UN: Global Compact with Business 'Lacks Teeth' - NGOs

The U.N.'s Global Compact with international big business "at the moment is so voluntary that it really is a happy-go-lucky club," says Ramesh Singh, chief executive of ActionAid, a non-governmental organisation.

The international initiative, proposed by the United Nations to bring companies together with U.N. agencies, labour and civil society to support universal environmental and social principles and take action to overcome the social and environmental challenges posed by globalisation, has no binding power and hence no teeth, Singh told IPS.

ActionAid and other civil society organisations of global stature, such as Greenpeace, Amnesty International (AI) and the Swiss-based Berne Declaration, fired their criticism at the Global Compact's weakest flank, which is its total lack of legal enforceability.

The environmental organisation Greenpeace believes that "voluntary action, though welcome, can never be a substitute for much-needed government regulation," said Daniel Mittler, Corporate Accountability Adviser at Greenpeace International.

"Greenpeace is therefore opposed to the U.N. Global Compact," he said.

Jean Ziegler, U.N. Special Rapporteur on the right to food, went even further. He is particularly interested in this subject because of the laxity of standards for prosecuting human rights violations committed by transnational corporations.

"I think that we have to fight the Global Compact, not only criticise it, because it is a public relations operation of the big multinational companies," Ziegler told IPS.

"The 500 biggest multinational companies controlled last year 52 percent of the gross world product," the Swiss academic said.

The controversy has come to a boiling point because of the Global Compact Leaders' Summit being held in Geneva on Thursday and Friday, at which over 1,000 representatives of multinational companies are taking part, in addition to well-known civil society figures like Irene Khan, the secretary general of AI; Mary Robinson, president of the Ethical Globalisation Initiative; Guy Ryder, general secretary of the International Trade Union Confederation; and Jeremy Hobbs, executive director of Oxfam International.

The U.N. said that the Summit would, above all, focus on "building the markets of tomorrow." Participants are addressing a range of core issues at the interface between business and society, such as climate change, human rights, corruption and access to finance and capital, the U.N. said.

The Global Compact initiative was launched on Jan. 31, 1999 by Kofi Annan, the former Secretary General of the U.N., in an address to the World Economic Forum in Davos, Switzerland.

"In the presence of the most powerful chiefs of companies, the Global Compact was launched under pressure from the Americans (the United States)," Ziegler told IPS, adding that "Annan is a very nice and decent man."

The Compact challenges corporations to adhere to 10 principles of corporate responsibility: firstly, to support and respect the protection of internationally proclaimed human rights, and to ensure that they are not complicit in human rights abuses.

On the labour front, they should uphold the freedom of association and effective recognition of the right to collective bargaining. They should also eliminate all forms of forced labour and effectively abolish child labour, as well as eliminate discrimination in respect of employment and occupation.

With regard to the environment, businesses should support a precautionary approach to environmental challenges. They should undertake initiatives to promote greater environmental responsibility, and encourage the development and diffusion of environmentally friendly technologies.

The problem of corruption, originally completely forgotten by companies and the U.N., was added belatedly as the 10th principle, which states that businesses should work against corruption in all its forms, including extortion and bribery.

Although critical of the Global Compact because of the lack of an enforcement mechanism to make it compulsory, the head of Economic Relations at AI, Audrey Gaughran, said that "such initiatives have a role to play, in particular as forums for learning."

"Some companies are learning" what the 10 principles and human rights mean in business. "We are seeing a definitive advance," she said.

"However, we must be careful that we understand the role of voluntary approaches to business and human rights, including their limitations and their weaknesses," Gaughran said.

Greenpeace's Mittler took the view that it is not the U.N.'s role to organise business round tables. "It is the job of the United Nations to set binding international standards and ensure that these can be, and are, enforced," he said.

"The world needs action and binding global codes for corporate behaviour," he added. "The Global Compact is not delivering."

Mittler pointed out that an analysis by McKinsey & Co., a management consultancy firm, "showed that only in 10 percent of cases was there any evidence of companies doing something that they would otherwise not have done as a result of being a member of the Global Compact."

Oliver Classen, media officer for The Berne Declaration, one of Switzerland's oldest non-governmental organisations, called on U.N. Secretary-General Ban Ki-moon to "fundamentally rethink the 'accord' with big business."

Mittler, in turn, asked Ban "to disassociate himself from 'greenwashing' by the coal and nuclear industries through the Global Compact."

"The UN's Global Compact is been a mockery because several companies violating human rights have been free to join and remain in the Global Compact, (thus) benefitting from an association with the UN," said Aftab Alam Khan, ActionAid's head of trade.

Ziegler described the Global Compact as "a gentlemen's agreement" which allows transnational corporations that sign up to the 10 principles to "put the U.N. logo" on their letterhead. The Swiss corporation Nestlé, for example, uses it to get away with violations of the code on maternal breastfeeding in its marketing strategy for infant food products, he said.

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