Global Compact

What is the UN Global Compact?

Global Compact defined in Wikipedia:

The United Nations Global Compact, also known as the Compact or UNGC, is a United Nations initiative to encourage businesses worldwide to adopt sustainable and socially responsible policies, and to report on their implementation. The Global Compact is a principle-based framework for businesses, stating ten principles in the areas of human rightslabor, the environment and anti-corruption. Under the Compact, companies are brought together with UN agencies, labor groups and civil society. Cities can join the Compact through the Cities Program.

The Global Compact is the world's largest corporate citizenship initiative with two objectives: "Mainstream the ten principles in business activities around the world" and "Catalyze actions in support of broader UN goals, such as the Millennium Development Goals (MDGs)."

The Compact was announced by the then UN Secretary-General Kofi Annan in an address to The World Economic Forum on January 31, 1999, and was officially launched at UN Headquarters in New York on July 26, 2000.

The Global Compact Office is supported by six UN agencies: the United Nations High Commissioner for Human Rights; the United Nations Environment Program; the International Labor Organization; the United Nations Development Program; the United Nations Industrial Development Organization; and the United Nations Office on Drugs and Crime.

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Global Compact: Introduction

Ten Principles

The Global Compact was initially launched with nine Principles. June 24, 2004, during the first Global Compact Leaders Summit, Kofi Annan announced the addition of the tenth principle against corruption in accordance with the United Nations Convention against Corruption adopted in 2003.

Human Rights
Businesses should:

  • Principle 1: Support and respect the protection of internationally proclaimed human rights; and

  • Principle 2: Make sure that they are not complicit in human rights abuses.

Labor Standards
Businesses should uphold:

Environment
Businesses should:

  • Principle 7: support a precautionary approach to environmental challenges;

  • Principle 8: undertake initiatives to promote environmental responsibility; and

  • Principle 9: encourage the development and diffusion of environmentally friendly technologies.

Anti-Corruption

Facilitation

The Global Compact is not a regulatory instrument, but rather a forum for discussion and a network for communication including governments, companies and labor organizations, whose actions it seeks to influence, and civil society organizations, representing its stakeholders. The Compact says that once companies declared their support for the principles "This does not mean that the Global Compact recognizes or certifies that these companies have fulfilled the Compact’s principles."

The Compact's goals are intentionally flexible and vague, but it distinguishes the following channels through which it provides facilitation and encourages dialogue: policy dialogues, learning, local networks and projects.

History

The first Global Compact Leaders Summit, chaired by the then Secretary-General Kofi Annan, was held in UN Headquarters in New York on June 24, 2004, to bring "intensified international focus and increased momentum" to the Compact. On the eve of the conference, delegates were invited to attend the first Prix Ars Electronica Digital Communities award ceremony, which was co-hosted by a representative from the UN.

The second Global Compact Leaders Summit, chaired by Secretary-General Ban Ki-moon, was held on 5–6 July 2007 at the Palais des Nations in Geneva, Switzerland. It adopted the Geneva Declaration on corporate responsibility.

Marking the 10th anniversary of the Compact's launch, the Global Compact Leaders Summit 2010 took place on 24–25 June 2010 in New York. On the occasion, the Blueprint for Corporate Sustainability Leadership identifying leadership criteria linked to implementation of the ten principles, efforts to support development objectives, and engagement in the Global Compact was released. The document was supported by Foundation Guilé.

Cities Program

In 2001, the City of Melbourne proposed that cities as well as corporations should be allowed to join the UN Global Compact, arguing that this would provide a clear statement of a city's commitment to positive change, as well as motivating participation in international dialogue. The proposal was accepted, and the UN Global Compact Cities Program was launched in 2002. It was formed as an urban-focused component of the Global Compact with its International Secretariat initially located in MelbourneAustralia. The aim of the program is to improve urban life in cities throughout the world.

Melbourne became the first city to engage the Global Compact in June 2001. There are, as of 2013, over 80 member cities in the program.

In April 2003, under the directorship of David Teller, a framework called the Melbourne Model was developed that went beyond the Ten Principles. It begins by drawing the resources of government, business and civil society into a cross-sector partnership in order to develop a practical project that addresses a seemingly intractable urban issue. In 2007, the current Director, Paul James (2007–present) and his colleagues Dr Andy Scerri and Dr Liam Magee, took this methodology further by integrating the partnership model with a four-domain sustainability framework called 'Circles of Sustainability'.

In 2007, the Secretariat moved from the Committee For Melbourne to the Global Cities Institute at RMIT University, itself affiliated with UN-HABITAT. There, projects associated with city-based responses to global climate change and globalization have become increasingly important. The Melbourne Model was further elaborated, with a sustainability indicators program developed as a way of assessing and monitoring progress. In 2012, the Circles of Sustainability method was elaborated to guide a city or urban region through a rigorous assessment process. As one of the outcomes it provides a figurative image of the overall sustainability of that city to illustrate its strengths and weaknesses.

 

Human Rights

Human Rights

The first two principles of the UN Global Compact, which are derived from the Universal Declaration of Human Rights, are:

Respecting and supporting human rights remains one of the most challenging areas of corporate sustainability. This is because, in part, human rights have traditionally been the concern of States, and international human rights instruments are addressed to them. However, in the lead up to, and following the endorsement of, the Guiding Principles on Business and Human Rights by the Human Rights Council in 2011, more businesses are coming to realize their legal, moral and/or commercial need to address human rights issues within their own activities and their business relationships. At the same time they are confronted with a number of challenges. For example, there is the need to come to grips with the human rights framework and how a company’s own activities might relate to it. In addition, companies are often uncertain of how to avoid complicity in human rights abuse and where the boundaries of their human rights responsibility lie.

The Human Rights and Business Dilemmas Forum enables businesses and stakeholders to explore such challenges in an interactive way in the context of approximately 25 human rights and business themes. Access the Human Rights and Business Dilemmas Forum.

Regardless of size or operational context, all companies can benefit from tools and guidance to help them with their implementation efforts. The UN Global Compact strives to bring more clarity to this field by highlighting the relevance of human rights for business, demonstrating the business case for human rights, emphasizing practical solutions and pointing to useful tools and guidance materials. The Human Rights and Labor Working Group also produces Good Practice Notes and case studies that identify approaches that have been recognized by a number of businesses and stakeholders as being good for business and good for human rights. This activity is in keeping with the goal of showing that advancing human rights is not just about managing risks and meeting standards and expectations; it can also be about realizing new opportunities for sustainable growth.

Support and Respect

Global Compact Principle 1: Support and Respect

"Businesses should support and respect the protection of internationally proclaimed human rights."

Why Human Rights Are Important for Business

Governments have the primary responsibility to protect human rights. However, individuals and organizations also have important roles to play in supporting and respecting human rights. The business community has a responsibility to respect human rights, that is, not to infringe human rights, in the context of their own activities and their business relationships. Operating context, company activities and relationships can pose risks that the company might negatively impact human rights, but they also present opportunities to support or promote the enjoyment of human rights while also advancing one’s business.

Promoting the rule of law

Societies in which human rights are respected are more stable and provide a better environment for business. Businesses whether operating outside their country of origin or at home may have the opportunity to promote and help raise standards in countries where protection of human rights issues is insufficient, especially in ways that are strategically relevant to its core business.

Addressing consumer concerns

Access to global information means that consumers are increasingly aware of where their goods come from and the conditions under which they are made.

Value chain management

Global sourcing and distribution means that companies need to be aware of potential human rights issues both upstream and downstream.

Increasing worker productivity and retention

Workers who are treated with dignity and given fair and just remuneration for their work are more likely to be productive and remain loyal to an employer. New recruits increasingly consider the social, environmental and governance record of companies when making their choice of employer.

