A Call to Mr. Ban Ki Moon: Realize the Potential for Business and the UN

By Andrew Savitz

Sustainable Development International • December 13, 2006

When Secretary General Designate Ban Ki-Moon officially takes charge as head of the United Nations in January, he will become the first Asian representative in thirty-five years to lead the organization. Replacing Kofi Annan, Ban has pledged to carry forward the departing Secretary General’s steps towards institutional reform, yet it remains to be seen how he will respond to perhaps the most important of Annan’s legacies: the mobilization of business and civil society through the UN Global Compact.

The paradigm shift created through the Compact is dramatic, and Annan should no doubt be commended. “For the first time in its history,” write Georg Kell, Executive Director of the UN Global Compact, and Ann Marie-Slaughter, Dean of the Woodrow Wilson School in a forthcoming publication, “the UN is embracing business and civil society as vital partners in the Organization’s work.” Annan has created what is now the largest voluntary corporate citizenship initiative. With its headquarters officially established in 2000, the Global Compact incorporates a set of ten broad principles that are framed into categories such as human rights, labor standards, environment, and anti-corruption. Companies join on their own accord, while the Compact provides a platform for stakeholder dialogue and networking with the objective of finding business solutions to global problems. Kell and Marie-Slaughter contend, “The Global Compact leverages the UN’s status as the largest, best-laid table in the room, able to attract and accommodate the widest range of stakeholders. No other environment can provide such comprehensive discussion and learning.”

Its successes are noteworthy. Take Novartis, the life sciences company. After signing the Global Compact in 2000, the Novartis management team, led by CEO Daniel Vasella, sought to adopt the Compact principles not only through policy from the boardroom, but also through unit-specific policies such as workers rights and drug accessibility in the developing world. Based on recommendations by nongovernmental organizations (NGOs) to resolve unacceptable wages to contract workers in Switzerland, Novartis has implemented a more robust compensation policy. Describing Novartis’ policy on corporate citizenship, Vasella states, “Across geographies and throughout our organization we will, in all our business, social, and environmental activities, strive to be in line with the principles of the Global Compact.”

Over 3,000 companies have joined, including 106 of the world’s 500 largest companies according to the Financial Times Global 500 ranking. McKinsey & Company determined in 2004 that half of the Compact signatories had reported changing their policies to harmonize with the Compact principles. Internally, the Compact headquarters office has beefed up with the establishment of a board composed of prominent leaders from business, labor, and civil society. Yet, the Compact has not existed without its critics, most of whom have charged that it lacks the ability to enforce compliance to the principles. In October, 335 companies were de-listed for failing to report their Compact initiatives.

In South Korea today, there is little consensus on what defines corporate social responsibility (CSR), and little room to establish how Mr. Ban’s South Korean roots will affect his approach to this emerging issue. Twelve Korean companies have signed the Global Compact and while corporate volunteerism and initiatives such as the Korea Business Council for Sustainable Development demonstrate progress, Korean companies continue to suffer from a more fundamental problem – corporate corruption. Lim Hyun-Chin, Professor of Seoul National University, writes that CSR in Korea has centered on “past corporate wrongdoings, including collusion between politics and business, falsification of corporate financial statements, manipulation of share prices, illegal transactions, and illegal inheritance practices.”

Nonetheless, Mr. Kell remains “very optimistic” that Mr. Ban will advance the Compact and its agenda. He points out in an interview we conducted during the fall that the Compact office is endorsed by the General Assembly, “And if you are running something out of the UN other than the Security Council, it does matter whether what you are doing is supported or not,” he notes. The endorsement in December 2005 implies that the Compact will continue to receive support from member states upon Annan’s departure. In addition to the General Assembly endorsement, Kell highlights two reassuring events: a recent speech delivered by UN Ambassador Choi Young-Jin where he identifies the Compact as an example of successful partnerships and the official launch of the Compact in South Korea in January.

Secretary General Designate Ban, a South Korean, will bring with him a wealth of diplomatic experience and UN-insider respect, but whether he will advance, reinvent, or dismiss the importance of business to meet UN objectives remains to be seen. Mr. Ban will take the reins of the UN at a time when business and civil society are finding new ways to work together, and we urge him to champion the idea that innovation, efficiency, and impact through business can lead to real solutions for the needs of our world. We hope that Ban will remain committed to carrying Annan’s legacy and continue to innovate how the UN can leverage its resources to do just that. Indeed, as Kell leaves us, “The Compact is one example, of how the UN can re-invent itself from within. It can indeed find new ways of leveraging its moral authority and do more even with less resources.” Moses Choi is currently a master’s degree candidate at the Fletcher School of Law and Diplomacy."

Andrew Savitz is author of The Triple Bottom Line: How the Best Run Companies Are Achieving Economic, Social and Environmental Success — and How You Can Too.





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