The United Nations Global Compacts - Essay Example

? GLOBALIZATION AND DIVERSITY In today’s competitive environment global businesses are experiencing tremendous challenges. It has now becomenecessary for the listed companies (i.e. listed on the stock exchanges) to make sure that they carry out their businesses in an ethical and responsible way. A responsible management demands that companies follow some sort of guidelines. To enable them to conduct business in a way that is acceptable in the civilized world, United Nations (U.N.) has formulated , what is popularly known as “Global Compact “. These are a set of indicative norms that companies can use to do their business. They help companies to adapt to international standards of corporate behavior. By adopting this, companies show their willingness to conduct their business in an ethical way and become role models for others to follow. Introduction It has been increasingly felt by all that there should be a proper alignment of objectives between the international community and the business community. This need has become stronger by the fact that they have common goals. Some of them are, fighting corruption, taking care of the environment and issues related to its safety, enabling social inclusion, and building common markets. All these factors have opened up avenues for an extraordinary cooperation and need for transparency between different stakeholders such as business, governments, civil society, labor force and the United Nations. The UN Global Compact is a very well planned initiative for all those organizations in the world, which are dedicated to align their business operations and strategies with “Ten universally accepted principles.” (United Nation, 2011). These principles are adopted in the areas of human rights, labor, environment and anti- corruption. This initiative is both local as well as global. In fact private and public enterprises can participate in this. There are no mandatory requirements to join this initiative. However once a company joins it, it must endeavor to remain accountable for its operations to its stakeholders. Discussion of question set By aligning the business operations and strategies with ten universally accepted principles, the organizations are indicating their willingness to join it on a voluntary basis. They also agree and believe that business is the key driver of globalization. With this initiative, they can make sure that they make significant contributions to the growth of economies and societies at large (Schreck 2009). Their contribution can be in several areas such as, markets, technology, finance and trading. The social, political and economic opportunities and threats have a significant effect on all the businesses. More and more companies are increasingly realizing the need to work together and collaborate with the all the stakeholders such as, governments, civil society, labor to improve their business volumes and profits. The UN Global Compact has made vital contribution to the development of business in an ethical way (Gjolberg 2004). The environmental principles of the United Nations Global Compact have left a great impact on the organizations. More and more companies have now started realizing the need for focusing on environmental issues and their effect on the industry and individuals (Rasche 2010). The first ten years of the existence of Compact have thrown interesting findings which have been endorsed by scholars, business tycoons, and stalwarts from the civil society as well the staff working in the Global Compact initiative. Their comments clearly indicate the achievements of the Global Compact and the future trends it should follow to sustain the initiative. It also has to meet challenges and oppositions from the traditionalists. Rashce also highlights the changes in the structure of the Compact, role of Global Compact Local Network and the spread of communication on the progress of the policy. The story of UN Global Compact is not all successful and its strengths and weaknesses are clearly brought out by Rashce. According to him, this would help all those who are committed to maintain and advance the principles and practices of achieving real change through definite initiatives (Sullivan 2003). The rapid growth of Global Compact is reflected by the fact that there are more than 8500 corporate participants and other stakeholders from around 130 countries around the globe. It has reached a status of the biggest voluntary business accountability initiative by any organization in the world (McIntosh, et al 2004). The best part of the Global Compact is that it is supported by the Chief Executives of the companies, whose participation and commitment is essential for the success of this kind of the initiative. It offers a structure for the development, and implementation as well as disclosure of policies and practices which are sustainable in nature. The framework suggested is practical in nature and can be easily implemented, if there is a commitment from all the participants. It offers the participants a wide range of resources and work areas as well as tools of management. These provide assistance to help in furthering the business models which are sustainable in the longer run. Participation in the program is quite easy. As mentioned earlier, the United Nations Global Compact provides a stage for both business as well as non – business organizations to come together and network and participate in the four key areas of common interest that is human rights, labor, environment, and anti- corruption. The whole objective is to contribute to the overall goal of United Nations that is “to achieve the common objectives of building a sustainable and inclusive global economy.” Global Compact is constantly making an effort to expand and encourage more and more organizations to participate in its attempt to bring them together. The procedure for participation in this program is quite simple. The Global Compact has two common objectives, the first to normalize the ten principles in the business activities around the globe and the second, to initiate and motivate people to take actions in support of the broader goals of the United Nation (UN). As it provides an avenue to business