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High Time for UN to Break 'Partnership' with the ICC

Corporate Europe Observatory
July 25th, 2001

The fourth article in our series focuses on the International Chamber of Commerce -- the self-described world business organization -- which has played a key role in shaping the UN Global Compact. Based on its ongoing violation of the Compact's Principles 7 (supporting a precautionary approach to environmental challenges) and 8 (promoting greater environmental responsibility), the Corporate Europe Observatory argues that it's high time for the UN to break its partnership with the ICC.


The International Chamber of Commerce (ICC), a lobby group with over 7000 corporate members, is a prominent partner in UN Secretary General Kofi Annan's Global Compact and has played a key role in shaping it from the start.[1] While this alliance has provided momentum to the Global Compact, it also seriously undermines its credibility.

The ICC has a long history of vigorously lobbying to weaken international environmental treaties and these efforts have continued even after the group has pledged support for the Global Compact principles. Examples include the Kyoto Protocol, the Convention on Biodiversity, and the Basel Convention against trade in toxic waste. In all of these UN negotiations, the International Chamber's obstructive lobbying is in direct opposition to the Global Compact principles it has pledged to pursue.

For instance, rather than "supporting a precautionary approach to environmental challenges," Principle 7, and rather than undertaking "initiatives to promote greater environmental responsibility," Principle 8,[2] the ICC promotes a narrow corporate agenda, dominated by the commercial interests of some of the world's most environmentally irresponsible corporations-an agenda that often effectively undermines a precautionary approach and basic environmental responsibility.


Shaping The Global Compact

The ICC has been a pioneering member of the Compact. As early as February 1998 a delegation of 25 corporate executives met with Kofi Annan and other senior UN officials and issued a joint statement promising closer collaboration. [3] According to the ICC, "the two groups resolved to form a close global partnership to secure greater input from ICC member companies into the UN's economic decision-making." [4]

The next major step was the ICC's Geneva Business Dialogue in September 1998, which brought together hundreds of captains of industry as well as top-level representatives of UN agencies and other international organizations. The Geneva Business Dialogue called for more "effective" global governance in order to avoid the growing backlash to economic globalization, including a stronger, reformed UN with "a more substantive involvement of business" . [5] In his message to the Geneva Business Dialogue, Annan pledged to "build on the close ties between the UN and the ICC." [6]

In March 1999, the ICC was the first group to officially join the Compact, two months after Kofi Annan first launched the Global Compact in Davos. There are no signs of the relationship cooling down: in a speech to a recent ICC conference, Kofi Annan praised the Chamber as "a highly valued partner of the UN." [7] The UN-ICC partnership is far from limited to the Global Compact: examples of far-reaching joint projects between the ICC and UN agencies include UN Conference on Trade and Development (UNCTAD), the UN Development Programme (UNDP) and UN Environment Programme (UNEP).


The Global Compact: ICC Greenwash?

According to an ICC fact sheet published on the UN's Global Compact website "the ICC has become a clearinghouse for business contributions to the Global Compact." [10] The group started its own Global Compact website in November 1999, several months before the official UN Global Compact website was launched.

The ICC website consists of a collection of very brief reports on environmental and human rights initiatives by BP-Amoco, Fiat, Unilever and other corporations. The ICC site even includes reports from companies not associated with the Global Compact such as Nestle and BAT. Combined with the UN's secrecy about who is and who is not a member of the Global Compact, this leaves the impression that these highly controversial companies are part of the Compact.

The reports, currently just over 20, are presented as "case studies" of "how the private sector is fulfilling the Compact through corporate actions."[8] The ICC invites companies to submit examples, but does not allow for external comments, for instance from NGOs who might not be convinced by the claims made on the site.

The ICC clearly regards the Global Compact as a public relations tool that it can use however it sees fit. Restating that the Global Compact should stay free of "any monitoring and verification procedure," ICC Vice-President Adnan Kassar explains the ICC's vision: "What the Global Compact does is to assemble a broad picture of company actions that demonstrate corporate citizenship in action in every part of the world." "In the past," Kassar elaborates, such initiatives "were often unnoticed, because they were conducted in isolation."[9]

The ICC's approach of presenting isolated, non-verifiable initiatives, however insignificant and unrepresentative of the companies' record, as proof of 'corporate citizenship', is deeply flawed. For instance, the fact that automobile and arms producer Daimler-Chrysler uses locally produced coconut fibers in a Brazilian factory producing car components says nothing about the company's overall environmental conduct.[10]

The ICC's strategy of highlighting isolated social or environmental initiatives while refusing monitoring of overall corporate conduct has been supported by the UN in other ways. The "Millennium Business Award for Environmental Achievement," initiated by the ICC and the UN Environmental Programme (UNEP) is another example.

