Switzerland: UN Chief Enlists ABB CEO to Boost Global Compact

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Forum News Daily

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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