organizations to increase their commitments to social responsibility and corporate citizenship, it becomes easier for business to participate in this initiative of United Global Compact. In today’s highly competitive environment, managing the enterprise with its associated risks and opportunities is a Herculean task. The United Nations Global Compact provides an opportunity to the businesses to create in these four areas viz. human rights, labor, environment and anti- corruption. The message it conveys is that it would provide benefit to both private sector as well as the societies as well. With clear cut objectives the Global Compact has created an initiative that makes available workable and practical solutions to the most basic challenges facing the business house and the society. These challenges are all pervasive and common to everyone around the world. It is for this reason that the initiative has found acceptance in all types of organizations (Mullerat 2009). The initiative gels with the best practices of the UN, for example moral authority and convening power. This power comes from the fact that all the participants of the UN are voluntary and hence have bestowed upon it, the power to issue moral guidelines and being a large organization, convene the meetings of like minded people. This is coupled with the solution finding strengths of the private sector and expertise and capacities of their major stakeholders, works out to be a wonderful and workable solution to solving the problems in the field of social and environmental areas of concern. The Global Compact works in local as well as global domain. The participation is not restricted to one type of entity. In fact private, public and non government organization (NGO) is encouraged to join it. The best part is that there is absolutely no compulsion to join. It is all voluntary. The organizations are convinced of the benefits and join it on their own and voluntary basis. However, once they join they have to show their accountability. Once you have joined, it is not morally right to shirk the responsibility of commitment. There are several benefits of committing for the Global Compact which include first, adapting the well established and globally recognized policy framework for the development, implementation, and disclosure of environmental, social, and governance policies and practices; second sharing the best and evolving practices to advance practical solutions and strategies to common challenges, third , advancing sustainability solutions in partnership with a range of stakeholders, including UN agencies, governments, civil society, labor, and other non-business interests; fourth , linking business units and subsidiaries across the value chain with the Global Compact's Local Networks around the world — many of these in developing and emerging markets; fifth , accessing the United Nations' extensive knowledge of and experience with sustainability and development issues and sixth, utilizing UN Global Compact management tools and resources, and the opportunity to engage in specialized work areas in the environmental, social and governance realms. The most important benefit of is that it focuses on its complementary nature and not as a substitute for regulatory norms. It also includes total transparency and accountability policy called Communication on Progress (COP). Participating business and non – business entities continuously convey the benefits on the portal of COP, which in itself is an indication of the commitment to the principles of UN Global Compact by its participants. All participating organizations are expected to follow these guidelines. Once again, voluntary nature of the UN Global Compact is highlighted. There are no rules or punishments; the only mandate is accountability and voluntary participation. Its is imperative on the part of participants to follow the guidelines. They also realize its importance because they know that it is for their own benefits. The success of this initiative entirely depends on commitment of the participants to transparency and disclosure. In case the participant does not stick to the norms, his membership status is changed and there is also a possibility of cancellation of his membership (Blowfield, 2008). The commitment of corporate to the Global Compact has to come from the Chief Executive Officer (CEO) or its equivalent. In principle, there has to be support of the board of governors. There has to be a commitment which is visible in implementation, disclosure and promotion of the ten universal principles .The joining company is expected to make the Global Compact as one of its integral part of overall business strategy, and also inculcate in all the levels. It should also show in its annual report, what all it is dong to make the stakeholders aware of its commitment. As mentioned elsewhere, the participant in Global Compact is voluntary in nature. This is purposely kept like this because it is sincerely believed that an initiative taken voluntarily ensures that value is created for the participating corporations and for society as well. Voluntary initiatives are the most effective way of ensuring that the rules and regulations are followed. A strict regulation does not always result in its implementation .However, when combined with voluntary disclosure, proves its worth and results in compliance. When we say the joining is voluntary, it implies that is not legally binding on the participants. The basic concept of voluntarism is the basis of consistent by unwritten themes that have made the mission, advocacy and initiatives of the United Nations Global Compact possible to implement. The reason why voluntarism has been chosen as its basic theme is because of its inherent benefits. First of all voluntary initiatives “instill a culture of corporate leadership and innovation in pursuit of responsible behavior”. It helps in implanting the related issues into the process of decision making and operations. Secondly, “Voluntary initiatives can move corporate responsibility from concept to fact” In other words, it makes sure that there is consensus among all the stakeholders. This is achieved by taking them into confidence and informing them about the risks and opportunities involved in achieving