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The Global Compact: What It Is -- and Isn't

UN Global Compact Office
January 17th, 2001

United Nations Secretary-General Kofi Annan first proposed the Global Compact in an address to the World Economic Forum on 31 January 1999. He challenged world business leaders to help build the social and environmental pillars required to sustain the new global economy and make globalization work for all the world's people.

His proposal was well received. A series of preparatory meetings brought together a UN team with representatives of business as well as international labor and civil society organizations. The Compact's operational phase was launched at a high-level event at UN Headquarters on 26 July 2000.

Based on an open process of engagement, with few formalities and no rigid bureaucratic structures, the Global Compact provides a unique space for dialogue and learning. Now that it has entered its operational phase, however, there is a need to define in more precise terms what the Compact is - and is not; the actors and their roles; how it will be carried forward; its success criteria; and how the quality of outcomes will be assured.


The Concept

The Global Compact is not a regulatory instrument or code of conduct, but a value-based platform designed to promote institutional learning. It utilizes the power of transparency and dialogue to identify and disseminate good practices based on universal principles.

The Compact encompasses nine such principles, drawn from the Universal Declaration of Human Rights, the ILO's Fundamental Principles on Rights at Work and the Rio Principles on Environment and Development (see Annex I for complete listing). And it asks companies to act on these principles in their own corporate domains. Thus, the Compact promotes good practices by corporations; it does not endorse companies.

Why should business participate in this initiative? Because as markets have gone global, so, too, must the idea of corporate citizenship and the practice of corporate social responsibility. In this new global economy, it makes good business sense for firms to internalize these principles as integral elements of corporate strategies and practices.

The Global Compact is not a substitute for effective action by governments, but an opportunity for firms to exercise leadership in their enlightened self-interest. Nor does it seek to supplant other voluntary initiatives. On the contrary, the Compact provides a complementary framework for such initiatives that encourages eventual convergence around principles that are unique in their universality and legitimacy.


The Actors and their Roles

The Global Compact involves all the relevant social actors: governments, who defined the principles on which the initiative is based; companies, whose actions it seeks to inform; labor, in whose hands the concrete process of global production takes place; civil society organizations, representing the wider community of stakeholders; and the United Nations, the world's only truly global political forum, as an authoritative convener and facilitator.

To engage in the Compact, companies and other appropriate organizations are asked to have their chief executive officer or executive director send a letter to the United Nations Secretary-General. It should express a clear commitment to support the Compact and its nine principles, and a willingness to participate in its activities.

  • All participants to advocate

    All participants are expected to become public advocates for the Global Compact and its nine principles. Advocacy can take many expressions, including in mission statements, annual reports, newsletters and similar public venues.

  • Companies to post concrete steps

    Participating companies are asked to post on the Global Compact website at least once a year concrete steps they have taken to act on any of the nine principles in their own corporate domains, and the lessons learned from doing so.

    The purpose of these posting is to create a forum showcasing what works and what doesn't. The postings will form the basis of a structured on-line dialogue, resulting in a better and more broadly shared understanding of what constitutes "good practices."

    Over time, these postings, together with additional case studies commissioned by the Global Compact Office, will form the basis of a comprehensive learning bank, providing useful information on how to foster change in support of the nine principles and overcome impediments to their implementation. This learning bank will serve as a resource not only for Compact participants, but also for the media, academic community and other interested parties. Details of the Learning Forumcan be found on the Global Compact website .

  • Participants invited to partner

    The Compact invites participants, on an optional basis, to work with the UN and its agencies in two types of partnership projects that involve companies in central roles:

    1. Thematic dialogues organized under the auspices of the Compact. These dialogues will involve the UN, national officials, business, labor and civil society organizations. The first will address the complex of issues related to the role of business in zones of conflict.

    2. In addition to making the Global Compact principles an integral part of business practices, the Global Compact encourages companies to take action on broader corporate social responsibility issues that are external to the company. This should reflect the principles of the Compact and advance broad UN goals, such as poverty eradication, and be of particular benefit to developing countries. Such projects could be undertaken in partnership with any of the UN partners, and depending on the project, the GC labor and civil society partners.

  • Labor and civil society organizations strengthen social roots

    The active engagement by the Global Compact's labor and NGO partners in designing and implementing its undertakings is critical if the Compact is to become firmly rooted in the fabric of society. Moreover, their expertise will help maximize the learning benefits associated with the company postings, as well as the dialogues and partnership projects. Labor, as a partner in industry, has a special role to play.

