by business groups to express their support for international environmental protection through such groups as Businesses for Sustainable Development resulted in charges of "green washing" by some environmental NGOs, the new UN partnership with business groups has been labeled "blue washing" by anti-corporate groups such as the Transnational Resource and Action Center (TRAC).

As part of his efforts to revitalize the United Nations, Secretary-General Annan has reached out beyond UN member states to religious groups, NGOs, and businesses. He calls this constituency-building campaign the UN's "New Partnership" initiative. The UN's creation this summer of a Global Compact designed to increase corporate social responsibility touched off strong opposition by many citizen groups involved in global economy issues.

Last week Assistant Secretary-General John Ruggie convened a meeting of NGOs to address some of these concerns. He stressed that the Global Compact (GC) was not a regulatory instrument and not a substitute for regulatory arrangements that countries or companies might establish. Rather it is "an open-ended experiment intended to identify, disseminate, and promote good practices based on universal principles." These principles are drawn from the Universal Declaration of Human Rights, the ILO's Fundamental Principles on Rights at Work, and the Rio Principles on Environment and Development. Specifically, the UN requests that corporations make three commitments:

1.Publicly advocate the Global Compact and its nine principles.

2.Post on the Global Compact's website the concrete steps they have taken to respect the nine principles in their own corporate practices.

3.Join in partnership projects of benefit to developing countries.

Concerned that corporations will seek to wrap their profit-making ventures in the UN flag and that deals with business groups will undermine the UN's ability to serve as a counterbalance to global corporate power, an NGO coalition recently wrote a letter to Annan critiquing the Global Compact initiative. Asking that the secretary-general reassess this initiative, the letter states that "the mission and integrity of the United Nations are at stake" with the Global Compact. Fifteen individuals signed the letter, including representatives from such groups as Essential Action, Greenpeace International, International Forum on Globalization, Institute for Policy Studies, Transnational Institute, People-Centered Development Forum, and Third World Institute.

The letter to Kofi Annan denounced the Global Compact as "threatening the mission and integrity of the United Nations." The coalition letter calls a number of the Global Compact's newly announced corporate participants, including Nike, Shell, Novartis, and Rio Tinto "simply inappropriate for partnerships with the United Nations." In the letter the coalition charges that the Global Compact allows corporations to "gain all the benefits of association with the UN without any responsibilities."

"The first three words of the UN Charter are 'We the Peoples,' said John Cavanagh, Director of the Institute for Policy Studies, which endorsed the letter. "Private corporations are accountable only to their shareholders, often in flagrant disregard of the rights of the people who work for them, live near them, or suffer the consequences of their decisions. Millions of people who work for or live near several of the 44 firms that have signed the Global Compact have had their rights denied or abused by these firms," said Cavanagh.

"The secretary-general seems to think the UN can help 'fix' the problems of globalization by getting serial violators of human rights, labor rights, and the environment to declare that they won't be bad anymore," said Kenny Bruno, UN Project Coordinator for TRAC-Transnational Resource and Action Center. "But the ongoing actions of Nike, Shell, Novartis and others continue to speak louder than words."

The letter went on to warn how corporations may use the UN logo under the new guidelines, asserting that "the UN logo and the Nike swoosh do not belong together." The guidelines provide ample opportunity for global companies to display the UN logo in conjunction with a UN project they may be involved with, allowing them to enhance their "brand image" by, for instance, placing the Nike swoosh next to the UN olive branches.

Scores of NGOs around the world have endorsed a Citizens Compact on the United Nations and Corporations, which, like the Global Compact, advances nine principles. The presumption of the Citizens Compact is that the UN will and should interact with corporations, but it sets different guidelines for this interaction. For example, the Citizens Compact's first principle states that "multinational corporations are too important for their conduct to be left to voluntary and self-generated standards. A legal framework, including monitoring, must be developed to govern their behavior."

In an apparent response to NGO criticism that a number of corporations within the GC have had reprehensible corporate practices, Ruggie speculated that these corporations may now want a "new image" after having "paid a price in public embarrassment and perhaps even diminished sales." Others, he said, now view global corporate social responsibility as "a natural extension of corporate social responsibility in their home countries as one of the rules of the game in the new global marketplace." Ruggie promised that the UN will be alert, along with the GC's NGO and labor partners, to the possibility that some companies may be opportunistically looking to the GC for a free ride of good publicity or co-branding with the UN without any sincere commitment to improving their corporate practices.

Cutting to the heart of the debate, Ruggie noted that opinions about the GC's objectives mirrored analysis about the possibilities of globalization. "If you want to make globalization work for everyone, as we do, then it is worthwhile. But if you reject globalization, global corporations, or even the system of capitalism itself, then you won't like what we're doing at all--any more than your predecessors liked social Keynesianism or social democracy because such pragmatic innovations inevitably reduce the social rationale and political support for more polarized rejectionist postures."

Ruggie then went on to critique the analysis of those who reject open markets as at least part of the solution to addressing global poverty. "I fear that the rejectionists of globalization in the North are on a collision course with the needs of the poor in the South." According to Ruggie: "The life-shaping force haunting the world's poor is not Disneyfication; it is not McWorld. Nor is it a Nike or a Shell, whatever its other sins may have been. Nor, indeed, is it the WTO, the World Bank or the IMF, though each has committed egregious policy errors over the years. The stark reality facing the world's poor is the absence of economic opportunity, a deep-rooted inability to generate equitable and sustainable economic growth, and a scarcity of the political, economic and social institutions conducive to that outcome. This root problem is compounded by an insufficient sense of global solidarity in the form of faster and deeper debt relief, greater market access for the exports of developing countries, especially the least developed, and vastly expanded programs of outright grants to poor countries, targeted for poverty reduction programs. Rejectionism will not solve a single one of those problems.

Globalization can help do so--a globalization that is embedded in universal values and principles, and one that is better managed by good governance at national and international levels alike."

Discussion about the wisdom and objectives of the Global Compact echoes other important debates that have emerged around globalization issues, such as sweatshop policy, corporate codes of conduct, Sullivan principles, and the reform or abolition of the institutions of global economic governance. The success of the global economy movement in loosening the corporate stranglehold on globalization will depend largely on its ability to advance a forward-looking agenda that moves beyond reaction toward solutions. Whether the Global Compact is part of the solution or "blue wash" is a debate worth having. Clearly, the operations of transnational corporations need to be monitored and regulated by the institutions of global economic governance.

In discussions about what kind of governance is needed and is feasible, previous UN attempts to regulate corporate behavior in the form of proposals by the UN Center on Transnational Corporations (UNCTC) and UN Center on Trade and Development (UNCTAD) deserve close consideration.


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