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United Nations Global Compact: The Promise–Performance Gap

Abstract

The United Nations Global Compact (UNGC) was created in 2000 to leverage UN prestige and induce corporations to embrace 10 principles incorporating values of environmental sustainability, protection of human rights, fair treatment of workers, and elimination of bribery and corruption. We review and analyze the GC’s activities and impact in enhancing corporate social responsibility since inception. First, we propose an analytical framework which allows us to assess the qualities of the UNGC and its principles in the context of external and internal elements that influence code effectiveness and implementation. Second, we analyze UNGC performance in encouraging companies to become signatory members and bring about demonstrable change in corporate CSR-sustainability activities. In its 10-year report, UNGC has proclaimed growth in both membership and program activity. However, all credible and publicly available data and documentation conclusively demonstrate that the UNGC has failed to induce its signatory companies to enhance their CSR efforts and integrate the 10 principles in their policies and operations. The result has been a loss of public trust and support of UNGC from important constituencies among civil society organizations, and those individuals and groups adversely impacted by corporate activities and resultant negative externalities. This diminished credibility has also made UNGC largely dependent on the corporate sector for its very survival. We conclude that this dependence has in turn impaired and would continue to hinder UNGC’s ability to fulfill its mission. Such an outcome raises serious questions as to the viability, usefulness, and continued existence of UNGC.

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Fig. 1

Notes

  1. In this paper, we have interchangeably used terms such as code of conduct, voluntary principles, voluntary initiative, and voluntary self-regulation to denote the same phenomenon and to forestall any criticism that this paper excludes certain types of voluntary initiatives on the part of business community or that in some cases the sponsoring organization may have been other than the business community, e.g., the United Nations, International Labor Organization, International Monetary Fund, Forest Stewardship Council, the Sullivan Principles, UN Human Rights Initiative, to name a few.

  2. The websites are, respectively: http://www.unglobalcompact.org/newsandevents/news_archives/2009_01_12b.html; http://www.dii.org/; http://www.healthcaregpoii.com/.

  3. Two letters sent to Secretary-General Kofi Annan raised significant questions regarding the ability of the GC to oversee signatories in their support of the principles. The first, written by a group of prominent scholars, objected to the vagueness of the principles, and expressed concern over corporate intent to reform. The second, composed by legal scholars, argued that partnerships with certain corporations would put UN integrity in serious jeopardy. The content of both letters can be found in the archives of CorpWatch (www.corpwatch.org). It should also be noted that lack of NGO participation in the GC operations was noted in the recent Joint Inspection Unit report. It states that the GC’s current roster of CSO/NGO members have little to offer by way of global reach or expertise in dealing with corporate social responsibility, sustainability, governance issues (Fall and Zahran 2010).

  4. Supra note 3.

  5. United Nations, 2004. Addressing Business Leaders at Global Compact Summit, Secretary-General Says Experience Shows that Voluntary Initiatives ‘Can and Do Work’. United Nations Press Release SG/SM/9387 ECO/71. Found at: http://www.un.org/News/Press/docs/2004/sgsm9387.doc.htm. Downloaded 3 August 2010.

  6. Current Board members and their affiliations can be found at: http://www.unglobalcompact.org/AboutTheGC/The_Global_Compact_Board.html.

  7. A full description of the Foundation can be found at: http://www.globalcompactfoundation.org/.

  8. This is based on estimates from the Global Compact Board minutes of November 2007, where it was estimated that the Foundation would supply approximately 50% of the overall budget, or between US$ 2–3 million per year. We used 8% per year as the increase factor for the budget. See: http://www.unglobalcompact.org/aboutthegc/the_global_compact_board.html.

  9. Over the 10 year history of the GC, donor countries have included Brazil, China, Colombia, Denmark, Finland, France, Germany, Italy, Republic of Korea, Norway, Spain, Sweden, Switzerland, and the United Kingdom. Source: United Nations Global Compact annual reviewanniversary edition June 2010.

  10. Sir Mark Moody-Stuart is a current director at HSBC Holdings PLC, Accenture Ltd, and Saudi Aramco. Past positions include stints as Chair of both Anglo American plc, and Royal Dutch/Shell Group. James V. Kearney is a senior partner in the international law firm of Latham & Watkins LLP. Caroline L. Williams is President of Grey Seal Capital, LLC. Oliver F. Williams is associate professor and director of the Notre Dame Center for Ethics and Religious Values in Business in the Mendoza College of Business at the University of Notre Dame.

  11. These minutes can be found at: http://www.unglobalcompact.org/aboutthegc/the_global_compact_board.html.

  12. Numbers taken from the United Nations Global Compact Annual Review 2010. Downloaded from http://www.unglobalcompact.org/docs/news_events/8.1/UN_Global_Compact_Annual_Review_2010.pdf on 8 August 2011.

  13. We believe our assertions regarding the inadequacies of the COP process to be true even given the recent emphasis on improving the COP as seen on the GC website in their description of the Differentiation Programme, found at http://www.unglobalcompact.org/COP/differentiation_programme.html.

  14. A letter detailing the charges can be found at http://www.unglobalcompact.org/docs/news_events/9.1_news_archives/2009_01_12b/letter_from_CNPC_15Dec2008.pdf.

  15. The text of the full letter can be found at: http://www.unglobalcompact.org/newsandevents/news_archives/2009_01_12b.html.

  16. Ibid.

  17. http://www.unglobalcompact.org/Issues/Environment/CEO_Water_Mandate/index.html. Downloaded 26 August 2010.

  18. http://www.globalpolicy.org/component/content/article/162-general/28046.html. Downloaded 3 September 2010.

  19. http://www.thecoca-colacompany.com/ourcompany/ar/pdf/2009-operating-group-eurasia-africa.pdf. Downloaded 3 September 2010.

  20. http://www.globalpolicy.org/component/content/article/162-general/28046.html. Downloaded 3 September 2010.

  21. http://www.indiaenvironmentportal.org.in/node/32669. Downloaded 3 September 2010.

  22. The requirements can be found at http://www.unglobalcompact.org/COP/.

  23. From the opening speech delivered by Secretary-General Ban Ki-Moon to the delegates at the 2010 Leadership Summit, June 2010.

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Acknowledgments

The authors are grateful to the Weissman Center for International Business for providing support for research on this paper.

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Correspondence to Donald H. Schepers.

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Sethi, S.P., Schepers, D.H. United Nations Global Compact: The Promise–Performance Gap. J Bus Ethics 122, 193–208 (2014). https://doi.org/10.1007/s10551-013-1629-y

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Keywords

  • UN Global Compact
  • Self-regulation
  • Global governance
  • Voluntary codes of conduct
  • UN and private sector collaboration
  • Non-market interventions
  • Nongovernmental organizations (NGOs)