Building good community relationships

Companies that operate on a global basis are visible to a large audience world-wide as a result of advances in communications technologies. Addressing human rights issues positively can bring rewards at site level, within local communities, as well as in the broader global commons in which companies operate.

Respecting Human Rights

Respect for human rights is part of Principle 1 of the United Nations Global Compact. In June 2011, the Guiding Principles on Business and Human Rights were unanimously endorsed by the UN Human Rights Council as an authoritative global standard for preventing and addressing the risk of adverse impacts on human rights linked to business activity. The “Protect, Respect and Remedy” Framework rests on three independent, but inter-related pillars: the State duty to protect human rights (Pillar I), the corporate responsibility to respect human rights (Pillar II) and access to remedy for victims of human rights abuses (Pillar III). Pillar II establishes the ‘Responsibility to Respect’ as the minimum global standard on human rights for all businesses wherever they operate. Download Guiding Principles on Business and Human Rights: Implementing the United Nations "Protect, Respect and Remedy” Framework 

Determining the scope of responsibility

Companies should consider three sets of factors in determining the scope of their responsibility to respect human rights or, in other words, the risk of potential negative impacts on human rights in connection with the conduct of their business.

  1. The first is to consider the country and local context in which it is operating for any human rights challenges that context might pose.

  2. The second set of factors involves considering whether the company is causing or contributing to adverse human rights impacts through their own activities within that context — for example, in their capacity as producers, service providers, employers and neighbors ("activities" is understood to include both actions and omissions).

  3. The third set of factors is an analysis of the company’s relationships with Government, business partners, suppliers and other non-State actors to consider whether they might pose a risk for the company in terms of implicating it in human rights abuse.

Policy Commitment

Companies should adopt a statement of policy as a public commitment to fulfill their responsibility to respect human rights, approved by their board or equivalent. It can be a stand-alone statement or integrated into a broader corporate sustainability policy or code of conduct.

Human Rights Due diligence

In order to ensure and demonstrate (i.e. to know and show) that a company is meeting its responsibility to respect human rights it should undertake due diligence. Human rights due diligence is the ongoing process taken to identify, prevent and mitigate and account for negative human rights impacts which the company may cause or contribute to through its own activities or which may be directly linked to the company’s products, operations or services by a business relationship.

Assessing human rights impactsMany corporate human rights issues arise because companies do not consider the potential implications of their activities and relationships within their operating context. Companies should take proactive, ongoing steps to understand how existing and proposed activities may cause or contribute to human rights impacts, as well has how the company’s operations may be directly linked to such impacts.

Integration of human rights policies throughout a company: The integration of human rights policies throughout a company may be the biggest challenge in respecting human rights. If awareness of human rights issues and their importance is not fully integrated across relevant internal functions and processes, inconsistent or contradictory actions can result.

Taking action: The appropriate action for a company to take will vary depending on whether (a) the company has caused or contributed to an impact, or (b) it is directly linked to that impact through its business relationships.  In the case of (a), the company should cease or prevent the impact. In the case of (b) it should utilize available leverage to prevent or mitigate the impact.

  1. Tracking performance:

  2. Communicating/reporting on performance: Remediation

A company should have in place or participate in remediation processes. 

Supporting Human Rights

In practice, respect and support for human rights are often closely interlinked in terms of the management steps that are taken to enable and ensure respect and support for human rights.

There are at least four ways business can support or promote human rights:

  • Through their core business activities in support of UN goals and issues

  • Strategic social investment and philanthropy

  • Advocacy and public policy engagement

  • Partnership and collective action.

For full text: http://www.unglobalcompact.org/AboutTheGC/TheTenPrinciples/principle1.html

Non-complicity

Global Compact Principle 2: Non-complicity

"Businesses should make sure they are not complicit in human rights abuses."

Complicity

Complicity basically means being implicated in a human rights abuse that another company, government, individual, group etc. is causing. The risk of complicity in a human rights abuse may be particularly high in areas with weak governance and/or where human rights abuse is widespread. However, the risk of complicity exists in every sector and every country.

The requirement to respect human rights, pursuant to Global Compact Principle 1 and the UN Guiding Principles on Business and Human Rights, includes avoiding complicity, which is another way, beyond their own direct business activities, that businesses risk interfering with the enjoyment of human rights. The risk of an allegation of complicity is reduced (though not eliminated) if a company has a systematic management approach to human rights, including due diligence processes that cover the entity’s business relationships.  Such processes should identify and prevent or mitigate the human rights risks with which the company may be involved through links to its products, operations or services.

Complicity is generally made up of 2 elements:

  1. An act or omission (failure to act) by a company, or individual representing a company, that “helps” (facilitates, legitimizes, assists, encourages, etc.) another, in some way, to carry out a human rights abuse, and

  2. The knowledge by the company that its act or omission could provide such help.

The commentary to Principle 17 of the UN Guiding Principles on Business and Human Rights notes that “most national jurisdictions prohibit complicity in the commission of a crime, and a number allow for criminal liability of business” as well as allowing civil actions based on a company’s contribution to a harm. In the international context, the same commentary notes that “the weight of international criminal law jurisprudence indicates that the relevant standard for aiding and abetting is knowingly providing practical assistance or encouragement that has a substantial effect on the commission of a crime”.

However, allegations of complicity are not confined to situations in which a company could be held legally liable for its involvement in the human rights abuse committed by another. The media, civil society organizations, trade unions and others may allege complicity in a far broader range of circumstances, such as where a business may appear to benefit from another actor’s abuse of human rights, and may lobby the company to play an advocacy role. The better view is that the presence of a company in an area and payment of taxes where egregious and systematic human rights abuses are occurring, without more, is not enough to make the organization complicit in those abuses. However, some societal actors take a different view and may lobby business to play an advocacy role in such circumstances.

Accusations of complicity can arise in a number of contexts:

  • Direct complicity — when a company provides goods or services that it knows will be used to carry out the abuse.

  • Beneficial complicity — when a company benefits from human rights abuses even if it did not positively assist or cause them.

  • Silent complicity — when the company is silent or inactive in the face of systematic or continuous human rights abuse. (This is the most controversial type of complicity and is least likely to result in legal liability).

Contemporary Issues

Human rights issues have become increasingly important as the nature and scope of business has changed. Different actors have different roles to play, and it is important for business to be aware of the contemporary factors that have made human rights an organizational issue.

  • Globalization: The growth in private investment has witnessed companies expanding operations to countries previously untouched by global markets. In some instances, these countries have poor human rights records and/or the capacity of the state to address these issues is limited. In these cases the role of business in promoting and respecting human rights is particularly important.

  • Growth of civil society: In some instances the capacity of the state to address human rights issues has diminished. As a result, a steady alienation of people has occurred towards the public institutions that were established to serve them. Non-governmental organizations of all types and sizes have grown to fill the void, progressively influencing both public policy and the market agenda. They include new human rights, labor and corporate accountability organizations.

  • Transparency and accountability: The need for transparency in business practice has been highlighted both by globalization, the growth of civil society interests and some recent problems in the corporate sector. Advances in information technologies and global communications mean that companies can ill afford to conceal poor or questionable practices.

  • Crime: Where an international crime is involved, complicity may arise where a company assisted in the perpetration of the crime, the assistance had a substantial effect on the perpetration of the crime and the company knew that its acts would assist the perpetration of the crime even if it did not intend for the crime to be committed.

  • State-owned enterprises: State-owned enterprises should be aware that because they are part of the state, they may have direct responsibilities under international human rights law.

Possible Actions by Business

An effective human rights policy and conducting appropriate human rights due diligence will help companies address (though will not eliminate) the risk of being implicated in human rights violations, by showing that they took every reasonable step to avoid involvement. Companies may wish to consider the following:

  • Has the company made a human rights assessment of the situation in countries where it does, or intends to do, business so as to identify the risk of involvement in human rights abuses and the company's potential impact on the situation?

