2010-08 - What if we are failing? - towards a post-crisis Compact for systemic change

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The Journal of Corporate Citizenship

38

August 2010

1470-5001

www.greenleaf-publishing.com/jcc

2010 Greenleaf Publishing Limited
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Turning Point

WhatIfWeAreFailing?TowardsaPost-CrisisCompactforSystemicChange

JemBendellAsia-Pacic Centre for Sustainable Enterprise,

Grifth Business School, Australia

has the un global compact (ungc)failed? This question deserves as muchattention as the search for evidence of suc-cess, if we are to be rigorous in our evalu-ation. The celebrations in New York tomark the tenth anniversary of its foundingwere justied and important. However, assomeone who held great hopes for this ini-tiative when I discussed it with its found-ers over ten years ago (Bendell 2000a), I

believe we need to think as freely, criticallyand ambitiously as we did back then if weare to ensure it evolves to meet the chal-lenges of our time.

Success or failure depends on what oneseeks to achieve. There are multiple aimsfor the UN, its member organisations, thecorporate participants, and the individualsinvolved, but the stated objectives of theUNGC are:

Mainstream the UNGC principles in1.business activities around the world

Catalyse actions in support of broader2.UN goals, including the MillenniumDevelopment Goals (MDGs)1

The UNGC has become the largest andmost international of voluntary responsi-ble business and nance initiatives, withover 5,000 members. It is normal forpeople involved in innovative and well-intentioned activities to gather informa-

tion to demonstrate the worth of what isbeing done and recruit more people to thecause. Yet growth should not be confusedwith success. And growth brings with itthe need for more critical introspection.In this essay I argue that experience ofthe Western nancial crisis makes it evenmore imperative that economic govern-ance issues, hitherto peripheral to thefocus of the Compact, must now become

central to its future.

1 All details of the UN Global Compact for thisarticle were taken fromwww.unglobalcompact.org, 1 June 2009.

Good people are good because theyve come to wisdom through failureWilliam Saroyan, 19081981
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lobbying, monopolistic practice, electoralnancing, rebel and civil war nancing,third world debt, and consolidation ofmedia ownership. In addition, I recom-mended that the Compact take measures

so that its existence did nothing to under-mine efforts to enhance mechanisms formandatory corporate accountability, andeven help its members to contribute toan enhanced accountability regime. In es-sence, I was arguing that learning to talkmore broadly about economic governanceissues is key to achieving systemic changein markets in line with the Compacts twomain goals (Bendell 2004).

It is understandable that some of the

difcult issues have been avoided in therst decade, as attention focused on re-cruiting members and creating partner-ships. Nevertheless, the Compact hasdone good work on anti-corruption, incor-porating a new principle, and on cuttingthe nancing of rebels and civil war. Ithas also supported the creation of the UNPrinciples for Responsible Investment,which address some investment issues,

although not directly the problems withderivatives and speculation. It has alsoencouraged corporate lobbying for effec-tive action from governments on climatechange. These are not yet part of a compre-hensive strategic approach to responsiblebusiness inuence on economic govern-ance, which now appears even more im-perative after a nancial crisis.

The Western nancial crisis is a dra-matic example of where people can seek

to learn from failure. Five important les-sons are relevant to the future of the com-pact. First, the nancial crisis shows howdevastating systemically irresponsiblebusiness practices can be to whole econo-mies. Second, it illustrates once again therisks to the public of regulatory captureby certain business interests. Third, thecrisis has revealed how there is no effec-tive and accountable global public policy

system for nance, with decisions in thehands of a few technical experts in centralbanks. Fourth, it highlights how volun-tary responsible business initiatives havenot effectively tackled the economic and

political dimensions of responsible busi-ness practice, having been something of asideshow to economic governance. Fifth,it highlights the inherent volatility of eco-nomic systems based on interest-bearing

money creation through private banks.Each of these areas has implications for

corporate responsibility, and can thereforebe part of the agenda of the Global Com-pact. It can begin a process by which dif-ferent parts of society address economicgovernance issues and how responsiblebusiness can be a part of a transforma-tion to more fair and sustainable forms ofeconomic governance. Yet if the Compactis to work on economic governance is-

sues effectively, another lesson should belearned from the crisis: the role of powerin shaping our views. For years criticismsof the nancialisation of the economywere being made from many differentquarters, including the corporate respon-sibility community (Bendell et al. 2009).Yet these views, and the people who articu-lated them, did not have access to power-ful initiatives such as the Compact. This

may have contributed to the growth ofa community of critics.4Principled lead-

ership does not simply involve bringingpeople together, but also requires pushingin one direction even though it will causesome powerful people and organisationsto push back against you.