Among the winners was Interfor, a Canadian logging company targeted by the Forest Action Network for its highly unsustainable environmental practices. Another dubious winner was the Tokyo Electric Power Company, Japan's largest producer of nuclear energy. The company is heavily criticized by environmental groups for destroying 3,000 hectares of native forests on Tasmania and replacing them with fast-growing eucalyptus. The environmental havoc wreaked on Tasmania will earn the Japanese power company carbon credits worth 130,000 metric tons of carbon dioxide emissions, allowing it to continue polluting from its Japanese power plants. The company received the UNEP-ICC award for "taking its fight against global climate change and environmental degradation onto the world stage."


Keeping the Global Compact Free of Binding Elements

The ICC's principle interest is using the Global Compact to promote a positive image of transnational corporate behavior. Therefore, it fiercely opposes proposals for binding elements or enforcement mechanisms, claiming that self-regulation will make its members responsible 'global corporate citizens'. ICC Secretary-General Maria Livanos Cattaui, in an opinion piece in International Herald Tribune, explained that "business would look askance at any suggestion involving external assessment of corporate performance."[11] The Global Compact, Cattaui wrote, "must not become a vehicle for governments to burden business with prescriptive regulations."

In the run-up to the 2001World Economic Forum held in Davos, Switzerland, the ICC sponsored a special four-page section of the International Herald Tribune on the Global Compact. In article after article, the ICC repeated the claim that business is voluntarily promoting environment, human rights and social progress around the world, while demanding to keep the Compact "free from 'command and control.'"[12] ICC president McCormick used the opportunity to stress Annan's promise that the Compact "is not intended to regulate or measure companies' compliance."

The ICC has taken the offensive in countering the world-wide movement against corporate-led globalization. In a statement to last year's G-8 Summit in Japan, the ICC called on powerful governments "to stand firm in rejecting demands by publicly unaccountable, and frequently unrepresentative, external groups seeking to impose such codes on 'multinationals' and claiming the right to pass judgment on companies' compliance with them."[13] The ICC has made such attacks on the legitimacy of non-governmental organizations a standard feature in its efforts to counter the growing criticism of corporate abuse of power around the world.

By arguing that "there is no demonstrable need for further government-mandated detailed rules," the ICC simply ignores the growing body of evidence which proves that leaving the solving of environmental and social problems to voluntary action by industry is wholly unrealistic. The UN's Research Institute for Social Development (UNRISD), for instance, in a July 2000 report on voluntary environmental initiatives by industry concludes that these "often result in 'non-compliance, double standards, inadequate targets or standards, or greenwashing'."[14]

The ICC sees the Global Compact as a powerful PR tool in the raging ideological battles over economic globalization. Witnessing a growing backlash against the deregulated global economy and the excessive power held by transnational corporations and institutions like the WTO, the ICC is determined to fight back.

Through decades of lobbying, the ICC has itself been instrumental in promoting the set of corporate-biased international trade and investment rules that are currently in place. As a result, the group is in absolute denial about the serious social and ecological problems that are becoming increasingly manifest. Rather than accepting that radical changes in the global economic system are needed, the ICC sees only public "fears and misconceptions" and discusses how to counter what it terms "globaphobia."[15]

As long as it is free of monitoring and enforcement, the Global Compact offers the ICC an ideal tool to improve the image of its member corporations. It is therefore hardly surprising that the ICC is using the Global Compact in its marketing campaign for economic globalization. At its May 2000 World Congress, plans were announced to fully exploit the PR potential of the Compact, including enlisting "the support of international media organizations to make the business response to the Global Compact even more widely known."[16]

Apart from avoiding enforceable elements in the Global Compact, the ICC also wants to keep non-business groups out of the Global Compact. The ICC demands that the Compact "remains a two-way compact between business and the UN," excluding trade unions and NGOs. [17] The UN tends to present the Compact as involving all 'stakeholders', but Cattaui remembers that "the Global Compact was launched as a challenge for business and the UN to work together." "We must make sure other players don't dilute it," she states. In the ICC's vision, NGOs should be excluded from the Global Compact altogether, and should only be involved in dialogue with individual corporations, "at the grassroots level."

