Academic journal article Vanderbilt Journal of Transnational Law

Novartis and the U.N. Global Compact Initiative

Academic journal article Vanderbilt Journal of Transnational Law

Novartis and the U.N. Global Compact Initiative

Article excerpt


The U.N. Global Compact initiative evolved from a challenge posed by Secretary-General Kofi Annan to the business community at the World Economic Forum in Davos in January 1999. "I call on you--individually through your firms, and collectively through your business associations--to embrace, support, and enact a set of core values in the areas of human rights, labor standards and environmental practices." (1) His vision is "to give a human face to the global market. (2) Over a year of intense interaction among business chief executive officers and associations, non-governmental organizations, labor unions, and four U.N. agencies led to the formulation of nine principles. Business is invited to embrace these principles, incorporating them into their strategies and decisions.

At core, the nine principles are based on fundamental human rights as articulated in various U.N. documents. The base document is, of course, the 1948 Universal Declaration of Human Rights. Its broad acceptance provides a legitimate touchstone virtually anywhere in the world. The first two principles ask business to,

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.

Principles three through six are based on the 1998 International Labour Organization Declaration on Fundamental Principles and Rights at Work. These principles request that businesses,

(3.) Uphold the freedom of association and 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 remaining three principles relate to protection of the environment, tied to the Rio Declaration on Environment and Development and the comprehensive plan for sustainable development outlined in Agenda 21. Accordingly, these three principles ask businesses to,

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.

The Global Compact is a voluntary initiative with no framework for legal enforcement. The decision to embrace the principles is up to the individual enterprise. There is no screening of firms that join the Compact and no U.N. endorsement. Member companies become participants in a set of embedded networks working toward the consideration of human rights in business activities.

Joining the Compact involves a letter of commitment from the CEO. Companies are then asked to describe in their annual financial reports or other prominent corporate reports (such as sustainability reports) the actions they are undertaking in support of the Global Compact's principles through the engagement mechanisms of Learning, Dialogue, Local Networks, and Projects.

For some companies, independent academic analysts are invited to assess the implementation of the nine principles. The attached case, one of the first, is a study of Novartis A.G., a large Swiss pharmaceutical enterprise. The report analyzes the inclusion of the Global Compact as an integral part of a strategy for sustainable corporate development. Based on managerial interviews, the process of initiating a principles-based human rights dimension into managerial behavior is assessed. **


   1.1 Post Merger Economic Consolidation
   1.2 Strategic Expansion To Include
       Corporate Citizenship
   2.1 A Focus on Process
   2.2 Valuable Experience
   2.3 From Concept To Action
   2. … 
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