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The Global Compact Report


Introduction

The Global Compact is a strategic policy scheme by the United Nations meant for corporations that are willing to align their business operations and working strategies with ten principles that are universally accepted with regards to human rights, anti-corruption, and environment. The United Nations Global Compact was launched in July 2000 (Tully 2007, 101-106)[1].

The two principles addressed are:

The principle against corruption

This was the 10th principle on corruption adopted on June 24, 2004. Corruption is a multifaceted and convoluted issue with a broad scope. Many tools and resources have been established to help firms and corporations to develop and effectively implement policies that restrict corruption activities. In order to stop and check corruption within companies, the Global Compact came up with certain guidelines on how corporations can be made to engage in clean business.

The Global Compact recommended that corporations should incorporate a vivid anti-corruption commitment into their corporate citizenship program. This principle also requires that corporations should avoid all forms of corruptions bribery and extortion (Rasche 2010, 520-563)[2].

The company’s point of view

The incorporation of this principle into the operations of the company may not be difficult. However, there is high likelihood that the company may not be able to come up with the appropriate and effective strategic means of tracking corrupt activities since the reality is that corruption takes place secretly and in many cases may involve the top executive officials; this actually makes it potentially difficult for responsible junior officials to effectively investigate any corrupt dealings within the company.

So, as much as the company may be willing to incorporate the principle in its business operations, the outcome may not be positive as expected.

The principle about the respect of human rights

Under this principle, business organizations are expected to give support and also respect the preservation of human rights that are recognized and proclaimed internationally. The business corporations are also required to ensure that they are never be involved in the abuses of human rights (Mares 2004, 94-96)[3].

The company’s point of view

Respect for human rights is very important both for the reputation and success of the company. It is important to note that any business entity that does not respect human rights is bound to fail. This stems from the fact that the most important part of a company is the personnel.

A company needs human beings to provide labor and also needs customers or clients to consume its products (Stationery Office 2009, 71-75)[4]. Without respect to human rights, the company fears it may lose out in business which is the case with any business entity (Alston 2005, 141-157)[5].

Positive and negative lessons from the company’s perspective and other companies’ experience in the process implementing the practices

There are a number of positive lessons that have been learnt in the process of implementing the practices. One of them is that integration of the principle or respecting human rights have given the companies’ workforce confidence and assurance about the protection of human rights.

This has motivated the workforce and hence increased commitment to companies’ business operations. The companies have therefore learnt that respect for human rights is not only important for companies’ reputation and public image, but also to get the commitment of the workforce. The integration of the principle against corruption has managed to lower the level of corruption within the companies even though it may not be possible to eliminate corruption totally within the companies’ business operations.

As much as there are positive lessons to be learnt there are also negative aspects of the principles that have been learn. The companies have learnt that it is easy to incorporate the principle of anti-corruption in their operations but almost impossible to operationalize it due to possible involvement of top executives of the companies. Meanwhile, the companies have also learnt that it could be costly to implement these principles since they add to the cost of companies’ business operations.

Benefits and risks to key stakeholders

The implementation of anti-corruption principle is of great benefits to shareholders of the company since the effectiveness of its implementation is highly likely to reduce possible embezzlement of funds which may lead to collapse of the company (National Technical Information Service 2005, 113-118).

The public reporting about the company’s intolerance to corruption passes a strong sign customers and both existing and potential investors about the company’s intention to engage in clean business transactions and possible growth of the company.

The risk involved here is that in case the top executives are involved in corruption and lack of respect for human rights, any attempt by junior officer to address the issues of both principles may lead to such an officer losing his or her job and therefore livelihood. The violation of these principles by the company may tarnish the image of the company and hence drive away customers and investors; this has the possibility of affecting the share values of the company. Consequently, the stakeholders may lose in their capital investments.

Recommendations

In order to ensure successful implementations of the above principles, the following recommendations are appropriate:

  1. The United Nations Global Compact should come up with a strategy of rewarding companies that are showing positive out come as a result of implementing the principles in within the context of their business operations;
  2. The Global Compact should also come up with a certain framework to punish signatories companies that default on the principles;
  3. The companies should not just be expected to implement the principles simply because they are signatories; the Global Compact should assists companies in implementing the principles by providing consultancy services to the companies;
  4. The accountability should be decentralized and the Global Compact should work in collaboration with governments where signatories operate. This implies that the Global Compact should monitor implementations of the principles through local governments.

Reference List

Alston, Philip. 2005. Non-state actors and human rights. Collected courses of the Academy of European Law: 141-157.

Mares, Radu. 2004. Business and human rights: a compilation of documents: 94-96.

National Technical Information Service. 2005. Daily report: People’s Republic of China, Issues 113-118. The University of Michigan: 113-118.

Rasche, Andreas. 2010. The United Nations Global Compact. Achievements, Trends and Challenges: 101-106.

Stationery Office. 2009. Any of Our Business? Human Rights and the UK Private Sector First Report of Session 2009-10: Vol. 2 Oral and Written Evidence: House of Lords Paper 5-ii Session 2009-10: 71-75.

Tully, Stephen. 2007. International documents on corporate responsibility. U.S.: Edward Elgar Publishing.

Footnotes

  1. Tully, Stephen. 2007. International documents on corporate responsibility. U.S.: Edward Elgar Publishing
  2. Rasche, Andreas. 2010. The United Nations Global Compact. Achievements, Trends and Challenges: 101-106.
  3. Mares, Radu. 2004. Business and human rights: a compilation of documents: 94-96
  4. Stationery Office. 2009. Any of Our Business? Human Rights and the Uk Private Sector First Report of Session 2009-10: Vol. 2 Oral and Written Evidence: House of Lords Paper 5-ii Session 2009-10: 71-75.
  5. Alston, Philip. 2005. Non-state actors and human rights. Collected courses of the Academy of European Law: 141-157.
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IvyPanda. "The Global Compact." February 7, 2019. https://ivypanda.com/essays/the-global-compact/.

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IvyPanda. 2019. "The Global Compact." February 7, 2019. https://ivypanda.com/essays/the-global-compact/.

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IvyPanda. (2019) 'The Global Compact'. 7 February.

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