Multinationals put on a human face

Stopping child labour is among ten principles under the Global Compact Keystone

The bosses of some of the world’s biggest companies have promised to improve labour and environmental standards, at the end of a summit in New York.

Switzerland described the “Global Compact” meeting as a success but NGOs say that without legally binding commitments, the promises amount to little more than words.

Bosses from over 400 multinationals signalled their support for the Compact – a pact between governments and the private sector – which was created at the World Economic Forum summit in Davos in 1999.

It contains nine principles concerning standards for human rights, working conditions and environmental protection. On Thursday, a tenth was added, targeting corruption.

Serge Chappatte, vice-director of the Swiss Agency for Development and Cooperation (SDC), said he was pleased with the commitment shown by industry leaders.

He said hundreds of businesses could now be expected to make a consistent and concerted effort to adopt the principles.

But the Compact, which is voluntary, has been criticised as a convenient way for corporations to tout their good intentions without delivering on them.

Harmful

“Good intentions can be harmful” without monitoring or penalties, said Matthias Herfeldt of the non-governmental organisation, Berne Declaration.

“And don’t talk about the value of example: admittedly, [about 1,600] businesses [have] signed the Compact but there are 80,000 multinationals in the world.”

Greenpeace was equally sceptical, saying the pact rewarded “rhetoric rather than deeds”.

Fourteen Swiss firms are among those that have signed up to the Compact, including the Basel-based pharmaceutical giant, Novartis.

Novartis boss, Daniel Vasella, who was in New York for the summit, said companies were aware that they had shortcomings, but were acting on them.

“We know we aren’t perfect,” said Vasella. “So we have to ask ourselves, again and again, how we might improve.”

Budget

Switzerland is one of the key supporters of the Compact, contributing SFr400,000 to its SFr1.5 million budget.

Chappatte said the government supports the Global Compact because its basic goals reflect Swiss values.

The United Nations secretary-general, Kofi Annan, who launched the Compact in 1999, said companies were seeing the advantages to being part of it. Fifty firms signed the pact when it was launched and that number has now grown to 1,600.

The principles have also been endorsed by all the world’s governments, Annan told the conference. “And more than any other such effort, it engages the developing countries, which are home to half its participating firms … and four-fifths of humanity,” he said.

Anton Stadler, a Swiss working in the Global Compact office in New York, agreed. “It is particularly important that business in the southern hemisphere recognises the importance of good environmental and social politics.”

Generally, social responsibility is good for business, he added.

Commitments

On Thursday 20 banks with a market capitalisation of $6 trillion promised they would take account of environmental, social and governance issues in their analyses of profitability and investment decision-making.

They include Banco do Brasil, Credit Suisse Group, Deutsche Bank, Goldman Sachs, HSBC and Morgan Stanley.

Ten world stock exchanges, with a combined market capitalisation of $3 trillion, announced an agreement to share information about the Global Compact with listed companies.

The Brazilian stock exchange Bovespa and the Jakarta Stock Exchange announced that they are joining the Global Compact, the first two stock exchanges to do so.

swissinfo with agencies

In brief

The Global Compact is a pact between governments and the private sector.

It was created by UN Secretary-General, Kofi Annan, at the World Economic Forum summit in Davos in 1999.

It is based on ten key principles concerning human rights, working conditions, environmental protection and combating corruption.

Key facts

Fourteen Swiss firms are among the 1,600 worldwide to have signed up to the Global Compact.
Big hitters include: ABB, Adecco, Credit Suisse, Holcim, Nestlé, Novartis, and UBS.