United Nations Global Compact

The United Nations Global Compact is an initiative to create general principles of voluntary responsible business behavior. In 1999, the UN secretary-general Kofi Annan called on corporations to help make economic globalization beneficial for all in a speech at the World Economic Forum in Davos, Switzerland. A year later he introduced the original nine Global Compact Principles, in the three categories of human rights, labor standards, and protection of the environment. The tenth principle, on corruption and bribery, was added in 2004.

The 10 principles are the following:

Human rights

• 1.
  Businesses should support and respect the protection of internationally proclaimed human rights.
• 2.
  They should ensure that they are not complicit in human rights abuses.

Labor

• 3.
  Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining,
• 4.
  They should ensure the elimination of all forms of forced and compulsory labor.
• 5.
  They should ensure the effective abolition of child labor.
• 6.
  They should effect the elimination of discrimination in respect to employment and occupation.

Environment

• 7.
  Businesses should support a precautionary approach to environmental challenges.
• 8.
  They should undertake initiatives to promote greater environmental responsibility.
• 9.
  They should encourage the development and diffusion of environmental-friendly technologies.

Anticorruption

• 10.
  Businesses should work against all forms of corruption, including extortion and bribery.

These principles are based on widely accepted international documents, including the Universal Declaration of Human Rights (1948), the Declaration on Fundamental Principles and Rights at Work (1998), the Rio Declaration on Environment and Development (1992), and the UN Convention against Corruption (2003). The small UN Global Compact Office partners with six UN agencies that provide expertise and resources in support of business involvement to achieve the 10 principles. The UN agencies are the Office of the High Commissioner for Human Rights, International Labour Organization, UN Environment Programme, UN Development Programme, UN Industrial Development Organization, and UN Office on Drugs and Crime.

Secretary-General Kofi Annan appealed to business executives to join the Compact because it was in their interest to strengthen public support for economic globalization. He argued that responsible business behavior would reduce fears that globalization would endanger vulnerable parties, especially the poor.

Approximately 50 organizations signed up to support the Global Compact when it was officially launched in July 2000. Corporate participation grew rapidly to more than 700 in 2002 and increased to 2,100 in 2004. By 2006, more than 2,700 corporations, based in more than 90 countries, were active participants of the Global Compact. Participation simply requires a letter declaring commitment from the organization's CEO and a report posted on the Global Compact Web site on how the company is meeting one or more of the principles. Early reports were typically single cases demonstrating responsible corporate performance. Annual updates are necessary to maintain active participation status. Information on participation by country, industry, company, and issue can be found in the UN Global Compact database at http://www.unglobalcompact.org.

About 25 NGOs representing labor, human rights, and environmental concerns are also affiliated with the Global Compact. Early critics of the Compact included NGOs that were concerned that corporations were not sincere in their commitment to the principles but rather would use the Compact for public relations [Page 2145]purposes only. While endorsing the concept of specific common standards for business behavior around the globe, they cautioned Annan not to permit corporations to use the stature of the United Nations as a way to improve business reputations without improving their actions. Later, NGO critics accused Annan of focusing on increasing corporate participation rather than on increasing accountability. They recommended that monitoring be instituted to ensure that companies were reporting their cases accurately and continuing to conform to the principles.

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