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U.N. Alliance for a Corporate-Free U.N.

EarthRights International
January 16th, 2004

Dear Mr. Toepfer, Mr. Malloch, Mr. Ramcharan, Mr. Magarios, and Mr. Somavia:

We are writing today to call on you to end your agency's participation in the Global Compact. We believe that the Global Compact, though started with good intentions by Secretary General Kofi Annan, is counterproductive. The Global Compact allows the name and reputation of the UN to be abused by corporations whose practices are in contradiction with the values of the UN. Partnerships with these corporations damage the integrity and mission of your agency and of the United Nations.

As an illustration, this letter describes the events surrounding the high profile participation of Nestl in the Global Compact, even as the company continues its long history of violating UN principles and undermining regulatory efforts. We also describe the use of the Global Compact by participating lobby groups as a rhetorical weapon in the effort to prevent progress on the UN Draft Norms on the Responsibilities of Transnational Corporations and other Business Enterprises with Regard to Human Rights.

We have chosen Nestl because its practices have long been a subject of scrutiny, because its political and public relations practices have been directly at odds with specific UN measures, and because the Global Compact Office was specifically informed of these facts. Despite all this, Nestl has been allowed to participate. Moreover, Nestl has been allowed to provide financial support to a Global Compact Symposium, at which it was singled out for praise by the Compact's top officer.

Nestl's participation is not an isolated example that can be fixed by expelling the company but rather part of the design and philosophy of the Global Compact, as we will describe.

Nestl is one of the most consistent violators of the International Code on the Marketing of Breast-milk Substitutes, according to monitoring of the marketing practices of infant food manufacturers over the past twenty years. The International Code was adopted by the World Health Assembly in 1981 and has since become an accepted human rights instrument.

Therefore, the inclusion of Nestl in the Global Compact contradicts UN policies. It clearly violates the Secretary General's July 17th 2000 Guidelines on UN Cooperation with the Business Community, which state that companies that violate human rights "are not eligible for partnership." It also contradicts the 2001 UNICEF Guidelines for Working with the Business Community, which specifically exclude "manufacturers of infant formula whose marketing practices violate the International Code for the Marketing of Breast-milk Substitutes" as potential allies.

The International Baby Food Action Network (IBFAN) has tried to attract the Global Compact's Office's attention to the fact that the admission of Nestl as a participant to the Global Compact will be detrimental to international efforts to hold the infant food TNC accountable for its marketing practices.

IBFAN first expressed concern formally about Nestl in a December 15, 2000 letter to the Executive Director of UNICEF which was copied to the Global Compact Office. In January 2001, Assistant Secretary General John Ruggie, one of the architects of the Global Compact, wrote to IBFAN that Nestle was "not involved in the Global Compact[had not] shown any sign of being 'anxious' to participatenor have we sought their participation."

Despite ongoing correspondence on the matter, IBFAN was not informed when Nestl became a Global Compact company. In October 2002, IBFAN learned that Nestl CEO Peter Brabeck-Letmath would be a featured plenary speaker at that month's Symposium on the UN Global Compact and Swiss Business. The program of the Conference acknowledged "the support of Nestl is making this event possible." At that Symposium, according to those in attendance, Global Compact Executive Head Georg Kell singled out Nestl as one of four exemplary Swiss companies for its socially responsible employment practices. In response to a question from the floor about Nestl's participation and its responsibility for harm to infant health, Mr. Kell said that was a "single-issue" concern, and that the Global Compact had "wider aims."

In other words, Nestl gained the praise of the UN Global Compact and the dismissal of its critics - experts on breast feeding and regulation of marketing of breast-milk substitutes - at a Symposium that it supported financially. This happened despite repeated denials by the Global Compact Office that it gives approval to participating companies, and its insistence that civil society participation is integral to the success of this initiative.

In reflecting on these circumstances, it is important to remember that Nestl is an extremely high profile company. The company has factories in 84 countries and owns some 6,000 brands, according to the Economist. According to its financial statements, Nestl's market capitalization is about $8.6 billion, sales in 2002 were some $66 billion and after tax profits over $5 billion. More important, Nestl is one of the more notorious companies in the world, the subject of an international boycott that is still going today, due to its especially unethical advertising and marketing practices for baby food . The Global Compact Office was aware of these facts. Moreover, they were aware of the controversy the participation of Nestl would cause within the community concerned with these issues. In other words, the decision to allow Nestl's high profile participation in the Global Compact was made with due consideration by the GC Office, and reflects its approach and philosophy toward private sector partnerships with the UN.

The acceptance of Nestl as a high profile participant in the Global Compact confirms that the Compact is pursuing partnership even with companies that are known to undermine the UN's goals, principles and agreements. The pursuit of partnership in these circumstances cannot undo nor compensate for the harm Nestl has done and continues to do through its basic business practices. Though UN officials stress that the Global Compact is not a membership based organization, the impression that Nestl has gained the favor of the UN is unmistakeable. Also unmistakeable is the appearance of impropriety in allowing Nestl to provide financial support to a Symposium at which a UN official praised Nestl and marginalized its critics.

The public presentation of Nestl by the Executive Head of the Global Compact in circumstances that highlighted only positive aspects of its behavior, no matter how minor or unsubstantiated, while ignoring negative aspects, no matter how significant, seems to indicate a capture of the Global Compact by its corporate participants.

Since July 2000, the Alliance for a Corporate Free UN has attempted to communicate serious concerns about the Compact to the Secretary General and to the Global Compact Office. We have written to the Secretary General several times, have published case studies, and various members of our Alliance have had ongoing communication with Global Compact staff.

