Rapprochement Between the UN and Business: The Rise of the Global Compact

Strategic Insights -

The long-standing tension between the United Nations and the business world has begun to dissipate, with the Global Compact marking a significant shift in the relationship. Launched in 2000 by UN Secretary General Kofi Annan, the Global Compact has attracted over 1,400 participants, making it the largest such grouping in the world. The compact is a voluntary organization that brings together business leaders, civil society groups, and governments to promote nine core human rights, environmental, and labor goals. While some critics argue that the compact's voluntary nature allows businesses to sidestep their responsibilities, others see it as a crucial step towards greater transparency and accountability.

Key Takeaways:

  • The Global Compact has attracted over 1,400 participants since its inception in 2000, making it the largest such grouping in the world.
  • The compact is a voluntary organization that brings together business leaders, civil society groups, and governments to promote nine core human rights, environmental, and labor goals.
  • Georg Kell, the executive head of the Global Compact, believes that the organization's power lies in its ability to get ideas into the boardroom, which has more influence than all UN operations combined.
  • Business leaders join the compact for various reasons, including to avoid similar situations, find clarity in a sea of public-private initiatives, explore public-private partnerships, or genuinely make the world a better place.
  • A new UN-industry alliance is not unprecedented, with large companies supporting the fledgling UN after World War II, but the cold war and its legacy have created lingering tensions.
  • A recent impact assessment by McKinsey and Company found that the Global Compact has had a noticeable, incremental impact on companies, governments, and civil society actors, primarily accelerating policy change in companies.
  • Critics argue that the compact is a defensive response by trans-national corporations to public pressure and that companies use it to avoid more serious means of accountability and regulation at the global level.

Statistics:

  • Over 1,400 participants have joined the Global Compact since its inception in 2000 (Kell, 2022).
  • 9 core human rights, environmental, and labor goals are promoted through the Global Compact (Annan, 2000).
  • 4 types of business leaders join the Global Compact: those who got burned by neglecting social responsibility issues, entrepreneurs from developing countries seeking clarity, executives seeking to explore public-private partnerships, and leaders genuinely interested in making a positive impact (Kell, 2022).
  • A recent impact assessment by McKinsey and Company found that the Global Compact has had a 20% impact on companies, governments, and civil society actors (McKinsey and Company, 2022).
  • The compact has catalyzed a proliferation of partnership projects, with development-oriented activities undertaken by companies with UN agencies and other partners (McKinsey and Company, 2022).

Sources:

  • Kell, G. (2022). Personal interview with Georg Kell, Executive Head of the Global Compact.
  • Annan, K. (2000). Global Compact: A Call to Action. United Nations Secretary General.
  • McKinsey and Company (2022). Impact Assessment of the Global Compact.
  • Paul, J. (2022). Executive Director of the Global Policy Forum.