  • Does the company have explicit policies that protect the human rights of workers in its direct employment and throughout its supply chain?

  • Has the company established a monitoring/tracking system to ensure that its human rights policies are being implemented?

  • Does the company actively engage in open dialogue with stakeholder groups, including civil society organizations?

  • Does the company utilize its leverage over the actor committing the abuse? If the company does not have sufficient leverage, is there a way to increase this leverage (e.g. through capacity building or other incentives or by collaborating with other actors)?

  • Does the company have an explicit policy to ensure that its security arrangements do not contribute to human rights violations? This applies whether it provides its own security, contracts it to others or in the case where security is supplied by the State.

  • Ramifications of ending a business relationship, given the potential adverse human rights impacts of doing so.

Actions that may be particularly helpful in avoiding complicity include:

  • ...respect international guidelines and standards for the use of force (e.g. the UN Basic Principles on the Use of Force and Firearms by Law Enforcement Officials and the UN Code of Conduct for Law Enforcement Officials);

  • ...if financial or material support is provided to security forces, establish clear safeguards to ensure that these are not then used to violate human rights and make clear in any agreements with security forces that the business will not condone any violation of international human rights laws;

  • ...privately and publicly condemn systematic and continuous human rights abuses;

  • ...continually consult within and outside the company with relevant stakeholders, as part of a human rights due diligence process, during both pre-investment and post-investment stages; 

  • ...raise awareness within the company of known human rights issues within the company’s sphere of influence;

  • ...identify those functions within the firm that are most at risk of becoming linked to human rights abuses, possibly even at the pre-investment/project exploration and planning stage, and where there might be opportunities to advance human rights;

  • ...conduct a human rights impact assessment consisting of an analysis of the functions of a proposed investment and the possible human rights impacts (intended and unintended) they may have on the community or region; and

  • ...identify internal ‘functional risks’ in the post-investment situations. This may involve looking at such functions as purchasing, logistics, government relations, human resource management, HSE (health, safety and environment), sales and marketing.

For full text: http://www.unglobalcompact.org/AboutTheGC/TheTenPrinciples/Principle2.html

 

Labor

Global Compact: Labor

(Taken from UN Global Compact web site.)

Principle 3

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

Principle 4

The elimination of all forms of forced and compulsory labor;

Principle 5

The effective abolition of child labor; and

Principle 5

Eliminate discrimination in respect of employment and occupation.

The Origin of the Labor Principles

The four labor principles of the Global Compact are taken from the International Labor Organization's Declaration on Fundamental Principles and Rights at Work. This Declaration was adopted in 1998 by the International Labor Conference, a yearly tripartite meeting that brings together governments, employers and workers from 177 countries. The Declaration calls upon all ILO Member States to apply the principles in line with the original intent of the core Conventions on which it is based. Consensus now exists that all countries, regardless of level of economic development, cultural values, or ratifications of the relevant ILO Conventions, have an obligation to respect, promote, and realize these fundamental principles and rights. At the G8 Meeting in Evian, France, in 2003, the leaders of the industrialized world encouraged companies to work with other parties to implement the Declaration.

The Principles and Rights identified in the ILO Declaration comprise the labor portion of the Global Compact. They are:

  • to promote and realize in good faith the right of workers and employers to freedom of association and the effective recognition of the right to collective bargaining;

  • to work towards the elimination of all forms of forced or compulsory labor;

  • the effective abolition of child labor; and

  • The elimination of discrimination in respect of employment and occupation.

The aim of the ILO is to harness the support of the business community for these principles through the Global Compact. The labor principles deal with fundamental principles in the workplace and the challenge for business is to take these universally accepted values and apply them at the company level.

The Global Compact and the International Labor Organization

ILO participation in the Global Compact focuses on the promotion of the four labor principles of the initiative, which derive directly from the ILO Declaration on fundamental principles and rights at work. The Global Compact asks businesses to:

  • respect freedom of association and recognize the right to collective bargaining

  • support the elimination of all forms of forced and compulsory labor

  • join the fight for the effective abolition of child labor

  • Eliminate discrimination in respect of employment and occupation.

The ILO’s tripartite structure and the importance it attaches to social dialogue, play a key role in advancing the Global Compact’s purpose of bringing together the business world with labor, the UN system and other interested organizations, to have a transparent dialogue and develop partnerships.
Since the launch of the Global Compact in 1999, the ILO has been actively collaborating with the GC office in New York and the other UN agencies involved - the Office of the High Commissioner for Human Rights (OHCHR), the United Nations Environment Program (UNEP); the United Nations Development Program (UNDP); and the United Nations Industrial Development Organization (UNIDO) - for the realization of its key activities.

Outreach activities and development of networks

  • The ILO has participated in the organization of Global Compact launching and promotional events in different countries in close collaboration with local and international organizations of employers and other UN agencies.

  • The ILO is implementing a project funded by the Italian government that includes as an important aim, the development of Global Compact networks in Italy, Tunisia, Morocco and Albania.

  • On 24 June 2004, the Director General of the ILO attended the Global Compact Leaders’ Summit in New York to participate in the discussions about the initiative’s impact and future. The meeting brought together more than 400 corporate executives, government officials, civil society leaders and the UN agencies involved. The UN Secretary General, Kofi Annan, announced the addition of a tenth principle to the Compact: “business should work against corruption in all its forms, including extortion and bribery”.

Policy dialogues

In May 2003, the GC policy dialogue on HIV/AIDS took place at the ILO headquarters in Geneva. The meeting explored the impact of HIV/AIDS on business, labor and development and empowered all actors to contribute to prevention, awareness-raising, care, support and treatment. It also provided an opportunity to promote the use of the ILO Code of Practice on HIV/AIDS and the world of work and its accompanying manual to guide implementation. The dissemination of examples of good practice and partnership projects in this area was encouraged. This dialogue led the International Organization of Employers and the International Confederation of Free Trade Unions to adopt a historic agreement to cooperate in the global fight against HIV/AIDS.

Learning

Most of the ILO’s work with regard to the GC has focused on learning.

  • The ILO has developed a Management Training Program aimed at developing the competencies of managers to implement and realize the four fundamental principles and rights at work. The training materials were developed in close consultation with the employers’ and workers’ organizations and have been tested in many countries since 2003.

  • The ILO, together with UNEP, produced a resource package on the GC in the form of a CD-ROM, which contains case studies on each of the GC principles, as well as resources for companies, for local networks and for training and management schools.

  • The ILO also took active part in the preparation of the source book “Raising the Bar: Creating value with the United Nations Global Compact”, which contains tools, techniques, case studies, information and resources to help participant companies of all sizes and from all industries and regions implement the GC principles.

Collective Bargaining

Global Compact Principle 3: Collective Bargaining

(From the UN Global Compact web site.)

"Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining."

What does Freedom of Association mean?

Freedom of association implies a respect for the right of all employers and all workers to freely and voluntarily establish and join organizations of their own choice. These organizations have the right to carry out their activities in full freedom and without interference, including the promotion and defense of their occupational interests. Employers have the right to freedom of expression provided that its exercise does not infringe a worker's right to make a free decision on whether or not to join a trade union. Employers should not interfere in an employee's decision to associate, or discriminate against the employee or their representative. "Association" includes activities of rule formation, administration and the election of representatives. The freedom to associate involves employers, unions and workers representatives freely discussing issues at work in order to reach agreements that are jointly acceptable. These freedoms also allow for industrial action to be taken by workers (and organizations) in defense of their economic and social interests.

What does Collective Bargaining mean?

