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UN: Multinationals Sign Pact on Rights and Environment

by Joseph KahnNew York Times
July 26th, 2000

UNITED NATIONS -- Executives of DaimlerChrysler, Nike and Royal Dutch Shell filled a chamber today where diplomats usually conduct business, as the United Nations recruited many well-known multinational companies to help protect workers and the environment in places where governments do not.

Secretary General Kofi Annan organized the session to encourage companies that operate across borders to spread Western-style human and environmental values or risk seeing the erosion of the consensus that favors open trade and investment.

Some 50 multinationals joined 12 labor associations and watchdog groups to sign a "global compact" that commits them to support human rights, eliminate child labor, allow free trade unions and refrain from polluting the environment wherever they do business.

Several signers are among the leading targets of protest groups that say the companies exploit workers and abuse the soil, water and forests in poor nations.

"Companies should not wait for governments to pass laws before they pay a decent wage or agree not to pollute the environment," Mr. Annan said after he had presided over the daylong meeting here. "If companies lead by example, the governments may wake up and make laws to formalize these practices."

Since the collapse of world trade talks and noisy street protests last year in Seattle, multinational companies have been scrambling to forge alliances with some of their critics, including unions and human rights and conservation groups. The compact sponsored by the United Nations is the most visible example of such alliances, and it is an attempt by Mr. Annan to make the world body a more effective force for social and labor standards.

The effort seems highly unlikely to alter the global economic landscape immediately. The pact, which took 18 months to negotiate, binds the signers to a declaration of principles rather than a legal code of conduct.

Several watchdog groups said the United Nations was participating in a "bluewash," allowing some of the largest and richest corporations to wrap themselves in the United Nations' blue flag without requiring them to do anything new.

But the session showed how world governments and corporate leaders increasingly rely on each other to demonstrate that they are helping the people left behind when companies move capital and manufacturing plants around the world. The United Nations and other international organizations have tried to address the side effects of growing international trade and investment but have found it difficult to act in isolation. Multinational companies, particularly those subject to barrages of criticism about how they conduct business in poor countries, are now eager to join the organizations.

"This global compact has the potential to become an historic partnership," the chairman and chief executive of Nike, Philip H. Knight, said. "We hope it provides the framework for real global progress versus each of us struggling with these issues alone."

Critics say Nike practices or tolerates sweatshop conditions in its foreign factories and those owned by its contractors. Nike says it adheres to the highest international standards.

Other companies that participated today have also run into criticism for their international operations, especially Shell projects in Nigeria. Numerous watchdogs have said the oil company violated environmental and human rights standards.

Bayer, Dupont, Ericsson, Healtheon/WebMD and Unilever were among the signers, as were Amnesty International and the World Wildlife Fund.

United Nations officials acknowledged that they had trouble attracting some American companies because the companies feared endorsing an instrument that might legally bind them to act in a certain way and subject them to fresh scrutiny. A United Nations official declined to identify companies that decided not to participate.

In the 1980's, the United Nations made a similar effort to forge international standards for foreign investment and workers' treatment. But that collapsed after rights groups, United Nations officials and executives clashed over the terms of the agreement.

This time, Mr. Annan, who became secretary general in 1997, selected nine loosely worded principles drawn from international accords like the Universal Declaration of Human Rights and the 1992 Earth Summit in Rio de Janeiro, seeking to build agreement around long-established codes.

Mr. Annan stressed that companies should adhere to the standards even when the nations where they conduct business did not require them to do so. He said a company operating in a country that did not allow free unions should permit its workers to organize and bargain collectively, a position that could put companies at odds with the government of China, where almost all companies that signed the compact have investments.

The United Nations will not insist on strict compliance. Mr. Annan said the United Nations did not have the "capacity or the mandate" to police the companies. Several executives warned that the compact would fail if it became the basis for sanctions.

Some social and environmental groups, including Greenpeace, did not sign the accord. They wrote to Mr. Annan that some of the participants -- the letter cited Nike, Shell and Rio Tinto, the British-Australian mining company -- had poor records of operating abroad and did not deserve to be United Nations partners.

The letter urged Mr. Annan to "reassess your overall approach to U.N.-corporate partnerships."

"The mission and integrity of the United Nations are at stake," it added.

Still, some outside observers see the partnership as vital as the world grapples with the reality that nations cannot regulate, tax and set standards for commerce as effectively when companies spread their operations over many countries, rich and poor.

Jeffrey Garten, dean of the Yale School of Management, compared the process to regulating labor, food, safety and the environment in the United States, programs that took decades to accomplish.

"There are just a huge number of issues that have to be addressed globally and there is no real infrastructure to do it," Mr. Garten said. "They can only be dealt with in partnership agreements between governments, business and nongovernment organizations."





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