ECO/70
25 June 2004
Global Compact Summit Concludes with Emphasis on Need to Fight Corruption
Over 400 Corporate Executives, Government Officials, Civil Society Leaders Participate in One-Day Event to Advance Responsible Corporate Citizenship
NEW YORK, 24 June (UN Headquarters) -- Concluding the daylong Global Compact Leaders Summit this evening, Secretary-General Kofi Annan noted that a tenth principle had been added to the Compact –- to combat corruption. Now, the immediate task ahead was to define the features of the Compact’s new strategic concept, and to design a new governance structure that matched its widening scope.
Introduced by the Secretary-General in 1999 as an international initiative to advance responsible corporate citizenship, and launched operationally the following year, the Global Compact challenges world business leaders to “embrace and enact” the benefits of global economic development through voluntary corporate policies and actions. Endorsed by all governments, the Compact sets forth nine guiding principles, which focus on human rights, labour standards and the environment.
The largest and highest-level gathering of leaders from business, labour and civil society ever held at the United Nations, the one-day Summit was convened by the Secretary-General examine the impact of the Global Compact, which includes nearly 1,500 firms in some 70 countries. More than 400 corporate executives, government officials and civil society leaders participated in today’s event, which included a series of round tables, dialogues and press conferences.
Noting that the day had ended with reinvigorated commitment to the Compact, the Secretary-General said the leaders attending the Summit had demonstrated that even in an era of uncertainty and fear, business, labour, civil society and governments could overcome their divisions. A range of specific pledges had been made, including defending human rights in conflict zones, ensuring decent working conditions and implementing “no-bribe” policies.
Describing the Compact’s core comparative advantages as its universality, international legitimacy and its potential as a truly global platform, he stressed the need for the Compact’s new strategic concept to give special emphasis to the potential for links, synergies and mutual support between the global- and local-level activities. Tied together through webs of trade, investment and technology, the global village could not prosper unless stronger common bonds and values were established, the Secretary-General added.
Welcoming the participants, General Assembly President, Julian Hunte (Saint Lucia) noted that the United Nations could best carry out its Charter goals and objectives if a broad range of actors engaged as active partners in its work. The presence of business and civil society leaders in the Hall affirmed the fact that collaboration and cooperation were essential building blocks for a peaceful society. He hoped the discussions today would provide new impetus for meeting the Compact’s goals to further human rights and to advance the United Nations global anti-poverty agenda.
Reporting on the outcome of round-table discussions throughout the day, representatives said that as the number of companies joining the Compact grew, it would be important to ensure that it remained free of political interference and the weight of bureaucracy. A number of initiatives had been proposed, such as those from the distribution industry and the stock exchanges, and it was now important to carry out concrete actions. Another speaker noted that, as there was a great deal of scepticism regarding the Compact, it remained to be seen if real teeth could be given to the 10 principles.
Also this evening, presentations were made on specific actions by various groups. Among the actions highlighted was “Cotton in Africa”, an initiative which meant to establish African cotton as a quality label for cotton produced in the developing world. Another initiative on the Compact’s new anti-corruption principle called on governments, international organizations and businesses to work against corruption and bribery.
Statement by Secretary-General
In a closing speech entitled, “The Way Forward: Commitment and Action”, Secretary-General KOFI ANNAN said it was fitting that the Summit ended in the General Assembly Hall, where all the world’s peoples, governments and other stakeholders came together to address common challenges and found common solutions. While symbolism was good, substance was even better. Important substantive progress had been made today.
The day was ending with reinvigorated commitments to the Global Compact and to responsible corporate citizenship, he said. The Summit had addressed the challenges facing the Global Compact as partners, transforming differences and tensions into constructive strategies for action. The leaders had demonstrated that even in an era of uncertainty and fear, business, labour, civil society and governments could overcome their divisions, and build on what they had in common.
The participation for the first time of the investment community demonstrated a growing mainstream interest in aligning market rewards with good corporate practices, he added. It also offered yet another powerful argument to the already strong business case for doing the right thing.
Also today, a tenth principle had been added to the Compact, to combat corruption, he said. The extensive consultation to arrive at that amendment showed not only that an overwhelming majority of participants wanted to strengthen the Compact, but also an exemplary deliberative process. As a result, the Compact was better positioned to address one of the most pernicious obstacles to growth and development, and to cooperate more intensively with groups such as Transparency International.
He said a range of specific pledges had been made today, including to implement the Compact’s principles in business supply chains; to defend human rights in zones of conflict; to ensure decent working conditions; to invest in clean technologies; to implement no-bribe policies; to combat diseases such as AIDS; and to grow small business in the least developed countries. The leaders had shown that principles and projects were two sides of the same coin, and that normative and operational efforts could complement each other. The United Nations itself was now fully committed to internalizing the principles of the Global Compact. From the start, one of the Compact’s singular achievements had been to help renew the United Nations from within. By adopting its principles in our internal processes, yet another step had been taken in that direction.
In important respects, the journey had only started, he continued. Experience with the Global Compact over the past four years had shown that, while voluntary initiatives could work, they had to be made to work. Governments had to do the right thing: to govern well, in the interests of all their people. Business had to restrain itself from taking away, by its lobbying activities, what it offered through corporate responsibility and philanthropy. Civil society actors needed to accept that the business community was not a monolithic bloc; that it had leaders and laggards; and that leaders should be encouraged when they took positive steps.
