The United Nation’s Global Compact has been criticised again, but this time it’s the UN’s own inspectors pointing the finger
It has not been an easy few weeks for the Global Compact, the United Nations’ flagship corporate responsibility initiative, set up in 2000 with the backing of then secretary-general Kofi Annan. In March, another UN body, the Joint Inspection Unit (JIU), strongly criticised it, saying the Global Compact’s shortcomings were serious enough to cause “reputational risk” to the UN brand.
According to the JIU, the Global Compact’s mission to get corporations to contribute positively to globalisation has been compromised. Participating companies – of which there are 6,200 – are meant to adhere to a set of principles ranging from eliminating discrimination to rejecting corruption. But this has been undermined by the “absence of adequate entry criteria and an effective monitoring system”.
The JIU says the compact has an unclear mandate, has failed to independently audit its work, and has a “highly unusual” governance structure that is “costly, cumbersome and ineffective”.
It is strong stuff, distilled into 16 recommendations. The Global Compact’s head of public affairs, Matthias Stausberg, says the initiative can accept some of these. For example, “we support the idea of independent impact evaluations, and we have said that we would welcome a clearer articulation of the Global Compact’s mandate”.
Other criticisms, however, have been rejected. Some JIU assertions were based on wrong “underlying observations” and old information. “The JIU report was outdated the moment it was released,” Stausberg says, adding that the Global Compact requested corrections but they were not included. “We do not really have a good explanation for that. Your guess is as good as ours.”
The result would seem to be a stand-off. But unfortunately for the Global Compact, the criticism is set to continue. Further condemnation is to be levelled at it by two academics from Baruch College, City University of New York, in a book to be published this summer, Globalization and Self-Regulation: The Crucial Role that Corporations Play in Global Business.
Two of the book’s writers, Prakash Sethi and Donald Schepers, argue that the Global Compact is only superficially doing what it is supposed to do.
Speaking to Ethical Corporation, Sethi, who is also the book’s editor, says the compact “has neither the commitment nor the resources to pursue its original mission”. Rather than substantively monitoring participating companies, it “does not seek any assurance of real progress, and merely asks for some form of communication under threat of delisting if companies fail to do so after considerable prodding”.
Sethi also points out that the Global Compact is sponsored by governments, but is in some cases vetting corporations in which those governments have vested interests – China’s state-owned companies, for example. “It is a mockery of everything that the Global Compact stands for,” he says. “Signatory companies may pay lip service.”
But for now the Global Compact is standing firm. Stausberg emphasises that it has expelled more than 2,000 companies for not reporting on integration of the principles into their operations. In fact, he says, “arguably, the Global Compact has achieved quite a lot with rather modest means”.