Values-Based Multinational Management: Achieving Enterprise Sustainability through a Human Rights Strategy

7. The United Nations Global Compact

157 C H A P T E R s e v e n The United Nations Global Compact The United Nations Global Compact (UNGC) initiative evolved from a challenge posed by Secretary-General Kofi Annan to the business community at the Davos World Economic Forum in January 1999. “I call on you—individuallythroughyourfirms,andcollectivelythroughyourbusiness associations—to embrace, support, and enact a set of core values in the areas of human rights, labor standards, and environmental practices.” His vision was to “give a human face to the global market.”1 Annan has also stated, “It is not enough to say—though it is true—that without business the poor would have no hope of escaping their poverty. Too many of them have no hope as it is. Those who have the power and means, governments and business, must show that economics, properly applied, and profits, wisely invested, can bring social benefits within reach not only for the few but for the many, and eventually for all.”2 Intense interactions among business chief executive officers and associations, nongovernmental organizations, labor unions, and four U.N. agencies for over a 158 implementing a human rights standard year led to the formulation of nine principles. Businesses were invited to embrace these principles and to incorporate them in their strategies and decisions. From the managerial viewpoint, the UNGC is a set of social principles, broadly perceived as legitimate, that are useful in implementing the goal of long-term enterprise sustainability. The necessary process is to translate these principles into a set of standards that become general rules reflecting the uniqueness of the firm in its environment, which are then applied across the multinational enterprise network. Given the uniqueness of the operating environment of each of a firm’s business units, in contrast to the uniform network standards, the tension of universality versus cultural relativity moves from philosophical debate to decisions about specific actions . This is the challenge of implementing the UNGC. This chapter outlines the nature of the Compact principles and the extent of their acceptance by NGOs and the business communities. I. COMPACT REQUIREMENTS Initially there were nine principles in the Compact adopted in 2000. A tenth was added in 2004 after extensive discussion and analysis. These principles can be summarized as follows: General Human Rights Principles 1. Support and respect the protection of internationally proclaimed human rights within their sphere of influence. 2. Make sure they are not complicit in human rights abuses. Labor 3. Uphold the freedom of association and the effective recognition of the right to collective bargaining. 4. Promote the elimination of all forms of forced and compulsory labour. 5. Promote the effective abolition of child labour. 6. Uphold the elimination of discrimination in respect of employment and occupation. the uniited nations global compact 159 Environment 7. Support a precautionary approach to environmental challenges. 8. Undertake initiatives to promote greater environmental responsibility. 9. Encourage the development and diffusion of environmentally friendly technologies. Corruption 10. Business should work against corruption in all its forms, including extortion and bribery. Note that Principles 1 and 2 differ in nature from Principles 3–10 in that these first two are the fundamental core of the others. The first two principles call for the overall defense of human rights, which can include a broad range of human rights concerns in local situations, whereas the other eight define and particularize the basic tenets of Principles 1 and 2 to the rights of labor, the environment, and dealing with corruption. Principles 3 through 10 are so-called hypernorms.3 They specify the precepts that will be uniform across the multinational network in all operating locations (business units). General Human Rights Principles Principles 1 and 2 address the duties of the corporation relative to the rights of its stakeholders. They capture the full reach of the Universal Declaration of Human Rights. In specifying these duties, there is a distinction between the duty not to deprive and the duty to protect.4 This is drawn from the philosophical identification of three levels of correlative duties associated with the deprivation of any right: 1. Duties to avoid depriving. These duties are limited. “Duties to avoid depriving require merely that one refrain from making an unnecessary gain for oneself by a means that is destructive for others.”5 2. Duties to protect from deprivation. Duties to protect usually arise because others have failed in their duties to avoid. “If...