The immediate task ahead was to define the precise features of the Global Compact’s new strategic concept, and to design a new governance structure that matched its widening scope, he said. The Compact’s core comparative advantages were the universality of its principles, the international legitimacy that only the United Nations embodied, and the Compact’s potential to be a truly global platform with great appeal not only in the industrialized countries, but also in the developing world. The Compact’s new strategic concept must, therefore, give special emphasis to the potential for links, synergies and mutual support between the global and local levels of our activities.
A new governance structure for the Compact also needed to be devised, he said. In corporate terms, the primary mission of the Global Compact office should become brand management and quality assurance. Bureaucratization had to be avoided and ownership and the power of initiative must be much more broadly shared among all participants, including businesses, labour, civil society, United Nations agencies and the rapidly expanding family of national networks, two thirds of which were in developing countries, where roughly half of the participating companies were based.
The global village could not prosper unless stronger common bonds and values were established. The future was tied together through webs of trade, investment and technology. “Let us not rest until we have truly succeeded in bringing positive change into the lives of people, and laid the foundations for peaceful, well-functioning, sustainable societies throughout the world”, he said.
Summaries of Round Table Presentations
BERTRAND COLLOMB, Chairman of Lafarge, presenting the results of his round table, said that participants had shown an impressive level of commitment to the Compact. Specific sector initiatives had been proposed, such as those from the distribution industry and the stock exchanges, and it was now important to carry out concrete actions.
The Compact’s aim was not to select a few companies and highlight their merits, he continued, but to engage as many as possible in the global struggle for corporate responsibility. In realizing that objective, it was also important for business to work with other partners, and for governments and international institutions to recognize the Compact and assist in furthering its principles. The Compact could expect commitment from a growing number of companies, but must remain a light, informal organization that was free of political interference and the weight of bureaucracy.
TALAL ABU-GHAZALEH, Chairman and Chief Executive Officer of Talal Abu-Ghazaleh Organization, presenting the results of his round table, offered some suggestions for the Compact. Those included the need to design and implement as a priority a governance structure, including a business-like organizational structure; to put in place working groups to implement the call for resources, advocacy and leadership; to create an anti-corruption culture condemning the double crime of being corrupt and of corrupting others; to launch a public awareness plan to make Global Corporate Citizenship a business brand; and to develop social benefit indicators to reflect the real impact of economic indicators.
ACHIM STEINER, Director General, IUCN - The World Conservation Union, said three things had stood out during meetings today, including the idea of leadership. The Secretary-General had shown leadership in Davos by calling for the Global Compact. Another issue was the concept of measurement or accountability. If companies wanted to differentiate themselves, a stronger form of accountability was essential, and the Global Compact must not shy away from it. He also stressed the need to turn words into action. There was a great deal of scepticism regarding the Compact, and it remained to be seen if real teeth could be given to the 10 principles. Without those next steps, the Global Compact would not move beyond its leadership role.
Announcements on Collective Actions
JANINA OTTO, a representative of Ostim OSB, describing a new initiative called “Cotton Made in Africa”, said the goal of that initiative was to establish cotton made in Africa as a quality label for cotton produced in the third world. Cotton represented Africa’s largest export commodity. A sustainable method for producing cotton was important due to the depletion of water and soil resources in numerous countries. In cooperation with cotton specialists, the idea was to define criteria for the sustainable growth of high-quality cotton. What made the project special was the fact that it was demand-market driven. The involvement of representatives from African markets would be crucial to the project.
CHUCK HARDWICK, Senior Vice-President of Pfizer, addressing the Compact’s new anti-corruption principle, noted that an estimated $3 trillion in bribes were paid each year, constituting a devastating hidden tax. Noting that the new anti-corruption principle aimed to combat corruption in all its forms, he said that some 150 companies taking part in the Business Roundtable had put anti-corruption high on their agendas. The Roundtable had called for governments to better monitor and comply with existing conventions against corruption and bribery; for international organizations to encourage governments to promote greater transparency and work against bribery; for businesses to adopt best practices in combating corruption; and for governments to promote transparency.
ANTHONY LING, Managing Director at Goldman Sachs, presenting the report “Who Cares Wins”, said the report had been endorsed by Chief Executive Officers of 20 major financial institutions. It represented a serious statement of intent by the finance industry that environment, social and corporate governance issues were vital in contributing to healthy financial markets. Such issues were a vital aspect of overall management in the new global world, and the prize for getting them right was increasing. Unfortunately, they were not fully understood, and a yawning chasm existed between what the investment community wanted and what the corporate world thought it wanted.
CHENG SIWEI, Vice-Chairman of the People’s Congress, said freedom was relative, as decisions of individual enterprises were constrained by other enterprises and influenced by external environments. There would be no market economy without a free enterprise system. However, that system should keep pace with time. In the old days, chief executive officers worked only for the benefits of owners. After the Second World War, however, some began to realize that they had to work for the benefit of their customers.
In recent years, a few chief executive officers began to understand that they had a responsibility to work on behalf of society and the people, and that they should pay more attention to human rights, environment and anti-corruption efforts. He hoped the 10 principles would be turned into practice. Governments should encourage enterprises to use the principles both by legal means as hard constraints and moral means as soft constraints. China was in transition from a central planning system to a socialist market system. On the one hand, the market had to play a fundamental role in resource allocation. On the other, it had to develop the socialist system with Chinese characteristics. He trusted that the Compact’s implementation in China would impact the country’s peaceful development. He also hoped the summit would be a milestone for promoting the compact.
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