United Nations Compact for a New Century

United Nations Compact for a New Century

The UN Global Compact (UNGC) is a strategic policy initiative for businesses that are committed to aligning their operations and strategies with ten universally accepted principles in the areas of human rights, labor, environment and anti-corruption (United Nations, 2010). The framework was developed to help international organizations develop responsible corporate leadership and implement policies that are favorable to the world's population. The UNGC brings business leaders together with other institutions to hold conferences, discuss best practices, and finds ways to promote responsible corporate citizenship (Janney, Dess, and Forloni, 2009). The UNGC was launched in July 2000 and has 6,000 participating businesses in 130 countries worldwide (United Nations, 2010). The Compact has had a positive effect on international businesses and in developing countries.

The UNGC is both voluntary and visible; firms who join it are publicly pledging support to the values that the UNGC sets forth and member firms must regularly publish a Communication on Progress (COP) report (Janney, Dess, and Forloni, 2009). The COP requires firms to self-audit their progress toward supporting each of the 10 principles (Rothlin, 2010). The COP represents a commitment by companies to transact business in a transparent and accountabile manner. Failing to publish a COP can cause a firm's status to be listed as inactive, forbidding them from using the trademarks and affiliations of the UNGC (Janney, Dess, and Forloni, 2009).

One of the goals of the UNGC is for businesses to be self-governing, which will benefit other stakeholders such as local and national governments. By voluntarily ascribing to the UNGC, firms may be able to convince stakeholders that more stringent and costly laws are unnecessary (Janney, Dess, and Forloni, 2009). Many regulatory groups place demands on shareholders for transparency and accountability about topics related to the UNGC, such as environmental concerns (Janney, Dess, and Forloni, 2009). A company that joins the UNGC has the advantage of having the transparency desired by the various stakeholders by filing it's COP.

An example of how the UNGC has been positively implemented by a company is that of ZTE Corporation. ZTE Corporation, a Chinese company and leading global provider of telecommunications equipment and network solutions is a member of the UNGC (ZTE, 2009). In support of the global campaign to protect the environment and conserve energy, ZTE has conducts R&D initiatives to develop green solutions and has been recognized and rewarded by many organizations for its efforts (ZTE, 2009). Over the years, ZTE has actively participated in public welfare activities worldwide, including natural disaster relief and educational aid programs (ZTE, 2009). This shows the positive effect that UNGC membership has had on businesses in China.

Although the primary obligation for human rights is with governments, globalization results in a number of challenges and opportunities that make it clear that businesses may have significant impact on human rights (Buhmann, 2009). Even though primary duties for human rights rest with governments, the economic, social and political power of business in today's world and in many countries, particularly in the developing world, makes business a potential partner for the implementation of human rights (Buhmann, 2009). Private regulatory regimes have been evolving as a result of globalization challenges, such as social expectations of business that regulate corporate behavior (Buhmann, 2009). The debate on social and particularly human rights responsibilities of companies has contributed to making it clear that poor governance or lack of will on the part of the government should never be an excuse for lax human rights records with regard to the full range of civil, cultural, economic, political and social human rights, even if business contributions may present an option for strengthened implementation of human rights (Buhmann, 2009).

Business respect for human rights in the work place could mean increased respect for and active use of rights of association and organization, just and favorable conditions of work, including fair wages that make it possible for workers and their families to have an adequate standard of living, non-discriminatory remuneration practices, safe and healthy working conditions with rest, leisure and reasonable working hours (Buhmann, 2009).

In relation to the overall aims set out in the preamble of the UN Charter, human rights compliant and promotional business action could contribute to social progress and better standards of life (Buhmann, 2009). By setting up educational or health service facilities, businesses might even contribute to implementation of government obligations (Buhmann, 2009).