C GonzalezPerez Leonard 2015 Post2015 Global Compact

Beyond the UN Global Compact: Institutions and
Regulations
The Global Compact: Corporate Sustainability in the Post 2015 World
Maria Alejandra Gonzalez-Perez Liam Leonard
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THE GLOBAL COMPACT:
CORPORATE SUSTAINABILITY IN
THE POST 2015 WORLD
Maria Alejandra Gonzalez-Perez and Liam Leonard
ABSTRACT
Purpose ! This chapter examines roles and challenges for cor-

porations in addressing Post 2015 world development objectives.
Specifically it does review the contributions and opportunities of the
principles of the Global Compact and other social responsibility initia-
tives for embedding corporate contribution to sustainable markets and
societal development.
Methodology/approach ! The results presented in this chapter are
based on analysis of secondary sources and a literature review to deter-
mine conceptual and theoretical frameworks for identifying assumptions
and challenges of corporate sustainability in the Post 2015 era.
Findings ! It was found that although there are neither academic
nor activist definitive consensuses regarding positive impacts of adopting
the UN Global Compact principles for sustainability, the impacts of
committed corporations, organisations and association are multiplying
Beyond the UN Global Compact: Institutions and Regulations

Advances in Sustainability and Environmental Justice, Volume 17, 1!19
Copyright r 2015 by Emerald Group Publishing Limited
All rights of reproduction in any form reserved
ISSN: 2051-5030/doi:10.1108/S2051-503020150000017001
1
2 MARIA ALEJANDRA GONZALEZ-PEREZ AND LIAM LEONARD
societal understanding of the implications in societies, governments and

markets of violating human and labour rights, degrading and not protect-
ing the environment, and having corruption.
Practical implications ! This chapter could be used as teaching material
for undergraduate and master courses of corporate social responsibility,
business ethics, sustainability, operations management and strategy.
Originality/value ! This chapter discusses firms’ responsibilities regard-
ing world development objectives in a Post 2015 world.

Keywords: Sustainability; corporate social responsibility; United
Nations Global Compact; Post 2015; MDGs
INTRODUCTION: NEW GLOBAL ALLIANCES TO

MEET MILLENNIUM DEVELOPMENT GOALS (MDGS)
POST 2015
In July 2012, the United Nations’ Secretary-General proclaimed a High-

Level panel for advising on the new global development framework after
2015. On May 2013, the panel submitted a report containing recommenda-
tions for the implementation of the MDGs. This report was the result of
an international consultation process to over 5,000 organisations in differ-
ent world regions and to a broad variety of social and economic sectors.
One of these recommendations was the creating of a new global alliance
for world poverty eradication by 2030, via transforming economics
towards sustainable development, and the establishment of pillars of a sus-
tainable development. This High-Level panel has participation of the gov-
ernments of Colombia, Denmark, Indonesia, Japan, Liberia, Mexico,
Netherlands, Sweden, the United Kingdom and the United States, and also
counted with the contribution of (corporate) foundations such as William
and Flora Hewlett, and the Ford Foundation. It also counted with the sup-
port of national networks of the Global Compact, the United Nations
Development Group (UNDG), and the network for sustainable solutions
for sustainable development.
MDGs have eight goals (each of them with specific targets and economic
indicators) that were established in 2000 at the United Nations’
The Global Compact: Corporate Sustainability in Post 2015 World 3
Millennium Summit, and 189 UN member states, and several non-

governmental organisations committed to achieve in the period
2000!2015. The proposed MDGs were:
1. Eradication of poverty and hunger

2. Universal coverage of primary education
3. Promotion of gender equality and women empowerment
4. Child mortality reduction
5. Maternal health improvement

