Why all the fuss?

• Author: Utting, Peter
• Position: The Global Compact

The two largest global development gatherings of 2002-the World Social Forum in Porto Alegre, Brazil and the World Summit on Sustainable Development in Johannesburg, South Africa-focused considerable attention on the issue of public-private partnerships, in particular United Nations business partnerships. The most high profile of these is the Global Compact, formally launched in July 2000, which aims to enlist the support of 1,000 companies over a three-year period. Participants are expected to publicly commit themselves to nine principles associated with environmental protection, labour standards and human rights, and to publicize, on the Global Compact web site, "good practice" examples that demonstrate compliance with these principles.

Opinions on the Global Compact are fairly polarized. Proponents generally see the initiative as an innovative and pragmatic approach that can reform corporate culture by instilling new values and mobilize the resources of big business for social and sustainable development. It is regarded as an exemplary form of "good governance", where cooperation and voluntary approaches win out over conflict and heavy-handed regulation. It is also intended to promote "social" or "organizational learning", where business and other stakeholders learn through multi-stakeholder dialogue, analysis and networking.

Critics of the initiative are concerned that it may be doing more to enhance the reputation of big business than aiding the environment and people in need. They are worried that companies with a reputation for malpractice have been welcomed into the Global Compact, and that the conditions imposed on business to comply with the principles are very weak. Companies can pick and choose among the nine principles they want to address and there is no monitoring of compliance. The focus on best practices diverts attention from malpractice, "greenwash" and structural and other factors that encourage corporate irresponsibility or a "business-as-usual" attitude.

Some supporters and critics overemphasize the advantages and disadvantages of the Global Compact. Those who see it as a major institutional development should remember that there are 65,000 transnational corporations (TNCs) worldwide, of which only a few will participate in this initiative and, once engaged, they have to do relatively little to comply. Furthermore, an increasing number of northern TNCs are already adopting socially responsible initiatives and are...