Sixty-second General Assembly

Second Committee

Panel Discussion (PM)

bank chief underscores importance of corporate social responsibility during

Second Committee Panel Discussion ON Global Compact’s Progress

Corporate social responsibility was essential to easing the tension between social justice and entrepreneurial drive, and failure to achieve that balancing act could put market capitalism at risk, Bunmi Akinremi, Deputy of the New York Branch of Nigeria’s United Bank for Africa, warned this afternoon during a panel discussion held by the Second Committee (Economic and Financial) under the theme “Highlighting the progress made to date of the UN Global Compact -- the UN’s voluntary corporate citizenship initiative, which aims to make global markets more sustainable and inclusive”.

He said the market-based system was the most efficient way thus far to sustain wealth, but entrepreneurship was often inconsistent with social justice.  The adverse impact of such tensions was no more evident than in Africa, where poverty was endemic and life expectancy very low.  “The African continent is a very clear and obvious example of what happens when we ignore the principles that the Global Compact adheres to and promotes.  The encouraging thing is that most Governments in Africa recognize that something needs to be done and recognize the role that the private sector in particular has to play to move the process forward.” 

For example, since 2003, the Nigerian Government had been promoting a “needs agenda” -- a socio-economic development strategy, he said.  The private sector would be expected to become more proactive in that process by creating jobs, enhancing productivity and improving the quality of life.  The United Bank of Africa –- the continent’s largest financial institution -- was doing its part by focusing on the environment, economic empowerment and education, in line with the Global Compact’s mission.  The bank, hoping to serve as a role model for African companies, had developed the “Equator Principles”, a financial industry benchmark for determining investment management and social and environmental risk.

Talal Abu-Ghazaleh, Chairman and Chief Executive Officer of Egypt’s Talal Abu-Ghazaleh Organization, agreed that the Compact was an ideal vehicle for bridging the space between the United Nations and civil society on the one hand and the private sector on the other.  Corporations’ emphasis on the ground at the country level was to impress on the business community the need for corporate citizenship and the goal now was to turn corporate social responsibility into a duty, rather than viewing the business community as charitable.  The aim was to motivate businesses to serve society and work towards achievement of the Millennium Development Goals within the context of United Nations Charter principles.  The Global Compact was unique in that it was independent of the United Nations but fully under the Organization’s dictates.

Toshio Arima, Director and Executive Adviser to the Board of Fuji Xerox, said that since the Compact’s launch in Japan in 2001, there had been many positive aspects, but some areas needed attention, among them the fact that, with 56 companies participating in the Compact, it was still not widely known.  There was little participation among top management, who had signed up to the Compact but then remained relatively inactive.  There was also a lack of long-term strategic direction and plans, as well as a low-level presence and interaction with Asian local networks.  But the reinforcement of the Japan Global Compact structure and arrangement was being discussed to resolve those issues and several top executives had expressed their willingness to participate and support that effort.

He said Fuji Xerox had already taken steps to protect the environment and reduce emissions by 15,000 tonnes of carbon dioxide a year.  In 2004, it had launched a recycling plant in Thailand, covering nine Asian countries.  Next year it would launch a plant in China to cover that country.  In line with the Compact’s principles, Fuji Xerox had also implemented ethical sourcing in China, the Republic of Korea and Japan and all suppliers had responded positively to the scheme.  It was extremely important for the United Nations to set and hold the base principles of the Global Compact and to provide a platform for its activities.

Mark Moody-Stuart, Chairman of Anglo American in the United Kingdom, said that if businesses were to cooperate with civil society and labour in the Compact, they must build trust, a goal that was best achieved by very open and transparent reporting.  A premium was placed on honouring commitments to the Compact’s principles, which were voluntary.  Expanding the Compact into more local networks to bring together businesses, civil society and labour must be done on a country-by-country basis.  For the Compact to be successful, the personal engagement of global corporate leaders was essential, as was the establishment of a more effective channel for the provision of private-sector funds in support of the Compact, which was currently staffed by the United Nations and financed by Member States through a trust fund.

Work initiated under Compact auspices included a project to grow sustainable businesses and economic activity in least developed countries.  That work now continued with the United Nations Development Programme (UNDP).  Indirectly, that had led to an increased focus on businesses, including Anglo American, and on growing business supply chains in developing countries, a phenomenon that was one of the most effective economic multipliers.  In South Africa, Anglo American had encouraged the development of entrepreneurial businesses beyond its own supply chain by using rolling investment funds, taking, for instance, 20 per cent equity in a business during the first three start-up years and selling out to the entrepreneur when the business was up and running and rotating the funds.  Such activities could be further leveraged using Government funds.

