In January 1999, United Nations Secretary General Kofi Annan called up business leaders at the World Economic Forum in Davos to “give a human face to the global market.”
His timing was awkward. The UN was only just recovering from US budget cuts; the developing world was drowning in debt; much of South and East Asia was still in the grip of the Asian financial crisis; and development aid was at its lowest level in half a century. It was also a time when hostility to corporate-led globalization, most visible in a thriving anti-sweatshop movement, was growing. Mere months after Davos, anti-WTO protests swept Seattle while Naomi Klein published her best-selling anti-corporate critique, “No Logo.”
Annan saw this dissent as an opportunity. “When people lack faith in the market,” Annan warned the business leaders, “protectionism, populism, nationalism, ethnic chauvinism, fanaticism and terrorism” arise. “Our challenge today,” he went on, is to devise a “global compact” to “compensate the victims of market failures” and replicate on a global scale the social policies that restored political stability during the “long post-war period of expansion.”
Urgent in tone but fuzzy on the details, Annan’s speech revealed how much power states had conceded to capital since the 1970s, and how dearly organized labor had paid for it. When he urged executives to not “wait for every country to introduce laws protecting freedom of association and the right to collective bargaining” but to “at least make sure your own employees, and those of your subcontractors, enjoy those rights,” he wasn’t demanding they respect unions; he was pleading for scraps.
The UN Global Compact—the voluntary corporate sustainability pact born out of Annan’s speech a year later—was never meant to correct, or even acknowledge, this power asymmetry. The rise and fall of the UN Center for Transnational Corporations, which was developing binding codes of conduct for corporations until the US government and the Heritage Foundation forced it to close down in 1992, had proved that the United States wouldn’t tolerate a corporate watchdog in the UN system.
What they would allow was a guide dog. It would have no teeth, but brim with enthusiasm for a collaborative, nonthreatening plan to help companies to ‘be better’ on their own terms. Gently, the organization could encourage companies to make ambitious commitments, without policing their actions. That is what the New York based UN Global Compact, which receives funding both from member companies and some governments, became, and remains, to this day.
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Today, the Compact boasts nearly 10.000 member companies and has grown into what its current CEO, a Danish ex-pharma executive named Lise Kingo, says is “probably the largest sustainability business initiative in the world.” As a guide dog (or is it lapdog?), the Compact isn’t allowed to ‘police’ (or even examine) the real-world actions of its member companies. Instead, it turns to companies’ declared intentions and the progress statements that their chief executives submit to the Compact every year. These self-congratulatory progress letters from member companies form the basis of the Compact’s near religious belief that a “business case” for anything under the sun can be cooked up in a heartbeat.
This market-driven logic has led to some surreal scenarios. In 2006, a vice president of Goldman Sachs and then-member of the Global Compact board offered the secretary general the notorious investment bank’s research assistance to help the UN sell the business case against poverty and inequality more effectively to the private sector. Goldman Sachs is no longer openly counseling the UN (though UN Women still takes advice from Lloyd Blankfein). But the growing presence of corporate managers in the UN system has become more noticeable in the past years.
Paul Polman, the controversial former chief of Unilever and vice chair of the Global Compact, has openly bragged about his role in shaping the UN’s anti-poverty Sustainable Development Goals. In 2016, the International Chamber of Commerce (ICC), coincidentally also chaired by Polman, was granted observer status in the UN General Assembly: the same role occupied by Palestine. This gave business, in the ICC’s own words, a “direct voice in the UN system” for the first time in history.
The proliferation of corporate partnerships is turning the UN’s development wing into a sturdy pillar of global capital’s myth-making apparatus. These projects depict excessive corporate power as natural and desirable: a seductive ideology for the private sector, but one that’s more than a little displaced for a body like the UN.
From UN Women and the UN Foundation to the UN Population Fund, many UN agencies are, with different degrees of reluctance, teaming up with big business and propagating the “business case” gospel for them. When in 2013, the head of the World Health Organization called “Big Food, Big Soda, and Big Alcohol” and their “fear of regulation” one of the greatest threats to public health and lashed out at their false promises of self-regulation, lobbying efforts and their use of misleading research to “confuse the evidence and keep the public in doubt,” she was an exception.
Then, when a couple of weeks ago, more than 180 CEOs released a statement about their maturing vision on the “purpose of a corporation” and their commitment to a kinder flavor of capitalism, the mainstream media treated their promises as something new. In reality, they were recycling the same voluntary promises that their predecessors made to Kofi Annan two decades earlier. While they’ve made some tweaks in the language, replacing ‘the business case’ and corporate responsibility with ‘purpose’ and stakeholder capitalism, their motive—to keep organized labor in its place and water down demands for radical change—is the same.
