The United Nations Global Compact:

The United Nations Global Compact: The world’s largest voluntary corporate citizenship initiative

London

November 27, 2007

What does CSR mean for you? Take a couple of minutes to write it down

Discuss with a partner and come up with a common statement

Overview of key themes in this session

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Why are businesses important to the United Nations?Different purposes, overlapping objectives

Building Markets

Good Governance& Security

Environment

Peace

Poverty Reduction

Profit

Growth Social Inclusion

Business

Global Health

Deepening Interdependencies

Why should business care about peace, security and democracy?

“Open markets, steady economic development and an open society are the best conditions in which we can pursue our business. This is contrary to the common belief that companies find it easier to [support] the apparent stability of regimes than to manage the uncertainties of democracy. Stability built on repression is always false. Sooner or later the waters break the dam.”

Sir John Browne, CEO, BP

22 Turkey 23 General Motors 24 Denmark 25 Wal-Mart 26 Exxon Mobil 27 Ford Motor 28 DaimlerChrysler

Of the world’s 100 largest economic entities, 51 are corporations and 49 are countries

Sources: Sales: Fortune, July 31, 2000. GDP: World Bank, World Development Report 2000

The Global Compact

A short video…

The Global Compact is….

A voluntary initiative to promote sustainable development and good corporate citizenship

A set of 10 principles based on universally negotiated international documents (UDHR, ILO Declaration, Rio Declaration, UN Convention against corruption)

A network of companies and stakeholders

A forum for learning and exchanging ideas

The Global Compact is not…

Legally binding

A means of monitoring company behaviour and enforcing compliance

A regulatory body

A public relations channel

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The Global Compact has two main objectives

2. Make the 10 principles part of business strategy, operations and culture everywhere

3. Promote partnerships in support of UN goals – MDGs

The 10 principles are organized in 4 main areasPrinciples 1 - 2 P

Human Rights PrinciplesPrinciples 3 - 6 P

Labour Principles

Principles 7 - 9 Environment Principles

Principle 10

The Anti-Corruption Principle

Human Rights Principles

Human Rights

1: Business should support and respect the protection of internationally proclaimed human rights;

2: Make sure that they are not complicit in human rights abuses.

Source: www.unglobalcompact.org

Labour related principles

Labour

3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining;

4: The elimination of all forms of forced and compulsory labour

5: The effective abolition of child labour

6: The elimination of discrimination in respect of employment and occupation.


Environment principles

Environ-ment

7: Businesses should support a precautionary approach to environmental challenges;

8: Undertake initiatives to promote greater environmental responsibility

9: Encourage the development and diffusion of environmentally friendly technologies.


The anti-corruption principle was added in 2003

Human Rights



Labour





Environ-ment




Anti-Corruption

10: Business should work against all forms of corruption, including extortion and bribery.


Using the Global Compact: Why and how?

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What are some incentives for a corporation to join the Global Compact?

How can a company join the Global Compact?

1. sends a letter from the Chief Executive Officer to the Secretary-General of the United Nations expressing support for the GC

2. sets in motion changes to business operations so that the Global Compact and its principles become part of strategy and culture

3. is expected to publicly advocate the Global Compact and its principles

4. is expected to publish a description of the ways in which it is supporting the Global Compact

http://www.globalcompact.org/docs/how_to_participate_doc/3.0.1.doc

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Current participation in the Global Compact

Almost 4,000 businesses in over 100 countries

Global, large domestic, SMEs

All business sectors represented

Developed and developing world (50:50)

Large number of non-business participants

80+ country networks

What is the business case for the Global Compact? (in small groups)

4 stations each covering 1 area of the GC

Think through the business benefits

Rotate to the next station at the signal (carousel technique)

Debrief on each group’s findings

Debrief from Group Activity

Overcoming criticism Your company has been a member of the

Global Compact for 1 year but is facing some backlash from watchdog NGOs….how do you react?

You represent a watchdog NGO – what are some of your concerns around the Global Compact?

How can business benefit from promoting and respecting human rights?

Improved stakeholder relations Improved employee recruitment, retention, and

motivation A more secure license to operate Increased security of investments in countries governed

by the rule of law and respect for human rights Reduced risk of consumer action Reduced risk from human rights related legal action Reduced reputational risk

Benefits of promoting labour principles

Increased retention of employees Higher productivity Improved reputation among consumers Lower training costs Fewer fines A safer workplace Improved relations (with government, other businesses,

civil society)

How does improving environmental performance affect business's bottom line?

