The Role Of Voluntary Business Initiatives In An Era Of Political Fragmentation
Georg Kell
Chairman, Arabesque
Apr 6, 2023,12:24pm EDT
The success of the recently concluded UN Biodiversity Conference COP15 in Montréal where UN Member States pledged to protect a third of the world’s biodiversity on land and sea by 2030 demonstrates that multilateralism is essential to safeguard our future. However, this encouraging development is overshadowed by political fragmentation and big power rivalry.
Military expenditures are rising in many countries, fueled by narratives of fear and divisiveness while the willingness to cooperate on common threats to humanity, in particular climate change and poverty, is taking a back seat. A permanent member of the UN Security Council is waging a brutal war of aggression, violating the UN Charter. The rule-based system that has supported peace and enabled economic development is degrading. Economic nationalism and protectionism are on the rise and are jeopardizing efforts to tackle climate change and to increase development cooperation.
This throws a spotlight on the role of voluntary business initiatives such as the UN Global Compact. The question arises whether these initiatives, which were founded on the bedrock of international cooperation and the universal principles and norms of the United Nations, are still relevant in today’s world and what role they should play.
The Global Compact was initiated in the late 1990s by then UN Secretary-General Kofi Annan with the goal to give globalization a human face by embedding ten universal principles in the areas of human rights, labor rights, the environment and anti-corruption in business practices everywhere .
Since 2000, the Global Compact has grown to become the world’s largest corporate sustainability initiative with more than 18,000 participant companies and 3,800 non-business signatories from all around the globe. It has spun off a series of other global initiatives, such as the Principles for Responsible Investment in 2006 whose mission has been the integration of environmental, social, and governance (ESG) factors into investment analysis and decision-making, as well as regional and country-level voluntary initiatives.
Some observers who are critical of voluntary business-led initiatives or who obsessively focus on greenwashing while ignoring state failures do not recognize that voluntary initiatives have produced massive positive social and environmental outcomes and have improved the lives of millions of people in the workplace and in communities around the world.
Given they are not legally-binding, voluntary initiatives cannot bring about systemic changes, but they play an important role in creating public awareness and in preparing the ground for policy changes across a range of important issues, such as child labor, decarbonization, women’s empowerment and anti-corruption.
The recently published Annual Report by the UN Global Compact suggests that the momentum behind the initiative is undiminished. Business participants continue to improve their performance and disclosure in alignment with the Ten Principles, and their engagement in numerous themes that advance public interests at the national and global level is increasing.
This could be explained by several factors. First, the urgency to act on issues such as climate change, water scarcity, poverty, women’s empowerment and anti-corruption to safeguard business growth continues to increase, irrespective of - and sadly often because of - power politics. Second, many participants are in countries that do not want to get drawn into power rivalry. Their agenda remains focused on economic development and on environmental and social issues that matter for their success. And third, participants headquartered in OECD countries and China are under greater political pressure to demonstrate good environmental and social performance and collaboration along the value chain in order to maintain their license to operate.
The UN Global Compact and other global voluntary business-led initiatives now have an opportunity to evolve further and play an even more important role.
Rediscovering the Power of the UN Global Compact Principles
The Ten Principles of the UN Global Compact are derived from international frameworks and agreements, such as the Universal Declaration of Human Rights, the International Labor Organization’s core labor standards, the Rio Declaration on Environment and Development and the United Nations Convention against Corruption. These frameworks are enshrined in numerous national laws, and governments all over the world frequently proclaim their importance.
The legitimacy of the Principles offers businesses the opportunity to contribute to the continued relevance of international law and norms so the lessons of history will not be forgotten. The simplicity of the Principles allows for pragmatic action while avoiding hypocritical morality or disrespect for diversity. By embracing the Ten Universal Principles, businesses help counter narratives of fear, racism and ethnic chauvinism whether they be based on ignorance of history or the intent to sow divisiveness.
Doubling down on collaboration to tackle global public good challenges
The need for more international collaboration is growing to tackle global challenges that countries cannot solve on their own. But the political will to do so risks losing momentum as ancient concepts of power are once again on the top of the agenda.
In this scenario, voluntary initiatives can play an even more important role in addressing global challenges such as climate change and biodiversity. By collaborating across cultures and political divides, by engaging in thematic platforms and by spreading technological solutions and know-how, UN Global Compact participants can fill part of the void left by the inaction of governments. By doing so, businesses can build bridges of mutual understanding.
Business-to-business collaboration to tackle climate change and other global public good priorities may not be enough to change the tide. But it may gradually create an awareness that humanity has a new common enemy and at some point, decision-makers in halls of power will also realize that the real enemy is not “them” but “us” and that collaboration across political and cultural divides is the only way to safeguard the future.
A greater focus on developing countries
The UN Global Compact also has the potential to make a greater contribution where it matters most: in the developing countries of Africa, Asia and Latin America, home to the great majority of the world’s young people. Growing sustainable and responsible business practices in these regions by supporting country networks and their activities can make a big difference in the fight against poverty and climate change. Technological advances in areas such as clean decentralized energy production and smart green farming technologies offer fresh opportunities.
More than two decades ago Kofi Annan challenged the global business community to support the UN goals - peace, human rights and sustainable development - by embedding the UN Global Compact’s Ten Principles in their strategies and operations through shared learning, dialogue and partnerships. Today, his call to action is more important than ever. In an increasingly fragmented world, the core values of the UN offer a much-needed narrative of hope, mutual understanding and respect to counter the forces of fear and divisiveness.
This article was co-authored with Sanda Ojiambo, Executive Director & CEO of the UN Global Compact
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Chairman of the Board of Arabesque, a technology company that uses AI and big data to assess sustainability performance relevant for investment analysis and decision making
Founder of the United Nations Global Compact, the world's largest corporate sustainability initiative. During my career of almost three decades at the United Nations, working directly with former Secretary Generals Kofi Annan and Ban Ki-moon, I built the UN Global Compact and oversaw the launch if its sister initiatives, including the Principles for Responsible Investing (PRI), the Principles for Responsible Management Education (PRME), and the Sustainable Stock Exchanges (SSE).
Spokesperson of the Volkswagen Sustainbaility Council
I started my career as a research fellow in engineering at the Fraunhofer Institute for Production Technology and Innovation in Berlin. I then worked as a financial analyst in various African and Asian countries before joining the United Nations in 1987. A native of Germany, I hold advanced degrees in economics and engineering from the Technical University of Berlin.
