History Of The United Nations Global Compact

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Does the United Nations Global Compact contribute to exercising global governance of Corporate Social Responsibility?

The origins of the United Nations Global Compact (hereafter referred to as the Global Compact or UNGC) date back to the World Economic Forum in Davos in 1999, where Former Secretary-General Kofi Annan proposed to the business community that ‘you, the business leaders gathered in Davos, and we, the United Nations, initiate a global compact of shared values and principles, which will give a human face to the global market’ (UN, 1999:1). There are several reasons as to why the UN invited the private sector to build partnerships and contribute to voluntary corporate governance such as the financial crisis within the UN, the shift from a neo-Marxist approach towards a neoliberalistic one, and the change of UN leadership. For Kofi Annan the Global Compact was a way to promote Corporate Social Responsibility (CSR) as a means to respond to the challenges of globalisation. He stated: ‘you do not need to wait for governments to pass new laws… you can and should act now in your own self-interest. The sustainability of globalisation is at stake’ (Ruggie, 2002:28). Therefore the initiative demands the private sector to embrace, support and carry out ten principles in the areas of human rights, labour standards, environment and anti-corruption within the corporate business community. A global governance approach is seen as the only way to combat the development challenge, since CSR and development issues are of transnational scope, and hence the Global Compact aims to implement minimum standards of good corporate practices and socio-development through close partnerships with private global businesses.
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...13:23). Besides re-defining the principles, the UN should implement toolkits and guidelines for businesses in order to be accountable and to enforce compliance. Through stricter COP reporting requirements higher levels of transparency can be obtained, which will subsequently lead to an increased balance of quality. Furthermore, CSR can only be achieved if businesses find a way to successfully combine economic profit generation, environmental protection and social justice; the three values of the so-called “triple bottom line”. This approach assumes that capitalism could possibly be a solution to the current CSR crisis as much as it is the cause of it. But of course capitalism and sustainability are not easy to combine, and even though the Global Compact makes an effort to combine those two and to exercise global governance of CSR, it has not (yet) succeed to do so.

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