In depth I  Corporate accountability
Protect, respect and remedy: a framework for business and human rights
Source: United Nations
Report of the Special Representative of the Secretary-General on the issue of human rights and transnational corporations and other business enterprises, John Ruggie. April 2008 (pdf version).[see more]
 
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Globalization, trade and investment designs and structures reinforce a model of development -centred on free trade, hyper economic growth, and export-oriented production- which is inherently unsustainable in ecological and social terms. They also destroy viable localized and regional systems that may have the greatest long-term promise for future sustainability.

Consequently, there is increasing global concern about the broader issue of corporate accountability and pressures seem to be mounting from diverse political and intellectual quarters for greater corporate responsibility. The Global Compact is the United Nations' response to this demand.

UN Secretary-General Kofi Annan first proposed the Global Compact in an address to The World Economic Forum on 31 January 1999. The Global Compact's operational phase was launched at UN Headquarters in New York on 26 July 2000.

The Global Compact is formally a multi-stakeholder partnership of UN agencies, business entities and civil society organizations, established to encourage business to promote good corporate practices in the field of environmental protection, human rights and labour standards. Those practices are based on nine principles extracted from the Universal Declaration of Human Rights, the International Labour Organization's Declaration on Fundamental Principles and Rights at Work, and the Rio Declaration on the Environment and Development.

The Global Compact is not a regulatory instrument -it does not "police", enforce or measure the behaviour or actions of companies. Rather, the Global Compact relies on public accountability, transparency and the enlightened self-interest of companies, labour and civil society to initiate and share substantive action in pursuing the principles upon which the Global Compact is based.

But from the statements made by the participants at the conference that launched the Global Compact, it is clear that the different partners want different things. Business wants a soft approach, with no imposition of standards and minimal scrutiny, and with specific companies allowed to go at their own pace. On the other hand, some NGOs and trade unions were joined by the UN High Commissioner for Human rights in calling for a 'price to be paid', that is, tougher measures including independent monitoring, public reporting, a faster response on the part of business, and measures against member companies that do not comply.

As Peter Utting, Project Leader at the UN Research Institute for Social Development (UNRISD), writes in his report on the Global Compact, opinions 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."

"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," says Utting. "They are worried that companies with a reputation for malpractice have been welcomed into 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."

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