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Letters to Kofi Annan Blasting the Global Compact Corporations

CorpWatch
July 25th, 2000

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  • July 20, 2000: Coalition Letter to Kofi Annan on the Global Compact

  • July 21, 2000: Response from John G. Ruggio, Assistant Secretary-General United Nations

  • July 25, 2000: Letter Says Global Compact Threatens UN Integrity



July 20, 2000

His Excellency Mr. Kofi Annan
Secretary General
Room 3800
United Nations, NY 10017

Mr. Secretary General,

We write to you as individuals who care deeply about the United Nations and on behalf of organizations that have worked for years to strengthen and support it.

We are writing to express our concern and reservations about the Global Compact.

On the one hand, we recognize the importance of bringing business behavior in line with the universal values and standards represented by the nine principles of the Global Compact.

However, there are two aspects of the Global Compact that trouble us. First, the text implies a universal consensus that open markets are the primary force for development. As you are aware, there is intense debate over the benefits and harms of free trade and market liberalization as currently promoted by the WTO and other institutions.

Many sectors of society do not concur with the Global Compact's vision of advancing popular social values "as part and parcel of the globalization process," to "ensure that markets remain open." Many do not agree with the assumption of the Global Compact that globalization in its current form can be made sustainable and equitable, even if accompanied by the implementation of standards for human rights, labor, and the environment.

We recognize that corporate-driven globalization has significant support among goverments and business. However, that support is far from universal. Your support for this ideology, as official UN policy, has the effect of delegitimizing the work and aspirations of those sectors that believe that an unregulated market is incompatible with equity and environmental sustainability.

Our second concern is the purely voluntary nature of the Global Compact, and the lack of monitoring and enforcement provisions. We are well aware that many corporations would like nothing better than to wrap themselves in the flag of the United Nations in order to "bluewash" their public image, while at the same time avoiding signficant changes to their behavior. The question is how to get them to abide by the principles in the Global Compact.

Without monitoring, the public will be no better able to assess the behavior, as opposed to the rhetoric, of corporations. Without independent assessment, the interpretation of whether a company is abiding by the Global Compact's principles or not will be left largely to the company itself.

Many of the corporations being asked to endorse the Global Compact suggest that while corporations SHOULD be responsible, efforts by governments to hold corporations accountable to international values and standards are harmful to development, innovation and human progress. Many in the NGO community reject this premise. On the contrary, we stress that markets cannot allocate fairly and efficiently without clear and impartially enforced rules, established through open, democractic processes. Asking corporations, many of which are repeat offenders of both the law and commonly accepted standards of responsibility, to endorse a vague statement of commitment to human rights, labour and environmental standards draws attention away from the need for more substantial action to hold corporations accountable for their behavior.

As you are aware, the UN Subcomission on the Promotion and Protection of Human Rights is currently drafting a legal instrument on TNCs and human rights. We would look for your support for this initiative.

Although it may take years before we can hope to achieve a binding legal framework for the transnational behavior of business in the human rights, environmental and labor realms, we believe it is necessary to start down that road, and to begin building the political support for that goal now. Therefore, the undersigned groups respectfully request you to re-assess the Global Compact, taking into account the concerns above.

In addition, we offer an alternative, the Citizens Compact, for your consideration. The Citizens Compact stresses the importance of a legal framework for corporate behavior in the global economy. The Citizens Compact also provides suggested guidelines for interactions between the UN and the private sector.

We invite your comments on the Citizens Compact and hope you will consider endorsing it.

Again, we believe that bringing corporate behavior in line with the universal principles and values of the United Nations is a goal of extremely high importance. We look forward to working with you and the entire United Nations system toward that goal.

Sincerely,

Upendra Baxi, Professor of Law
University of Warrick, UK and former Vice Chancellor University of Delhi (India)

Roberto Bissio
Third World Institute (Uruguay)

Thilo Bode, Executive Director
Greenpeace International (Netherlands)

Walden Bello, Director
Focus on the Global South (Thailand)

John Cavanagh, Director
Institute for Policy Studies (U.S.)

