Public Eye on Davos 2004
Who benefits from the Global Compact? (23.01.04)
Who benefits from the Global Compact?
Paneldiscussion 21 January 2004 at “The Public Eye on Davos” Conference
Participants
UN-Secretary General Kofi Annan first presented the Global Compact at the annual WEF meeting in Davos in early 1999. It contains nine principles pertaining to human rights, worker rights and the environment which corporations pledge to uphold as they become members.
The first discussion round centred upon the strengths and weaknesses of the Global Compact. John Ruggie, one of the founding fathers of the Compact began by making it clear that the Compact cannot be criticised for being a weak, watered-down legal framework because it was never meant to be that. Instead the Compact was created to be an <> through which corporations could learn to appreciate the importance of respecting human and workers rights as well as the environment. The presence of governments and NGOs in the Compact would be able to help corporations achieve this aim.
Jens Martens of the German development think tank World Economy, Environment and Development (WEED) summarised the common criticisms of the Global Compact:
Jens Martens made it clear that he believes the Global Compact is based on an erroneous assumption, namely that corporate-driven globalisation serves everyone’s interests. This position is no longer tenable today. However, the Compact still reflects this positive view of globalisation and links the UN to this view as well. Indeed, at the launch of this initiative, Kofi Annan promised the business community that he would work for the creation of a business-friendly environment, one that would contain open markets and free trade. In Martens’ view this position compromises the UN’s position gravely.
Irene Kahn, General Secretary of Amnesty International, who has been involved in the Global Compact since its launch, sees the Compact as a process. The very fact that the UN has puts its name behind such an initiative gives the cause of corporate responsibility legitimacy and the move to require accountability authority. She recognises that the principles create non-binding rules but hopes that they will evolve into stronger ones, much as human rights law has over the past decades. Presently, only two of the nine principles of the Compact deal with human rights and therefore it is clear that there is work to be done. The newly developed UN Human Rights Norms for Business provide a legal framework within which this could happen.
According to Kahn, corporations are, however, against any legally binding regulations and Martens stressed that industry lobby groups are being mobilised to fight the UN Norms. In Martens’ opinion, business is using the Compact as a means of derailing the Norms, illustrating that the Compact does not serve to compliment the effort to create binding regulations. He called for the scrapping of the Compact so that efforts can be concentrated on building support for the UN Norms.
John Ruggies disagreed with this assessment and named several companies that are members of the Global Compact and who are also behind the UN Norms. On the question of whether the Compact has an ideological vision, he claims it has and it is a Social Democratic one, not a radical market-oriented one.
In the second part of the panel voices from the South were trained on the practices of one of the Global Compact and UN Norms’ members, the Swiss multinational Nestlé. Franklin Frederick of the Movement of Citizenship for the Waters in Brazil reported on the activities of Nestlé in the protected ‘water park’ of São Lourenço. Nestlé is taking out groundwater from this area, which was once used as a therapeutic resort for locals because of the high mineral content of the waters there. In order to produce their brand <>, the company is first removing all of the naturally occurring minerals and then putting specific minerals back in to create a standardised product. So much water has been pumped out that the groundwater level has sunk and the water springs are in danger of drying out. These activities are in violation of Brazilian law and Nestlé is currently under investigation by the authorities.
Joo Kean Yeongs Organisation International Baby Food Action Network (IBFAN) is active in promoting breastfeeding and in combating aggressive marketing practices of breast milk substitutes. Even after years of campaigning and public awareness, 3 million babies a year still die, babies which could be saved if they were to be breastfed. As a result of the <> scandal of the 1970s there exists a code of conduct for companies active in the baby milk substitute industry. With numerous pictures of current practices, Joo Kean Yeong showed how Nestlé’s marketing violates this code. Although Nestlé has changed somewhat since the 1980s, they remain the company that hinders most efforts to promote breast feeding.
Nestlé’s share of the baby food market is 40%, but the sector makes up only 2% of Nestlé’s sales. In other words, it would not cost Nestlé much to live up to the code of conduct. Jens Martens pointed out that Nestlé was accepted as a member of the Global Compact even though its practices have long been known. In his view, this proves that the Global Pact serves only to help Nestlé solve its image problem, not to a reform of their deeds.
The panel’s moderator, Peter Brey, reminded the public and panel members that while this is not the forum to try Nestlé, the presentation illustrated the need for guidelines with more teeth than the Global Compact offers. Although the panel members did not agree on the value of the Compact, all agreed in principle on the need for this. Franklin Frederick concluded by calling for the Compact to at least organise an open dialogue between Nestlé and its critics, something Nestlé has always avoided.
