It started with a vision of what business could be. At the urging of
United Nations Secretary-General Kofi Annan, 38 companies, including
Nike and Volvo, embraced nine principles ranging from not hiring child
workers to cutting down greenhouse gas emissions.
Now, five years later, some 1,500 firms have signed on to what has
become the world's largest corporate citizenship initiative, the United
Nations Global Compact, which held its first summit here last month.
That explosive growth illustrates what many business leaders already
believe: Corporate social responsibility is entering the mainstream.
Membership ranges wildly, from financial powerhouse Goldman Sachs to
Amazon Caribbean Guyana Ltd., which employs 200 Amerindians who can
hearts of palm in the jungle.
While the compact has no policing powers, it can point to some success
stories. For example: William E. Connor & Associates, a product
sourcing company headquartered in Hong Kong, reports that an underage
girl employed in a supplier's factory was dismissed, provided with an
educational stipend, and rehired when she reached legal age. Lafarge, a
French construction materials firm, boasts plans to reduce its
carbon-dioxide emissions to 85 percent of 1990 emissions by 2010. And
Banco Itau, a Brazilian bank, touts its healthcare plan and exercise
Of the compact's nearly 1,700 signatories - a list that not only
includes companies, but nongovernmental organizations, unions, and
other groups - only 61 are American. US companies are similarly
underrepresented in two other United Nations-endorsed efforts, the
Global Reporting Initiative, and the World Economic Council for
Sustainable Development, says Georg Kell, who heads the compact. The
reason? The compact asks companies to embrace principles, rather than
meet explicit standards - an approach "not easily understood in
[America's] litigious culture," he says.
But US firms are showing more interest. Nearly a quarter of American
signatories - including Starbucks Coffee Co. and Newmount Mining Corp.
- have signed since March.
With no authority to enforce its dictates, the compact has merely
"delisted" companies that refuse to report their social progress. Some
signatories want more stringent measures. "It's easy to sustain [the
compact's] principles when you're operating in Western Europe, or
America, or Japan perhaps," said Fred Hicks, General Secretary of the
International Confederation of Chemical, Energy, and Mineworkers, at
the summit. "But where you are not expected to do it by law, are you
going to be prepared to put the resources in to still apply those
Other signatories prefer the volunteer approach, believing that good
corporate citizenship will spread because it is profitable in the long
term. Social concern is a measure of "management quality," says Anthony
Ling, managing director of Goldman Sachs.
Still others say that even if good citizenship does not increase
long-term profits, the principles should become an integral part of
doing business. The compact and similar initiatives can create "an
enabling environment in which social responsibility pays," says Peter
Eigen, chairman of Transparency International, an international
nongovernmental organization devoted to fighting corruption.
But skeptics argue that good citizenship will take hold only among
businesses that are already keen to be good citizens. Companies that do
not heed existing regulations will not change to embrace the compact,
says Alexandra Wrage, president of Transparent Agents and Contracting
Entities, a nonprofit that certifies businesses' compliance with
anticorruption laws. For example, one compact principle asks
signatories to "work against" extortion and bribery. "If companies can
be working against that on their own," Ms. Wrage adds, "it means
they're already doing it."