United Nations

DSG/SM/222
                                                                                                                        ECO/59
                                                                                                                        5 May 2004

Deputy Secretary-General, Launching Global Compact in Italy, Says Corporate Social Responsibility Has Evolved as World Business Network Has Taken Root

NEW YORK, 4 May (UN Headquarters) -- The following is the text of Deputy Secretary-General Louise Fréchette address at the launch of the Global Compact in Rome today, 4 May:

I am delighted to be with you today for this event, which marks the formal launch of the Global Compact in Italy.  I can assure you that the Secretary-General is very glad to know that the Compact is taking hold in a country that plays such an important and truly innovative role in the world economy.

It is now five years since the Secretary-General called on business leaders to embrace nine universal principles in the areas of human rights, labour and the environment -- three areas on which the private sector’s activities have such a direct and major impact.  He did so because of his concern that unless global markets were embedded in shared values, and unless corporations themselves were strongly committed to responsible practices, globalization itself would be fragile and perhaps even unsustainable, with unfortunate results for us all.

The Compact is not a contract, a code of conduct, a set of regulations or a new system of monitoring.  Rather, it is an attempt to get business to work with the United Nations, on a voluntary basis, to fortify the social pillars of the global economy.  It brings companies together with international labour and civil society organizations, with the ultimate aim of helping to ensure that the benefits of globalization reach all the world’s people.

The prospect of having Italy’s unique energies as part of this effort is very encouraging.  For let us make no mistake, we have a long way to go.

The leading yardstick of progress today is the extent to which countries are achieving the Millennium Development Goals, which were adopted by world leaders at the Millennium Summit in 2000.  The goals -- ranging from halving extreme poverty to halting the spread of major diseases and providing universal primary education, all by the target date of 2015 -- are ambitious but achievable.  The poverty goal may well be met at the global level, largely because of the dramatic gains being made in the world’s two most populous countries, China and India.  But many individual countries are not as integrated into the global economy, and some have stagnated or lost ground in recent years.  Moreover, HIV/AIDS has become a devastating obstacle to development in many countries.

Success in improving the well-being of poor and vulnerable people is a moral responsibility and a matter of global equality.  But it is also essential for peace and security, since the roots of conflict and instability can often be found in economic distress, social marginalization, competition over resources.  So investments in the fight against poverty are also investments in the future stability and prosperity of societies and markets alike.

The Secretary-General believes that there are convincing reasons for the business community, as a matter of both enlightened self-interest and the global interest, to embrace this agenda of development and peace.  Clearly, many companies agree, since as of today more than 1,200 companies have joined, from virtually every sector of the economy, and with operations in more than 70 countries, North and South, including, of course, Italy.

As the Compact has evolved and taken root, so has the corporate social responsibility movement.

Where once that movement was limited to specific industries or individual companies, today it is on its way to gradually involving the full range of global stakeholders -- governments, labour and civil society.

And where once the movement was largely the preserve of multinational corporations, today it is expanding to encompass small- and medium-sized businesses, which in many countries, including Italy, are the backbone of the economy and important agents of job creation. The Compact is encouraging closer links between multinational corporations and small- and medium-seized enterprises -- not only commercial links, but also efforts by the former to help the latter adhere to global standards like those at the heart of the Compact.

The Government of Italy and the Italian business community have shown great leadership in advancing the Compact.  Twenty-three Italian companies, many of them represented here today, are officially participating, and the Global Compact Italian Network is up and running.  I would like to thank the Government, Foreign Minister Frattini and his colleagues, for their political and moral support, and for contributing to the Global Compact Trust Fund.

In a few minutes, Mr. Baccini will tell you about a project involving small- and medium-sized enterprises known as “Sustainable Development through the Global Compact”.  I would like to thank the Ministry of Foreign Affairs for funding it, and the Rome office of the ILO for its involvement.

I would also like to mention four other exciting initiatives that the Global Compact is pursuing.

First, the Compact is exploring how stock exchanges could support the goals of the Global Compact, for example through raising awareness of corporate responsibility and good corporate governance among their members.  A first meeting was held on 15 March in New York, and we were delighted that the Borsa Italiana was among the 15 exchanges that participated.

Second, the Compact is working with global investment companies to integrate social and environmental factors into investment research.  We think both of these efforts are critical to bringing about systemic change in the financial markets that help fuel the global economy.

Third, as the Minister mentioned, we will be holding a Global Compact “leaders summit” in June in New York, to take stock and consider future directions.

Fourth, as you may be aware, participants in the Compact are currently engaged in wide-ranging consultations on whether to add a tenth principle, on corruption, especially now that there is a United Nations Convention against Corruption.  Indications are that participants overwhelmingly favour such a principle.  This would add to the spectrum of values covered by the Compact, and offer another path for rebuilding the trust in the business community that has been seriously eroded by corporate governance scandals in Europe, the United States and elsewhere.

Let me add a final word about the Global Compact Networks. There are more than 50 such country networks -- several in Europe, most of them in the developing world. They are autonomous, and bring stakeholders together to advance the Compact while ensuring that the Compact is translated appropriately into a society’s unique culture, language and value system.  You might even say that the Compact is a “network of networks”.  After this formal programme is over, you will have an opportunity to talk with one of my colleagues in New York, Anton Stadler of the Global Compact Office, who is in charge of outreach and networks and is ready to answer your questions about how the Italian Network might move ahead.

This event is both the culmination of the Global Compact’s early days in Italy, and the beginning of what the Secretary-General hopes will be a more intense phase of activity and accomplishment.  The United Nations looks forward to your wide and active participation in the Compact, and most of all to the contribution that our partnership can make to building a safer, fairer world.

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