The Global Compact - Case Study Example

Summary The global compact is a UN initiative whereby businesses are required to adopt and adhere to set principles in regards to human rights, anti-corruption, environment and labor. Cadbury being a multinational company is a participant in UN global compact since December 20031. The Cadbury in question is the one in Singapore which falls under the Asian region where two principles will be applied. The paper will further discuss the practices and approaches suggested by the global compact, issues and implications to the company, benefits and risks to stakeholders and lastly the various viable recommendations for the implementation and compliance to the principles. Global compact – principle 3 This principle states that a business should recognize the right to collective bargaining as well as freedom of association2. In respect to freedom of association companies should ensure that their employees have the freedom to express themselves and to form organizations or unions that are to cater for their interests. They should have representatives who are to represent them in forums on issues affecting them and the company at large3. In respect to right to collective bargaining, workers have the right to have extensive discussions and engage in negotiations that aim at elevating their working conditions. Issues and implications When Cadbury allows the workers to join trade unions there is a good chance that solutions to issues related to employees’ plight will be solved peacefully, there is saving of time as few representatives are elected and above all it is easier to manage the HR department and its functions4. However, trade unions are known to place numerous demands and put the lifeline of the organization i.e. human resources on the line by calling for strikes and the like5. Lessons learnt In many companies in the food industry long working hours is a major problem together with low wages. These are problems that have been amicably solved through negotiations with trade union officials in many companies6. Benefits and risks to key stakeholders Through its adoption this principle ensures that workers in particular benefit a great deal as their working conditions are well taken care of as well as better remuneration packages. It is also easier for employees to receive unbiased promotion7. This is not a good sign though for the shareholders of the company and considering that Cadbury is a public company more expenditure must be matched by more returns. The management on the other hand is pressured between the two opposing sides all demanding the best treatment. Global compact – Principle 9 This principle states that businesses should develop technologies that are environmentally friendly and try to diffuse them within their operations8. This is one of the key areas that organizations and governments around the world are concerned about. Global warming and its consequences have made these stakeholders to adopt measures that are more environmental friendly. In respect to Cadbury and other companies in the local network this initiative needs to be embraced more so as more and more Asian countries become industrialized. Some of the few initiatives towards this course are; use if better machinery that consumes less energy and emits negligible or no pollutants, use if sustainable manufacturing processes and use of recyclable materials for products made among others9. Issues and implications As much as the effects of global warming are known and some have started dawning on planet earth, many companies are still reluctant to incorporate fully the elements of this principle. The biggest obstacle for this has been the availability of finances10. Cadbury has however tried as compared to many within its network to use recyclable materials, energy efficient machinery and processes among others. Apart from finances the level of understanding in respect to environmental issues is an issue by itself that is seen as a hindrance. Lessons learnt Stakeholders more so the shareholders of companies have been skeptical in respect to expenditure towards these initiatives. This has been a major drawback since managers tend to spend as few resources as possible to avoid criticism11. The positive side of it though is that for companies which invest to comply with this principle the rewards are attractive in respect to long term cost cutting and efficiency which has been witnessed in Cadbury, Singapore. Benefits and risks to key stakeholders The benefits to the shareholders are more profits in the long term and high efficiency in operations. As a result it is possible for a company to afford better remuneration12. Consumers on the other hand end up buying the same goods at lower prices. However, there is a risk of a company spending too much in these initiatives and take too long to recover; this is one of the key notable factors to consider for company managers and shareholders before authorizing such spending. Recommendations Companies the world over wish to operate in the best way possible and implement the best practices in management. The UN global compact is more based on a business’ social responsibility initiatives and this has been seen to be a sensitive area to dwell in. Most managers and shareholders believe that the business of business is business meaning that other responsibilities can be done away with. Due to this notion there is a disconnection between business management theory and practice and even reality. Today’s world is quite different and as time changes so should be the practices as companies should shape up according to the reality on the ground. Education initiatives should therefore be encouraged to promote awareness of the advantages associated with better practices towards the society at large13. Funding should also be availed by relevant authorities within the business circles so as to ensure that the initiatives are fully implemented. Reference list Emerson, Thomas. Freedom of association and freedom of expression. The Yale Law Journal. 74, 1 (2004): 1-35. Global Compact Principle 9. Businesses Should Encourage The Development and Diffusion of Environmentally Friendly Technologies. Last modified 12 August 2010, http://www.unglobalcompact.org/aboutthegc/thetenprinciples/principle9.html Idowu, Samuel and Filho, Walter. Global Practices of Corporate Social Responsibility. 2008. International Labour Office. Collective Bargaining: A Fundamental Principle, a Right, a Convention. International Labour Organization, 1999. International Labour Office. Freedom of Association and Collective Bargaining. International Labour Organization, 1994. Kell, Georg and Slob, Bart. UN Global Compact – Is the Compact raising corporate responsibility standards? Ethical Corporation, May 2008. Knight, G. and Smith, J. The Global Compact and Its Critics: Activism, Power Relations, and Corporate Social Responsibility, in Discipline and Punishment in Global Politics: Illusions of Control, 2008. Neumayer, Eric and de Soysa, Indra. Globalization and the right to free association and collective bargaining: an empirical analysis. World Development. 34. 1 (January 2006): 31-49. Rasche, Andreas and Kell, Georg. The United Nations Global Compact: Achievements, Trends and Challenges. Cambridge University Press, 2010. UN global compact Principle 3. Businesses Should Uphold The Freedom of Association and The Effective Recognition of The Right to Collective Bargaining. Last modified 12 August 2010, http://www.unglobalcompact.org/aboutthegc/thetenprinciples/principle3.html Read More