Susan George, Associate Director
Transnational Institute (Netherlands)

Olivier Hoedeman
Corporate Europe Observatory (Netherlands)

Joshua Karliner, Executive Director
Transnational Resource & Action Center (U.S.)

Martin Khor, Director
Third World Network (Malaysia)

Miloon Kothari, Coordinator
International NGO Committee on Human Rights in Trade and Investment (India)

Smitu Kothari, President
International Group for Grassroots Initiatives (India)

Sara Larrain, Coordinator
Chile Sustentable (Chile)

Jerry Mander, Director
International Forum on Globalization (U.S.)

Ward Morehouse, Director
Program on Corporations, Law and Democracy (U.S.)

Atila Roque, Programme Coordinator
Brazilian Institute of Economic and Social Analysis (Brazil)

Elisabeth Sterken, National Director
INFACT Canada/IBFAN North America

Yash Tandon, Director
International South Group Network (Zimbabwe)

Vickey Tauli-Corpuz, Coordinator
Tebtebba (Indigenous Peoples' International Centre for Policy Research and Education), and Asia Indigenous Women's Network (Philippines)

Etienne Vernet, Food and Agriculture Campaigner
Ecoropa (France)

cc: Mary Robinson, High Commissioner for Human Rights
Juan Somavia, Director General, International Labour Organisation
Klaus Toepfer, Executive Director, United Nations Environment Programme
Mark Malloch Brown, Administrator, United Nations Development Programme
Carol Bellamy, UNICEF
Georg Kell, First Secretary, Executive Office of the Secretary General



July 25, 2000

His Excellency Mr. Kofi Annan
Secretary General
Room 3800
United Nations, NY 10017

Mr. Secretary General,

On July 20th, a number of us wrote asking you to re-assess the Global Compact and to join us in a "Citizens Compact." We are writing again today to express our shock upon learning the identities of the corporate partners for the Global Compact and our disappointment in the Guidelines for Cooperation Between the United Nations and the Business Community.

In the July 20th letter, we expressed concern that the UN is endorsing a specific vision of corporate-led globalization that is opposed by many sectors of civil society. We also suggested that the purely voluntary nature of the Global Compact may distract from the need for a legal framework to hold corporations accountable internationally.

We wrote to you as individuals who care deeply about the United Nations and on behalf of organizations that have worked for years to strengthen and support it.

Now, after reviewing the July 17th Guidelines and the initial list of companies joining the Global Compact, we believe that the Global Compact and related partnerships threaten the mission and integrity of the United Nations.

Some of the companies in the partnership are simply inappropriate for partnerships with the United Nations.

Nike, one of the Global Compact partners and an international symbol of sweatshops and corporate greed, is the target of one of the most active global campaigns for corporate accountability. The company has made announcements of changes to its behavior only after enormous public pressure. It has also aggressively opposed the only union and human rights-group supported independent monitoring program--the Worker Rights Consortium (WRC).

CEO Phil Knight withdrew a $30 million donation to the University of Oregon after the University joined the WRC. Nike also cut its multimillion dollar contracts with the University of Michigan and Brown University after they joined the WRC. Nike became a sweatshop poster child not just through complicity in labor abuses but through active searching for countries with non-union labor, low wages, and low environmental standards for its manufacturing operations. This has made Nike a leader in the 'race to the bottom' -a trend that epitomizes the negative tendencies of corporate-led globalization.

Shell is a corporation with a history of complicity in human rights abuses, most infamously in Nigeria. Its operations there are also notorious for environmental contamination and double standards. Shell has adopted sophisticated rhetoric about its social responsibilities, but it has not shown understanding, let alone remorse, about its own role. For example, on its website, Shell posts a photograph of a pro-Ogoni rally, without acknowledging that the Ogoni people's protests have been against Shell itself.

