The Global Compact: Human Rights protection or Marketing tool?
Corporations are a major force shaping society and influencing health. Given their size and command over markets, corporations have great power to improve or to worsen population health. Large businesses should be leading the way in improving labour and environmental standards, yet their significant share of the market gives them the power to resist legislation upholding environmental and labour standards.Recognising the enormous power which corporations wield, the Global Compact was launched by Kofi Annan-then the Secretary General of the United Nations (1) - to promote respect for human rights, higher labour standards, higher environmental standards and work against corruption (2). Signatories agree to further these four aims by adhering to the ten principles of the Compact. The principles are commitments both to positive action, such as supporting and human rights and environmentally-friendly technologies, and to action against injustice, such as human rights abuses, forced labour and corruption. This United Nations (UN) project has grown since its launch in 2000 and is now operating in over 100 countries.
In an age where many companies are multinational yet the perception and the reality of labour and environmental standards vary between countries, this agreement proposes overarching ethical principles. The Compact applies rules to companies above and beyond national laws, thereby shifting power away from sovereign states and towards a global institution. This is part of the proliferation of global norms, values and principles which is often called globalisation.
The Global Compact was designed to harness globalisation in such a way that human rights and dignity are protected in the face of rapid marketisation of societies (1). But is this the most effective way to improve corporate social responsibility and protect human rights and health? For a number of reasons, the answer may be no.
The UN Global Compact is a voluntary agreement, and according to Wynhoven, head of integrity measures for the Global Compact, it is intended to be a “platform for dialogue”, rather than a “compliance based initiative” (3). This limits its effectiveness, and, although over 4000 companies have now signed up, the Compact’s sphere of influence would be far greater if the principles were enforced rather than voluntary.
Furthermore, companies striving for profits cannot be trusted to be their own corporate social responsibility (CSR) watchdogs, and the infrastructure and funds for monitoring are in short supply. Integrity measures used in the compact are minimal, with the greatest sanction available being “de-listing”. Despite 203 companies being de-listed at the start of this year (4), information about this delisting is not readily available and the impact this has had on the companies is not clear.
Theoretically, the damage that delisting would bring to a company’s reputation should be a strong deterrent to break the rules. Reputation is important, with 80% of CSR decision makers in British corporations being confident that branding can be improved through CSR (5). The downside is that companies are often more concerned with the appearance of doing good than the reality of fulfilling their social responsibilities.
Whilst the paramount concern in business remains profit not people, companies look for economic rewards, and the approach of the Global Compact is to use market mechanisms to capitalise on consumer demand for ethically sourced products. If civil society makes evident that its purchasing decisions will be affected by a company’s ethical credentials, companies will become more concerned with upholding, and being seen to uphold, ethical principles.
The downside is that there are limits to the ability of civil society to hold companies to account. There is a knowledge imbalance between the general public and large, powerful corporations, who have informed and effective advertising strategies. Consumers can never fully and accurately assess the ethical credentials of every product they buy and every company they buy from. Furthermore, concern with corporate social responsibility less of a priority where populations have more pressing concerns such as political instability and violence.
What should be done to make companies more socially responsible then? Enhancing the ability and power of civil society is a worthy venture, and systems to highlight the ethical credentials of different companies can play a role. By simplifying the difficult task of making ethical purchases, these systems can give individuals the option to make ethical choices. However, we should be weary of two an “ethical-wash”, giving a good reputation where it is not deserved.
Legal mechanisms to monitor and enforce adherence to ethical principles and protect health and well-being are also important, as voluntary agreements will never gain universal support from the business sector. The Global Compact will need revision and reinforcement if it is to achieve its aims of improving human rights, labour standards and environmental standards. Initiatives such as the Global Compact are not holding businesses accountable to workers or consumers, and global health stands to suffer. Now, more than ever, it falls on civil society to push for accountability and challenge the growing corporate hegemony.
Sarah Walpole
Fourth Year Medical student
Leeds Medical School
Worsley Building
Clarendon Way
Leeds
LS2 9NL
argotomunky@yahoo.co.uk
1) Annan K (1999) Address to the World Economic Forum, Davos, 31 January 1999.
2) Global Policy Forum, http://www.globalpolicy.org/reform/2001/0308fel.htm, accessed 3rd June 2007.
3) Wynhoven U, Personal communication, August 2007.
5) Echo Research (2005) ‘CSR reaches top table of global business and political leaders” http://www.echoresearch.com/echo_zones/press_area/press_release/csr2_pressrelease.htm, visited 16/6/05, in Corporate Watch (2006) What’s wrong with corporate responsibility? Oxford: Corporate Watch.
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