Global Compact International Yearbook 2015

Agenda
Global Compact+15
that they do have a moral responsibility for the behavior of
their subcontractors. In fact, they have become one of the best
employers in the world in developing countries, because they
monitor their subcontractors. If they don’t measure up and
treat the workers well, they don’t get a new contract from
Nike. So, that was the niche that Kofi Annan suggested we
needed to work on: developing a consensus on moral norms
for the global economy.
To be sure, the problem is not only present in developing
countries. For example, until recently in Germany there was
not a moral norm on bribery. In Germany and some other
developed countries, it was legitimate to consider bribery a
business expense. Now that moral norm has been established.
Germany is one of the better countries in enforcing that moral
norm, as we know from the Siemens case. There is also a
large deficit of moral norms on environmental issues – the
physical environment, as well as corporate governance and a
whole host of social / ethical issues. That is the niche that Kofi
Annan wanted to work in.
Globalization was still a new concept back then, shortly after the Cold
War had ended. It was an era of hope, and perhaps even utopia. Today
we are reentering a kind of cold war, and far too many people feel that
globalization is a race to the bottom. In light of these new conditions,
is Kofi Annan’s original idea of the UNGC still up to date?
Williams: We have come a long way in meeting the challenge
of forming a global consensus on the moral norms required
to guide the global economy. One example that I think illustrates
how much headway has been made occurred in 2012,
when Apple’s subcontractor in China – a company called
Foxconn – was accused of treating its workers brutally. In
that particular case, the workers were demoralized and there
was a growing problem with suicides. Foxconn put up a series
of nets around the building so that there wouldn’t be body
parts around the residences when people committed suicide.
That was a major story in the New York Times in 2012. Of course,
people were outraged. And what did Apple say? Apple didn’t
say: We have no responsibility for our subcontractors. In fact,
Tim Cook, the CEO of Apple, flew over to China, met with
the executives of Foxconn, and said: If you don’t straighten
this out and treat your workers better, we are pulling all of
our subcontractors out of China. So Foxconn has changed its
behavior. I think that is an example, one of many, where you
can say, the establishing of a moral norm has taken hold. At
least in regard to sweatshops.
Moral norm is a very good issue to focus on. UN Secretary-General Ban
Ki-moon says the UNGC is a kind of moral compass for the economy.
So far so good. But when we look at the media, it seems that way too
many companies around the world are ignoring this compass. What
must happen?
Williams: As you probably know, we have got 8,000 signatory
companies as of 2015 – many of them very influential, large
companies. But half of them are small, medium-sized companies.
Our own discussions at the board of the Global Compact
would be that we really need a critical mass of about 20,000
companies to reach a tipping point in the world whereby we
reach an established understanding that business has more
responsibilities in a global economy. So we are trying to get
more and more companies involved. Our goal is to have 20,000
companies by 2020. That would be a way to establish firmer
moral norms in society.
The measuring unit in business schools or in business is money. In a
certain way that would put a price on everything: climate, biodiversity,
labor, community engagement, etc. Is it appropriate – or is it even possible
– to put a price on every ethical behavior? How can we measure
what you said was sustainable societal value?
Williams: This is one of the current issues we discuss often. I
think the Global Reporting Initiative (GRI) has come up with a
series of questions, generally covering what they call the ESG
(environmental, social, and governance) issues. The point, of
course, is that you cannot put a monetary figure on some of
these issues. We can compare and contrast by having a series
of standard questions that companies address. While we don’t
require that companies use the Global Reporting Initiative
standard to create their annual report, the Communication
on Progress (COP), we do strongly encourage it. Perhaps some
time in the future we will require it, once it becomes more
accepted. While the common metric is certainly money for
financial reporting, what we are trying to do – when we
talk about the “triple bottom line” and integrative reporting
– is to say that there are other non-monetary metrics that
measure environmental, social, and ethical issues. They are
just as important.
Adam Smith, one of the founding fathers of the modern economy, said
that business is about more than just making money. It has to do with
responsibility as well. If so, what can the CSR movement contribute
toward changing an outdated management culture?
Williams: CSR was largely philanthropy 25 years ago. Companies
were giving to primary and secondary schools, they were
giving to the opera, they were giving to universities. That was
considered the CSR activity – and we certainly don’t want
to discourage companies from doing those things! But as we
evolve in our understanding of the purpose of business – to
create sustainable value for stakeholders – we see that CSR is,
in fact, creating that sustainable value for all stakeholders. So
the very purpose of business is corporate social responsibility.
Part of that social responsibility is to have earnings for investors.
Part of it is to have sustainable value for employees and
suppliers as well as the physical environment and communities
where the appliance and equipment are for the business.
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