6. Combating HIV/malaria, and other diseases
7. Ensuring environmental sustainability
8. Developing a global partnership for development
Since the adoption of the eight MDGs in 2000, substantial progress has
been made, such as the reduction of 30% in child mortality, 25% of deaths
due to malaria; and over 500 million people overcome the poverty line (less
than USD $1.25 per day). However, over 1,200 million people in the world
still live in extreme poverty conditions. Between 2010 and 2013, assessment
accomplishments of the MDGs established an unequal achievement of
goals (some countries advance more towards the goals, while other coun-
tries with low financial resources and affected by internal conflicts did not
manage to advance). This is why the High-level panel was created and
proposed a new global alliance with a pragmatic implementation focus for
specific topics such as water, hunger, garbage recollection, education and
health care.
Meeting these new MDGs could threaten the scientifically proven effects
of climate change such as storms, floods and droughts. The High-level
panel announced that the transformation required structural changes and
specific actions to be implemented by 2030 such as increase forest areas
from 190 to 240 million hectares, 1.2 billion people should have overcome
extreme poverty conditions, 470 million workers should have decent jobs,
amongst others. These identified changes that must be measured and con-
tinuously monitoring with sophisticated methodological processes of data
collection and analysis are crucial to build a universal agenda. For this, the
following new objectives are proposed:
• Universal coverage of human rights and basic economic opportunities.

• Sustainable development (social, economic and environmental) must be
placed at the centre of the agenda.
• Transformation of the economies (production and consumption) for jobs

creation, and ensuring universal access to quality education, drinking
water, electricity, knowledge, transportation and telecommunication.
• Building peace and efficient institutions (transparent, responsible and
receptive governments, to promote the State of rights, property rights,
freedom of speech, open political choices and justice access).
• Consolidating a dynamic new global alliance based on share responsibil-
ity, solidarity, respect and cooperation, in which participants are com-
mitted to the reduction of corruption, facilitation of transparency,

financial system stability, taking actions against climate change, free and
fair trade, and dissemination of technology and innovation.
CORPORATE SUSTAINABILITY AND

INTERNATIONALISATION
Although the concept of sustainability embodies an existential promise of
societal advancement towards more equitable and prosperous planet in
which the environment and cultural attainments are conserved for future
generations (Dyllick & Hockerts, 2002), at the firm level the implementa-
tion and implications of responsible management are predominantly prag-
matic (Filatotchev & Nakajima, 2014). The implementation of corporate
responsible management entails changes at the firms’ strategy, objectives
and business vision, which are not always convenient, nor immediately
profitable. These changes generally transcend financial considerations or
existing corporate social responsibility (CSR) initiatives and transversally
connect all domestic and international business units. Embracing a respon-
sible, transparent, and transforming management oriented towards sustain-
ability could have positive effects (ultimately reflected in increasing
competitiveness) in different organisational processes. Been perceived as
social and environmental innovators may influence brand differentiation,
reputational retributions, and clients and employees respect and loyalty for
been responsible.
Incorporating an ethical and responsible business management is related
to a large extent to the aesthetics sensitivity, wisdom (Waddock, 2014) and
responsive capacity (speed and accurateness of responses) to act upon
needed changes to lead a firm (and its industry) to be sustainable in the
long run, not only at the local level, but having in mind that companies are
interdependent organisations in the global environment. A responsible and
ethical management reflects genuine interests of the higher-level manage-

ment of having a relevant business for next generations, and having at pre-
sent times profits, clients satisfaction, employees’ sense of belongings and
social legitimacy where the company operates. Furthermore, an ethical
manager is recognised for communicating in a transparent way to her/his
team the value of ‘doing things in the right way’ in ethical terms. As a con-
sequence of this, organically financial profits are going to be reflected.
Besides, an ethical manager is also known for having visible ethical prac-
tices that are perceived as social models in the company. Traditionally, a

responsible managerial leadership has been based on values, and implied
shared ideals on societal wellbeing (moral decisions and accountability),
and the ability of cultivating sustainable relationships with stakeholders in
order to meet business objectives (Hibbert & Cunnlife, 2013). Furthermore,
to the irresponsible managerial behaviour is attributed lack of respect and
concern for others (at collective and individual level) wellbeing (Lange &
Washburn, 2012).
There are several questions for academics, policy makers and business
leaders regarding the relationship between CSR, sustainability and interna-
tionalisation without definitive answers. For instance:
• Does a firm engage into a social and environmental sustainability agenda
in order to increase social legitimacy in targeted international markets
and host countries?
• How compatible are corporate objectives with social development?
• What are the social responsibilities of international firms in a Post 2015
world?
• Is corporate social responsibility a mechanism to align financial and
non-financial results?
• How labour CSR contributes to develop workers into consumers?
• How adopting Global Compact principles contribute to standardise
environmental and labour practices across borders?
• How adopting Global principles might decrease reputational risk?
Certainly there is neither theoretical nor empirical consensus of an explicit
and definitive positive relationship. Some authors see CSR as an invest-
ment, since it might increase employees’ satisfaction and sense of belong-
ingness and this affects firm’s productivity and also might positively affect
consumers’ perception (Webber, 2008).
Since the beginning of the 21st century, scandals for corporate irrespon-
sible behaviour have internationally increased (Gonzalez-Perez, 2013).
These scandals were enhanced by the financial crises in the United States
and some European countries that were partially attributed to unethical

management in the financial sector. Both situations have escalated eco-
nomic, social and environmental concerns, which are partially, perceive to
be caused by lack of ethical considerations of doing business.
Since its inception in July 2000, the United Nations’ Compact has
defined an agenda for business, labour and environmental groups, agencies,
advocate groups and the United Nations to work together to promote a
more equitable world for markets, employers and employees. At the heart
of the Global Compact is found the core value of ‘global citizenship’. The
UN Global Compact is currently the largest corporate citizenship interna-
tional network, framework and voluntary mechanism joined (by May
2014) by over 12,300 organisations of all types around the world, half of
them have joined after 2010.
Driven by the reconfigured relationship between markets and societies
(and increasing interactions between transnational corporations and non-
governmental organisations), corporate citizenship, corporate governance
and corporate social responsibility’s initiatives have been decoded as
approaches to regulate the increasing social power of transnational corpora-
tions (Costa, Botelho, & Costa, 2013; Helleiner, 2001; Kell & Ruggie, 1999;
Leonard & Gonzalez-Perez, 2013; Rasche, Waddock & McIntosh, 2013;
Whitehouse, 2003). The United Nations Global Compact (UNGC) is an
example for evolving ‘complex multilateralism on a global level’ (Fritsch,
2008, p. 1), and possibility for implementing global multi-stakeholder gov-
ernance and corporate citizenship values (Baumann-Pauly & Scherer, 2013;
Utting, 2013).
THE GLOBAL COMPACT AND SUSTAINABLE

SUPPLY CHAIN MANAGEMENT
In recent years there has been an increasing importance in sustainable sup-

ply chain management. The functional business area of supply chain man-
agement increased its importance at the end of 1980s when firms increased
their participation in international ventures, and then, including in busi-
ness’ ethos and corporate objectives the importance of integrating all com-
ponents of the production, logistics and marketing chains, while seeking
maximising efficiency. Traditionally, one of the main objectives of the sup-
ply chain management was stock optimisation, aiming to have supplies as
close to the market demand as possible. However, due to increased
reputation risks associated with contentious corporate practices (including

labour and environmental issues, and involvement in bribery and corrup-
tion), pressures by human rights and environmental advocacy groups,
increasing political instability, climate change effects, consumers’ demands
for responsibly produced goods, the relationship between financial perfor-
mance and sustainability has become more visible into operations manage-
ment. This is why, for companies operating at both domestic and
international level, a voluntary implementation of a sustainable supply
chain management makes both business and social sense.

According to an extensive review by Seuring and Müller (2008), concep-
tually sustainable supply chain management is divided into supplier man-
agement for risk and performance, and supply chain management for
sustainable products. Sustainability of goods and services depends on the
control that firms can exercise on sustainability features of their suppliers;
the alliance and engaging means firms can develop across their supply
chain. For these purposes, traceability is decisive to safeguard the reliabi-
lity of sustainably assertions through tracking social, environmental and
financial dimensions across the entire production and supply chains.
Traceability is the process of determining and tracking the components of a
product or services from raw material to completed good (United Nations
Global Compact, 2014a).
There is evidence that the production systems and quality management
schemes (such as total quality management ! TQM; just in time ! JIT;
and lean manufacturing) improve the operational performance of the firms.
As well, it has been found that the adoption and implementation of these
systems increase awareness of environmental, social, and labour effects of
firms’ operations. However, these are not enough to have a sustainable
business.
Sustainability is most commonly associated only with environmental
aspects, or green markets, and less often takes into account with social
aspects, or the consequences of corporation decisions and practices on the
value and production chain. There is a current trend in which the results of
the supply chain management should be measure not only by profits, but
also should include (social, environmental and financial) impacts of the
supply and production chain in societal and environmental systems (triple
bottom line). To hold sustainable operations means to a firm to achieve
being on the markets longer than competitors; therefore, to be sustainable
a firm must at least ensure that it generates prolonged profits without hurt-
ing the people, the natural environment and the economies where the firm
operates.
The UN Global Compact encourages companies to incorporate and pro-

mote material initiatives to integrate the 10 principles into supply chain
management systems. The Global Compact together with Business of a
Better World (BSR) launched in April 2014 the ‘Guide to traceability: A
practical approach to advance sustainability in global supply chains’
(United Nations Global Compact, 2014). With concrete lessons from differ-
ent industries, different company sizes (large transnational corporations
and small business) and types (for profit, governmental and NGOs), and
located in different geographic regions this guide offers companies and

their stakeholders to understand, implement, develop and multiply trace-
ability in their supply chain.
FINANCIAL MARKETS AND THE GLOBAL COMPACT
Since 1990s, and progressively since corporate governance scandals, and

the financial crises in the United States and some European countries,
changes in public expectations are reflected in the incorporation of environ-
mental, social and governance (ESG) considerations in the agendas of
investors, activists and academics. Concepts as socially responsible invest-
ment (SRI), sustainable investment and ethical investment have been used
since the 1990s with intensification with the global financial crises. In June
2004, the UN Global Compact at the UN Headquarters in New York
initiated meetings with a number of global stock exchanges and proposed
the initiative ‘Who Cares Wins’ for promoting investors and analysts to
focus on the ESG materiality, and how these are related to climate change,
anti-corruption, water and human rights.
Investors and financial analysts that considered ESG criteria, avoid
the inclusion in their investment portfolio industries and sector with
unacceptable for ethical, financial, legal, or moral performance; and
considered within their potential portfolio companies with good ESG
performance.
In 2009, the United Nations Conference for Trade and Development
(UNCTAD) together with the Principles for Responsible Investment (PRI)
hold meetings at the UN Headquarters in Geneva with stock exchanges,
public policy officials, investors and financial information providers. This
call for action between UNCTAD, Global Compact and PRI motivated
the UN initiative: The Sustainable Stock Exchanges (SSE). For the SEE,
UNCTAD has developed voluntary technical assistance for stock exchanges
and regulators (policy who has responsibility in the implementation of sus-

tainability report initiatives (UNCTAD, 2013)).
These initiatives create market-rewarded incentives for stock exchange
listed transnational corporations to increment materiality in their ESG
practices, and to be transparency when reporting progress towards the 10
GC principles.
THE EQUATOR PRINCIPLES: ENVIRONMENTAL AND

SOCIAL RISK MANAGEMENT FOR PROJECTS
The Equator Principles (EPs) were launched in 2003 followed the initiatives
of the World Bank Group’s International Finance Institution (IFC) and
nine international banks (IIED, 2014). EPs were designed to assure sustain-
able development in project finance, and therefore EPs could be used to sig-
nal banks’ responsible conduct (Scholtens & Dam, 2007). The financial
organisations (banks) that signed the EPs can ensure to their investors and
stakeholders that the projects they fund have social and environmental
responsibilities. For financial firms, the adoption of the Equator Principles
is the result of institutional pressures and demands for sound management
and social awareness in the international financial markets (O’Sullivan &
O’Dwyer, 2009; Wright & Rwabizambuga, 2006). At October 2014, there
were 80 financial institutions in 34 countries that have adopted the EPs,
and this covers over 70% of international project finance debt in emerging
markets (Equator Principles, 2014).
PRINCIPLES FOR RESPONSIBLE INVESTMENT (PRI)
Financial markets around the world have increasingly incorporated the

Principles for Responsible Investment (PRI). These principles were
launched at the New York Stock Exchange in April 2006, and it was spe-
cially focused to large institutional investors (e.g. pension funds). By May
2014, there were 1,258 signatories to the PRI. To become a voluntary sig-
natory to the PRI, companies must demonstrate public commitment to
responsible investment, and to ensure their interest in building more sus-
tainable financial systems thought committing to their six principles. These
principles are:
1. Principle 1: Incorporation of ESG issues into investment analysis and

decision-making process.
2. Principle 2: Active incorporation of ESG issues into companies’ owner-
ship policies and practices.
3. Principle 3: Appropriate disclosure on ESG issues.
4. Principle 4: Acceptance and implementation of the PRI within the
investment industry.
5. Principle 5: Working together to enhance effectiveness in implementing
the Principles.
6. Principle 6: Report activities and progress towards implementing the
Principles.
GLOBAL COMPACT 100 (GC 100)
On September 2013, the UN Global Compact in partnership with

Sustainalytics launched the Global Compact 100 (GC 100) index, which is
composed of 100 companies, have demonstrated leadership and commit-
ment in the UN Global Compact’s 10 principles, and also have financial
health (steady base-line profitability). Sustainalytics is a research and analy-
sis organisation created in Canada in 1992 to serve financial institutions
and investors in providing environmental, social and governance (ESG)
information to support sustainable investment decision-making. The GC
100 was released at the Global Compact Leaders Summit in 2013, and dur-
ing its first year (2013), the indexed companies demonstrated in investment
returns of 26.4% (exceeding the global stock market) (United Nations
Global Compact, 2014b).
DOW JONES SUSTAINABILITY INDEX (DJSI)
Another mechanism to integrate Global Compact in the financial markets

and which informs investors who are taking into consideration sustain-
ability performance of their companies in their portfolio is the Dow Jones
Sustainability Index (DJSI). The DJSI was launched in 1999, as the first
global sustainability benchmark. It comprises 2,500 large companies
listed on the Dow Jones Global Total Stock Market Index that have
exceptional sustainability standards, and therefore at reference point for
investors who are considering sustainability in their investment decisions.
The Dow Jones Sustainability Index considered financial, environmental

and social performance of companies and has into account sector-specific
sustainability criteria. To be incorporated in the index, companies
are assessed based on their long-term performance in the mentioned
dimensions (financial, environmental and social), and on the provision
of longstanding sustainability plans to address this. The DJSI has a
global index, but also has specific regional and country benchmarks in
Asia Pacific, Emerging Markets, North America, Australia, Eurozone 40
and Nordic. The indexing criteria are updated yearly and incorporated
companies are continuously monitored through a corporate sustainabil-
ity assessment.
GLOBAL COMPACT LOCAL NETWORKS (GCLNS)
The Global Compact can be understood as a ‘Global Policy Network sup-

porting ten universal principles in the areas of human rights, labour stan-
dards, environmental protection and anti-corruption’ (Gilbert & Behnam,
2013, p. 135). Since its beginning, the Global Compact rather than a regu-
latory approach, it has adopted an explicit learning approach to persuade
corporate change (Ruggie, 2002). Local networks integrate domestic
dimensions (cultural, economic, social and environmental) in their discus-
sions and priorities.
According to the Global Compact (2012) there were 101 local networks
around the world. The Global Compact has established local networks in
countries geographically distributed in all the continents. These networks
were mostly established before 2005, with few exceptions in Australia,
Republic of Korea and the United States. Local networks play a pivotal
role in the governance of the Global Compact, and they have the participa-
tion of business (domestic and multinational operations operating locally)
of all sizes, academic institutions, government entities and NGOs. Local
network representatives meet together in the Annual Local Networks
Forum that is chaired and coordinated by the Global Compact Office.
Also, working in networks facilitates the progress and implementation of
the 10 principles in current and potential members, and accordingly to
Geog Kell, Executive Director of UN Global Compact, the initiatives and
contributions of the local networks ‘provide an important base to jump-
start action and awareness on the ground’ (United Nations Global
Compact, 2012).
Almost one third of the organisations (business and non-business) that

have signed the Global Compact are located in Europe, and this is followed
by organisations in the United States.
GLOBAL COMPACT REPORTING INITIATIVES

Communication on Progress (COP), and Communication on

Engagement (COE)
Organisations who have signed the Global Compact commit to publicly

report every year their progress on the 10 principles. This communication
on progress (COP) ought to be disclosure to stakeholders (consumers,
investors, employees, etc.), and it is a mechanism to be accountable, and to
demonstrate commitment to advance towards broader UN development
goals. COPs also should be submitted and posted in the UN Global
Compact’s website, and therefore an increasing repository of corporate
practices has been built. Also, the Global Compact shares these COPs with
financial markets through Bloomberg.
Based on a self-assessment of the COP’s content, these are classified into
GC Learner, GC Active, and GC advance. On October 2013, the Global
Compact introduced a communication of engagement (COE) for non-
business participant organisations. For non-business organisations the
COE ought to be submitted every two years (instead of annually as it is for
business participants).
Organisations that have failed in communicating their annual progress
are expelled from the Global Compact and they are publicly exposed. By
May 2014, almost 4,500 organisations from all sectors and from every con-
tinent have been expelled.
GLOBAL REPORTING INITIATIVE (GRI)

The Global Reporting Initiative (GRI) is currently the most widely used
voluntary corporate reporting framework for sustainability. In May 2010
at the Amsterdam Global Conference on Sustainability and Transparency,
the UN Global Compact signed a partnership with GRI for aligning their
initiatives aiming to advance transparency and corporate responsibility
through a joint encouragement to companies to increase their sustainability
commitments. GRI’s framework provides companies a structure their

Global Compact’s annual Communication of Progress (CoP), but also inte-
grating other dimensions of sustainability, enhancing with this the value of
the COP. GRI was founded in 1997 in Boston, and it was pioneered by the
Coalition for Environmentally Responsible Economics (CERES) and the
Tellus Institute. The initial aim of GRI was to provide a multi-stakeholder
accountability mechanism for companies’ responsible environmental beha-
viour. This objective was amplified to other sustainability dimensions, and
social, economic and governance issues were included. The first version of
GRI was launched in 2000, then in 2002 the second-generation guidelines
(known as G2) were presented at the World Summit on Sustainable
Development in Johannesburg, and it was embraced by the United
Nations. In 2006, the third generation (G3) was launched, and it has a par-
ticular emphasis on strategic alliances with the UN Global Compact, the
Organisation for Economic Co-operation and Development (OECD), the
United Nations Environment Programme (UNEP), and the International
Standards Office (ISO). G3 took into consideration for its development a
consultancy process to over 3,000 business and civil society experts.
Furthermore, G3 proposed sector-specific guidelines and provided educa-
tional and training support to potential reporters. In 2011, G3.1 was pro-
posed and it included guidance on reporting gender, community and
human rights performance.
Finally in May 2013, GRI Sustainability Reporting Guidelines of
fourth generation (G4) was launched. Aiming to increase comparativeness
with other measures inside and outside organisations; G4 has included
more universally transferable metrics on sustainability. The specific differ-
ence of the G4 in relation with the previous GRI is that it emphasises the
importance of materiality. This implies that organisations in order to
achieve their organisational objectives, and increase their impact on society,
should focus their sustainability reports to those issues that are material to
their business, and their strategic stakeholders.
PRINCIPLES FOR RESPONSIBLE MANAGEMENT

EDUCATION (PRME)
As one of the proactive effects to address sustainability issues, business

schools around the world had to increase their responsibility training
responsible managers with a higher level of awareness of the implications
along their entire production chains of their behaviour as future business

managers. For this the United Nations have supported the initiative
Principles for Responsible Management Education (PRME) to catalyse
required transformations in academic programmes in order to respond to
current societal demands of having responsible and sustainable companies
(PRME, 2011). The Global Compact identified that in order of having sus-
tainable and social responsible managers, higher education institutions
should be voluntarily involved, as they ‘help shape the attitudes and beha-
viours of business leaders thought business education, research, manage-

ment development programmes, training, and other pervasive, but less
tangible, activities, such as the spread and advocacy of new values and
ideas’ (Global Compact, 2007, p. 3).
The PRME were first developed in 2007 by an international task force
of Deans from business schools in the United States, Latin America,
Middle East and Europe; and international academic institutions
(Association to Advance Collegiate Schools of Business ! AACSB;
European Foundation for Management Development ! EDMD; the
Aspen Institute Business and Society Programme, European Academy
of Business and Society ! EABIS; Globally Responsible Leadership
Initiative ! GRLI; and Net Impact) together with the UN Global
Compact supported the drafting of the final document. As it was stated at
the PRME launched by UN Secretary-General Ban Ki-moon ‘The
Principles for Responsible Management Education have the capacity to
take the case for universal values and business into classrooms on every
continent.’ By 2014, there were over 500 leading business schools from over
80 countries around the planet, and more than one third of the Financial
Times’ top 100 business schools are signatories to PRME.
CENSURES AND ADVOCATES TO THE UN

GLOBAL COMPACT
The significance of the UN Global Compact is implied through the success-
ful private sector (mostly business) engagement with their initiatives.
Recently academic, activist and policymaking debates have been raised
regarding the lack of monitoring, regulation and volunteering reporting
mechanisms associated to the Global Compact (Berliner & Prakash, 2014).
Bandi (2007) discusses that the engagement of corporations in the inter-
national development since the 1990s has represented a shift for the United
Nations in which the business community plays a complementary role to

governments. Nonetheless, Bandi (2007) argues that the contribution of the
business sector to the development agenda only provides a superficial role,
since businesses are not involved in structural changes of the current sys-
tem, and for some business, signing and participating in the Global
Compact might be a public relations tool, disguising with this the main role
of business which is profit making. Therefore, in some cases the United
Nations has been perceived as a ‘blue-washing’ strategy and could be also
understood as a disruption with the traditional UN position on economic

policies via bring up a fresh power relationship among the UN and cor-
porations which might weaken the legitimacy of the UN (idem).
The Global Compact is a voluntary initiative and therefore ‘does not
intent to either regulate or monitor participant activities’ (Kell, 2003,
p. 35). However, by launching the Global Compact, UN inserted itself in
the corporate responsibility ground (Rasche & Kell, 2010). According to
UN Global Compact’s head Georg Kell the attributes that those who have
interactively contributed to the Global Compact growth have been provid-
ing ‘continued relevance of the initiative’s underlying idea, sustained insti-
tutional leadership support, governmental support (political back-up), and
operational viability’ (Kell, 2013, p. 31).
The reasons why companies participated in the Global Compact and
their perceived impact may vary (Arevalo, Aravid, Ayuso, & Roca, 2013).
Companies participating in the GC receive both ethical and economic
benefits in being part of the global initiative (Arevalo et al., 2013;
Centidamar & Husoy, 2007; Fussler, Cramer, & van der Vegt, 2014). Some
companies have identified that participating in the UNGC could increase
network opportunities and also improve corporate image (Centidamar &
Husoy, 2007).
The Global Compact emerged in a context in which the international
economic order (constructed after the Second World War) relied on an
ideological consensus that the responsibility of the State in addressing
national socio-economic needs was challenged by the presence and power
of global networks of production, consumption and finances in which inter-
national business and corporate actor have a protagonist role to play in
tackling socio-economic issues (Kell & Ruggie, 1999).
On January 1999, UN Secretary-General Kofi Annan addressed the
audience at the World Economic Forum (WEF) at Davos (Switzerland)
engaging the attention of the participants and encouraging them to take
action on the fragility of globalisation, the rising inequality in wealth distri-
bution, the imbalances in governance and regulations for human rights,
environment and social issues, and the unsustainability of the current levels
of degradation of natural resources. Kofi Annan proposed a reconnection
amongst expanding international markets players and core human values,
suggesting that international business, governments, and all types of orga-
nisation around the world have a substantial responsibility of embracing
new models of business and social responsibility networks in order to
reverse the negative effects of globalisation by giving a ‘human face to the
global market’.
At the WEF, Kofi Annan maintained that international businesses and

multinational companies could use their economic power and been high
standards models in their spheres of influence for leveraging principles of
human rights, labour rights and environmental protection. As part of his
speech the Secretary-General suggested the role that United Nations and its
agencies could play in adopting this global challenge and offered the Office
of the High Commissioner for Human Rights (OHCHR), International
Labour Organisation (ILO) and the United Nations Environment
Programme (UNEP). The International Chamber of Commerce on 5 July
1999 adopted a statement ‘arguing for a stronger United Nations as the
most sensible way forward, and pledged to work with United Nations agen-
cies to implement the Global Compact at the corporate level’ (Kell &
Ruggie, 1999, p. 105). Business, governments and civil society organisations
with different points of view overwhelmingly supported the UN initiative,
and the Global Compact was officially launched together with framework
for action on July 2000 at the UN Headquarters in New York (Rasche &
Kell, 2000).
Due to different struggles, interests and social relations of power
between absolutely profit driven gigantic MNEs and not-for-profit and
causes motivated organisations, perceptions on the Global Compact have
different criticisms (Soederberg, 2007). On one hand, it faced high-pitched
criticisms and generated suspicion by non-governmental organisations,
which consider that the Global Compact might be an opportunity to ‘cor-
porate criminals’ to ‘bluewash’ their image ‘by wrapping themselves in the
flag of the United Nations’ (Ruggie, 2001, p. 371), and also as a corporate-
led highly exclusionary neoliberal strategy to legitimate MNEs’ increasing
social power (Soederberg, 2007). And on the other hand, those who sup-
port it might have disproportionate expectancies (Rasche, 2009; Ruggie,
2001; Waddock & McIntosh, 2011; Williams, 2007). Authors, such as
Petersmann (2002), have call for a complementary ‘Global Compact’ incor-
porating organisations such as the World Trade Organisation (WTO) to
integrate human, economic and political rights into the law and practice of
these intergovernmental organisations aiming to protect human rights

