The most relevant measures that have been implemented by the Compact in thepast eight years are the policy on communi-cating progress and the grievancemechanism.The policy on communicating progressrequires participants to explain annuallywhat they are doing to meet their commit-ment to the Compact’s ten principles. Manycompanies fail to do this. Sanctions for suchfailure are unimpressive. Companies aredeemed “inactive” only afterfailing to report within threeyears of signing up. The onlyimmediate consequence for“non-communicating partici-pants” is that they aremarked as “non-communi-cating” on the Compact’swebsite, denoted by a tinyyellow traffic triangle withan exclamation point in it.Another problem with thecommunications on progressis the quality and trustwor-thiness of the informationprovided. The information isoften superficial, unclearand, in some cases, untrue. TransparencyInternational in Argentina found in 2007that companies reported a very largenumber of activities, many of which bore norelation to the ten principles of theCompact. In this way, the Compact unfortu-nately generates free publicity forcompanies that make a mockery of theflawed policy for communicating progressand do not seem to care about complyingwith international standards of corporateresponsibility.As for the grievance mechanism, itspurpose is noble: “To promote continuousquality improvement and assist the partici-pant in aligning its actions with thecommitments it has undertaken with regardto the Global Compact principles.” Despitethis, complaints against Compact partici-pants have not led to quality improvementor higher standards of corporate responsi- bility, for two reasons.First, the mechanism lacks transparency.Your office does not divulge which compa-nies are involved, who has made thecomplaints, or the specifics of the charges brought under the integrity measures. Thepublic is kept in the dark about how manycomplaints have been raised since thecreation of the grievance mechanism andhow many companies have been removedfrom the list of participants as a result ofconduct “detrimental to the reputation andintegrity of the Global Compact”.Second, you limit the complaints proce-dure to instances that illustrate “systematic”or “egregious” abuses, yet these types ofabuses are not clearly defined. This vagueformulation makes it difficult for stake-holders to determine whether a breach hasoccurred, ie whether a company has failedto support and protect internationallyproclaimed human rights or is complicit inhuman rights abuses.The Compact could be animportant stepping stone tothe promotion of stricter, binding and universallyacceptable standards, suchas the UN Norms on theResponsibilities of Transna-tional Corporations andOther Business Enterpriseswith Regard to HumanRights. As this initiativefaded away, the GlobalCompact became the singleUN-led effort in the area ofcorporate responsibility. John Ruggie, one of theGlobal Compact’s architects, has declaredthat the UN Norms are dead. If this isindeed true, the UN needs to come up withsomething far more ambitious than theGlobal Compact to meaningfully and effec-tively address irresponsible corporate behaviour.Kind regards,Bart
Disclosure drives performance
Dear Bart,Youareraisingimportantissuesandyouaredoing so with a deep understanding of thedetails. Unfortunately, you focus on a fewtrees and you don’t seem to see the forestwhen assessing the UN Global Compact.Worse, you seem to fall victim to surrealprojections of what the purpose of theCompact is and how it works.Your main point is the old argument thatthe Compact does not work as a compli-ance-based system. As a matter of fact, theCompact never pretended to do so, nor wasit designed as one. The fact that someobservers continue to criticise the Compactfor something it never pretended to be isremarkable. Ever since the inaugural launchon 26 July 2000, we have been very clearthat the Compact is about learning,dialogue and partnerships. The UN doesnot endorse companies or their perform-ance. Rather, it seeks to promotecollaborative efforts, transparency andpublic accountability.Our annual requirement to publiclyreport on progress made in the implemen-tation of the Compact’s principles (the“communication on progress”) has led to
• May 2008
“Measures to increase the credibility and effectiveness of the Compact have not led to higher standards of corporate responsibility” – Bart Slob
UN Global Compact fordummies
A beginner’s guide to what the Compact is, andhow it works.What is the UN Global Compact?
A voluntary, principles-based initiative to encouragecompanies to follow responsible business practices.
What do member companies sign up to?
Companies agree to advocate the Compact’s ten princi-ples (which cover human rights, labour andenvironmental standards, and anti-corruption) and takesteps to make them central to the way they do business.
How many companies have signed up?
The Compact has 3,800 members in more than 100countries. It is increasingly popular in emerging markets,such as central and eastern Europe and China, wherecorporate responsibility is a relatively new concept.
How does the Compact get companies to follow itsprinciples?
The Compact does this through 70 local networks,where member companies meet to share best practicewith peers in the same region. These groups meettogether in an annual Local Networks Forum. Everythree years, the Compact holds its Leaders Summit, themost recent having taken place in July 2007.
How does it check that companies are makingprogress?
Every year, the Compact asks member companies toreport on what steps they are taking to implement itsprinciples, in so-called “communications on progress”.
How does it check that companies are doing whatthey say?
The Compact does not verify whether companies are infact doing what they claim in their communicationson progress. As a non-binding, voluntary initiative,the Compact does not pass judgment on companies’performance against its principles. But since October2006, 1,000 participants have been “delisted” – ornamed and shamed for failing to report on progressfor two years running.