The ICC clearly prefers the Global Compact to other UN processes where it has to operate on an equal footing with non-profit civil society groups like NGOs and trade unions. In the UN's Commission on Sustainable Development (CSD), for instance, the ICC is one of several 'major groups' of stakeholders that are consulted closely. The Compact brings the ICC a step closer to its ambition of business being granted a privileged position in the UN.[18]


Using the Global Compact to Justify Pulling out of a UN Process

In March 2000 the ICC withdrew from the CSD's Multistakeholder Review of Voluntary Initiatives, an evaluation process created in 1998 by the CSD's sixth session (UNCSD6). In a letter to CSD director JoAnne DiSano, the ICC explained that it felt that its resources "may be allocated to greater effect in other current initiatives we are undertaking with the United Nations."[19] As an example, the ICC mentioned that it "is heavily engaged in the Secretary General's Global Compact project." The Voluntary Initiatives project, the ICC wrote had "progressed as far as it can at the present time."

In fact, the review has not even started yet. Knowing that a review of the effectiveness of voluntary action would reveal dubious practices of numerous ICC member corporations, the ICC lobbied hard during CSD6 to water down the mandate. As a result, the mandate is no more than an "exploration" of the elements of a "potential" review. Still, the ICC felt it was safer to step out. "Any effort to police or monitor voluntary initiatives on an adversarial basis which assumes lack of commitment by industry," the ICC letter stated, "ought not to be supported by us."

Referring to the Global Compact offered the ICC an easy escape route. The Compact's absence of monitoring and enforcement are ideal for the ICC's attempts to escape transparency and accountability. NGOs involved in the CSD's two years of "exploration" hope to convince governments that a review of the effectiveness of voluntary industry initiatives is still desperately needed.


ICC vs. the Kyoto Protocol on Climate Change

The ICC's self-regulation mantra comes up in virtually all international negotiations that the lobby group is involved in. This is certainly the case in the UN negotiations on the rules for implementing the Kyoto climate change Protocol where the Chamber continues to lobby against international rules to force corporations to reduce their greenhouse gas emissions. These efforts are in direct contradiction with the environmental principles of the Global Compact.

With over 100 accredited lobbyists, the ICC was one of the most visible industry lobby groups at the November 2000 UN climate negotiations in The Hague (COP-6).[20] While trying hard to portray itself as environmentally responsible, the ICC's lobbying efforts aimed to undermine the effectiveness of the Kyoto Protocol. In a revealing statement, then ICC Vice-President (current President) Richard McCormick warned against, "a 'quick-fix, look-good' deal that causes a dramatic and costly shift in the way industrialized countries use energy"[21], while such a shift is, of course, exactly what is needed if catastrophic climate change is to be averted.

The ICC's "alternative" to government regulation is voluntary action by industry , plus the dramatic expansion of the role of the Kyoto Protocol's 'market-based mechanisms'. Environmental activists say this would allow corporations numerous, often harmful, ways to escape reducing their greenhouse gas emissions, such as through global emissions trading and the accounting of 'carbon sinks' (carbon absorption via forests, wood products, soil and industrial and genetically modified agriculture).[22]

Far from taking the environmental high road, the ICC plays a coordinating role in all business lobbying at UN negotiations, including daily strategy meetings. The ICC's working group on climate change consists of over 70 lobbyists from European, US and Japanese corporations. Among them are major oil corporations which are openly campaigning against the Kyoto Protocol.

An example is ExxonMobil, whose Brian Flannery was one of the ICC prime spokespeople in The Hague.[23] With his ICC-hat on, Flannery delivered the ICC's rosy "free market environmentalism" discourse to the media. But Flannery also spoke out as lobbyist of ExxonMobil and then the feel-good rhetoric was replaced by questioning the scientific evidence for climate change and making warnings against government investments in green technology.

