Sustainability Report

MBA 402

Add-on Workshop

United Nations Global

Compact and Sustainability

Reporting

Purpose of this Session

• To introduce the UN Global Compact, a

voluntary association of businesses

designed to foster sustainability thinking

across the global community

• To identify the UN Global Compact

website, as a useful reference source for

Assessment 3 (Sustainability Report)

Origins of the United Nations Global Compact

(UNGC)

• By the late 1990s, the world economy was globalized

• The regulatory powers of nation-states were becoming increasingly eroded (Oliver 2014, p.242)

Nation-states least capable of controlling the MNCs operating in their territories include:

• Low income countries

• Countries in conflict or just emerging from conflict

• Countries with weak rule of law and strong levels of corruption

(UNHRC 2008b, p. 6, §14)

Origins of the United Nations Global Compact

(UNGC)

• Unrestrained actions by many MNCs was leading to serious human rights abuses and other irresponsible behaviours

• There was a growing need to reach agreement on standards of global governance

• Ideally: imposing or creating a global moral ethic, embedding agreed moral standards into the globalized economy

(Oliver 2014, pp. 242-243)

Origins of the United Nations Global Compact

(UNGC)

• 31st January, 1999: Kofi Annan, Secretary- General of the UN addressing the World Economic Forum (WEF)

• Announced need to embed moral norms in the globalized markets

• Need “to give a human face to the global market”

• Creating an inclusive and sustainable global economy (Oliver 2014, p.243)

• This call to action led to the adoption of the United Nations Global Compact (26 July 2000)

Theme 3: the Purpose, Vision and Mission of

the UNGC (Oliver 2014, pp.243-244)

• https://www.youtube.com/watch?v=MQLXA1Nhjuo

Purpose Vision Mission

= fundamental

reason for the

existence of an

organisation

Focuses attention

on a goal and

energises the

organisational

actors

The way the

organisation plans

to realise its vision

UNGC: Create a

world where all

could lead a

humane life

Give a human face

to the global

market

Using dialogue, to

embed the 10

principles of the

UNGC across the

global community

Theoretical Commitments underpinning the

UNGC

• UN DECLARATION OF HUMAN RIGHTS (1948):

https://www.un.org/en/universal-declaration-human-rights/

• RIO DECLARATION ON ENVIRONMENT AND DEVELOPMENT (1992):

https://www.un.org/documents/ga/conf151/aconf15126- 1annex1.htm

• ILO Declaration on Fundamental Principles and Rights at Work (1998):

https://www.ilo.org/declaration/lang--en/index.htm

• UN CONVENTION AGAINST CORRUPTION (2003)

https://www.unodc.org/unodc/en/treaties/CAC/index.html

UNGC Principles

• Under the UNGC companies pledge to

follow responsible business practices in

the areas of:

Human Rights: Principles 1 & 2

Labour Rights: Principles 3, 4, 5 & 6

Environment: Principles 7, 8, & 9

Anti-Corruption: Principle 10

How the UNGC ‘Works

To demonstrate their commitment to the UNGC, businesses:

• Produce an annual Communication on Progress (CoP) report, indicating the progress made in implementing the Principles into their operations

• Businesses that do not produce a CoP may be removed from the list of participating companies

How the UNGC ‘Works

• As a voluntary initiative with light reporting duties, the UNGC has been criticised as a ‘blue-washing’ exercise

The real intention of the UNGC:

• To provide local networks and learning communities around ethical best practice for businesses

• CoPs are not necessarily read by stakeholders

• CoPs give internal benefits to the company (opportunities for planning and reflection as they write the document)

• CoPs may be read by other signatory companies, as part of learning around sustainability (Hamid & Johner, 2010)

United Nations (2008), ‘After the Signature’

How the UNGC ‘Works

• For many UNGC signatory

companies, an annual sustainability

report using the GRI Standards

• Acts as a sound replacement for a

CoP

UNGC and the protection of Universal

Human Rights

Businesses should support and respect

the protection of internationally proclaimed

human rights

Businesses should make sure they are not

complicit in human rights abuses

What are Human Rights?

• Proclaimed 10

December, 1948

• Document lists a total

of 30 human rights

• But what is a Human

Right?

https://www.amnesty.org.au/

how-it-works/what-are-

human-rights/

What are Human Rights?

• Fundamental human rights form the following categories:

• Right to the means of subsistence (food, water, clothing and shelter)

• Right to ‘liberty’ as self-determination (freedom of expression, worship, political and workplace associations; freedom from slavery, coercion, and unjust and unusual punishment)

• Right to happiness (education, development of talents)

• Right to fulfilment of one’s human nature (a ‘properly’ human existence, including sexual reproduction and friendships)

UNGC Principle 3

(see next slide)

The UNGC on Labour Rights

• Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining

• Principle 4: the elimination of all forms of forced and compulsory labour

• Principle 5: the effective abolition of child labour

• Principle 6: the elimination of discrimination in respect of employment and occupation

(ILO, 2018)

The UN ‘Protect, Respect and Remedy’

framework

• The UN proposes a ‘Protect, Respect and Remedy’

framework for the protection of human rights

• The State has a duty to protect human rights (through

legal means)

• Corporations have a duty to protect human rights

This means:

• Business entities must not infringe on the rights of others

• In the conduct of business, the moral duty is to ‘do no

harm’

• Where rights have been violated, corporations have a

further duty to provide mechanisms for effective

remediation

How do businesses Respect and Remedy

human rights

RESPECT: Involves due diligence procedures.

Companies consider:

1. Country contexts and any human rights challenges these

pose

2. What human rights impacts do their own activities have in

that context?

