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Get Four
|  | JULY 20, 2004
By Pete Engardio Two Views of the Global Compact [Page 2 of 2] AVOIDING EMBARASSMENT. However, the U.N. has done a poor job of communicating its goals to NGOs, which have much higher expectations. "The NGOs are concerned that the Compact appears to set standards that companies are complying with, and that this is misleading," says Greathead, who also notes that "some companies are using it for public relations." Instead, the U.N. officials heading the Compact mainly "want to establish a dialogue that includes companies and stakeholders," he says, adding that unfortunately, "they really haven't been able to bridge this communication gap." The trouble is the U.N. talked early on of something much bolder. Greathead says, "They had a very ambitious hope that companies would follow these commitments with action," adding, "Some companies actually do -- but most don't." Greathead doesn't see how the U.N. can really toughen up enforcement. "I think it's beyond the capacity of the Compact as it's staffed and funded to really monitor compliance," he notes. Greathead believes it would be too hard to get companies to join up if the Compact made judgments on their practices. He thinks even an earlier U.N. plan to have companies report what they're doing to comply with U.N. principles on a Web site -- and then have NGOs critique them -- would be hard to implement. "It would scare off too many companies,' he says. "Companies want a dialogue about solutions -- they aren't looking for another opportunity to be publicly embarrassed." GO DEEPER. Elkington takes a very different view. He doesn't see how the Compact can gain legitimacy if it has no way to keep companies honest. "Voluntary initiatives -- but particularly the Global Compact -- are likely to come under growing pressure," he says. Rather than focus on expanding membership, the program should concentrate on quality. "The appetite to go wider instead of going deeper raises real concerns about the longer-term risk to the U.N.'s reputation," Elkington says. "The challenge now is not just to scale up the dialogue, but to scale up the practical, on-the-ground responses to the challenges." He thinks the Compact should go even further and get multinationals involved in working with governments in poor nations and international agencies to develop policies that promote sustainable development and achieve the U.N. Millennium Goals. These include halving world poverty by 2015. CONTRADICTORY LOBBYING. Currently, many corporations contribute to development projects abroad. But to make an impact, "governments will need to take a much more active role, such as through fiscal and financial instruments and in shaping markets with rewards and disincentives," Elkington says. British Petroleum Chief Executive John Browne raised this notion at the Compact summit, but it didn't generate a lot of discussion. Also undercutting the Compact, Elkington contends, is that many corporations lobby their own governments not to take actions that promote some of the same humanitarian goals. For example, the International Chambers of Commerce and companies like Shell publicly oppose U.N. principles that urge corporations take an active role in promoting human rights and in reporting abuses in nations where they operate. "Currently, governments lean over backwards to protect the interests of business," Elkington says. "More attention should be paid to the extent to which corporate lobbying by Global Compact members align -- or don't align -- with their stated commitment to voluntary intiatives." Instead, Compact members should lobby governments and other key actors to support policies consistent with the U.N. principles.
 Engardio is BusinessWeek's senior international news editor in New York Edited by Tzyh Ng
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