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Switzerland: UN Chief Enlists ABB CEO to Boost Global Compact

by Jason Topping ConeForum News Daily
January 29th, 2001

DAVOS -- United Nations Secretary General Kofi Annan called here on Sunday for more corporations to get serious about environmental protection, human rights and labor standards -- and lobbied them to come on board the UN's Global Compact for corporate responsibility.

The UN chief also announced that he had enlisted the help of a top executive, Goran Lindahl, former President and CEO of the Swiss company ABB, Ltd., to recruit more businesses to join the compact.

The Compact is set of nine principles on environmental protection, human rights and labor standards that was born out of a speech the Secretary General delivered at the World Economic Forum's Annual Meeting in 1999.

Annan asked business leaders on Sunday to not wait for governments to establish laws in these areas but to adopt their own code of conduct based on the Compact's principles.

''Global systems of rules to protect intellectual property are stronger than rules to protect human rights,'' Annan said.

The UN has set the target of trying to get 1,000 corporations to endorse the Compact by 2002. So far it has been endorsed by about 300 companies.

Annan also announced the convening of a meeting in March to work on how corporations can behave responsibly in zones of conflict. He said that UN agencies on the ground in areas of conflict would work with companies operating in those regions.

Georg Kell, Annan's top adviser on the Compact, told the Forum News Daily in an interview at his office at UN Headquarters in New York that the 1999 speech was so well received by governments that they lobbied Annan to take the Compact beyond words even though it was only intended to give a boost to the elements of the UN system that watch over these areas: the UN Environment Programme (UNEP), UN High Commissioner for Human Rights (UNHCHR) and the International Labour Organization (ILO).

If the Compact's principles appear to be vague or obscure, then Kell and his associates at the UN have accomplished their mission. According to Kell, the goal was to provide a ''broad tent'' which companies could work under as they shape their practices, taking into account their own realities.

The Compact is not a code of conduct, Kell said. Companies do not have to report on their compliance with it. The UN has neither the mandate nor the resources to hold the companies accountable, said Kell.

Among the Compact's signatories are 40 top-flight companies (including BP Amoco, DuPont, Unilever and Nike), several business associations including the International Chamber of Commerce, and NGOs such as Amnesty International and the World Wildlife Fund.

Many of the signatories say they have been busy trying to incorporate the principles into their business practices, and some are even acting as publicists for the Compact.

Volvo Car Corp. has helped build a ''Scandinavian Network'' of companies in the region that have met to discuss best practices in following the Compact's principles, according to Kaarina Dubee, a Corporate Diversity Manager with Volvo.

''We wanted to create a forum for sharing of best practice and experiences,'' she said, ''because it is extremely complex for a company that is not used to thinking about human rights. When it comes to human rights and labor standards, companies tend to work at a very local level, following the laws. But things are changing so quickly.''

The network includes the Norwegian energy company Statoil, ABB and regional offices of Deloitte Touche Tohmatsu. According to Dubee, getting corporations, particularly high-tech companies, to think about human rights and labor standards is more difficult than getting them to think about environmental issues. A high tech company may have to look far down its supply chain to be sure that its suppliers are not violating human rights, labor or environmental standards, said Dubee.

The Compact has also caught on with corporations in developing countries. Some 220 Brazilian companies and a local business association have expressed support for the Compact, said Kell. In the Asia-Pacific region, 19 employers' organizations have voiced their support of the Compact, as have business leaders in Malaysia and India.

Some companies have tried to improve the conditions of the countries in which they operate. Statoil donated $115,000 to the Norwegian Refugee Council to support refugees and displaced persons in countries where it operates, including Angola, Azerbaijan and Georgia. WebMD, which operates Internet sites providing health care information, is in the process of launching 10,000 online ''tele-medicine'' sites in developing countries.

While many groups have supported the Compact, including some of the toughest critics of many of companies that have also endorsed its principles, it does have its critics.

Among them is CorpWatch, which says these companies are getting a free ride by not being held accountable for how they follow the Compact's principles in their operations. It argues that if the UN does not have the ability to enforce its principles it should not work with these companies.

The Compact's ''vague and voluntary character means that it will likely do more harm than good,'' writes Corporate Europe Observer, a corporate watchdog group. ''Annan has made it no secret that the Global Compact is a chance for corporations to improve their public image and counter the backlash against trade and investment liberalization,'' it wrote. ''It is certain that through the Global Compact the UN will contribute to the largely incorrect impression that corporations are on the way to becoming socially and environmentally responsible actors.''

Kell said this argument is weak. Many of the companies that are endorsing the Compact were not on the radar screens of NGOs and the media, he said, adding that when these companies publicly endorse the Compact they open themselves up to scrutiny. These companies can ''no longer just look at the financial bottom line,'' said Kell. ''You can make change only where there is a need for change.''

When the British mining giant Rio Tinto said it wanted to start mining uranium out of Australia's Kakadu National Park, environmental groups cited the company's endorsement of the Compact as a reason they should abandon the project, according to Kell.

Another charge leveled by these groups is that the companies get to ''wrap themselves in the UN flag.'' Kell conceded that, in terms of public image of the Compact, he and his colleagues had been naive. Since this criticism was raised, Kell has made it clear that the UN flag or logo may not be used by any company without clearance from the UN Legal Office.

Critics of the Compact have also focused on the natural resources extracting companies that have endorsed the principles Rio Tinto, Royal Dutch/Shell Group, Statoil and Norsk Hydro. Such companies are among those most likely to be working in conflict zones, and in many cases the tax revenues they generate for local governments has exacerbated conflicts. Annan cited how the South African diamond cartel DeBeers was working to ensure it was not purchasing diamonds from areas where there is reason to believe the money would be used to fuel conflict and buy arms.

''Because the oil companies are sometimes among the first foreign investors to arrive in a country,'' said Geir Westgaard, Statoil's Vice President for Country Analysis and Social Responsibility, ''we tend to lead the charge in terms of opening the country to integration into the world economy.''

Westgaard said that oil companies are increasingly being asked to take on responsibilities beyond the scope of their ability, such as ensuring that revenue generated by their operations is used by governments for the public good.

''While we don't want to be seen as shirking our corporate social responsibilities,'' said Westgaard, ''we are not at all comfortable with expectations that we should tell our host governments how to spend their revenues. I believe it's important to acknowledge and draw some clear distinctions between the roles and responsibilities that can and should be assumed by business, NGOs, governments and the UN system respectively.''

Kell and his colleagues at the UN say they agree with this position. Kell has said that governments must not divest themselves of responsibility to their citizens to protect the principles outlined in the Compact.

''Already governments are divesting responsibilities, and there is a temptation to use the notion of corporate citizenship or social responsibility to justify this,'' said Kell. ''But governments continue to hold the key to unlocking economic opportunities; leaders failing their own people continue to constitute the single biggest source of human misery.''

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