Global Compact International Yearbook 2012

Agenda Rio + 20
/Expectations///Expectations///Expectations///Expectations///Expectations///Expectations///
Georg Kell
Georg Kell,
Executive Director, UN Global Compact
Never before in recent history has there been such widespread uncertainty
about the future. Major developments are shaping our world,
raising important questions about the proper role of business and the
legitimacy of markets. First, while the adoption of austerity measures
has been a painful adjustment for countries in many parts of the developed
world, a good portion of the world’s economic might and growth has gradually
been shifting from Europe and the West to the East and South. At the same
time, rising inequality and widening gaps between rich and poor have become
global phenomena. Income gaps in OECD countries have reached the highest
levels in 30 years and are even more pronounced in many emerging economies.
As a result of rapidly eroding trust in markets, institutions, and leadership,
citizens are demanding more equality, freedoms, and accountability. Popular
protests – from Wall Street to Moscow – are expressions of global discontent
that cuts across economic, social, and political spheres. And continued stress
on natural resources threatens to disrupt economies and societies around the
planet. More than one billion people lack access to food, electricity, or safe
drinking water. Climate change remains a critical issue, and ecosystems are
in dramatic decline.
Many argue that business is at the heart of many of these problems. But this
sweeping indictment fails to see the potential of business, if properly channeled,
to produce many of the solutions needed to drive positive and transformative
change. The good news is that thousands of companies already incorporate
environmental and social issues into their agendas. The UN Global Compact
alone counts nearly 7,000 corporate signatories in 150 countries driving
innovation in areas as diverse as energy and climate change, women’s empowerment,
and anti-corruption.
However, most companies simply are not doing enough. Sustainability as a
value proposition has not yet gained global acceptance. With an estimated
80,000 multinationals and millions of smaller enterprises, much remains to
be done. This June’s UN Conference on Sustainable Development, commonly
known as Rio+20, is a unique chance to move the corporate sustainability
agenda to a global scale, but it will require government and business to deliver
on a variety of critical fronts:
Corporate governance – at the Board level – must recognize environmental and
social issues as being critical to long-term business success. Companies must
strengthen their Boards’ ability to understand and oversee social components
as a complement to their roles in assessing business strategy, risk management,
and legal compliance. Such oversight will ensure that implementation will
cascade throughout the value chain. The courage to deliver what we call a
new contract between business and society will help generate and restore balance
and boost growth in the marketplace. Of course, none of this can happen
without strong political leadership. But as a growing number of companies
embrace the sustainability challenge, political leaders will be encouraged and
inspired to do their part.
Businesses must also heed the call of a new generation of investors and other
stakeholders and report publicly on their sustainability performance. While
there is great appetite for increased disclosure, investors typically find reporting
in the environmental or social realms to be insufficient. A global policy
framework to disclose sustainability information in line with annual financial
or other reports would go a long way in helping business to communicate more
transparently on these issues – or explain why they do not.
While governments are ultimately responsible for developing institutional
frameworks, they cannot solve the world’s challenges alone. Transformative
public-private partnerships that engage governments and society at all levels
build on the relative strengths and competencies of each actor and can have
lasting positive impacts on policy, market structure, and social norms.
Responsible lobbying and advocacy must be supported at the highest levels.
Lobbying actions often conflict with a company’s stated values and take a
lowest-common- denominator approach rather than pursue long-term interests.
Governments should adopt smart regulatory frameworks and incentive structures
so that the dinosaurs of business are not rewarded above environmental
and social performance.
Goods and services that respond to the growing demand for more sustainable
solutions should be encouraged and rewarded. Consumers and markets
are ready for them, but incentive structures have not kept pace with shifting
values and preferences.
The courage to deliver what we call a new contract between business and society
will help generate and restore balance and boost growth in the marketplace.
Of course, none of this can happen without strong political leadership.
But as a growing number of companies embrace the sustainability challenge,
political leaders will be encouraged and inspired to do their part.
Source: Guest article on the “Sustainable Development Policy &
Practices” platform prepared for the UN Conference on Sustainable
Development (UNCSD) and initiated by the International Institute for
Sustainable Development (IISD).
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Global Compact International Yearbook 2012
Global Compact International Yearbook 2012 17