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Finance GreenWatch » 4. Asset management & Pension » Global Compact Rejects Independent Panel’s Criticism(IPS News)

Global Compact Rejects Independent Panel’s Criticism(IPS News)

By Isolda Agazzi:   GENEVA, Mar 26, 2011 (IPS) – An independent U.N. body has criticised the Global Compact, the largest initiative for corporate social responsibility, for not sufficiently monitoring the human rights and environmental commitments of participating companies.The Joint Inspection Unit (JIU), an independent external evaluation body of the U.N., based in Geneva, echoes a longstanding complaint by NGOs that the Global Compact may just be helping companies don a positive marketing image.

“On the whole, the Global Compact has been successful in legitimating the progressive and generalised engagement of the United Nations with the private sector, and promoting new partnerships whose effectiveness is yet to be proved. However, it has been less successful in making business participants translate their commitment into real policy change,” the JIU says bluntly in a report.

Though the report was published at the beginning of the year, the JIU only drew public attention to it last week, by issuing a press release. The Global Compact reacted with a harsh statement, dated Mar. 24, that rejects the report as “flawed and inaccurate” and asks for corrections.

However, the intricacies of U.N. policies and the ping pong between Geneva and New York will remain a mystery since Papa Louis Fall, the main author of the report, is apparently not allowed to talk to the press.

The Global Compact is the largest initiative for corporate social responsibility. It was launched by former U.N. secretary general Kofi Annan in 1999 at the World Economic Forum in Davos, Switzerland. Businesses that adhere to this compact commit themselves to ten principles relating to human rights, environmental and labour standards and anti-corruption practices. In exchange, they can make use of the U.N. Global Compact logo with a blue globe and a laurel wreath, which is very similar to the U.N. logo.

The world body’s independent inspectors see a threat to the credibility of the United Nations if any company can use its logo simply by subscribing to the Compact. It points to the Alliance for a Corporate-Free U.N., an NGO initiative that has long criticised the international organisation for “blue washing” companies that use its logo just for marketing purposes.

“It is curious that the report makes reference to that coalition, which ended its activities about five years ago, and not to the more recent articles and reports published on our blog,” Bart Slob, senior researcher at SOMO, told IPS.

SOMO is a Dutch-based NGO that monitors companies and does research on supply chains. In 2007 it funded Global Compact Critics, an informal network of organisations and people with concerns about the U.N. Global Compact.”The general views of the authors that contribute to our blog correspond to the ones of the JIU,” he ensures.

The Global Compact is intended to exhort business to “learn and dialogue”, but it has become victim of its own success: in ten years, it has gathered 7,450 participants from 135 countries — mainly businesses, but also NGOs, business organisations and academia. Large companies make up 35 percent of the total and small and medium enterprises another third.

By region, the largest representation is in Europe (43 percent), with U.S. companies making up only 5 percent of the total, Middle East ones 2 percent, Asian 20 percent, Latin American 24 percent and African 6 percent. But if quantity has steadily increased, quality is lagging behind. The report suggested more stringent criteria for admission. Presently, the CEO of a company only needs to sign a letter pledging to make the ten principles an integral part of its business strategy, without having to give sufficient guarantees that it will spread them throughout its supply chain and subsidiaries.

“The lack of company monitoring is the initiative’s Achilles’ heel,” stresses the report. NGOs like Amnesty International, Greenpeace, ActionAid and the Berne Declaration have long criticised the initiative for lacking teeth, but companies have always resisted any form of monitoring. Companies self-assess themselves and their reports are allegedly not verified.

The Global Compact rejects this criticism by pointing out that it has excluded more than 2,000 enterprises that did not meet the criteria. But for the inspectors this is not enough. “There is an absence of adequate entry criteria and of an effective monitoring system and the voluntary nature of the commitments is not a guarantee of future good behaviour,” they write.

Bart Slob agrees with this point and with the criticism of the governance structure: “There are many business representatives on the Compact’s Board, but there is very little space for NGOs and U.N. member states,” he notes. “I am very pleased with this report because it confirms what civil society has been saying since the beginning: lack of clarity, lack of teeth, lack of follow-up proceedings,” Andreas Missbach, joint managing director of the Berne Declaration, told IPS.

The Berne Declaration is a Swiss NGO that co-organises the Public Eye on Davos, an annual award attributed to the least responsible enterprise. It does not participate in the Global Compact arguing that it “does not have any effect in the real world, since nobody is policing the companies if they don’t abide to their commitments. I have looked at the reports of UBS and Credit Suisse, they are extremely poor,” he added.

He points to Barrick Gold Corporation, a mining company that is a member of the Compact “despite having constantly run into human rights and environment problems, like in Papua New Guinea”. So, should the Global Compact be reformed or does it have to be closed down? “There are mixed views on that,” Bart Slob replied. “If the U.N. is unwilling to take rigorous reform measures, it would be better to consider an alternative course of action, like establishing a code of conduct for large companies, like it was suggested by the U.N. in the 1970s. An idea that unfortunately never materialised.” (END)

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