When the Bush administration withdrew US support for the Kyoto Protocol in March, the ICC was clearly relieved and threw off its green mask. On its website it advertised a new climate initiative from the United States Council for International Business (USCIB), the US affiliate of the ICC. Welcoming the Bush decision, USCIB called for an alternative to the Kyoto Protocol that would avoid its "unrealistic targets, timetables and lack of developing country participation."[24]


ICC vs. Biodiversity and Biosafety Accords

The ICC's lobbying around UN negotiations on global biodiversity is no less out of line with the Global Compact principles. The ICC has systematically obstructed the implementation of the 1992 Convention on Biodiversity (CBD) and the subsequent negotiations for a Biosafety Protocol. Instead, the ICC is uncompromising in its defense of the World Trade Organization's (WTO) controversial rules on intellectual property rights, which are heavily biased towards corporate interests (the Trade Related Intellectual Property -- TRIPs -- Agreement).

The vast majority of developing countries and environmental campaigners have long since pointed out the conflict between the Convention on Biodiversity (CBD) and the TRIPs agreement. The CBD assigns sovereignty in matters concerning biological resources, such as plants and seeds, to the countries that possess them (the largest share of the world's biodiversity being in Third World countries). It also states that local communities should benefit from the use of this resource. However, TRIPS weakens such provisions by allowing corporations to patent these resources. The ICC strategy has been to claim that both agreements are totally compatible, while lobbying against any attempt to strengthen the position of the CBD vis--vis TRIPs.

The ICC has played a particularly obstructive role at the negotiations for a Biosafety Protocol. This Protocol, adopted in Montreal in January 2000 after years of discussions, provides a legal framework to ensure safety in the transboundary movements of genetically modified organisms. In contradiction to the Global Compact Principle 7, which advocates a "precautionary approach," the ICC has campaigned against the inclusion of the Precautionary Principle into the Protocol. Another major demand was that the business-friendly WTO rules would overrule the Biosafety Protocol -- an environmentally irresponsible, if commercially sound proposition.

The ICC's US branch (the United States Council for International Business -- USCIB) has played a particularly obstructive role in the battle over the biosafety negotiations, through its defense of the commercial interests of the US biotech industry. USCIB, which is also part of the Global Industry Coalition (a group infamous for its extremely aggressive anti-environmental lobby), has worked systematically to prevent the adoption of the Biosafety Protocol. USCIB lobbied the US government to put pressure on the European Union and other governments to change their stance at the negotiations. This alliance, determined to push bioengineered products into foreign markets, managed to disrupt the UN talks in Cartagena in February 1999 and significantly weakened the final Protocol.


ICC vs. The Basel Convention

In direct contradiction with the principles of the Global Compact, the ICC is campaigning against the UN Basel Convention's ban of the export of hazardous waste from the richer industrialized countries (OECD) to developing countries and Eastern Europe (non-OECD countries). The group features prominently in the Basel Action Network's "Hall of Shame."[25] The ban, which was agreed in 1994 after a boom in North to South shipments of dangerous waste in the 1980's, has already had a dramatic impact. Waste trade scandals became rare in the 1990's as governments had de facto implemented the ban, thereby cutting off possibilities for Northern industry to get rid of its waste at low cost. The ban however goes into full legal force only when 62 countries have ratified it.

Meanwhile, the ICC continues to work hard to attack the ban and prevent if from entering into force. According to the Basel Action Network ,the ICC's role has been "very obstructive," ranging from "publishing fact sheets full of erroneous information" to "lobbying vigorously behind the scenes."[26] The ICC's lobbying delegation has been headed by Harvey Alter of the Business Recycling Coalition, which represents US traders in waste metals.[27]

The ICC also tries to undermine the implementation of the ban by promoting various loopholes. One example is the ICC's support for circumventing the ban via bilateral agreements that would allow hazardous waste trade between countries, completely undoing the concept of a strict ban. In the ICC's latest (November 1999) position paper on the Basel Convention, the group has even called for the ban to be stopped by the World Trade Organization (WTO). According to the ICC, the ban on trade in hazardous waste is "trade disruptive" as it "would arbitrarily and unjustifiably discriminate among countries."


The Wrong Partner

Contrary to what it would like the world to believe, the ICC has never been an enlightened or progressive business organization, nor has it become one since joining the Global Compact.

The debate about the social and environmental impacts of economic globalization has never been more intense and it increasingly hones in on the role of transnational corporations. The call for political action to rein-in their economic and political power, for instance through enforceable UN rules on corporate behavior, is gaining strength. The International Chamber of Commerce (ICC) is vehemently against such rules. In this debate, the UN leadership has unfortunately chosen the wrong side.