On 24 June 2019, I watched the Global Compact’s CEO Lise Kingo reflect on the organization’s evolution at an event in London. Pointing out how “closing the gender gap alone could add $US 28 trillion to global GDP” and “bold climate action could yield a direct economic gain of $US 26 trillion” Kingo argued that the business case for responsible business should be self-evident by now, adding that she hoped “we can soon stop discussing whether this is the case or not.”
When Kingo brought up a recent survey, in which 68 percent of member companies reported that their chief executives were “personally involved in the sustainability agenda,” she cast it as proof of the Compact’s positive impact. A speaker from Nestlé echoed the sentiment. “We’re all on a journey,” she told her fellow managers, “but we’re all on different places in that journey.”
“There’s no wrong or right place to be,” the speaker went on. “It’s really about making sure that you know where you want to get to.”
It’s with nonsensical bromides like this that corporate voluntarism is transforming rights into favors, replacing accountability with responsibility and advancing the false notion that corporations don’t need binding obligations to bequeath the global marketplace with the “human face” Kofi Annan begged them for.
At the end of the conference, the organizers asked us to leave the event with “a thousand new ideas” and to write the best of them down on a large white notice board put up on the wall for that purpose. To my surprise, many attendees instead used the board to air their annoyance with the speakers and their out-of-touch optimism. “Our house is on fire,” someone had written, “more ambition and urgency please.”
“There is huge urgency,” a green-penciled comment read, “yet words as ‘invite’, ‘encourage’ and ‘suggest’ are used by the panel.”
Others mocked the naivety of “motivating individual companies” to do the right thing, lamented the silence on tax evasion and called for “systemic approaches.” “We apparently still believe that we can have economic growth [within] a finite planetary system,” observed another.
The state of the ‘idea board’ exhibits the broader legitimacy crisis that the Global Compact finds itself in today. While critiques of the Compact are as old as the initiative itself—over the years, it has been accused of serving as a “Trojan Horse” that blue-washes rapacious corporate power, embarrasses the UN’s credibility and waters down international labor standards—these critiques usually come from NGOs, trade unions or, in some cases, UN internal inspection units. But here in London, it was business people who ridiculed the Compact’s willfully naïve and misguided vision on progress. Their irritation illuminates how, contrary to their C-suite bosses, most corporate workers have a lot to gain from a more democratic economy and equal workplace.
As cringeworthy as this language is in a conference room, it creates real problems in the real world—particularly when it comes to labor rights and supply chains.
Even Guy Ryder, now the Director General of the International Labour Organization, pointed out in a 2010 book about the Global Compact that “many…firms that pledge their undying devotion to the Global Compact have organized their work using sub-contracting, contracting out, short-term contracts, phony self-employment and precarious work so as to avoid employment relationships and ensure that they never have to bargain with workers whose rights they claim to honour.”
Ryder, who at that time led the International Confederation of Free Trade Unions (ICFTU) and sat on the board of the Global Compact Board, also noted how “corporate responsibility was spawned by public relations” and that, regardless of the good intentions of some companies, “it suffers from its origins—a public effort to prove virtue and/or correct (or distort) images.”
One such distortion is the notion that social justice can be achieved without real accountability from corporations. The Global Compact sees its role as complementary to watch-dogs and to those that advocate for binding solutions, but much of its labor-focused work helps big businesses portray binding instruments and strong, independent unions as unnecessary.
These kinds of self-regulatory programs are “actively standing in the way of independent, enforceable, worker-driven programs” says Theresa Haas from the Worker Driven Social Responsibility Network, which works on transparent and binding supply chain initiatives, such as the Fair Food Program and the Bangladesh Accord on Fire and Safety. “Ultimately,” she says, “they serve to protect corporations’ reputations and have not at all been proven effective at improving conditions on the ground.”
Today, it’s Philip Jennings, the former general secretary of UNI, a global union federation, who—with Shannon Burrow from the International Trade Union Confederation–represents labor on the board of the Compact. He told me in a phone call that, with the recent momentum for binding instruments and the changes that the ILO and the OECD have made to their (nonbinding) codes on business and human rights the past years, the Compact “should strengthen its compliance and integrity measures.”
But that’s not going to cut it. This past month alone, watchdogs have exposed Coca Cola–a Global Compact member and Business Roundtable signatory—as the largest plastic polluter on the planet. What’s more, BP and Shell—some of the Compact’s earliest members—have been revealed to be spending millions of dollars to block climate emergency legislation. As long as the guide dog sticks to its power-blind, struggle-free vision of social change, it will keep tripping over reality.
What the guide dog could do to change course and to channel its enthusiasm toward the UN Binding Treaty on Business and Human Rights that is currently being developed in Geneva to create binding rules for corporations. Jennings sees the treaty as “the way forward” for global worker’s rights says he will use his position as a board member to push the Compact to support it as well.
Meanwhile, Deputy Secretary General Amina Mohammed recently signed a pact with the World Economic Forum, ushering in a new phase of Davos collaboration. If history serves as any guide, there’s a good chance the billionaires will prevail.