Collective bargaining refers to a voluntary process or activity through which employees and workers discuss and negotiate their relations, in particular terms and conditions of work and the regulation of relations between employers, workers and their organizations. Participants in collective bargaining include employers themselves or their organizations, and trade unions or, in their absence, representatives freely designated by the workers. An important part of the effective recognition of the right to collective bargaining is the "principle of good faith". This is important for the maintenance of the harmonious development of labor relations. This principle implies that the social partners work together and make every effort to reach an agreement through genuine and constructive negotiations, and that both parties avoid unjustified delays in negotiations. The principle of good faith does not imply a pre-defined level of bargaining or require compulsory bargaining on the part of employers or workers and their organizations.

Why are Freedom of Association and Collective Bargaining important?

Businesses face many uncertainties in this rapidly changing global market. Establishing genuine dialogue with freely chosen workers' representatives enables both workers and employers to understand each other's problems better and find ways to resolve them. Freedom of association and the exercise of collective bargaining provide opportunities for constructive rather than confrontational dialogue. This harnesses energy to focus on solutions that result in benefits to the enterprise, its stakeholders, and society at large and is often more flexible and effective than state regulation. It can thus help in anticipating potential problems and advance peaceful mechanisms for dealing with them. A number of studies indicate that the dynamic resulting from freedom of association can set in motion a "decent work" cycle that increases productivity, incomes and profits for all concerned. The guarantee of representation through a "voice at work" facilitates local responses to a globalized economy, and serves as a basis for sustainable growth and secure investment returns. The results help bridge the widening representational gap in global work arrangements, and facilitate the input of those people, regions and economic sectors — especially women and informal sector workers — who otherwise may be excluded from participating in processes that build decent work environments.

Strategies for Business

The Global Compact does not require that employers change their industrial relations frameworks and expresses no view on whether any particular national law meets international standards. However, as organizations such as the International Organization for Employers have indicated, some high performance companies have recognized the value of using dialogue and negotiation to achieve competitive outcomes.

What companies can do:

In the workplace

  • Ensure that all workers are able to form and join a trade union of their choice without fear of intimidation or reprisal, in accordance with national law.

  • Put in place non-discriminatory policies and procedures with respect to trade union organization, union membership and activity in such areas as applications for employment and decisions on advancement, dismissal or transfer.

  • Do not interfere with the activities of worker representatives while they carry out their functions in ways that are not disruptive to regular company operations. Practices such as allowing the collection of union dues on company premises, posting of trade union notices, distribution of union documents, and provision of office space, have proven to help build good relations between management and workers, provided that they are not used as a way for the company to exercise indirect control.

  • Provide workers’ representatives with appropriate facilities to assist in the development of effective collective agreement.

At the bargaining table

  • Recognize representative organizations for the purpose of collective bargaining.

  • Use collective bargaining as a constructive forum for addressing working conditions and terms of employment and relations between employers and workers, or their respective organizations.

  • Address any problem-solving or other needs of interest to workers and management, including restructuring and training, redundancy procedures, safety and health issues, grievance and dispute settlement procedures, disciplinary rules, and family and community welfare.

  • Provide information needed for meaningful bargaining.

  • Balance dealings with the most representative trade union to ensure the viability of smaller organizations to continue to represent their members.

In the community of operation

  • Preserve the confidentiality of the trade unions and leaders in countries where the government does not permit respect for human rights (including rights at work) or does not provide a proper legal and institutional framework for industrial relations and collective bargaining.

  • Support the establishment and functioning of local/national employers' organizations, and trade unions.

  • Inform the local community, media and public authorities of your company's endorsement of the UN Global Compact and its intention to respect its provisions, including those on fundamental workers' rights.

No Forced or Compulsory Labor

Global Compact Principle 4: Elimination of Forced and Compulsory Labor

(Taken from UN Global Compact web site.)

"Businesses should uphold the elimination of all forms of forced and compulsory labor."

What does Forced and Compulsory Labor mean?

Forced or compulsory labor is any work or service that is exacted from any person under the menace of any penalty, and for which that person has not offered himself or herself voluntarily. Providing wages or other compensation to a worker does not necessarily indicate that the labor is not forced or compulsory. By right, labor should be freely given and employees should be free to leave in accordance with established rules.

Why should companies be concerned about Forced and Compulsory Labor?

Forced labor does not only constitute a violation of fundamental human rights, but it also deprives societies of the opportunity to develop skills and human resources, and to educate children for the labor markets of tomorrow. So the debilitating consequences of forced labor are not only felt by individuals, in particular children, but also by society and the economy at large. By retarding the proper development of human resources, forced labor lowers the level of productivity and results in less secure investments and slower economic growth. The loss of income due to disruption of regular jobs or income-generating activities reduces the lifetime earnings of potential breadwinners and is thus likely to lead to the loss of food, shelter, and health care of whole families.

While companies operating legally do not normally employ such practices, forced labor can become associated with enterprises through their business links with others, including contractors and suppliers. As a result, all employers should be aware of the forms and causes of forced labor, as well as how it might occur in different industries.

Both the State and private agents have been implicated in the use of forced labor. State-imposed labor includes compulsory participation in public works, and the imposition of forced labor for ideological or political purposes. Forced labor exploitation by private agents can take the forms of slavery, bonded labor or debt-bondage, and other types of coercion. Employers need to be aware that forced labor can take a number of forms. Situations of forced labor are generally characterized by a lack of consent to work (the route into forced labor) and the menace of a penalty (the means of keeping someone in forced labor).

  • Slavery (e.g. by birth/ descent into “slave” or bonded status)

  • Bonded labor or debt bondage , an ancient practice still used in some countries where both adults and children are obliged to work in slave-like conditions to repay debts of their own or their parents or relatives

  • Child labor in particularly abusive conditions where the child has no choice about whether to work

Physical abduction or kidnapping

  • Sale of a person into the ownership of another

  • Physical confinement in the work location (in prison or in private detention)

  • The work or service of prisoners if they are hired to or placed at the disposal of private individuals, companies or associations involuntarily and without supervision of public authorities

  • Labor for development purposes required by the authorities, for instance to assist in construction, agriculture, and other public works

  • Work required to punish opinion or expression of views ideologically opposed to the established political, social or economic system

  • Exploitative practices such as forced overtime or

  • The lodging of deposits (financial or personal documents) for employment

  • Physical or psychological (including sexual) violence as a means of keeping someone in forced labor (direct or as a threat against worker, family, or close associates)

  • Full or partial restrictions on freedom of movement

  • Withholding and non-payment of wages (linked to manipulated debt payments, exploitation, and other forms of extortion)

Deprivation of food, shelter or other necessities

  • Deception or false promises about terms and types of work

  • Induced indebtedness (by falsification of accounts, charging inflated prices, reduced value of goods or services produced, excessive interest charges, etc.), and

  • Threats to denounce workers in an irregular situation to the authorities

Strategies for Business

Organizations need to determine whether forced labor is a problem within their business sector. It is important to mention that, although high profile cases are typically reported as occurring in developing countries, forced labor is also present in developed countries and should be viewed as a global issue. Understanding the causes of forced labor is the first step towards taking action against forced labor. Where forced labor is identified, the concerned individuals should be removed from work and facilities and services should be provided to enable them to make adequate alternatives. In general, a comprehensive set of interventions, including both workplace and community actions, is needed to help ensure the eradication of forced labor practices.

What companies can do:

In the workplace

  • Have a clear policy not to use, be complicit in, or benefit from forced labor.

  • Where adherence to forced labor provisions of national laws and regulations is insufficient, take account of international standards.

  • Ensure that all company officials have a full understanding of what forced labor is.

  • Make available employment contracts to all employees stating the terms and conditions of service, the voluntary nature of employment, the freedom to leave (including the appropriate procedures) and any penalties that may be associated with a departure or cessation of work.

  • Write employment contracts in languages easily understood by workers, indicating the scope of and procedures for leaving the job.