To summarize the concerns we have expressed to the Global Compact office:

-The GC allows known human rights violators to participate, even though the Secretary General's July 17th, 2000 Guidelines on UN Cooperation with the business community state that companies that violate human rights "are not eligible for partnership."
-The GC framework broadly aspires to partnership with companies, which we believe is a fundamentally wrong relationship between public institutions and the for-profit sector.
-The GC exposes the UN's reputation to being tarnished by socially and environmentally irresponsible corporations, while companies get a chance to 'bluewash' their image and wrap themselves in the flag of the UN.
-Many Global Compact participants have continued to violate one or more of its nine universally accepted principles since signing on.
-The Global Compact gives the false impression that the aims and interests of business and the UN are one and the same, and that business interests are synonymous with public interests.

In addition to these criticisms, we are calling your attention to the disturbing fact that some corporate participants in the Global Compact are working against international rules on human rights, thus undermining the overall goals of the Compact, and using the Global Compact as a justification for their opposition.

As you know, since 1998 a sessional working group of the UN Sub-Commission on the Promotion and Protection of Human Rights has been drawing up a document which would bring together a range of widely accepted obligations on corporations, drawn from existing, human rights, labour rights and environmental instruments. This work did not receive the same high-level support which the Global Compact was given throughout the years. It nevertheless resulted in the presentation, in July 2003, of the UN Draft Norms on the Responsibilities of Transnational Corporations and other Business Enterprises with Regard to Human Rights.

Reacting to the Draft Norms, two major Global Compact partners, the International Chamber of Commerce and the International Organisation of Employers issued a joint statement which criticized the "binding and legalistic approach" of the Draft Norms. The two business associations described the proposed Draft Norms as "counterproductive to the UN's ongoing efforts to encourage companies to support and observe human rights norms by participating in the Global Compact." They said that the Draft Norms "risk inviting negative reaction from business, at a time when companies are increasingly engaging into voluntary initiatives to promote responsible business conduct." The U.S. Council on International Business, the ICC's U.S. affiliate, has also launched an attack on the Draft Norms, and refer to their "considerable efforts into developing voluntary codes" such as the Global Compact. The USCIB says these voluntary codes are a supplement to legislation, but claims erroneously that the Draft Norms aim to circumvent national laws.

As environment, development and human rights groups, we believe in a strong UN, fully funded by governments, which maintains the integrity of international environmental and social agreements and that seeks to hold corporations accountable in a legal framework. Yet, we also believe in a UN that avoids excessive and undue corporate influence, and which holds commercial interests subservient to human rights, labor and environmental principles. Instead of bringing shared values into the market, the Global Compact threatens to bring commercialism into the UN. It rewards rhetoric rather than deeds, and it undermines our efforts to bring a measure of corporate accountability, rather than purely voluntary responsibility, into the intergovernmental arena.

Kofi Annan has said that "cooperation [with the private sector] must be managed in a manner that does not compromise the independence and neutrality of the United Nations" We believe that the inclusion of Nestl as a Global Compact participant, and the use of the Global Compact to attack the Draft Norms, do in fact compromise the UN.

Therefore, again, we call on you to end your agency's participation in the Global Compact, in favor of initiatives that emphasize cooperation with groups that share the aims of the United Nations, and in favor of measures to hold powerful corporations accountable in an international legal framework.

Sincerely,

Kenny Bruno, EarthRights International
Alison Linnecar, International Baby Food Action Network
Chee Yoke Ling, Third World Network
John Cavanagh, Institute for Policy Studies
Miloon Kothari, Habitat International Coalition
Pratap Chatterjee, CorpWatch
Anuradha Mittal, Food First
Fiona Dove, Transnational Institute
Susan George, ATTAC
Tom Goldtooth, Indigenous Environment Network
June Zeitline, Women's Environment and Development Organization
Rob Weissman, Essential Action
Bobby Peek, groundWork
Victor Menotti, International Forum on Globalization

This letter was sent to:

Mr. Klaus Toepfer, Executive-Director
of the United Nations Environment Programme (UNEP)
United Nations Environment Programme
United Nations Avenue, Gigiri
PO Box 30552, Nairobi, Kenya
Fax: (254-20) 624275/217119

Mark Malloch Brown, Administrator
of the United Nations Development Programme (UNDP)
One United Nations Plaza
New York, NY 10017, USA
Fax: 212-906-5778

Bertrand Ramcharan, acting United Nations High Commissioner for Human Rights
Office of the High Commissioner for Human Rights
United Nations Office at Geneva
1211 Geneva 10, Switzerland
Fax: +41 22 917 9022
Via Facsimile and U.S. Mail

Carlos Alfredo Magarios, Director-General
of United Nations Industrial Development Organization (UNIDO)
Vienna International Centre
P.O. Box 300
A-1400 Vienna, Austria
Fax: +43 (1) 2692669

Mr. Juan Somavia, Director-General
International Labour Office
Office of the Director-General
4, route des Morillons
CH-1211 Geneva 22, Switzerland
Fax: +41 22 799 8533

For More Information Contact:

EarthRights International
1612 K Street N.W., Suite 401
Washington, D.C. 20006
USA

www.earthrights.org
tel: +1 (202)466-5188
fax: +1(202) 466-5189
email : kenny@earthrights.org

Steering Committee:

EarthRights International(US/Thailand) - Secretariat
Corporate Europe Observatory (The Netherlands)
Council on International and Public Affairs (US)
Brazilian Institute for Social and Economic Analysis (Brazil)
Institute for Policy Studies (US)
International Baby Food Action Network (Switzerland)
International NGO Committee on Human Rights in Trade and Investment (India)
Tebtebba Foundation (The Philippines)
Third World Institute (Uruguay)
Third World Network (Malaysia)