Reduced manufacturing expenses Reduced recruiting costs Increased Productivity Reduced water, energy, and consumables expenses Lower Waste Disposal Costs Resource and Energy Efficiency Reduced risk and easier financing Lower Environmental Fines

Key reasons for avoiding involvement in corrupt practices…

Legal risks Reputational risks Financial costs Being 'known as clean' dissuades opportunist corruption Blackmail, and security risks "The one who cheats will be cheated against" Companies have a vested interest in sustainable social,

economic and environmental development

Reporting on progress “Our goal in writing this report has been to be as accurate,

complete and honest as we can be about how Nike performs. Just producing this report proved to us that the value of reporting goes far beyond transparency. It becomes a tool for improving both our management of business and in giving us clues about what we need to do next.”

Phil Knight, Chairman and CEO, Nike Inc., 2004 Sustainability Report

Convergence

The nonprofit world has been experiencing significant changes too

Increasing privatization of government services (education, health care, social services, the arts)

Increasing financial pressure on nonprofits

Increasing concerns about the efficacy of traditional charities

Source: Social Enterprise: Private Initiatives for the Common Good (Harvard Business School)

“The era of convergence is upon us” Creating Value – social and economic value

Managing Stakeholders – both are broadening their definition of stakeholders

Restructuring Organizations – for-profit and non-profit subsidiaries (e.g. Pura Vida coffee)

Mobilizing Capital – social venture capital to SRI Austin J, Gutierrez R, Oliastri E, Reficco E. Capitalizing on Convergence. SSIR (2007).

“The leaders of nonprofits and businesses would be wise to shift their current mind-set from one of “us and them” to one of “we”.

Austin J, Gutierrez R, Oliastri E, Reficco E. Capitalizing on Convergence. SSIR (2007).

Time-permitting

On Complicity Direct Complicity Occurs when a company knowingly assists a state in violating human rights.

An example of this is in the case where a company assists in the forced relocation of peoples in circumstances related to business activity.

Beneficial Complicity Suggests that a company benefits directly from human rights abuses

committed by someone else. For example, violations committed by security forces, such as the suppression of a peaceful protest against business activities or the use of repressive measures while guarding company facilities, are often cited in this context.

Silent complicity Describes the way human rights advocates see the failure by a company to

raise the question of systematic or continuous human rights violations in its interactions with the appropriate authorities. For example, inaction or acceptance by companies of systematic discrimination in employment law against particular groups on the grounds of ethnicity or gender could bring accusations of silent complicity.

Source: Global Compact

Doing Good Business

“We believe that the winning companies of this century will be those that not only increase shareholder value, but increase social and environmental value.”

Carly Fiorina, CEO, Hewlett Packard

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Why should a company join the Global Compact? Helps organize a CSR strategy

Availability of implementation tools and guidance Multi-stakeholder dialogue and problem-solving

Trust-building in societies 10 Principles are universal = social legitimacy Manage globalization’s new risks/opportunities

Socially Responsible Investments (SRI)

Sustainable investment, also known as 'socially responsible investment’ (SRI), has grown enormously in the past decade. The amount of money invested in 'sustainable' funds has increased dramatically, and many of the large financial services firms have begun offering their clients a 'sustainable' option.

The GC PrinciplesHuman Rights



Labour





Environ-ment




Anti-Corruption

10: Business should work against all forms of corruption, including extortion and bribery.


CSR refers to business practices intended to have a positive impact on society – not just the company’s financial bottom line.

Source: Institute for Global Ethics

Corporate Social Responsibility

Corporate social responsibility is the continuing commitment by business to contribute to economic development while improving the quality of life of the workforce and their families as well as of the community and society at large.

Corporate Social Responsibility 2

Source: World Business Council for Sustainable Development

Some drivers moving business towards more socially responsible practices include:

Demands for greater disclosure

Customers

Growing investor pressure

Employee retention

Some of the benefits experienced by businesses adopting CSR measures

• Enhanced brand image and reputation

• Increased sales and customer loyalty

• Greater productivity and quality

• More ability to attract and retain employees

• Better use of renewable resources

• Community relations

• Product safety and decreased liability

Improved

Financial

Performance

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Area of Focus Business Initiatives

CERES : The Coalition for Environmentally Responsible Economies. The 10 CERES Principles deal exclusively with environmental matters.

International Chamber of Commerce : The ICC charter sets out 16 principles for environmental management

The Global Compact sets out 10 very broad principles The International Institute for Sustainable Development

integrates environmental stewardship, economic development and the well-being of people—not just for today but for countless generations to come.

The Global Reporting Initiative has developed voluntary guidelines for use by organizations for reporting on the economic, social, and environmental dimensions of their activities.

There is a growing number of players in the field of CSR – over 300 different instruments are available

Environment

Social

Economic

Environment

Environment

The many concerns with CSR…

• Businesses could just enhance their public image by signing up with the GC vs. actually changing practices (“Blue washing”).

“CSR can become merely a branch of PR”.

• What does the Christian Aid article advocate to address this?

Documents

The United Nations Global Compact: