About CEO

Corporate Europe Observer - Issue 7
    home > observer 7 > un

intro ebs ert igc icc un water norway news

Campaign for a Corporate-Free UN

n July 26th, some 50 industrialists and business lobby group representatives visited the UN headquarters for a 'High-Level Meeting on the Global Compact'. The UN leadership presented the meeting as the official launch of its Global Compact After 18 months of negotiations. The Compact consists of a number of very general principles intended to guide corporate behaviour, but without any enforcement mechanisms. At the meeting, the UN, for the first time, presented a list of corporations as well as a handful of non-governmental organisations that have joined the Global Compact.[1] Meanwhile, a growing coalition of groups continues to oppose the Compact and demands that the UN adopts a far more critical approach towards TNCs and corporate-driven globalisation.

Despite one and a half years of deliberations since Annan first proposed the Global Compact, joining still has no binding consequences (i.e. no mechanisms for monitoring and enforcement) for companies. The UN's Global Compact website plays a central role.[2] On this website, corporations are supposed to present a yearly 'progress report' on their performance with regards to environmental and human rights considerations. The idea being that NGOs that have joined the Global Compact will have the opportunity to respond to these reports. However, that's as far as it goes. "This is not a code of conduct, and the U.N. has neither the mandate nor the capacity to verify compliance," UN Assistant Secretary-General John Ruggie clarified.[3]

A few days before the High-Level Meeting, the Transnational Resource and Action Center (TRAC), on behalf of a coalition of environmental, human rights and other groups, had written to Annan asking him to reconsider the Global Compact. The Compact, says the letter, allows corporations to "gain all the benefits of association with the UN without any responsibilities."[4] Entering a partnership with corporations on the basis of a vague statement, it continues, "draws attention away from the need for more substantial action to hold corporations accountable for their behaviour." The letter also pointed out the disturbing fact that so many of the first corporations to enter the Global Compact have highly flawed social and environmental records- companies such as Shell, BP Amoco, Nike, Rio Tinto, Novartis, Bayer, DuPont, Suez Lyonnaise des Eaux, and ABB.[5] By pushing the Compact, the UN risks becoming complicit in the positive branding of corporations that violate UN principles on human rights and the environment. The coalition called the UN to instead work on establishing an international binding legal framework for the operations of transnational corporations.

Corporations and their lobby groups have all along made it very clear that they will not accept any binding elements or enforcement mechanisms in the Global Compact.[6] An example was Maria Livanos Cattaui of the International Chamber of Commerce who at the High-Level Meeting told Annan that the original version of the Compact, with no monitoring and enforcement mechanisms, must be "nourished and protected."[7] In an opinion piece in International Herald Tribune, she clarified further that "business would look askance at any suggestion involving external assessment of corporate performance."[8] The Global Compact, Cattaui wrote, "must not become a vehicle for governments to burden business with prescriptive regulations."[9]

In a preemptive move, the ICC has begun a new offensive against the those calling for binding international rules for TNCs (see also article on the ICC's World Congress in this issue). In a statement to the annual G-8 Summit in July, in Japan, the ICC flatly rejected any moves in that direction.[10] They called on G-8 governments "to stand firm in rejecting demands by publicly unaccountable, and frequently unrepresentative, external groups seeking to impose such codes on "multinationals" and claiming the right to pass judgement on companies' compliance with them."[11] The ICC has made such attacks on the legitimacy of NGOs a standard feature in its struggle to counter the growing criticism of corporate power abuse around the world. "There is no demonstrable need for further government-mandated detailed rules of such a nature," the ICC told the G-8 leaders.[12] Instead of "prescriptive government codes and regulations," the ICC suggests, "voluntary business principles, developed by companies themselves or by business organizations such as the ICC."[13]

Its entirely voluntary character makes the Global Compact much loved by the ICC. The industry grouping has given the Compact a prominent place on its website and has big plans for its future use.[14] At the UN's High-Level Meeting, the ICC announced that it would use the Global Compact in "preparing the business contribution for the Rio-plus-ten conference in 2002."[15] Business has already begun making preparations for the UN conference on the tenth anniversary of the Earth Summit in Rio de Janeiro. The ICC will once again promote 'free markets' and corporate self-regulation in a proactive attempt to avoid or water-down civil society demands for policies to counter the accelerating social and environmental crisis. The Compact has also been embraced by other notorious corporate greenwashers, including the World Business Council for Sustainable Development (WBCSD) [16], the International Petroleum Industry Environmental Conservation Association (IPIECA)[17], and the International Fertilizer Industry Association (IFA).[18] These groupings all have separate sections on their websites with the Global Compact logo prominently displayed.

Compact Against Anti-Corporate Backlash?

It is hardly surprising that corporate lobby groups are using the Global Compact as a public relations tool. Kofi Annan has, from the beginning, sold the Compact as a tool for corporations to improve their image and indeed the image of corporate-led globalisation as a whole. At the High-Level Meeting in July, Annan recalled how he had "warned international business leaders that globalisation might be far more fragile than they realized."[19] "Since then," Annan stressed, "events in Seattle and elsewhere have reinforced my warning."[20] Phil Watts of Royal Dutch Shell Group agreed with Annan, "Remember Seattle, remember Davos, remember Washington, if that is the alternative, then I think there is no alternative to engagement."[21] According to a UN press release, the protests against corporate power that took place during the WTO Ministerial Meeting in Seattle is exactly what has inspired corporations to embrace the Global Compact.[22] Such statements suggest that the primary motivation for TNCs to join the Compact stems not from a true regard for the principles which the Compact espouses, but because they consider the Compact to be a useful PR bulwark against the rising tide of public criticism of corporate-driven globalisation.

The debate about the social and environmental impacts of neoliberal globalisation has never been more intense and increasingly homes-in on the role of transnational corporations. The call for political action to reign-in their economic and political power is gaining strength. A concrete example is the demand for enforceable UN rules on corporate behaviour. The International Chamber of Commerce (ICC) is vehemently against such rules, while simultaneously lobbying to weaken existing UN agreements on social and environmental issues. The UN leadership urgently needs to explain why it is entering into partnerships with corporate groupings like the ICC whose very purpose it is to shape international rule-making around the purely commercial interests of large transnational corporations.

Recommended Reading

"Tangled Up In Blue - Corporate Partnership at the United Nations", a new report published by TRAC (Transnational Resource & Action Center): http://www.corpwatch.org/globalization/un/tangled.html


1. List of NGOs supporting the Global Compact:

The International Confederation of Free Trade Unions (ICFTU), Amnesty International, Lawyers Committee for Human Rights, Human Rights Watch, The World Conservation Union, World Wide Fund for Nature (WWF), World Resource Institute, International Institute for Environment and Development (IIED) and the Regional International Networking Group. Source: "Tangled Up In Blue - Corporate Partnership at the United Nations". A new report published by TRAC (Transnational Resource & Action Center): http://www.corpwatch.org/globalization/un/tangled.html | Back to Text |

2. http://www.unglobalcompact.org
The corporations which have joined the Compact are obliged to "at least once a year, posting on the Global Compact website specific examples of progress they have made, or lessons they have learned, in putting the principles into practice." Executive Summary and Conclusion, High-Level Meeting on the Global Compact, held on July 26, 2000, United Nations Headquarter | Back to Text |

3. "The UN's Partnership for Something," San Francisco Chronicle July 26, 2000. | Back to Text |

4. Transnational Resource and Action Center (TRAC), "Coalition Says Global Compact Threatens UN Mission and Integrity - Corporate Partners Scrutinized," TRAC Press Release July 25, 2000. | Back to Text |

5. For details see, "Tangled Up In Blue - Corporate Partnership at the United Nations". A new report published by TRAC (Transnational Resource and Action Center). http://www.corpwatch.org/globalization/un/tangled.html | Back to Text |

6. "United Nations officials acknowledged that they had trouble attracting some American companies because the companies feared endorsing an instrument that might legally bind them to act in a certain way and subject them to fresh scrutiny." ABC News. "It's a Small World After All. But Will Everyone Benefit?". ABC News, September 7, 2000.| Back to Text |

7. "U.N. Launches Partnerships," Associated Press July 26, 2000.| Back to Text |

8. Ibid. | Back to Text |

9. ibid. | Back to Text |

10. "Business and the global economy," ICC Statement to the G-8 Summit delivered to Japanese Prime Minister Mori in early July, 2000. http://www.iccwbo.org | Back to Text |

11. Ibid. | Back to Text |

12. ibid. "On the contrary, numerous studies have shown that multinationals are good corporate citizens who contribute very positively to raising standards among customers, suppliers and business associates - in areas such as labour, the environment and human rights - in countries where they operate." | Back to Text |

13. ibid. According to the ICC these, "have the invaluable advantage of bridging cultural diversities within multinational enterprises and offering the flexibility to tailor solutions to particular conditions."
| Back to Text |

14. See: http://www.iccwbo.org | Back to Text |

15. "Executive Summary and Conclusion," High-Level Meeting on the Global Compact, held on July 26, 2000, United Nations Headquarters in New York. | Back to Text |

16. World Business Council for Sustainable Development: http://www.wbcsd.ch/globalcompact/index.htm | Back to Text |

17. IPIECA, a lobby group defending the interests of the oil industry vis-à-vis environmental issues, expresses its support for the Compact and mentions its cooperation with the UN Environment Programme (UNEP), as an example of its commitment to the principles of the Compact. IPIECA "provides an interface between the petroleum industry and the United Nations Agencies." It also "helps members identify new global environmental issues and assesses their potential impact on the oil industry." For more info see: http://www.ipieca.org/globalcompact/index.html | Back to Text |

18. IFA, representing 500 corporations from the global fertilizer industry producers, also refers to its partnership with UNEP, as proof of its commitment to the Compact. See http://www.fertilizer.org/ifa/cooperation_unep.asp | Back to Text |

19. The Secretary-General's Opening Remarks at High-Level Meeting on the Global Compact, New York, 26 July 2000. | Back to Text |

20. Ibid. | Back to Text |

21. "UN Launches Program with Business on Rights, Labor," Reuters July 26, 2000. | Back to Text |

22. "In the months since the world trade talks in Seattle, more and more businesses and organizational leaders are recognizing the importance of the Global Compact as a means to address social problems and to keep world markets open." United Nations, "Issues Relating to the Global Compact," UN Press Release http://www.un.org/partners/business/gcevent/press.htm | Back to Text |

< Previous Article Table of Contents Next Article >

Paulus Potterstraat 20 1071 DA Amsterdam Netherlands tel/fax: +31-20-6127023 e-mail: <ceo@xs4all.nl>