In the next years it will become increasingly apparent (and embarrassing) to the UN that it has chosen the wrong partner. The ICC has already announced that it will use the Global Compact in "preparing the business contribution for the Rio-plus-ten conference in 2002." The ICC will once again promote 'free markets' and corporate self-regulation in a proactive attempt to avoid or water-down civil society demands for policies to counter the accelerating social and environmental crisis. The abuse of the UN's Global Compact will undoubtedly be taken to hitherto unknown heights. Clearly, there is little time left for Kofi Annan to break with the ICC before the UN's credibility suffers permanent damage.

Thanks to: Pieter van der Gaag (ANPED), Jeffrey Barber (ToBI), Jim Puckett (BAN), Chee Yoke Ling (TWN) and Silvia Ribeiro (RAFI).

CEO, is a European-based research and campaign group targeting the threats to democracy, equity, social justice and the environment posed by the economic and political power of corporations and their lobby groups.


Endnotes

  1. "ICC and the Global Compact" on the UN's Global Compact website: accessed May 4th 2001

  2. See http://www.globalcompact.org for the nine global compact principles.

  3. "Joint statement on common interests by the Secretary-General of the United Nations and the International Chamber of Commerce," 9 February 1998.

  4. "Global rules needed for a global economy," ICC website: accessed May 4th 2001

  5. "The Geneva Business Declaration," 24 September 1998.

  6. Message from Kofi Annan, ICC Geneva Business Dialogue, 24 September 1998.

  7. How Africans can make the leap to a better life -- Kofi Annan, Abuja, 20 November 2000: accessed May 4th 2001.

  8. http://www.iccwbo.org/home/menu_global_compact.asp accessed May 9th 2001

  9. "Taking up the challenge: business and the Global Compact," Adnan Kassar, text distributed during the UN's Millennium summit, 6-8 September 2000.

  10. "DaimlerChrysler turns waste coconuts into car seats," Accessed May 9th 2001

  11. "Yes to Annan's 'Global Compact' if It Isn't a License to Meddle," Maria Livanos Cattaui in the International Herald Tribune, July 26 2000.

  12. Cattaui in "The Global Compact - Business and the UN," published in "The Global Compact - Business and the UN," sponsored section in the International Herald Tribune, January 25 2001.

  13. "Business and the global economy," ICC statement on behalf of world business to the Heads of State and Government attending the Okinawa Summit, 21-23 July 2000.

  14. "Business Responsibility for Sustainable Development," Peter Utting, United Nations Research Institute for Social Development (UNRISD), June 2000.

  15. "The Global Economy: An Opportunity, Not a Threat," The Budapest Business Declaration, ICC, Hungary, 5 May 2000.

  16. "ICC steps up counter-campaign against critics of corporate-led globalisation," Corporate Europe Observer, Issue 7, 2000

  17. "The business of building a better world," published in "The Global Compact - Business and the UN," sponsored section in the International Herald Tribune, January 25 2001.

  18. It has long been an ICC ambition to achieve "the treatment of business by the U.N. on a different basis than the conventional NGOs." "Special U.N. General Assembly Session Marking Fifth Anniversary of Rio Conference on Environment and Development Shows Limited Results," USCIB website: Accessed May 9th 2001

  19. Letter from the ICC's Lord Cheltenham to JoAnne DiSano, March 8 2000.

  20. COP-6 participants list, see the UN's COP-6 website

  21. Richard D. McCormick, "Charting a New Course for the Environment -- and the Economy," International Herald Tribune, November 18-19, 2000.

  22. For a comprehensive overview of the wide range of global equity and environmental problems related to the proposed emissions trading and other market-based "solutions" to climate change, see CEO's November 2000 briefing "Greenhouse Market Mania."

  23. ExxonMobil is "firmly against the Kyoto Protocol" because "it achieves very little and costs too much." "Kyoto treaty flawed says top exec of ExxonMobil," Earth Times, November 15, 2000.

  24. See http://www.ban.org/hall_shame.html

  25. Letter from Jim Puckett, coordinator of the Basel Action Network (BAN), April 16 2001

  26. "Industry Groups Say They Would Support Basel Legislation Under Certain Conditions," International Environment Reporter, June 10 1998

  27. "Executive Summary and Conclusion," High-Level Meeting on the Global Compact, held on July 26, 2000, United Nations Headquarters in New York.