GLOBAL COMPACT CAN ACHIEVE ITS GOALS ONLY IF LARGE COMPANIES JOIN INITIATIVE, SECRETARY-GENERAL TELLS MEETING OF CEOS IN DAVOS

GLOBAL COMPACT CAN ACHIEVE ITS GOALS ONLY IF LARGE COMPANIES JOIN

INITIATIVE, SECRETARY-GENERAL TELLS MEETING OF CEOS IN DAVOS

(Delayed in transmission.)

Following is the text of remarks by Secretary-General Kofi Annan at a breakfast meeting with chief executive officers in Davos, Switzerland on 25 January:

I am delighted to be here.  This meeting with CEOs in Davos has special meaning for me.  It was here, five years ago, that I first proposed a Global Compact, calling on business leaders to embrace within their sphere of influence universal principles in the areas of human rights, labour and the environment.

This call to action was based on several assumptions:

If a critical mass of business leaders were to embrace such universal principles, then global markets would be more stable and inclusive, because we would be building much needed social and environmental pillars.

If business were willing to work together with the United Nations and other partners, such as global labour and civil society, then we could find solutions which no actor alone can produce; and if there were indeed a willingness to learn and conduct a dialogue, then we could move from confrontation to cooperation.

If we were able to keep the principles simple and aspirational, then we could give them new meaning through voluntary practices and projects, and thereby complement regulatory frameworks.

If business and civil society were willing to work together, then we would challenge governments to do their share as well.

Five years on, I am delighted to say that many corporate leaders have heeded my call to action.  Today, more than 1,200 companies from over 70 countries are participating in the Global Compact -- as well as dozens of global labour and civil society organizations.

More than half of the participants are from the developing world, including countries such as India, Brazil, China, Egypt and South Africa.  More than 50 local networks have been created, rooting the idea locally through dialogue, learning and projects.  Today, the Compact is truly global and very much alive.

The Compact’s leadership model, which showcases the commitment of CEOs, has brought about welcome developments, both at the level of individual organizations as well as at the collective level.

At the level of individual organizations, many participating companies have taken steps to make the principles of the Compact part of their business strategy and operations.  Many, moreover, have discovered that doing so makes good business sense.  They have improved their image, attracted and retained qualified staff, and learnt useful lessons about the assessment and management of risk.

In fact, the gains from embracing an ethical framework are such that I have now asked my own Organization to follow the examples of corporations!  In areas such as procurement and human resources, the UN itself is now applying Compact principles.  We are learning from you, the private sector, about how to achieve change and how to connect values with performance.

At the collective level, the Compact has offered a useful platform for business, labour and civil society to conduct a dialogue, to learn, and to work together.  It has inspired dozens of projects and initiatives that advance UN goals, while at the same time safeguarding business investment.  And it has helped break down barriers and overcome confrontation, as the different groups of actors have learned to listen to each other and to act together.

The Compact has also helped to bridge the historical divide between the UN and business by giving many UN organizations a gateway to partnerships with business.  By doing so, we have not only left behind us old ideologies.  We have also given fresh life to the Organization, and more impact to our efforts.

I hope we can all agree that this is good progress.  But several challenges have still to be met.

First, the Compact can achieve its goals only if large companies who have remained bystanders join the initiative.  I know that many of them fear hidden clauses in the Compact or uncertainties about its future evolution.

My message to them is there is no small print in the Compact.  I believe that over the past few years, we have shown that we are faithful to the fundamental mission of the Compact as a voluntary initiative, with emphasis on practical solution-finding.

There are plenty of fora where lawyers can argue about language.  The Compact is not one of them.  It is about getting the job done through dialogue, learning and projects.  This exclusive focus on the practical side is not always easily understood by those whose profession is to interpret the nuances of words.  But I know business leaders understand the importance of action.

Second, we know that if we want to tackle root problems, such as the inability or unwillingness of political leaders to provide for a fair and effective governance framework, we need to ask some hard questions.

-- Can corporate performance help to overcome government deficiencies?

-- How can corporate performance have a positive influence on government policy-making?

-- How can we scale up promising solutions and achieve greater systemic change?

-- How can we bring the financial community on board so that they recognize that a commitment to positive change can reduce risks?

-- How do we need to change the mission and operations of the Compact to make us more effective in our undertaking?

The mission of the Compact -- “making openness work by underpinning economic imperatives with social and environmental priorities” -- is as relevant today as it was five years ago.  We all have an interest in making sure that business prospers everywhere -- especially in the poorest countries where, contrary to popular belief, the problem is not business but the absence of business.

That is why I am convening a summit meeting on the Compact at UN Headquarters on 24 June this year.  I hope that by then, many more of you will have joined the initiative.  And I hope we can make progress towards taking the Compact to the next level.

As CEOs, you have operated in the world of corporate social responsibility for several years now.  What's your experience?  What works, what doesn't and why?  What are the new challenges on the horizon, as you see them?  How would you want to see the Global Compact modified to take those lessons on board?

Those are just some of the questions on which I would value your views.  I very much look forward to our discussion.

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