The Hindu Business Line : Where competition ends and collective conscience begins

THE commitment of the business community to lend a new dimension to development by embracing the principles of responsibility and obligation to society and humanity can be traced to the UN's Global Compact initiative notwithstanding the Enron and WorldCom debacles that brought in sharp focus the corporate shenanigans.

In 1999, the UN Secretary- General, Dr Kofi Annan, in an address to the World Economic Forum in Davos, proposed the Global Compact, a voluntary corporate citizenship initiative with two complementary goals — making the Global Compact and its principles part of business strategy and operations, and facilitating cooperation among key stakeholders and promoting partnership in support of UN goals of peace and development the world over.

Operating out of the UN Headquarters in New York, Mr George Kell, Executive Head, Global Compact, Office of the Secretary-General, told Business Line that markets are not embedded in universal human values and rights.

The backlash against globalisation, particularly on the poorest of the poor, should compel businesses to work in a spirit of enlightened self-interest to make globalisation "more inclusive, so that markets become more socially legitimised and socially more robust".

He said there is a growing body of evidence that "companies are aware that acting on a sound ethical basis, reflecting that the business prosperity and prosperity of society cannot ultimately be separated. This kind of mindset is beneficial because it forces upon companies on a broader thinking, being aware business is just not to satisfy shareholders but ultimately the rights and obligations of the companies have much to do with their social contribution to environment where it operates."

Mr Kell said that companies have a choice — invest for the long-run, invest in skill training, in quality improvement, make special efforts on supply chain, on building capacities and transferring technology or they can choose not to do so.

Though the business of the government remains proclaiming lofty ideals leaving a wide gap in implementing the principles on the ground, the UN resolved to solve this lack of momentum in forward movement all over the world through the launch of the Global Compact. Mr Kell observed that the Global Compact's principles in the realm of human rights, labour and the environment command universal consensus as they are based on the bedrock of nine principles.

Thus, on human rights, businesses are asked to support and respect the protection of international human rights within their sphere of influence and make sure their own corporations are not complicit in human rights abuses. On labour, businesses are asked to uphold the freedom of association and the effective recognition of the right to collective bargaining, the elimination of all forms of forced and compulsory labour, the effective abolition of child labour and the elimination of discrimination in respect of employment and occupation. On environment, businesses are asked to bolster a precautionary approach to environmental challenges, undertake initiatives to promote greater environmental responsibility and encourage the development and diffusion of environment-friendly technologies.

Mr Kell said that in India around 90 leading Indian companies have joined the Compact, along with a plethora of industry associations, employer organisations and professional bodies. He said that one of the Compact's unique feature is that it has gained credibility in both developed and developing countries with over 50 per cent of participating companies being from developing world. He said that for corporates the world over, there is a unique opportunity in this era of global interdependence to create new awareness and relevance for the very values the UN has produced over decades.

Recognising that business has to stay ahead of the government in this globalising time and recognising that the legitimacy of market expansion must be grounded in a social consensus, the United Nations has basically told the businesses that in their enlightened self-interest they should make sure that social and environmental dimensions are carried forward.

Mr Kell remarked that Global Compact is "extremely light, aspirational, action-oriented and a non-threatening framework to operationalise complex issues" that have been eluding the governments efforts the world over for meaningful implementation because of lack of political will. He said the Compact has no conditionality. "We do not tell an entreprenuer in Egypt or anywhere that you go through an expensive and externally-certified reporting mechanism for your products to be sold abroad."

Proclaiming that Infosys Chief Mentor, Mr N. R. Narayana Murthy, has been on the Advisory Council of the Global Compact, and that Satyam Computer Services Corporation was one of the many notable signatories to the Compact, Mr Kell said that "we are going in for an impact assessment study — trying to get a handle of what type of output is being provided and how we can relate changes to the ongoing priority and how we relate to the overarching goals of peace and development. Indian Institute of Management (IIM) is to help us on the intellectual side."

Mr Kell concluded graphically: "The Compact principles suggest that multiple actors with often seemingly irreconcilable beliefs pull in concert towards a common vision. Actors should then agree on how to navigate the unclear boundaries between belief and bigotry, responsibility and accountability, interventions and interference. Players in the capitalist system would need to agree on where competition ends and where collective conscience begins."

This is the boldest restatement of proponents of development paradigm in a changing scenario where markets operate mercilessly, leaving the hapless to their fate. It is time the business community of the world increasingly recognised its social responsibility for good governance even as governments failed miserably to provide one so for millions of people the world over.

Article E-Mail :: Comment :: Syndication

Stories in this Section
Will the real Indian investor stand up?

Power claims

A special cocoon called SPC

Debunking the staid look

Padded secrets spilling off big bean-counters

International terrorrism — The Saudi-Pakistani nexus

Where competition ends and collective conscience begins

Agri worries

IMF-Bank meet