3. How far they might contribute to abuse through their

relationships with business partners, suppliers, State

agencies, other non-State actors

REMEDY: Companies must provide individuals with a means to notify companies wherever they believe they have been harmed.

Victims should be able to seek remediation without compromising access

to legal channels.

(UNHCR 2008b)

Complicity in Abuses

• Complicity refers to the indirect involvement of companies in human rights abuses

• Complicity may take the form of ‘aiding and abetting’ through “acts … directed to assist, encourage or lend moral support to the perpetration of a crime, and which have a substantial effect upon its perpetration”

• An act may be complicit, even if the crime would have happened anyway, without the contribution made by the company

• Complicit contribution may occur before, during or after the principal crime has been committed

• The complicit act of the company need not be geographically close to the crime

(UNHCR, 2008a)

Global Compact

Principle Implications Benefits

Principle 7

Support a

precautionary

approach to

environmental

challenges

“Prevention rather than

remediation….. more cost-

effective to take early

action to ensure

that…damage does not

occur”

“Improving environmental

performance means less

financial risk, an important

consideration for insurers.”

Principle 8

Undertake initiatives to

promote greater

environmental

responsibility

“Cleaner and more efficient

processes… increased

resource productivity ….

needing fewer raw material

inputs and lower costs.”

“Employees and consumers

are increasingly interested in

doing business with

responsible companies.”

Principle 9

Encourage the

development and

diffusion of

environmentally friendly

technologies

(EFTs)

EFTs ……”are less polluting,

use all resources in a more

sustainable manner, recycle

more of their wastes and

products and handle residual

wastes in a more acceptable

manner” than traditional

technologies

“EFTs help reduce use of raw

materials leading to increased

efficiency;

EFTs create new business

opportunities and … increase

overall competitiveness of the

company

UNGC and Environmental Sustainability:

Principle 8

https://www.unglobalcompact.org/what-is-gc/mission/principles/principle-8

UNGC and Environmental Sustainability:

Principle 9

https://www.unglobalcompact.org/what-is-gc/mission/principles/principle-9

References: UN Global Compact

• Cragg, W 2018, ‘Corruption, bribery, and moral norms across national boundaries’, in E. Heath, B Kaldis & A Marcoux (eds.), The Routledge companion to business ethics, 1st ed., ch. 4, pp. 573-589.

• Enderle, G 2014, ‘Some ethical explications of the UN framework for business and human rights’, ch. 8 in Williams (ed.), pp. 163-183.

• Hamid, U & Johner, O 2010, ‘The United Nations Global compact Communication on Progress policy: origins, trends and challenges’, in Rasche, A & Kell, G (eds.), The United Nations Global Compact: achievements, trends, and challenges’, Cambridge University Press, ch. 15, pp. 265-280.

• Independent Commission Against Corruption (ICAC) 2019, ‘What is corrupt conduct?’, viewed 2 May 2019 <https://www.icac.nsw.gov.au/about-corruption/what-is-corrupt- conduct>

References: UN Global Compact

• International Labour Organization (ILO) 2018, ‘Integrated strategy on fundamental principles and rights at work 2017-2023’, viewed 19 April 2019, <https://www.ilo.org/wcmsp5/groups/public/@ed_norm/@ipec/documen ts/publication/wcms_648801.pdf>

• Mantovani, M 2014, ‘The private sector role in the fight against corruption’, pp. 35-42 in Manacorda et al. (eds).

• Sandage, J 2014, ‘The universal approach of the United Nations Convention Against Corruption’, in S. Manacorda, F. Centonze & G Forti (eds.), Preventing corporate corruption: the anti-bribery compliance model, Springer, Switzerland, pp. 31-34.

• Transparency International 2018, ‘What is Corruption?’ viewed 2 May 2019 https://www.transparency.org/what-is-corruption

• United Nations 2008, ‘After the signature – a guide to engagement in the Global Compact’, United Nations Global Compact, viewed 19 April 2019 <https://www.unglobalcompact.org/library/241>

References

• United Nations (UN) 2018, ‘Global cost of corruption at least 5 per cent of world gross domestic product’, 18 Sept. 2019, viewed 21 April 2019, https://www.un.org/press/en/2018/sc13493.doc.htm

• United Nations Human Rights Council (UNHRC) 2008a,’Clarifying the Concepts of “Sphere of influence” and “Complicity”’, Report of the Special Representative of the Secretary-General on the issue of human rights and transnational corporations and other business enterprises, John Ruggie’, viewed 19 April 2019 https://documents- ddsny.un.org/doc/UNDOC/GEN/G08/134/78/PDF/G0813478.pdf?OpenElem ent

• United Nations Human Rights Council (UNHRC) 2008b,’Protect, Respect and Remedy: a Framework for Business and Human Rights’, Report of the Special Representative of the Secretary-General on the issue of human rights and transnational corporations and other business enterprises, John Ruggie’, viewed 19 April 2019 https://documents-dds- ny.un.org/doc/UNDOC/GEN/G08/128/61/PDF/G0812861.pdf?OpenElement

References

• Williams, OF 2014, ‘The United Nations Global Compact: what did it promise?’ Journal of Business Ethics, vol. 122, no. 2, pp. 241-251.

• Williams, OF (ed.) 2014, Sustainable Development: the UN Millennium Development Goals, the UN Global Compact, and the Common Good, University of Notre Dame Press.

• World Economic Forum (WEF) 2018, ‘Corruption is costing the global economy $3.6 billion dollars every year’, WEF 13 Dec. 2018, viewed 21 April 2019, https://www.weforum.org/agenda/2018/12/the-global- economy-loses-3-6-trillion-to-corruption-each-year-says-u-n/

• Zgheib, PW 2015, Business ethics and diversity in the modern workplace, IGI Global, pp. 196-210.