Press Conference by Executive Director of United Nations Global Compact Office

Businesses around the world were increasingly warming to the idea that social, environmental, human rights and governance issues were essential components for long-range corporate profitability, the Executive Director of the United Nations Global Compact Office said this afternoon.

As the global financial meltdown wreaked havoc worldwide, companies were realizing that short-term profits would not necessarily sustain them over the long-term -- a message that the Compact hoped to build on.  “What we used to preach -- that non-financial issues are important to manage risks and opportunities in an interdependent world -- because of the crisis is now much better understood,” George Kell said during a Headquarters press conference.

“We are convinced -- as we have been for many years -- that engagement on non-financial issues is a way to restore and rebuild trust, and we do believe that the Compact can be at least a part of the answer by challenging companies, now in particular, to demonstrate responsibility.”

Through the Compact, more than 5,000 chief executives worldwide had pledged to align business operations and strategies with 10 universally accepted principles in human rights, labour, the environment and anti-corruption.  Many of those leaders, according to Mr. Kell, were more closely embracing sustainability based on those principles as a new business strategy.  “This kind of thinking now needs to develop much faster because the necessity for doing so is clearly out there,” he said.

More than 1 billion people worldwide had no access to potable water, he said.  And the international community faced the daunting task of cutting carbon dioxide emissions by 80 per cent to avoid environmental catastrophe.  But no one was clear on how to achieve those goals.  Fundamental socioeconomic change was needed and that required the full engagement of the private sector, he said, noting the merits of a “green deal” combining stimulus packages with environmental conservation.

“We strongly believe that next year will be the year of sustainability, where the sustainability of markets will be intimately linked with climate change, water and related issues,” Mr. Kell said.

Launched in 2000, the Compact had grown from a broad policy platform to engage businesses in support of the United Nations goals to a practical framework for companies to manage their activities on specific issues.  He said the Compact’s working group on labour addressed workplace violations, while the working group on anti-corruption looked at transparency as an organizational tool.

The more than 300 members of the “Caring for Climate” initiative focused on business solutions to climate change in a post-Kyoto policy framework.  Mr. Kell added that more than 450 businesses, representing $18 trillion in assets, had signed the Principles for Responsible Investment, while 200 business schools had endorsed the Principles for Responsible Management education.

The Compact had removed 800 companies for failing to publicly disclose on an annual basis their progress in reaching the Compact’s goals, Mr. Kell said.  More than 200 would likely be de-listed in the future.

During the press conference, a correspondent asked Mr. Kell to comment on how the financial crisis would affect corporate donations to charity and how companies that had engaged in unethical practices and that were now receiving Government bailouts should conduct business in the future.

In response, Mr. Kell said ethics issues, including executive pay, were very much on the top of the agenda of corporate restructuring.  From the Compact’s perspective, the real issue at hand was the fundamental difference between the short-term and long-term approaches to corporate sustainability, which involved the ethics dimension of risk.  In that regard, there had been total failure.  The key was for businesses to get back on track and embrace long-term, sustainable approaches.

The same correspondent asked Mr. Kell to respond to criticism by the United Nations Senior Adviser on Water Issues, Maude Barlow, and others that the Compact was not serious enough in requiring companies to adopt socially responsible behaviour.  Mr. Kell said he had never met Ms. Barlow and that she was likely not aware of the Compact’s work.  However, many non-governmental organizations were involved in the Compact’s activities in water issues, which aimed to explore ways in which businesses could reduce water waste and improve water efficiency.

Another correspondent asked about Compact’s involvement in Nigeria and its impact there on human rights concerns.  Mr. Kell said the Compact’s Nigeria Network had been launched two years ago and had since worked to reinforce positive change in the business community and mobilize collective action.  The Compact’s working group on anti-corruption was planning a major event in Nigeria in the coming months on corrupt practices, as well as poverty issues in neighbouring African countries.

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For information media • not an official record