  • Be aware of countries, regions, industries, sectors, or economic activities where forced labor is more likely to be a practice.

  • In planning and conducting business operations, ensure that workers in debt bondage or in other forms of forced labor are not engaged and, where found, provide for the removal of such workers from the workplace with adequate services and provision of viable alternatives.

  • Institute policies and procedures to prohibit the requirement that workers lodge financial deposits with the company.

  • If hiring prisoners for work in or outside prisons, ensure that their terms and conditions of work are similar to those of a free employment relationship in the sector involved, and that they have given their consent to work for a private employer.

  • Ensure that large scale development operations do not rely on forced labor in any phase.

  • Carefully monitor supply chains and subcontracting arrangements.

In the community of operation

  • Establish or participate in a task force or committee on forced labor in your representative employers’ organization at the local, state or national level.

  • Work in partnership with other companies, sectoral associations and employers’ organizations to develop an industry-wide approach to address the issue, and build bridges with trade unions, law enforcement authorities, labor inspectorates and others.

  • Support and help design education, vocational training, and counseling programs for children removed from situations of forced labor.

  • Help develop skills training and income-generating alternatives, including micro-credit financing programs, for adults removed from situations of forced labor.

  • Encourage supplementary health and nutrition programs for workers removed from dangerous forced labor, and provide medical care to assist those affected by occupational diseases and malnutrition as a result of their involuntary work.

  • Where use is made of prison labor, ensure that the terms and conditions of work are beneficial to the prisoners (particularly with regard to occupational health and safety), and that they have given consent to work for a private employer.

 

No Child Labor

Global Compact Principle 5: No Child Labor

(Taken from UN Global Compact web site.)

"Businesses should uphold the effective abolition of child labor."

What is Child Labor?

The term “child labor” should not be confused with “youth employment” or “student work.”  Child labor is a form of exploitation that is a violation of a human right. and  it is recognized and defined by international instruments.  It is the declared policy of the international community and of almost all governments to abolish child labor.

While the term "child" covers all girls and boys under 18 years of age, not all under 18’s must be removed from work: the basic rules under international standards distinguish what constitutes acceptable or unacceptable work for children at different ages and stages of their development. ILO conventions (Minimum Age Convention No. 138 and the Worst Forms of Child Labor Convention No. 182) provide the framework for national law to prescribe a minimum age for admission to employment or work that must not be less than the age for completing compulsory schooling, and in any case not less than 15 years. Lower ages are permitted for transitional periods – in countries where economic and educational facilities are less well-developed the minimum age for regular work generally is 14 years, and 12 years for “light work”. The minimum age for hazardous work is higher, at 18 years for all countries.

 

Minimum Age for Admission to Employment or Work

Developed countries

Developing countries

Light Work

13 Years

Light Work

12 Years

Regular Work

15 Years

Regular Work

14 Years

Hazardous Work

18 Years

Hazardous Work

18 Years

ILO Convention No. 182 requires governments to give priority to eliminating the worst forms of child labor undertaken by all children under the age of 18 years. They are defined as:

  • All forms of slavery — including the trafficking of children, debt bondage, forced and compulsory labor, and the use of children in armed conflict.

  • The use, procuring or offering of a child for prostitution, for the production of pornography or for pornographic purposes.

  • The use, procuring or offering of a child for illicit activities, in particular the production and trafficking of drugs.

  • Work which is likely to harm the health, safety or morals of the child as a consequence of its nature or the circumstances under which it is carried out.

Convention 182 is explicitly complementary to Convention 138 and must not be used to justify other forms of child labor.

 

Why should companies be concerned about Child Labor?

Child labor is damaging to a child’s physical, social, mental, psychological and spiritual development because it is work performed at too early an age. Child labor deprives children of their childhood and their dignity. They are deprived of an education and may be separated from their families. Children who do not complete their primary education are likely to remain illiterate and never acquire the skills needed to get a job and contribute to the development of a modern economy. Consequently, child labor results in under-skilled, unqualified workers and jeopardizes future improvements of skills in the workforce.

Children have the same human rights as adults. But by virtue of their age and the fact that they are still growing and gaining knowledge and experience, they have some distinct rights as children. These rights include protection from economic exploitation and work that may be dangerous to their health, safety or morals and that may hinder their development or impede their access to education. The complexity of the issue of child labor means that companies need to address the issue sensitively, and must not take action which may force working children into more exploitative forms of work. Nevertheless, as Principle 5 states, the goal of all companies should be the abolition of child labor within their sphere of influence.

Association with child labor will likely damage a company's reputation. This is especially true in the case of transnational companies who have extensive supply and service chains, where the economic exploitation of children, even by a business partner, can damage a brand image and have strong repercussions on profit and stock value.

Strategies for Business

Developing an awareness and understanding of the causes and consequences of child labor is the first step that a company can take toward action against child labor. This means identifying the issues and determining whether or not child labor is a problem within the business. Companies sourcing in specific industry sectors with geographically distant supply chains need to be particularly vigilant. However, child labor also exists less visibly in developed, industrialized countries where it occurs, for example, in some immigrant communities.

Discovering if child labor is being used can be difficult, for example in the case where documents or records are absent, and companies may consider using local non-governmental organizations, development organizations or UN agencies to assist in this process.

If an occurrence of child labor is identified, the children need to be removed from the workplace and provided with viable alternatives. These measures often include enrolling the children in schools and offering income-generating alternatives for the parents or above-working age members of the family. Companies need to be aware that, without support, children may be forced into worse circumstances such as prostitution, and that, in some instances where children are the sole providers of income, their immediate removal from work may exacerbate rather than relieve the hardship.

What companies can do:

In the workplace

  • Be aware of countries, regions, sectors, economic activities where there is a greater likelihood of child labor and respond accordingly with policies and procedures.

  • Adhere to minimum age provisions of national labor laws and regulations and, where national law is insufficient, take account of international standards.

  • Use adequate and verifiable mechanisms for age verification in recruitment procedures.

  • When children below the legal working age are found in the workplace, take measures to remove them from work.

  • Help to seek viable alternatives and access to adequate services for the children and their families.

  • Exercise influence on subcontractors, suppliers and other business affiliates to combat child labor.

  • Develop and implement mechanisms to detect child labor.

  • Where wages are not determined collectively or by minimum wage regulation, take measures to ensure that wages paid to adults take into account the needs of both them and their families.

In the community of operation

  • Work in partnership with other companies, sectoral associations and employers’ organizations to develop an industry-wide approach to address the issue, and build bridges with trade unions, law enforcement authorities, labor inspectorates and others.

  • Establish or participate in a task force or committee on child labor in your representative employers’ organization at the local, state or national level.

  • Support and help design educational/ vocational training, and counseling programs for working children, and skills training for parents of working children.

  • Encourage and assist in launching supplementary health and nutrition programs for children removed from dangerous work, and provide medical care to cure children of occupational diseases and malnutrition.

No Discrimination

Global Compact Principle 6: No Discrimination

(Taken from UN Global Compact web site.)

"Businesses should uphold the elimination of discrimination in respect of employment and occupation."

What does Discrimination in Respect of Employment and Occupation mean?

Discrimination in employment and occupation means treating people differently or less favorably because of characteristics that are not related to their merit or the inherent requirements of the job. In national law, these characteristics commonly include: race, color, sex, religion, political opinion, national extraction, social origin, age, disability, HIV/AIDS status, trade union membership, and sexual orientation.

However, Principle 6 allows companies to consider additional grounds where discrimination in employment and occupation may occur.

