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USA: Global Compact--NGOs, Business Differ Over Initiative's Future

by Joe FiorillUN Wire
January 31st, 2002

WASHINGTON -- As global business and political players gather today in New York for the opening of the World Economic Forum, differences are beginning to emerge among nongovernmental organizations, multinational corporations and the United Nations over the future shape of the U.N. Global Compact and its role in regulating corporate behavior worldwide. The controversy centers on whether implementing Global Compact ideals will remain largely voluntary, with only the theoretical threat of expulsion from the initiative to ensure participating companies observe its principles, or will require more concrete commitments.

"How do you make sure that the principles are actually being implemented, not just being paid lip service to?" is the question the compact's advisory council began to discuss at its first meeting Jan. 8, U.N. spokesman Farhan Haq, who attended part of the meeting, told UN Wire yesterday. Nike Vice President for Corporate Responsibility Maria Eitel asked a similar question: "How do you make this something that goes beyond a forum for dialogue or a membership organization?"

CorpWatch, a U.S. nongovernmental organization that monitors the U.N.-business relationship, this week launched a report accusing various participating corporations of using the Global Compact as a public relations tool while violating the nine principles of responsible corporate behavior on which the U.N. initiative is based. In a letter Tuesday to U.N. Secretary General Kofi Annan, the watchdog group cited such violations -- naming Aventis, Nike, Unilever, Norsk Hydro, Rio Tinto and the International Chamber of Commerce -- in calling for a "re-design" of the compact to stress the primacy of the United Nations and require "accountability" of companies.

CorpWatch U.N. and Corporations Project Coordinator Kenny Bruno, the report's author, said the world body's adoption of "the philosophy of mainly encouraging voluntary measures" -- combined with a "failure of will by the collective governments, led, probably, by the U.S., to rein in corporate behavior" -- has led to a toothless Global Compact.

"The model of the Global Compact as it's been so far is not the model we should be looking at in Johannesburg" at the Aug. 26-Sept. 4 World Summit on Sustainable Development, Bruno said, expressing hope that a binding "framework convention on corporate accountability," separate from the Global Compact, will be launched at the summit. The idea received "quite positive" reactions from countries such as Egypt, Hungary and Algeria during World Summit preparatory discussions this week at U.N. headquarters, Bruno said.

Beyond the possibility of a treaty, Bruno said the compact itself should involve "dialogue" and "cooperation," not "partnership" or "compromise," between business and the United Nations. "We believe that the U.N. should strive to monitor corporations and to hold them accountable," he said. "That's not currently the case."

Although Bruno chided the world body for presenting itself as an "equal partner" with business, DaimlerChrysler Washington Public Affairs Manager Stuart Schorr said the Global Compact represents a "validation that goes in both directions," with the United Nations validating responsible corporate behavior and the companies endorsing the U.N. initiative in a "unifying call" to encourage other corporations to follow suit.

"There's always opportunities to poke holes in any corporation's citizenship activities," Schorr said, calling a recent DaimlerChrysler brochure on the Global Compact -- criticized by CorpWatch for featuring the initiative's logo -- an example of the company "just trying to get the word out" about the program.

"We've been doing these kinds of things for many years," said Schorr. "There's some principles about the Global Compact that our corporation believes in deeply," he said, "and there are examples all over the world where you could find .... business principles being used, investments being made that are in line with the principles of the Global Compact."

Schorr cited DaimlerChrysler investments in schools, factories and employee health programs in South Africa as one example of the company's efforts to "spread the benefits of globalization" to "places ... that aren't as developed as some other places." He said DaimlerChrysler is the automotive industry's "single largest investor in inner cities" in the United States, has set up a post-Sept. 11 children's fund and may invest in Afghanistan once political stability takes hold there.

Eitel suggested debate between proponents of strict regulations and those who see the compact as a validation of existing practices may be premature. Although she stressed that companies must "demonstrate utility and progress" as part of their participation in the Global Compact, she added that the real value of the initiative is in "getting the right players together" to determine what concrete measures will follow.

Eitel said Nike, which set up its corporate responsibility division four years ago, supports "generally accepted social accounting principles" and enhanced government-corporate cooperation. Although the Global Compact was not intended to play a regulatory role on such issues, Eitel said, the program could "evolve into that."

"The stronger it becomes, the better we think it is," Eitel said, acknowledging that "political realities of what the U.N. can and cannot do" could limit the compact's scope. "We'd love to see the ILO [International Labor Organization] be much more active in training around labor and labor rights and in monitoring," she said. "However, there's a lot of constraints ... to those things happening, to what role the U.N. can play."

Asked about CorpWatch's idea of an international treaty on corporate responsibility, Eitel said Nike is "probably pretty progressive in this area, if you look at our actions and what we've been looking toward. ... These issues demand voluntary action, where appropriate, voluntary, incentives-based action and also, where appropriate, codification actions on issues like child labor."

At the Jan. 8 advisory council meeting, members emphasized that the compact's success depends on demonstrable results. Haq said yesterday that the meeting was meant to "strengthen the global compact" and to determine "whether standards are needed ... to determine whether all those who sign up are really abiding by the nine principles."





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