BP Amoco is another company with sophisticated rhetoric on environmental and social issues. But their actions do not measure up. CEO John Browne admits that climate change is a problem for any oil company, yet his company continues to search for oil and gas even in remote and pristine regions, while investments in renewable energy are a pittance compared with the size of the corporation and its investments in ongoing fossil fuel exploration and production.

Rio Tinto Plc is a British mining corporation which has created so many environment, human rights, and development problems that a global network of trade unions, indigenous peoples, church groups, communities and activists has emerged to fight its abuses. For instance, the company stands accused of complicity in or direct violations of environmental, labor and human rights in Indonesia, Papua New Guinea, Philippines, Namibia, Madagascar, the United States and Australia, among others.

Novartis is engaged in an aggressive public relations and regulatory battle to force consumers and farmers to accept genetically engineered food, without full testing for potential harms and without full access to information. The behavior of Novartis in the area of genetically engineered foods is diametrically opposed to the precautionary principle, one of the principles of the Global Compact.

These are but a few of the corporate endorsers of the Global Compact whose historical and current core activities run counter to the spirit and the letter of the Compact itself.

The Guidelines on Cooperation Between the United Nations and the Business Community which you issued on July 20th raise a further, related set of issues. These guidelines state that 'business entities that are complicit in human rights abuses...are not eligible for partnership.' The inclusion of Shell in the Global Compact violates those guidelines.

The Guidelines also state that a "business entity may be authorized to use the name and emblem" of the United Nations. As the United Nations Development Programme has noted, when a company uses the UN logo, "a mutual image transfer inevitably takes place." It is dismaying to contemplate such an image transfer between Nike, Shell, or Rio Tinto and the UN. The UN logo and the Nike swoosh do not belong together.

The Guidelines state that the use of the UN name may only be used when the "principal purpose is to show support for the purposes and activities of the UN..." This guideline does not take into account the modern practice of branding, by which a corporation sells it image as much as its manufactured products. Nike, one of the Global Compact partners, is a pioneer of modern branding. It is obvious that the use of the UN name and logo by corporations will be not only for short term profit but for the long term business goal of positive brand image. The UN must not become complicit in the positive branding of corporations that violate UN principles.

Given that there is no provision for monitoring a corporation's record in abiding by UN principles, the Guidelines' modalities for partnerships are quite susceptible to abuse. For example, a company with widespread labor or environmental violations may be able to join with the UN in a relatively minor cooperative project, and gain all the benefits of association with the UN without any responsibilities. The UN would have no way to determine whether the company, on balance, is contributing to UN goals or preventing their realization.

In short, Mr. Secretary General, the Global Compact partnership and the Guidelines for Cooperation do not "ensure the integrity and independence" of the United Nations. They allow business entities with poor records to "bluewash" their image by wrapping themselves in the flag of the United Nations. They favor corporate-driven globalization rather than the environment, human health, local communities, workers, farmers, women and the poor.

Again, we urge you to re-assess the Global Compact and its partners. We urge you to re-evaluate your overall approach to UN - corporate partnerships. The mission and integrity of the United Nations are at stake.

Sincerely,

Upendra Baxi, Professor of Law, University of Warwick (UK)
and former Vice Chancellor, University of Delhi (India)

Medea Benjamin, Founding Director
Global Exchange (U.S.)

Roberto Bissio
Third World Institute (Uruguay)

John Cavanagh, Director
Institute for Policy Studies (U.S.)

Jocelyn Dow, Board Chairperson
The Women's Environment and Development Network (U.S.)

Susan George, Director
Transnational Institute (The Netherlands)

Joshua Karliner, Executive Director
Transnational Resource & Action Center (U.S.)

Martin Khor, Director
Third World Network (Malaysia)

David Korten, President
The People-Centered Development Forum (U.S.)

Miloon Kothari, Coordinator
International NGO Committee on Human Rights in Trade and Investment (India)

Smitu Kothari, President
International Group for Grassroots Initiatives (India)

Jerry Mander, Director
International Forum on Globalization (U.S.)

Ward Morehouse, Director
Program on Corporations, Law and Democracy (U.S.)