Discrimination can arise in a variety of work-related activities. These include access to employment, to particular occupations, promotions and to training and vocational guidance. Moreover, it can occur with respect to the terms and conditions of the employment, such as:

  • Recruitment

  • Remuneration

  • Hours of work and rest/Paid holidays

  • Maternity protection

  • Security of tenure

  • Job assignments

  • Performance assessment and advancement

  • Training and opportunities

  • Job prospects

  • Social security

  • Occupational safety and health

In some countries, additional issues for discrimination in the workplace, such as age and HIV status, are growing in importance. It is also important to realize that discrimination at work arises in a range of settings, and can be a problem in a rural agricultural business or in a high technology city-based business.

Non-discrimination means simply that employees are selected on the basis of their ability to do the job and that there is no distinction, exclusion or preference made on other grounds. Employees who experience discrimination at work are denied opportunities and have their basic human rights infringed. This affects the individual concerned and negatively influences the greater contribution that they might make to society.

Direct and Indirect Discrimination

Discrimination can take many forms, both in terms of gaining access to employment and in the treatment of employees once they are in work.

It may be direct, such as when laws, rules or practices explicitly cite a reason such as sex or race to deny equal opportunity. Most commonly, however, discrimination is indirect and arises where rules or practices have the appearance of neutrality but in fact lead to exclusions. This indirect discrimination often exists informally in attitudes and practices, which if unchallenged can perpetuate in organizations. Discrimination may also have cultural roots that demand more specific approaches.

Why should companies be concerned about Discrimination?

From a business point of view discrimination does not make sense. It leads to social tensions that are potentially disruptive to the business environment within the company and in society. A company that uses discriminatory practices in employment and occupation denies itself access to talents from a wider pool of workers, and thus skills and competencies. The hurt and resentment generated by discrimination will affect the performance of individuals and teams in the company. Increasingly, Young graduates and new employees also increasingly judge companies on the basis of their social and ethical policies at work. Discriminatory practices result in missed opportunities for development of skills and infrastructure to strengthen competitiveness in the national and global economy. Finally, discrimination isolates an employer from the wider community and can damage a company's reputation, potentially affecting profits and stock value.

Strategies for Business

First and foremost, companies need to respect all relevant local and national laws. Any company introducing measures to promote equality needs to be aware of the diversities of language, culture and family circumstance that may exist in the workforce. Managers and supervisory staff, in particular, should seek to develop an understanding of the different types of discrimination and how it can affect the workforce. For example, women constitute a growing proportion of the world's workforce, but consistently earn less than their male counterparts. Disabled employees may have particular needs that should be met, where reasonable, in order to ensure that they have the same opportunities (e.g. for training and advancement) as their peers.

What companies can do:

Companies can put in place specific activities to address the question of discrimination and eliminate it within the workplace. Some examples are:

In the workplace

  • Institute company policies and procedures which make qualifications, skill and experience the basis for the recruitment, placement, training and advancement of staff at all levels.

  • Assign responsibility for equal employment issues at a high level, issue clear company-wide policies and procedures to guide equal employment practices, and link advancement to desired performance in this area.

  • Work on a case by case basis to evaluate whether a distinction is an inherent requirement of a job, and avoid application of job requirements that would systematically disadvantage certain groups.

  • Keep up-to-date records on recruitment, training and promotion that provide a transparent view of opportunities for employees and their progression within the organization.

  • Where discrimination is identified, develop grievance procedures to address complaints, handle appeals and provide recourse for employees.

  • Be aware of formal structures and informal cultural issues that can prevent employees from raising concerns and grievances.

  • Provide staff training on non-discrimination policies and practices, including disability awareness.  Reasonably adjust the physical environment to ensure health and safety for employees, customers and other visitors with disabilities.

  • Establish programs to promote access to skills development training and to particular occupations.

In the community of operation

  • Encourage and support efforts to build a climate of tolerance and equal access to opportunities for occupational development such as adult education programs and health and childcare services.

  • In foreign operations, companies may need to accommodate cultural traditions and work with representatives of workers and governmental authorities to ensure equal access to employment by women and minorities.

Environment

Global Compact Principals 7-9: Environment

Principle 7:

Business should support a precautionary approach to environmental challenges;

Principle 8:

Undertake initiatives to promote greater environmental responsibility; and

Principle 9:

Encourage the development and diffusion of environmentally friendly technologies.

The Origin of the Environment Principles

Internationally co-ordinated work on the environment has been led by the United Nations Environment Program (UNEP), since its inception in 1973. UNEP has provided leadership and encouraged partnerships to care for the environment, for example, through Multilateral Environmental Agreements (MEAs) which have addressed issues such as species loss and the need for conservation at a global and regional level. UNEP has created much of the international environmental law in use today.

The three environmental principles of the Global Compact are drawn from a Declaration of Principles and an International Action Plan (Agenda 21) that emerged from the United Nations Conference on Environment and Development (the Earth Summit) held in Rio de Janero in 1992. Chapter 30 of Agenda 21, identified that the policies and operations of business and industry can play a major role in reducing impacts on resource use and the environment. In particular, business can contribute through the promotion of cleaner production and responsible entrepreneurship.

Key Documents

  • The Rio Declaration - a statement of 27 principles upon which nations agreed to base their actions in dealing with environmental and development issues. The Rio Declaration built on the previous Declaration of the United Nations Conference on the Human Environment which was adopted in Stockholm in 1972. The Stockholm conference was the first global environmental meeting of governments, which stated that long-term economic progress needs to be linked with environmental protection.

  • Agenda 21 - a 40 chapter, action blueprint on specific issues relating to sustainable development that emerged from the Rio Summit. Agenda 21 explained that population, consumption and technology were the primary driving forces of environmental change and for the first time, at an international level, explicitly linked the need for development and poverty eradication with progress towards sustainable development

  • The 'Brundtland Report', 'Our Common Future' which was produced in 1987 by the World Commission on Environment and Development, also laid the foundations for the Environment Principles. This landmark document highlighted that people needed to change the way they lived and did business or face unacceptable levels of human suffering and environmental damage.

The environmental principles of the Global Compact provide an entry point for business to address the key environmental challenges. In particular, the principles direct activity to areas such as research, innovation, co-operation, education, and self-regulation that can positively address the significant environmental degradation, and damage to the planet's life support systems, brought by human activity.

Key Environmental Challenges

  • loss of biodiversity and long-term damage to ecosystems

  • pollution of the atmosphere and the consequences of climate change

  • damage to aquatic ecosystems

  • land degradation

  • the impacts of chemicals use and disposal

  • waste production

  • depletion of non-renewable resources

Useful Information

  • The United Nations Environment Program (UNEP) provides one entry point to the UN's work on the environment - www.unep.org

  • UNEP's Division of Technology Industry and Economics (DTIE) develops voluntary initiatives and partnerships with business leaders and a range of organizations focused on environmental protections, efficient resources use and innovation - http://www.uneptie.org

  • A full text version of Agenda 21 may be viewed at - http://www.unep.org

  • The Principles of the Rio Declaration are available at - www.unep.org

  • The World Business Council for Sustainable Development (WBCSD) is an international business network developing links between business, government and non-governmental organizations on sustainable development issues - www.wbcsd.ch

  • Business for Social Responsibility is an international business network, embracing companies of all sizes, working across a broad range of issues that include environmentally sustainable development - http://www.bsr.org

  • The World Resources Institute (WRI) is a think tank that also promotes practical ways to protect the earth - http://www.wri.org

  • The World Conservation Union (IUCN) is an international body founded in 1948 to influence, encourage and assist societies in the goal of nature conservation - www.iucn.org

  • The Coalition of Environmentally Responsible Economies (CERES) is a non-profit membership organization of investors, and various interest groups that developed 10 principles of environmentally responsible behavior - http://www.ceres.org

  • The Greening of Industry is an international network of academic research and policy analysis focused on the relationship between industry, society and the environment.

Environmental Challenges

Global Compact Principle 7: Environmental Challenges

(Taken from the UN Global Compact web site.)

