Global Compact International Yearbook Ausgabe 2010

Profit is a means to an end, not an end in itself. Without profit,
there is no growth, and without growth there is no development.
But if business does not create value and instead divvies up the
same pie over and over again for personal gains (remember
the subprime mortgages, collateral debt obligations, and credit
default swaps?), then it is bound to fail and cause havoc for
society. Responsible business leaders all over the world know
this to be true, yet time and again they fall into the trap of
short-term profit for long-term value. Here is where the UN
Global Compact has an important leadership role to play.
In the first decade since its launch, the UNGC has done an
admirable job of mobilizing nearly 6,000 businesses from
all over the world to commit to the universally accepted Ten
Principles of the UNGC, and even more broadly agree on a
common platform that addresses the most difficult problems
facing humanity – the Millennium Development Goals.
More recently, the process of communicating results and
tracking progress has resulted in an ever-improving honor
system, whereby the participating companies have raised
the stakes on demonstrating action over rhetoric. In spite of
such an impressive start, in my opinion, we have just begun
the hard work.
The idea of a “triple bottom line,” or the task of reconciling
shareholders’ interests with those of society’s, is easier preached
than practiced. The natural laws of business, at times, are at
odds with the long-term interests of society. Unlike planet
earth and its inhabitants, businesses and business careers are
not meant to last forever. What is good for one community
may not be in the interests of the global community and vice
versa. In spite of the win-win rhetoric that many who are enamored
by the Global Compact espouse, some businesses that
have taken their social and environmental roles seriously will
tell you that it has come at the cost of their financial bottom
lines. It is exactly for these reasons that we should applaud
the 6,000 and more companies that have signed on to the
Global Compact. It is an act of faith that they have committed
to a path and a course of action. They hope to reach the
end destination. Not all of them will succeed in achieving the
sought-after integration, but those who do will have done it
through innovative business models and visionary leadership.
This is the part of the Global Compact work that needs to
be cherished, supported, and spread. It is in this spirit that I
would like to forward two ideas.
First, that the UNGC promote a collaborative network among
clusters of participating companies to share best practices, refine
business models, and influence change in the larger industry
environment. Second, that the UNGC create a technical advisory
unit to help eager SMEs (small and medium enterprises) to
make the transition to the Principles of the Global Compact.
I elaborate on each of those ideas below.
As currently structured, the Global Compact is a network of
companies that undertake significant actions with respect to
society and the environment, but do so almost independently.
Much of their actions are based on their value systems and
their belief that a firm’s profit goals need not be divorced from
society’s goals for sustainable development – both in a human
and environmental sense. The real power of the Compact
will come only when this self-selected group forms a compact
among its participating companies to put teeth into what
now remains an act of faith. Rather than a one-way channel
to and from UNGC headquarters, the idea is to unleash the
power of the network by actively encouraging consortiums of
companies to get together to set standards, codes of conduct,
and other operating principles in a collaborative manner
as a way of prodding and helping participants to raise their
own commitments and actions. Horizontal and speedy collaboration
among participants in the different clusters could
unleash a simultaneous burst of actions not possible through
the vertical “report and communicate” structure implied by
the current model. When the decentralized model starts to
work well, there is no reason why these standards cannot flow
outside the Global Compact to non-participating companies
in similar businesses. To put it simply, the Global Compact
should transform itself from a participatory organization to a
network that acts as a catalyst in helping businesses undertake
models that bring business into harmony with society.
The idea of a collaborative business coalition working for the
larger interests of society is not new. The Marine Stewardship
Council in the fishing industry and the Extractive Industries
Transparency Initiative in the oil and mining industry are but
two examples. Regardless of the origin of such coalitions, their
end result is impressive. The Equator Principles, for example,
have done much for banking and human rights and has
brought a degree of responsibility to project-lending not seen
before. The list is even longer when one adds the initiatives of
the numerous trade associations and chambers of commerce.
My argument is that the UNGC should attempt to replicate
such successful initiatives. Its role is to actively aid, abet, and
promote business practices in the direction of its Principles.
The UNGC is a global body with the weight and credibility of
the United Nations behind it and claims an impressive 6,000
participating businesses from 130 countries. Surely there
are clusters, both by geography and industry. Engagement
within clusters is likely to lead to big wins. By definition, the
participating companies have made a commitment to actively
engage in harmonizing their interests with those of society.
What better starting point than that?
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Global Compact International Yearbook 2010