Corporate Social Responsibility and the United Nations Global Compact

Article excerpt

EXECUTIVE SUMMARY

Corporate Social Responsibility (CSR) has received growing attention during the last several decades. Its impact dramatically reached the top echelons of the United Nations when, in 1999, UN Secretary-General Kofi Annan proposed The Global Compact at the World Economic Forum in Davos, Switzerland. The Global Compact has grown to encompass over 6,000 business participants. In addition, many government entities and civil society organizations have joined so that the total number of organizational participants is now nearly 8,000. This paper discusses the strengths and limitations of The Global Compact.

Keywords: Corporate social responsibility, United Nations, Global governance, Global compact

INTRODUCTION

The priority of The Global Compact to Secretary General Kofi Annan, among his many duties, was emphasized at an Adelphi University reception in 2005 honoring Ambassador Pierre Schori before his departure on a UN Mission to the Ivory Coast. The Secretary General was in attendance for approximately thirty minutes and spoke with many people. When one of co-authors of this paper mentioned that he taught International Business in an MBA program, Kofi Annan then launched into several minutes of discussion about The Global Compact and why he believed that business students should know about its significance. This spontaneous conversation demonstrated the importance of the United Nations Global Compact to Kofi Annan and it may become one of his most important legacies.

UNITED NATIONS GLOBAL COMPACT PRINCIPLES

In summary, The Global Compact is a UN initiative designed to encourage companies to act as socially responsible members of the international community by committing to the following ten principles (United Nations, 2010):

Human Rights

1) Businesses should support and respect the protection of internationally proclaimed human rights; and

2) Make sure that they are not complicit in human rights abuses.

Labor Standard

3) Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining;

4) The elimination of all forms of forced and compulsory labor;

5) The effective abolition of child labor; and

6) The elimination of discrimination in respect of employment and occupation.

Environment

7) Businesses should support a precautionary approach to environmental challenges;

8) Undertake initiative to promote greater environment responsibility; and

9) Encourage the development and diffusion of environmentally friendly technologies.

Anti-Corruption

10) Businesses should work against corruption in all its forms, including extortion and bribery.

The United Nations Global Compact process also includes an annual Communication on Progress (COP) report. Those who do not meet the COP deadline will be marked non-communicating. on the Global Compact website. If the non-disclosure continues for an additional year, the companies will be delisted from the Compact; however, these companies may reapply.

CORPORATE SOCIAL RESPONSIBILITY AND STAKEHOLDERS

An important dimension of Corporate Social Responsibility (CSR) involves a shift of focus from the maximization of shareholder value to the satisfaction of the interests of a broader set of stakeholders. (Becchetti, 2010). These stakeholders are frequently divided into two categories. Primary stakeholders are directly related to the business such as stockholders, customers, suppliers, and employees. Secondary stakeholders frequently include governments at various levels, charities, community organizations, and in broader definitions, activist groups and the media (Davis & Frederick, 1984). It can be argued that this comprehensive view of stakeholders would include the United Nations which represents 191 countries encompassing almost all human beings on earth. …

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