while reducing trade discrimination and enabling a welfare-increasing divi-
sion of labour.
In some countries, governments have designed and implemented corpo-
rate social responsibility policies (and laws) based on Global Compact
Principles. These policies have in some cases substitute and complement
domestic institutions and policies, and as measures for promoting inter-
national competitiveness of domestic businesses (Knudsen & Brown, 2015).
ACKNOWLEDGEMENT
Some of the content included in this chapter is based on the chapter ‘The
Global Compact’ by Maria Alejandra Gonzalez-Perez & Liam Leonard,
published in the Handbook of Research on Transnational Corporations
edited by Alice de Jonge and Roman Tomasic, and published by Edward
Elgar Publishing Ltd.
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Beyond the UN Global Compact: Institutions and

Compact: Institutions and Regulations. Published online: 13 Apr 2015; 1-19.

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Maria Alejandra Gonzalez-Perez and Liam Leonard

Purpose ! This chapter examines roles and challenges for cor-

Beyond the UN Global Compact: Institutions and Regulations

societal understanding of the implications in societies, governments and

ing world development objectives in a Post 2015 world.

INTRODUCTION: NEW GLOBAL ALLIANCES TO

In July 2012, the United Nations’ Secretary-General proclaimed a High-

Millennium Summit, and 189 UN member states, and several non-

1. Eradication of poverty and hunger

5. Maternal health improvement

• Universal coverage of human rights and basic economic opportunities.

• Transformation of the economies (production and consumption) for jobs

mitted to the reduction of corruption, facilitation of transparency,

CORPORATE SUSTAINABILITY AND

ethical management reflects genuine interests of the higher-level manage-

tices that are perceived as social models in the company. Traditionally, a

and some European countries that were partially attributed to unethical

THE GLOBAL COMPACT AND SUSTAINABLE

In recent years there has been an increasing importance in sustainable sup-

reputation risks associated with contentious corporate practices (including

chain management makes both business and social sense.

The UN Global Compact encourages companies to incorporate and pro-

located in different geographic regions this guide offers companies and

FINANCIAL MARKETS AND THE GLOBAL COMPACT

Since 1990s, and progressively since corporate governance scandals, and

and regulators (policy who has responsibility in the implementation of sus-

THE EQUATOR PRINCIPLES: ENVIRONMENTAL AND

PRINCIPLES FOR RESPONSIBLE INVESTMENT (PRI)

Financial markets around the world have increasingly incorporated the

1. Principle 1: Incorporation of ESG issues into investment analysis and

GLOBAL COMPACT 100 (GC 100)

On September 2013, the UN Global Compact in partnership with

DOW JONES SUSTAINABILITY INDEX (DJSI)

Another mechanism to integrate Global Compact in the financial markets

The Dow Jones Sustainability Index considered financial, environmental

GLOBAL COMPACT LOCAL NETWORKS (GCLNS)

The Global Compact can be understood as a ‘Global Policy Network sup-

Almost one third of the organisations (business and non-business) that

GLOBAL COMPACT REPORTING INITIATIVES

Communication on Progress (COP), and Communication on

Organisations who have signed the Global Compact commit to publicly

GLOBAL REPORTING INITIATIVE (GRI)

commitments. GRI’s framework provides companies a structure their

PRINCIPLES FOR RESPONSIBLE MANAGEMENT

As one of the proactive effects to address sustainability issues, business

along their entire production chains of their behaviour as future business

viours of business leaders thought business education, research, manage-

CENSURES AND ADVOCATES TO THE UN

Nations in which the business community plays a complementary role to

understood as a disruption with the traditional UN position on economic

At the WEF, Kofi Annan maintained that international businesses and

these intergovernmental organisations aiming to protect human rights

network theory perspective. Business & Society, 52(1), 135!169.

Citizenship, 2002(5), 27!36.

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