New study examines effectiveness of U.N. Global Compact

Rev. Oliver F. Williams, C.S.C., associate professor of management at the University of Notre Dame, examines the problems and potential of the U.N. Global Compact in a paper published in the current issue of the journal Business Ethics Quarterly.

U.N. Secretary-General Kofi Annan first raised the notion of developing a “global compact of shared values and principles” in business at the World Economic Forum in January 1999. He challenged world business leaders to “embrace and enact” a set of policies that would increase and diffuse the benefits of global economic development, especially for developing countries, through voluntary corporate policies and actions.

Annan’s vision became reality 18 months later with the creation of the U.N. Global Compact. The initiative sets forth 10 principles related to human rights, labor rights, corporate corruption, and concern for the environment.

Father Williams, who in April 2002 hosted the first U.S. meeting devoted to discussion of the compact, writes in his new study that the four-year-old initiative has been “relatively successful,” signing up more than 1,100 companies worldwide, including more than 200 of the largest multinational firms.

One problem, however, has been the lack of participation by many major U.S. corporations.

“While the premier U.S. companies are interested in meeting the legitimate expectations of society,” Father Williams writes, “there is concern centering around accountability issues.” In particular, increasing litigation has many U.S. companies fearful that joining the compact to advance human and labor rights around the world would be taken as a legally binding contract rather than an aspirational promise.

Father Williams found that U.S. companies are reluctant to endorse and sign on to the compact because it lacks a traditional monitoring system. Minus that, the compact is unable to ensure, for example, that a company’s performance matches its rhetoric. Thus, some companies may join for public relations purposes alone and ruin the reputation of the project.

There are several contentious issues in the global economy for which the umbrella organization of the U.N. Global Compact might be the most effective means to bring together the key actors in a non-adversarial environment, Father Williams reported. For example, the concept of a two-tier pricing system for the poor in developing countries and the question of whether multinational firms have an obligation to correct human rights abuses in all countries in which they operate, are ripe for discussion by leaders from companies, non-governmental organizations, academics and think tanks.

Father Williams provides insight from the ethical literature that may address the concerns of U.S. companies and provide new ways of thinking about the issues. In the end, he argues that the forum provided by the U.N. Global Compact may be the most effective means to gain consensus on the role of business in society.

Father Williams is director of the Center for Ethics and Religious Values in Business in Notre Dame’s Mendoza College of Business. To obtain a copy of his study, titled “The U.N. Global Compact: The Challenge and the Promise,” contact the center at ethics.ethics.1@nd.edu.

For additional information, contact  Rev. Oliver F. Williams, C.S.C., 574-631-5761 or Williams.80@nd.edu

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