Participants
 | Franklin Frederick, Movement of Citizenship for Waters, Brazil |
| | Joo Kean Yeong, Legal Advisor, International Code Documentation Centre/IBFAN, Malaysia |
| | Irene Khan, Secretary-General, Amnesty International, UK |
| | Jens Martens, World Economy, Environment and Development, Germany |
| | Prof John Ruggie, Special Advisor to UN Secretary-General for the Global Compact, USA |
| | Moderation: Peter Brey, Secretary-General, Terre des homes Foundation, Switzerland |
UN-Secretary General Kofi Annan first presented the Global Compact at the annual WEF meeting in Davos in early 1999. It contains nine principles pertaining to human rights, worker rights and the environment which corporations pledge to uphold as they become members.
The first discussion round centred upon the strengths and weaknesses of the Global Compact. John Ruggie, one of the founding fathers of the Compact began by making it clear that the Compact cannot be criticised for being a weak, watered-down legal framework because it was never meant to be that. Instead the Compact was created to be an <
Jens Martens of the German development think tank World Economy, Environment and Development (WEED) summarised the common criticisms of the Global Compact:
| | The Compact does not contain the mechanisms for monitoring and sanctioning |
| | Companies that break the principles are not expelled |
| | Companies use their partnership with the UN as a way of improving their image |
Jens Martens made it clear that he believes the Global Compact is based on an erroneous assumption, namely that corporate-driven globalisation serves everyone’s interests. This position is no longer tenable today. However, the Compact still reflects this positive view of globalisation and links the UN to this view as well. Indeed, at the launch of this initiative, Kofi Annan promised the business community that he would work for the creation of a business-friendly environment, one that would contain open markets and free trade. In Martens’ view this position compromises the UN’s position gravely.
Irene Kahn, General Secretary of Amnesty International, who has been involved in the Global Compact since its launch, sees the Compact as a process. The very fact that the UN has puts its name behind such an initiative gives the cause of corporate responsibility legitimacy and the move to require accountability authority. She recognises that the principles create non-binding rules but hopes that they will evolve into stronger ones, much as human rights law has over the past decades. Presently, only two of the nine principles of the Compact deal with human rights and therefore it is clear that there is work to be done. The newly developed UN Human Rights Norms for Business provide a legal framework within which this could happen.
According to Kahn, corporations are, however, against any legally binding regulations and Martens stressed that industry lobby groups are being mobilised to fight the UN Norms. In Martens’ opinion, business is using the Compact as a means of derailing the Norms, illustrating that the Compact does not serve to compliment the effort to create binding regulations. He called for the scrapping of the Compact so that efforts can be concentrated on building support for the UN Norms.
John Ruggies disagreed with this assessment and named several companies that are members of the Global Compact and who are also behind the UN Norms. On the question of whether the Compact has an ideological vision, he claims it has and it is a Social Democratic one, not a radical market-oriented one.
In the second part of the panel voices from the South were trained on the practices of one of the Global Compact and UN Norms’ members, the Swiss multinational Nestlé. Franklin Frederick of the Movement of Citizenship for the Waters in Brazil reported on the activities of Nestlé in the protected ‘water park’ of São Lourenço. Nestlé is taking out groundwater from this area, which was once used as a therapeutic resort for locals because of the high mineral content of the waters there. In order to produce their brand <
Joo Kean Yeongs Organisation International Baby Food Action Network (IBFAN) is active in promoting breastfeeding and in combating aggressive marketing practices of breast milk substitutes. Even after years of campaigning and public awareness, 3 million babies a year still die, babies which could be saved if they were to be breastfed. As a result of the <
Nestlé’s share of the baby food market is 40%, but the sector makes up only 2% of Nestlé’s sales. In other words, it would not cost Nestlé much to live up to the code of conduct. Jens Martens pointed out that Nestlé was accepted as a member of the Global Compact even though its practices have long been known. In his view, this proves that the Global Pact serves only to help Nestlé solve its image problem, not to a reform of their deeds.
The panel’s moderator, Peter Brey, reminded the public and panel members that while this is not the forum to try Nestlé, the presentation illustrated the need for guidelines with more teeth than the Global Compact offers. Although the panel members did not agree on the value of the Compact, all agreed in principle on the need for this. Franklin Frederick concluded by calling for the Compact to at least organise an open dialogue between Nestlé and its critics, something Nestlé has always avoided.