The UN Global Compact
June 30, 2009 by admin
Filed under Interviews
More and more businesses are taking an interest in operating on sustainable principles. To help them, the United Nations has put together the UN Global Compact, a strategic policy initiative. The compact is meant for businesses that are committed to aligning their operations and strategies with ten universally accepted principles in the areas of human rights, labour, environment and anti-corruption.
The UN Global Compact primary objectives are to:
- mainstream the ten principles in business activities around the world
- catalyze actions in support of broader UN goals, including the Millennium Development Goals (MDGs)
These goals are obviously desirable to the international business community, which is the largest corporate citizenship and sustainability initiative in the world, having more than 5,100 corporate participants and stakeholders from over 130 countries.
The Global Compact is a leadership platform, endorsed by Chief Executive Officers, and offering a unique strategic platform for participants to advance their commitments to sustainability and corporate citizenship.
However, the initiative is not without its critics. To promote the initiative’s good and to counter criticism, Nessa Whelan (Global Compact Coordinator) gave these responses through an email interview with the CSR Digest.
CSRD: What are the business benefits of joining the UN Global Compact?
NW: The advantages of joining the UN Global Compact are numerous. Among them are:
- Global and local opportunities to dialogue and collaborate with other businesses, NGOs, labour organizations and governments on critical issues;
- Exchange of experiences and good practices inspiring practical solutions and strategies to challenging problems;
- Leveraging the UN’s global reach and convening power with governments, business, civil society and other stakeholders;
- Entry point through which companies can access the UN’s broad knowledge of development issues;
- Ensuring accountability and transparency through a public communication on progress;
- Increased legitimacy and license to operate, particularly in the developing world, because business practices are based on universal values. Improved reputation and increasing brand value towards consumers and investors – specifically in the context of changing societal expectations; and
- Increased employee morale and productivity, and attracting and retaining the highest qualified employees. Improved operational efficiency, for instance through better use of raw materials and waste management.
Other reasons include:
- Networking with other organizations,
- Universal nature of the principles,
- Expanded business opportunities/risks,
- Promote organizational integration of environmental, social and governance issues,
- Improve operational efficiency,
- Address climate challenges,
- Pressure from external stakeholders, and
- Financial market expectations.
CSRD: What is the difference between joining the UN Global Compact and the Local Network?
NW: All participants of the UN Global Compact (both at the global and local levels) are required to sign up to the initiative by writing a letter of commitment to the Secretary-General. They are then required to submit an annual Communication on Progress.
The UN Global Compact currently has approximately 90 established and Local Networks around the world. Engagement in Local Networks in entirely up to the participants themselves, although it is highly recommended, as they provide valuable support to companies in meeting the challenges they face in internalizing the principles. Some companies, however, prefer to engage only at the global level and do not perceive a value in engaging locally.
However, as indicated in the Annual Review 2008, approximately 60% of participants see a value and engage locally. In some cases, Local Networks are open to any and all UNGC participants from their country and invite them to engage in all activities at the local level. Others, for reasons of sustainable financing ask for membership fees from participants of the Local Network. In those cases, only fee-paying participants are invited to attend all events and activities of the Network.
CSRD: Does membership to the Local Network automatically mean membership to the UN Global Compact?
NW: As indicated above, in order to be considered participants, organisations have to sign up at the global level, i.e. by sending a letter to the Secretary-General, being listed on the global database of participants and posting the annual COP on the global website.
There are some cases, for example, when it comes to micro-enterprises (less the 10 employees), when the Networks accepts their participation at the local level. However, for reasons of resource constraints, micros cannot be administered at the global level.
CSRD: How much does it cost to join the Local Network? What are the fees used for?
NW: As indicated previously, not all Local Networks have participant fees but increasingly Networks are using participant fees as a source of funding in order to support the activities of the Network. Local Network participant fees vary greatly depending on the Network, and it is entirely up to the Network to decide the level of fees. The use of fees varies also.
Some Networks use them to support the work of the secretariat – Focal Point. This person is responsible for acting as the liaison b/w the GCO and the company, assists with the COP process, reports on activities etc. Fees are also used to pay for the activities of the Network – meetings, events, publications etc.
CSRD: According to the UN Global Compact website, companies with less than ten direct employees (micro-enterprises) will not be entered into the database of participating companies. However, they are encouraged to engage with their Global Compact Local Network. This notwithstanding, we have been informed that the Malaysian Local Network does not take on Malaysian micro-enterprises. What are your comments?
NW: Local Networks are free to determine whether or not they wish to engage micro-enterprises. Some do as they consider them to be an important constituency within their business community. Others do not, as, in a similar fashion to the Global Compact Office, they do not have the capacity to handle the needs of micro-enterprises. For more information, please see the presentation below which details the outcomes of the Working Group on the engagement of micro-enterprises.
The Working Group developed recommendations for Networks which were presented and accepted by Network representatives at the recent Annual Local Networks Forum in Istanbul last week.
CSRD: If the answer to the above is true, what options do local micro businesses have in terms of learning and developing to be sustainable and responsible businesses?
NW: This would depend on the country, I imagine. I am sure in many countries they are business associations who cater to their needs. As I mentioned, some Networks are working with micros and any tools or publications which would be applicable to micros we would make available on our website and micros are encouraged to use them and stay informed of GC activities as much as possible.
CSRD: There have been some critics to the Global Compact and the Local Networks. For example, in India, there are claims that there the Local Network does not work for all members and looks after the interest of a select few. How does Malaysia’s Network Focal Point intend to manage any potential of the same here in Malaysia?
NW: In order to be a Global Compact Local Network, Networks have to enter into a MOU with the Global Compact Office. This MOU clearly states that the Network Representative has to be nominated by participants to act on behalf of the network. If participants feel that their Network does not represent them, they are encouraged to bring this up at the Annual governance meeting that Networks are required to have.
(Dr Tan Lin Lah, Malaysia’s Focal Point, has promised the CSR Digest that she will respond to this question at a later date)
CSRD: What happens when signatories to the Local Network / Global Compact fail to report? What does it take for a signatory to get de-listed?
NW: For answer to this question and more, please click here.
For the UNGC Network in Malaysia, please contact Dr Tan Lin Lah, Malaysia’s Focal Point, at linlah@crt.org.my.◊