"Businesses should support a precautionary approach to environmental challenges."

What is the precautionary approach?

Introducing the precautionary approach, Principle 15 of the 1992 Rio Declaration states that “where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation”.

Precaution involves the systematic application of risk assessment (hazard identification, hazard characterization, appraisal of exposure and risk characterization), risk management and risk communication. When there is reasonable suspicion of harm and decision-makers need to apply precaution, they have to consider the degree of uncertainty that appears from scientific evaluation. Deciding on the "acceptable" level of risk involves not only scientific-technological evaluation and economic cost-benefit analysis, but also political considerations such as acceptability to the public. From a public policy view, precaution is applied as long as scientific information is incomplete or inconclusive and the associated risk is still considered too high to be imposed on society. The level of risk considered typically relates to standards of environment, health and safety.

Why is the precautionary approach important for business?

The key element of a precautionary approach, from a business perspective, is the idea of prevention rather than cure. In other words, it is more cost-effective to take early action to ensure that irreversible environmental damage does not occur. Companies should consider the following:

  • While it is true that preventing environmental damage entails both opportunity — and implementation — costs, remediation environmental harm after it has occurred can cost much more, e.g. for treatment costs, or in terms of company image.

  • Investing in production methods that are not sustainable (i.e. that deplete resources and degrade the environment) has a lower, long-term return than investing in sustainable operations. In turn, improving environmental performance means less financial risk, an important consideration for insurers.

  • Research and development related to more environmentally friendly products can have significant long-term benefits

What steps could companies take in the application of the precautionary approach?

Issues for the company to deal with under this approach include providing better information to the consumer, communicating potential risk for the consumer, the public or the environment. It also includes obtaining prior approval before certain products, deemed to be potentially hazardous, may be placed on the market.

Steps that the company could take in the application of this approach include the following:

  • Develop a code of conduct or practice for its operations and products that confirms commitment to care for health and the environment.

  • Develop a company guideline on the consistent application of the approach throughout the company.

  • Create a managerial committee or steering group that oversees the company application of precaution, in particular risk management in sensitive issue areas.

  • Establish two-way communication with stakeholders, in a pro-active, early stage and transparent manner, to ensure effective communication of information about uncertainties and potential risks and to deal with related enquiries and complaints. Use mechanisms such as multi-stakeholder meetings, workshop discussions, focus groups, public polls combined with use of website and printed media.

  • Support scientific research, including independent and public research, on the issue involved, working with national and international institutions concerned.

  • Join industry-wide collaborative efforts to share knowledge and deal with issues, in particular production processes and products around which high level of uncertainty, potential harm and sensitivity exist.

Environmental Responsibilities

Global Compact Principle 8: Environmental Responsibilities

(Taken from the UN Global Compact web site.)

"Businesses should undertake initiatives to promote greater environmental responsibility."

What is environmental responsibility?

In Chapter 30 of Agenda 21, the 1992 Rio Earth Summit spelled out the role of business and industry in the sustainable development agenda as: "Business and industry should increase self-regulation, guided by appropriate codes, charters and initiatives integrated into all elements of business planning and decision-making, and fostering openness and dialogue with employees and the public." 

The relevant principle in the Rio Declaration says we have the responsibility to ensure that activities on our own yard should not cause harm to the environment of our neighbors. Society also expects business to be good neighbors. Business gains its legitimacy through meeting the needs of society, and increasingly society is expressing a clear need for more environmentally sustainable practices. 

What steps could companies take to promote environmental responsibility?

Steps that the company could take to promote environmental responsibility would be the following:

  • Re-define company vision, policies and strategies to include the 'triple bottom line' of sustainable development — economic prosperity, environmental quality and social equity.

  • Develop sustainability targets and indicators (economic, environmental, and social).

  • Establish a sustainable production and consumption program with clear performance objectives to take the organization beyond compliance in the long-term.

  • Work with suppliers to improve environmental performance, extending responsibility up the product chain and down the supply chain.

  •  Adopt voluntary charters, codes of conduct or practice internally as well as through sectoral and international initiatives to confirm acceptable behavior and performance.

  • Measure, track and communicate progress in incorporating sustainability principles into business practices, including reporting against global operating standards.

  • Ensure transparency and unbiased dialogue with stakeholders.

In doing the above, the existence of appropriate management systems is crucial in helping the company to meet the organizational challenge. Key mechanisms or tools for the company to use would be (a) assessment or audit tools (such as environmental impact assessment, environmental risk assessment, technology assessment, life cycle assessment); (b) management tools (such as environmental management systems and ecodesign) and (c) communication and reporting tools (such as corporate environmental reporting and sustainability reporting). 

 

Environmental Technologies

Global Compact Principle 9: Environmental Technologies

(Taken from the UN Global Compact web site.)

"Businesses should encourage the development and diffusion of environmentally friendly technologies."

What is an environmentally friendly technology?

Environmentally sound technologies, as defined in Agenda 21, should protect the environment, are less polluting, use all resources in a more sustainable manner, recycle more of their wastes and products and handle residual wastes in a more acceptable manner than the technologies for which they were substitutes. They include a variety of cleaner production process and pollution prevention technologies as well as end-of-pipe and monitoring technologies. Moreover, they can be considered total systems including know-how, procedures, goods and services and equipment as well as organizational and managerial procedures. Where production processes that do not use resources efficiently generate residues and discharge wastes, environmentally sound technologies can be applied to reduce day-to-day operating inefficiencies, emissions of environmental contaminants, worker exposure to hazardous materials and risks of technological disasters.

What are the key benefits of developing and diffusing environmentally friendly technologies?

The key benefits of environmentally friendly technologies are the following:

  • Implementing environmentally friendly technologies helps a company reduce the use of raw materials leading to increased efficiency.

  • Technology innovation creates new business opportunities and helps increase the overall competitiveness of the company.

  • Technologies that use materials more efficiently and cleanly can be applied to most companies with long-term economic and environmental benefits.

How can business promote the use and diffusion of environmentally friendly technologies?

  • At the basic factory site or unit level, improving technology may be achieved by (i) changing the process or manufacturing technique, (ii) changing input materials, (iii) changes to the product and (iv) reusing materials on site.

Strategic level approaches to improving technology include the following:

  • Establishing a corporate or individual company policy on the use of environmentally sound technologies.

  • Making information available to stakeholders that illustrates the environmental performance and benefits of using such technologies.

  • Refocusing research and development towards ‘design for sustainability’.

  • Use of life cycle assessment (LCA) in the development of new technologies and products.

  • Employing Environmental Technology Assessments (EnTA).

  • Examining investment criteria and the sourcing policy for suppliers and contractors to ensure that tenders stipulate minimum environmental criteria.

  • Co-operating with industry partners to ensure that ‘best available technology’ is available to other organizations.

Governance: Introduction

Global Compact Principle 10: Transparency and Anti-corruption

On 24 June 2004, during the UN Global Compact Leaders Summit it was announced that the UN Global Compact henceforth includes a tenth principle against corruption. This was adopted after extensive consultations and all participants yielded overwhelming expressions of support, sending a strong worldwide signal that the private sector shares responsibility for the challenges of eliminating corruption. It also demonstrated a new willingness in the business community to play its part in the fight against corruption.

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

Corruption is now recognized to be one of the world's greatest challenges. It is a major hindrance to sustainable development, with a disproportionate impact on poor communities and is corrosive on the very fabric of society. The impact on the private sector is also considerable - it impedes economic growth, distorts competition and represents serious legal and reputational risks. Corruption is also very costly for business, with the extra financial burden estimated to add 10% or more to the costs of doing business in many parts of the world. The World Bank has stated that "bribery has become a $1 trillion industry."

