More firms join UN push to be good corporate citizens
UNITED NATIONS, N.Y. — It started with a vision of what business could be. At the urging of United Nations Secretary-General Kofi Annan, 38 companies, including Nike and Volvo, embraced nine principles ranging from not hiring child workers to cutting down greenhouse gas emissions.
Now, five years later, some 1,500 firms have signed on to what has become the world's largest corporate citizenship initiative, the United Nations Global Compact, which held its first summit here last month. That explosive growth illustrates what many business leaders already believe: Corporate social responsibility is entering the mainstream.
Membership ranges wildly, from financial powerhouse Goldman Sachs to Amazon Caribbean Guyana Ltd., which employs 200 Amerindians who can hearts of palm in the jungle.
While the compact has no policing powers, it can point to some success stories. For example: William E. Connor & Associates, a product sourcing company headquartered in Hong Kong, reports that an underage girl employed in a supplier's factory was dismissed, provided with an educational stipend, and rehired when she reached legal age. Lafarge, a French construction materials firm, boasts plans to reduce its carbon-dioxide emissions to 85 percent of 1990 emissions by 2010. And Banco Itau, a Brazilian bank, touts its healthcare plan and exercise facilities.
Of the compact's nearly 1,700 signatories - a list that not only includes companies, but nongovernmental organizations, unions, and other groups - only 61 are American. US companies are similarly underrepresented in two other United Nations-endorsed efforts, the Global Reporting Initiative, and the World Economic Council for Sustainable Development, says Georg Kell, who heads the compact. The reason? The compact asks companies to embrace principles, rather than meet explicit standards - an approach "not easily understood in [America's] litigious culture," he says.
But US firms are showing more interest. Nearly a quarter of American signatories - including Starbucks Coffee Co. and Newmount Mining Corp. - have signed since March.
With no authority to enforce its dictates, the compact has merely "delisted" companies that refuse to report their social progress. Some signatories want more stringent measures. "It's easy to sustain [the compact's] principles when you're operating in Western Europe, or America, or Japan perhaps," said Fred Hicks, General Secretary of the International Confederation of Chemical, Energy, and Mineworkers, at the summit. "But where you are not expected to do it by law, are you going to be prepared to put the resources in to still apply those standards?"
Other signatories prefer the volunteer approach, believing that good corporate citizenship will spread because it is profitable in the long term. Social concern is a measure of "management quality," says Anthony Ling, managing director of Goldman Sachs.
Still others say that even if good citizenship does not increase long-term profits, the principles should become an integral part of doing business. The compact and similar initiatives can create "an enabling environment in which social responsibility pays," says Peter Eigen, chairman of Transparency International, an international nongovernmental organization devoted to fighting corruption.
But skeptics argue that good citizenship will take hold only among businesses that are already keen to be good citizens. Companies that do not heed existing regulations will not change to embrace the compact, says Alexandra Wrage, president of Transparent Agents and Contracting Entities, a nonprofit that certifies businesses' compliance with anticorruption laws. For example, one compact principle asks signatories to "work against" extortion and bribery. "If companies can be working against that on their own," Ms. Wrage adds, "it means they're already doing it."