the long term success of the initiatives. Lastly, “Voluntary initiatives can give voice to the people’s concerns, thus securing a positive place for business in society”. It helps companies in building up trust and confidence in social communities and also economies of the market. (Sethi 2003) The UN Global Compact Engagement provides opportunities in several areas such as Women Empowerment Principles, Caring for Climate, Human Rights and Labor to name a few. Consequent to the 100th anniversary of the International Women’s Day (which was on 8th March 2011), the Global Compact persuaded the top executives of companies to sign a Statement of Support for the Women's Empowerment Principles. The objective was to impress upon the corporate CEOs to commit to advance gender equality and agree to use the Principles as guidance for business actions that empower women in the workplace, marketplace and community. (Lenssen 2006). Caring for Climate is another initiative of the United Nation Global Compact. It is intended as a sort of coalition of global business on matters concerning the climate. It seeks commitment from business and asks government to incorporate transparency into their actions. (Keinert 2008).The popularity of the initiative can be judged from the fact that more than 300 organizations from 60 countries around the globe have joined it and shown their willingness to participate in this venture. This Caring for Climate is a new initiative which helps companies in the development of policies which can bring about effective change in the climate. Simultaneously they can also provide necessary inputs and feedback the government to formulate necessary policies for proper implementation. The supporters of Climate for Change are spread across geographical boundaries and across developed and emerging and developing countries. The importance of signing United Nation Global Compact can be seen by the comments of U N Secretary General as reproduced below “We need business to give practical meaning and reach to the values and principles that connect cultures and people everywhere.” — Ban Ki-moon, Secretary-General of the United Nations The U N Global Compact makes use of the best properties of the U N, namely moral authority and the power of convening. The private sector has at its disposal, various resources and has strengths in many of these areas. Therefore, UN Global Compact has initiated this drive and hopes that it would be successful and produce concrete results. In fact, study of the results has shown that the initiatives are successful. Several benefits are envisaged by joining the initiatives of the UN Global Compact, the most prominent and obviously visible among them are , one, business units and their subsidiaries can be linked across the value chain with the help of UN Global Compact’s Local Networks around the globe, second, knowledge of the United Nations can be accessed in terms of its experience in sustainability and development issues, third, sustainability solutions can be accessed in partnership with a number of stakeholders such as UN agencies, governments , civil society , labor and other non – business units. The UN Global Compact encourages the organizations that join the initiative to adopt certain basic principles in the respective areas of their work. These principles are very simple and easy to adopt. All that is required is the will and encouragement of the top management for others to follow them down the line. The principles are explained hereunder in the respective areas Human rights Businesses should support and respect the protection of internationally proclaimed human rights; and make sure that they are not complicit in human rights abuses. Labor Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining; the elimination of all forms of forced and compulsory labor; the effective abolition of child labor; and the elimination of discrimination in respect of employment and occupation. Environment Businesses should support a precautionary approach to environmental challenges; undertake initiatives to promote greater environmental responsibility; and encourage the development and diffusion of environmentally friendly technologies. Anti-corruption Businesses should work against corruption in all its forms, including extortion and bribery. CONCLUSIONS AND RECOMMENDATIONS By following the ten principles the UN Global Compacts appeal to companies to adopt, support and endorse within their area of control, a set of core values in certain areas of operations namely human rights, labor standards, environment and anti- corruption. To summarize, the Global Compact exists to assist the private sector in the management of increasingly complex risks and opportunities in the environmental, social and governance realms, seeking to drive in markets and societies with universal principles and values for the benefit of all. References 1. United Nation. 2011. What is the Global Compact? [ONLINE] Available at: http://www.unglobalcompact.org/. [Accessed 29 May 11]. 2. United Nation. 2011. Corporate Sustainability in. [ONLINE] Available at: http://www.unglobalcompact.org/docs/news_events/8.1/GC_brochure_FINAL.pdf. 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Learning to talk: corporate citizenship and the development of the UN Global Compact. 1st ed. U.K.: Greenleaf Publishing 11. Sullivan, R., 2003. Business and human rights: dilemmas and solutions. 1st ed. U.K.: Greenleaf Publishing 12. International Council on Human Rights Policy, 2002. Beyond voluntarism: human rights and the developing international legal obligations of companies. 1st ed. Switzerland: ICHRP 13. United Nations Publications, 2007. Embedding Human Rights in Business Practice II. 1st ed. USA: UNITED NATIONS PUBLICATIONS 14. Mullerat, R., 2009. International Corporate Social Responsibility::The Role of Corporations in the Economic Order of the 21st Century. 1st Ed. The Netherlands: Kluwer Law International 15. Keinert, C., 2008. Corporate social responsibility as an international strategy. 1st ed. Leipziz: Springer 16. Schreck, P., 2009. The business case for corporate social responsibility: understanding and measuring economic impacts of corporate social performance. 1st ed. Heidelberg: Spriger. Read More