Silent reform through the Global Compact.

• Author: Kell, Georg
• Position: ESSAY - United Nations Global Compact and corporate social responsibility

For the first time in its history, the United Nations is embracing business and civil society as vital partners in advancing its goals of international peace and development. In today's interdependent and globalizing world, business and the United Nations share common objectives. Despite different purposes--the United Nations works for peace, poverty reduction and human rights protection, while business has traditionally focused on profit and growth--the overlapping objectives of the United Nations and business are clear: building markets, good governance, combating corruption, safeguarding the environment, achieving global health and ensuring social inclusion.

UN engagement with business is not simply limited to policy and papers, but can be seen in countless day-to-day operations and projects worldwide. One result of this collaboration is that the United Nations is showing transnational corporations (TNCs) how universal values can translate into business value, thus bringing powerful new allies to UN goals. Perhaps equally important, these new partnerships are exposing the United Nations system to the management principles of the world's most dynamic firms.

At the centre of these efforts is the United Nations Global Compact, the largest voluntary corporate citizenship initiative in the world, whose mission is to ensure that business--in partnership with other societal actors, including Governments, organized labour, non-governmental organizations (NGOs) and academia--plays an essential role in achieving the United Nations vision of a more sustainable and equitable global economy. Its participants voluntarily commit to advance the ten universal principles on human rights, labour standards, environmental protection and anti-corruption, which are derived from core UN treaties (see page 29). And to give concrete meaning to this change approach, companies are expected to internalize these principles within their day-to-day operations and undertake projects to advance broader societal goals.

Formally launched in 2000, the Global Compact is reaching critical mass. Over 3,000 businesses from some 100 countries belong to it, including 108 of the Financial Times global 500 firms. The "Global 108" alone employ close to 10 million workers, with a market capitalization of approximately $5 trillion and recorded revenues of about $3.5 trillion in 2005. Business participants are joined by over 800 civil society organizations, labour groups, city governments, foundations and academic partners. Country networks, which provide an arena for participants to engage at the ground level, have surfaced in over 50 countries.

The Global Compact's impact extends beyond numbers. By providing a truly international platform for participants and stakeholders to share practices and challenges, it has significantly contributed to the emerging worldwide consensus on the value of corporate responsibility for both society and business. There is a growing understanding that responsible business practices can lead to social and economic inclusion, helping to advance international cooperation, peace and development. And the business community is seeing first-hand the value of values. As more and more companies engage in responsible practices, the business case for corporate citizenship deepens. In the past year alone, significant players in the investment community, such as pension funds with over $5 trillion in managed or held assets, have called for a value-based approach to business and taken steps to incorporate such thinking into their investment decisions.

Despite these achievements, however, vast challenges remain. There are over 70,000 TNCs that are not involved in the UN initiative. North American companies, which represent less than 4 per cent of current Global Compact members, have been particularly reluctant to sign up. The key question is whether the Compact can grow to the point where a sizeable portion of the world economy commits to the ten principles, and in so doing ensures that its definition of corporate citizenship--the combined practice of implementing universal principles into business practices and engaging in partnership projects to meet broad societal goals--becomes the global standard. Less rigorous "window-dressing" approaches to corporate responsibility may be easier to mainstream, yet they are ineffective in meeting the common challenges facing business and society in the twenty-first century.

The Global Compact marks a radical step forward for the United Nations. Ten years ago, the relationship between the Organization and the private sector was...