Remi Parmentier, Director, Political Unit
Greenpeace International (The Netherlands)

Atila Roque, Programme Coordinator
Brazilian Institute of Economic and Social Analysis (Brazil)

Elisabeth Sterken, National Director
INFACT Canada/IBFAN North America

Victoria Tauli-Corpuz, Executive Director
Tebtebba Foundation (The Philippines)

Etienne Vernet, Food and Agriculture Campaigner
Ecoropa (France)

Rob Weissman, Co-director
Essential Action (U.S.)

Dr. Owens Wiwa
member of Movement for the Survival of the Ogoni People (MOSOP)
and brother of Ken Saro-Wiwa (Nigeria)

(View a list of more endorsers.)


21 July 2000

Dear Colleagues,

I am responding to your very thoughtful letter to Secretary-General Kofi Annan, dated 20 July 2000, concerning the Global Compact.

As you know, the Compact is an outgrowth of the Secretary-General's address at Davos in January 1999. In it he argued that the globalization of markets as we have known it for the past decade or so was unsustainable and likely to trigger a backlash. The benefits of globalization are distributed too unequally, he noted, both within and among countries. And it lacks an adequate social foundation in broadly shared values and practices, without which markets historically have been unable to survive and thrive. (This was 10 months before Seattle!)

The Secretary-General then challenged the business community to work with the United Nations to help rectify this state of affairs. Specifically, he asked companies to embrace and enact in their own corporate practices nine principles drawn from the Universal Declaration of Human Rights, the ILO's Fundamental Principles on Rights at Work, and the Rio Principles on Environment Development - all of which enjoy universal consensus among governments.

And so the Global Compact was born. The reaction of the business community was favorable, and before long international labor and civil society organizations in human rights, the environment and development joined in the partnership. The Compact goes operational on 26 July, when leaders from all participating organizations join the Secretary-General for its official launch.

Voluntary initiatives of this sort are no substitute for effective action by governments. But they can be more quickly designed and implemented, and they can complement other approaches.

For example, in his recently published Millennium Report, entitled "We the Peoples: The Role of the United Nations in the 21st Century," the Secretary-General urges unimpeded access for the exports of the least developed countries to the markets of the industrialized world; he proposes some innovative approaches to debt relief; and he stresses the need to reverse the decline in official development assistance while making it more effective. No voluntary initiative at the corporate level can substitute for such measures.

Let me now turn to some of the specific issues you raise in your letter. First, you take objection to the Secretary-General's support for open markets, and claim that they are not a universally supported objective. The problem is that you equate open markets with unrestrained or unfettered markets. By virtue of promoting and seeking to implement universal values and principles, the Secretary-General by definition does not align himself with unfettered markets. But he does support open markets - that is, nondiscrimination and minimum barriers to trade, coupled with differential treatment for developing countries, especially the least developed. Why? Because open markets offer the only remotely viable means of pulling billions of people out of the abject poverty in which they find themselves today. And their welfare is our primary concern.

Second, we appreciate your effort in drafting a citizen's compact and find much of value in it. However, we cannot associate ourselves with its first principle because governments have given us neither the mandate nor the capacity to pursue the regulatory approach you favor. Thus, the Global Compact is not a code of conduct, and it is not about monitoring or assessing corporate performance.

Instead, ours is a learning model, utilizing the powerful tool of transparency. One of the core commitments companies make within the Global Compact is to go public at least once a year, on our Compact website, with concrete steps they have taken to implement the principles of the Compact.

The idea is to identify and disseminate good practices. Our labor and civil society organization partners - which represent hundreds of millions of people worldwide - will lend their expertise to that process. Indeed, you will be able to see and judge the same actions because all of the information will be in the public domain.

I take the liberty of attaching a short speech I recently gave on the subject of "The Global Compact and Global Community," which may be of interest to you.

Please be so kind and circulate this letter to all the signatories of the letter to the Secretary-General.

With best regards,

Yours sincerely,

John G. Ruggie
Assistant Secretary-General