  • Respect and mutual benefits

    Participation in the Global Compact is based on mutual respect by and for all parties, a commitment to dialogue and a genuine desire to achieve progress within the common policy space offered by the Compact. Beyond the confines of the Compact all participants are, of course, at liberty to pursue other approaches.


The UN's Core Competencies

The Global Compact is a uniquely positioned instrument for promoting the aims of global corporate citizenship and social responsibility. Its foundations are lodged in the UN's own values and mission, on which it is able to build additional competencies and strengths:

  • The power of the principles

    The universality and legitimacy of the nine principles have the capacity to inspire all social actors to work towards change for the better. Moreover, the fact that the Compact integrates principles from the areas of human rights, labor standards and the environment, provides a single authoritative platform on which to define the meaning and practices of global corporate citizenship.

  • The power to convene

    The UN's convening power at the highest possible levels provides an unparalleled opportunity for dialogue, and for identifying and implementing high profile and high-impact activities.

  • The leadership of the Secretary-General

    The personal commitment and involvement of the Secretary-General underscores, at one and the same time, the authoritative and yet pragmatic nature of the Compact.

  • The capacity to network

    As a UN initiative, and as a joint venture of the relevant UN agencies, the Compact has unrivalled access to global, regional and national actors and expertise, as a means to leverage and help carry forward its vision and aims.


Success Criteria

The viability of the Global Compact ultimately hinges on the net impact it has in generating concrete actions in support of UN goals that would not have taken place in its absence. Based on this understanding, the Compact's success can be defined as follows:

  • Integrate the nine principles into business operations

    By 2002, recruit 100 major multinationals and 1,000 other companies across the world's regions, which are committed to internalizing the nine principles into their corporate management practices.

  • Establish learning bank

    Based on company postings describing the steps taken to enact the principles, build a comprehensive learning bank showcasing what works and how to avoid mistakes. Drawing on this material, organize a structured dialogue to gain a shared understanding of what constitutes good practices.

  • Conduct issue dialogues

    One major dialogue will take place annually. Each dialogue must have practical value for all involved. This can take many forms, such as guidelines for action that inspire change within the participating organizations.

  • Generate partnership projects

    The Compact should generate a significant number of concrete partnership projects each year. They should reflect and advance the principles of the Compact - and be of particular benefit to developing countries.


Stewardship

The Compact is an initiative of the UN Secretary-General. Responsibility for overall stewardship, therefore, lies with him. A small support structure has been established, in the form of the Global Compact Office, to sustain the initiative and to ensure quality control. It reports directly to the UN Secretary-General.

At the same time, the Compact will have maximum impact only if others embrace its aims and carry its vision forward. Therefore, this will remain an innovative, open-ended and network based experiment, in which the willingness and ability to contribute to its goals is the key criterion for participation. A continuous focus on learning and improvement must underpin all efforts.

The Global Compact Office does not accept contributions from the private sector for its operations. Moreover, the strict rules regarding the use of the UN logo are applicable.

The open architecture of the Compact provides the flexibility required to adapt to changing situations. However, there is a need to steer the Compact and to maintain momentum. To that end, two vehicles are envisaged. First, the Secretary-General and the heads of UN partner organizations will meet with leaders of the private sector, labor and civil society organizations annually, to review progress made and to set the overall course.

Other mechanisms, such as champions or advisory expert groups, may be established around priority undertakings. But they will evolve on an ad hoc basis, in line with the actual requirements, and they should be goal driven and time-bound.


Annex

The Compact's Nine Principles

The Global Compact asks firms to embrace, support and enact a set of core principles within their sphere of influence in the areas of labor standards, human rights and environmental practices.


Human Rights

  1. Business should support and respect the protection of internationally proclaimed human rights; and

  2. Ensure that they are not complicit in human rights abuses.


Labor

  1. Business should uphold the freedom of association and the effective recognition of the right to collective bargaining; as well as

  2. The elimination of all forms of forced and compulsory labor;

  3. The effective abolition of child labor; and

  4. Eliminate discrimination in respect of employment and occupation.


Environment

  1. Business should support a precautionary approach to environmental challenges;

  2. Undertake initiatives to promote greater environmental responsibility; and

  3. Encourage the development and diffusion of environmentally friendly technologies.


For further information, please visit:

www.unglobalcompact.org
or contact us at:
unglobalcompact@un.org