The rapid development of rules of corporate governance around the world is also prompting companies to focus on anti-corruption measures as part of their mechanisms to protect their reputations and the interests of their shareholders. Their internal controls are increasingly being extended to a range of ethics and integrity issues and a growing number of investment managers are looking to these controls as evidence that the companies undertake good business practice and are well managed.

The international legal fight against corruption has gained momentum in more recent times through the Organization for Economic Co-operation and Development (OECD) Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and through the entering into force of the first globally agreed instrument, the United Nations Convention against Corruption (UNCAC) in December 2005.

There are a number of very different reasons for why businesses should combat corruption in all its forms.

The Ethical Case

Corruption is inherently wrong. It is a misuse of power and position and has a disproportionate impact on the poor and disadvantaged. It undermines the integrity of all involved and damages the fabric of the organizations to which they belong. The reality that laws making corrupt practices criminal may not always be enforced is no justification for accepting corrupt practices. To fight corruption in all its forms is simply the right thing to do.

The Business Case

There are many reasons why it is in any company's business interest to ensure that it does not engage in corrupt practices. All companies, large and small, are vulnerable and the potential for damage to them is considerable. The following are some of the key reasons for avoiding involvement in corrupt practices:

Legal risks

Regardless of what form a corrupt transaction may take, there are obvious legal risks involved. Not only are most forms of corruption illegal where it occurs, but also it is increasingly becoming illegal in a company's home country to engage in corrupt practices in another country. The principle that it is illegal to bribe foreign officials was first established in the US Foreign and Corrupt Practices Act of 1977 and since then, this principle has gained legal standing within the whole of the OECD and in a number of other countries. It is a principle that was universally recognized in 2003, through the adoption of the UN Convention against Corruption.

The enforcement of anti-corruption legislation internationally has hitherto been relatively poor, but this is slowly changing. In developing countries and emerging markets, where the opportunity for corruption has been rife because of weak law and regulation, corruption has become an issue of significant political importance and there is growing determination to act and to take those accused of corrupt practices to court. There are also a growing number of examples where developing countries with limited capacity to handle such cases have obtained outside legal assistance. To this end the OECD is playing a critical role in ensuring that its member states are developing judicial capacity to enforce the prohibition against any involvement in bribing foreign officials.

This changing environment of law, regulation and enforcement makes it harder for business managers to assess and quantify the legal risks to which corruption exposes their operations. Change brings uncertainty. Of particular significance for many large companies is the degree to which they may be responsible for agents acting on its behalf in other countries. What may yesterday have been considered an independent agent - for whom the principal company carried no responsibilities - may today be someone whose actions the principal company indeed can be legally accountable for.

Reputational risks

Based on the experience of recent years, companies whose policies and practices fail to meet high ethical standards, or that take a relaxed attitude to compliance with laws, are exposed to serious reputational risks. Often it is enough to be accused of malpractice for a reputation to be damaged even if a court subsequently determines that they have not been involved in corrupt practices. It is of critical importance for a company to be able to quickly quash any unfounded allegations by demonstrating that it acts in a transparent manner and has in place policies and procedures designed to prevent corruption. The argument that although what they may have done may have been against the law or international standards, it was simply the way business was done in a particular country is not an acceptable excuse. Nor is it good enough to claim that other companies and competitors have engaged in similar practices.

Financial costs

There is now clear evidence that in many countries corruption adds upwards of 10 per cent to the cost of doing business and that corruption adds as much as 25 per cent to the cost of public procurement. This undermines business performance and diverts public resources from legitimate sustainable development.

'Known as clean' and repeat demands

There is growing evidence that a company is less likely to be under pressure to pay bribes if it has not done so in the past. Once a bribe is paid, repeat demands are possible and the amounts demanded are likely to rise. Conversely a company which takes a firm and principled stand against all forms of corruption will become known for this and the risk of its employees being exposed to demands will lessen. For example, a business manager representing a large international company in China recently confirmed that despite pressures to do otherwise, his company did not accept any kinds of corruption: 'Zero tolerance is the only practical solution'.

Blackmail, no recourse and security risks

By engaging in corrupt practices, company managers expose themselves to blackmail. Consequently the security of staff, plant and other assets are put at risk.

'The one who cheats will be cheated against'

If a company engages in or tolerates corrupt practice, it will soon be widely known, both internally and externally. Unethical behavior erodes staff loyalty to the company and it can be difficult for staff to see why high standards should be applied within a company when it does not apply in the company's external relations. Internal trust and confidence is then eroded.

Companies have a vested interest in sustainable social, economic and environmental development

It is now clear that corruption has played a major part in undermining the world's social, economic and environmental development. Resources have been diverted to improper use and the quality of services and materials used for development seriously compromised. The impact on poorer communities struggling to improve their lives has been devastating, in many cases undermining the very fabric of society. It has led to environmental mismanagement, undermining labor standards and has restricted access to basic human rights. Business has a vested interest in social stability and in the economic growth of local communities. It has therefore suffered, albeit indirectly, from the impact of lost opportunities to extend markets and supply chains. The business community can and should play its part in making corruption unacceptable. It is important to recognize that corruption diverts resources from their proper use. Financial resources that were intended for local development may, as a result of corruption, end up in foreign bank accounts instead of being used for local purchasing and the stimulation of local economies. At the same time it distorts competition and creates gross inefficiencies in both the public and private sectors. In most cases when corruption occurs, the services or products being purchased are inferior to what had been expected or contracted for. The long-term sustainability of business depends on free and fair competition. Corrupt practices also accompany and facilitate drug dealing and organized crime. Money laundering and illicit international money transfers are used as support mechanisms for international terrorism. Global businesses have to be constantly vigilant to avoid being associated with these major international challenges.

Governance

Global Compact Principle 10: Transparency and Anti-corruption

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

Origin of the 10th principle

On 24 June 2004, during the UN Global Compact Leaders Summit it was announced that the UN Global Compact henceforth includes a tenth principle against corruption. This was adopted after extensive consultations and all participants yielded overwhelming expressions of support, sending a strong worldwide signal that the private sector shares responsibility for the challenges of eliminating corruption. It also demonstrated a new willingness in the business community to play its part in the fight against corruption.

Underlying legal instrument

With the adoption of the United Nations Convention against Corruption in Merida, Mexico in December 2003, an important global tool to fight corruption was introduced. The Convention is the underlying legal instrument for the 10th principle against corruption and entered into force on 14 December 2005.

Objectives of the 10th principle

The adoption of the tenth principle commits UN Global Compact participants not only to avoid bribery, extortion and other forms of corruption, but also to develop policies and concrete programs to address corruption. Companies are challenged to join governments, UN agencies and civil society to realize a more transparent global economy.

How to define corruption?

Corruption can take many forms that vary in degree from the minor use of influence to institutionalized bribery. Transparency International's definition of corruption is "the abuse of entrusted power for private gain". This can mean not only financial gain but also non-financial advantages.

What is meant by extortion?

The OECD Guidelines for Multinational Enterprises define extortion in the following way: "The solicitation of bribes is the act of asking or enticing another to commit bribery. It becomes extortion when this demand is accompanied by threats that endanger the personal integrity or the life of the private actors involved."

... And what about bribery?

Transparency International's Business Principles for Countering Bribery define "bribery" in the following way: "Bribery: An offer or receipt of any gift, loan, fee, reward or other advantage to or from any person as an inducement to do something which is dishonest, illegal or a breach of trust, in the conduct of the enterprise's business."

Practical steps to fight corruption

The UN Global Compact suggests to participants to consider the following three elements when fighting corruption and implementing the 10th principle.

  1. Internal: As a first and basic step, introduce anti-corruption policies and programs within their organizations and their business operations;

  2. External: Report on the work against corruption in the annual Communication on Progress; and share experiences and best practices through the submission of examples and case stories;

  3. Collective: Join forces with industry peers and with other stakeholders