B. Muthuraman, Managing Director of India’s Tata Steel, said private enterprise needed to run smoothly so that profits came from the people and reverted back to the people.  That was the philosophy that Tata Steel had embraced, evidence of which could be traced back to the company’s beginnings.  Almost a century ago, Tata Steel had introduced the eight-hour work day, and implemented employee benefits and services in the 1920s and 1930s, long before industries and legislation had followed suit.  The Tata Worker’s Union had been born in 1937, and a strong, responsible trade union was critical for industrial peace.

The company’s social outreach programme spanned through 600 villages in areas surrounding mines and operations, he said.  Health clinics, scholarship schemes, literacy programmes, support and advice for population issues, enhancing irrigation cover to improve yields and HIV/AIDS programmes were among the programmes components.  In 1992, Tata Steel had launched a population stabilization programme and had counselled more than 1.5 million people.  All those benefits were part of what made a successful business.  In a time of increasing globalization, the Global Compact was the kind of organization needed to engage businesses in supporting and practising corporate social responsibility.  Leadership and strong advocacy were crucial and it was essential to measure progress because “what gets measured gets done”.

Gabrielli de Azevedo, Chief Executive Officer and President of Petrobras, Brazil, said that since signing the Global Compact in 2003, his company had striven to put the Compact’s 10 management principles into practice.  The 2020 Petrobras Strategic Plan aimed to achieve the “triple bottom line” of balancing economic, environmental and social goals.  Social responsibility was now a corporate function, guided by policies and objectives for integrated, ethical and transparent management, and relations with all stakeholders.  The firm aimed to promote human rights and citizenship, respect human and cultural diversity, forbid discrimination as well as child and slave labour, and work to reduce social inequalities.

Habiba Al Marashi, Chairperson of the Emirates Environmental Group, spoke on behalf of civil society, saying the Group had launched a corporate social responsibility network in 2004 to help achieve sustainable development in the United Arab Emirates.  Corporate social responsibility was a new concept in that country and in the Gulf Cooperation Council region.  The United Arab Emirates was known for its philanthropic activities, but the network’s aim was to expand private-sector engagement with a focus on education and support for the country’s strategic development goals.

She said the Emirates Environmental Group had joined the Global Compact last year and more than 17 leading organizations in the Gulf Cooperation Council region were members.  The environmental impact of the construction boom in the United Arab Emirates and other Gulf countries presented challenges like carbon dioxide emissions and climate change, which must be addressed.  The United Arab Emirates was encouraging businesses to make use of clean technologies and the Government had recently announced that, as of January 2008, all new buildings would have to adhere to “green” building criteria and principles.

Chen Ying, Deputy Director General of China Enterprise Confederation, said the Compact’s goals were compatible with those of the Chinese Government, -- social and economic development.  The Global Compact was a vision of a future borderless world and it permitted China to participate in forming global rules.  Among the progressive steps made in China was the formulation by a national electricity company of a social responsibility guideline.  A State development bank had incorporated environmental protection criteria when considering business loans.  Through Global Compact meetings, the social responsibility movement in China had experienced rapid growth.  In addition, the implementation of social responsibility principles was in harmony with those of the Millennium Development Goals.

What China needed now was clear guidelines, she said.  While the 10 principles of the Global Compact were effective, social and environmental problems had become important issues and guidance was needed.  To that end, more training and regional platforms were needed to enhance the reach and effectiveness of the Global Compact for an ever-growing number of companies.  Enterprises desperately needed tool kits and guidelines, which would further promote social responsibility throughout the country.

During the ensuing discussion, delegates asked whether there was a monitoring mechanism to measure Compact members’ results and ensure that they adhered to the Compact’s principles and how Governments could assist in that regard.  One delegate asked why the Compact only met in New York and not in African locations where many people were unaware of the Compact and could benefit greatly from learning about it.  Another delegate asked the speakers to elaborate on the Compact’s reporting process.

In response, Mr. Abu-Ghazaleh said the Compact had an annual review process and stressed that companies embracing Compact principles were advantaged, not disadvantaged.  Society had a way of rewarding companies that were good corporate citizens.

Mr. Moody-Stuart said that while the Compact’s monitoring mechanisms aimed to chart companies’ progress, it lacked the capacity to read, monitor, evaluate and check every member organization.  That must be left to reports, which could be seriously challenged by global scrutiny.  Non-compliant companies were damaging to industry as a whole.

Participating in the discussion were the representatives of Portugal, Benin, France, Guinea, Cameroon and Mexico. 

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For information media • not an official record