The paradox we face today is that busi-ness executives are needed to becomemore involved in policy processes, yet atthe same time, this generates new prob-

lems about conict of interest. We ur-gently need clarity about the potentialprogressive role of business in policy ne-gotiations about climate change, for in-stance. The Climate Savers initiative ofthe Compact is helping demonstrate togovernments that many businesses wantto see action. However, this will also legiti-mise further corporate involvement. Towhat effect? Unfortunately some business

executives involved in the policy processes

4 For a review of some of the criticisms of theCompact visit http://globalcompactcritics.blogspot.com, accessed 28 May 2010.
http://globalcompactcritics.blogspot.com/http://globalcompactcritics.blogspot.com/http://globalcompactcritics.blogspot.com/http://globalcompactcritics.blogspot.com/


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what if we are failing?

are paid by companies who seek sectoralallocations of carbon, so that they wouldhave cheaper carbon than other types ofcompany. Such a policy would not helpreduce carbon emissions. The emphasis

on cap and trade, rather than carbon taxeslevied on energy producers is also onethat presents more opportunities to thenance industry, among other businessinterests (Dag Hammarskjld Foundationet al. 2006; Bendell 2010). Given the criti-cal importance of getting climate policiesright, the way companies can be effec-tive participants in economic governancepolicy processes is more key than ever.The management academe has tradition-

ally not been very open to insights frompolitical philosophy, yet important workis needed in the eld to guide principledpractice (Coen et al. 2010).

So has the UN Global Compact failed?It has failed to meet some of its specic ob-jectives at this stage, yet its conveners andparticipants have succeeded in globalisingthe conversation about how business canplay a positive role in society. Its now time

to shift that conversation to how we cancreate more systemic change. Key areasfor future attention include:

Generating more accountable andsustainable economic governance5

Harnessing business to communi-cate about global challenges and theneed for responsible business andnance

Developing insight into methods forcreating systemic change for fair andsustainable economies

Cultivating the character of executivestatespersons to participate in globalchange processes in personally ac-countable ways

5 A more detailed discussion of the elementsof this agenda can be found in Bendell 2004.How the Compact could inuence other neweconomic governance mechanisms is coveredin Bendell 2000.

Enabling the effective mobilisation ofdiverse constituencies on these workareas by continuing to make the Com-pact more open and accountable

The Global Compact has often been de-scribed as a learning initiative. The im-portance of learning from mistakes wasemphasised by George Kell after the ap-pointment of Chey Tae-Won to the board(Mr Chey had been embroiled in corrup-tion scandals in his country):

The fact that Mr Chey and the SKGroup had demonstrated much will-ingness to learn from past transgres-sions was a key factor in the decision-

making process. By all accounts, theSK Group, under Mr Cheys leader-ship, has emerged as a frontrunnerin corporate governance in Korea. Tothe Global Compact, this is highlyrelevant and a sign of positive changein the spirit of the Global Compactprinciples. It also reinforces the no-tion of continuous performance im-provement (Kell 2009).

The staff of the UN Global Compact havesucceeded in creating a historic initiativewith global reach. For it to have a positivefuture, let us assess its progress in light ofthe scale of the global challenges. Let uslearn from the failure of economic govern-ance. Let us learn by allowing ourselves toconsider for a moment that the Compactmight have failed. Let us learn from thepossibility that we ourselves are failingto see uncomfortable realities because of

our own careers and self-esteem. Becauseto learn about transforming our societieswe must rst be open to the idea that wemight be failing ourselves. The pride onemay feel at working with or within theUnited Nations, and representing onesinstitutions at that level, should not closeour hearts and minds to a deeper explora-tion of whether what we are doing is trulyenough and in time. The end of folly is

the beginning of wisdom, which is theultimate goal if learning is indeed thekey benet of participation in the UNGC.Such deeper exploration may lead us todevelop a more ambitious agenda to co-


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create fair and sustainable economic sys-tems (Bendell 2010).

Unless we learn to fail, we fail to learn.Ultimately, the only real failure in lifeis not to be true to the best one knows

(Hindu Prince Gautama Siddharta, thefounder of Buddhism, 563483 BC).

References

Bendell, J. (2000a) Civilizing Markets, TheUN Chronicle 37.2 (www.un.org/Pubs/chronicle/2000/issue2/0200p43.htm).

(ed.) (2000b) Terms for Endearment: Busi-ness, NGOs and Sustainable Development

(Shefeld, UK: Greenleaf Publishing). (2004) Flags of Inconvenience? The Global

Compact and the Future of the United Nations(ICCSR Research Paper Series No. 22-2004;Nottingham, UK: Nottingham University,www.nottingham.ac.uk/business/ICCSR/research.php?action=download&id=58).

(ed.) (2009) The Eastern Turn in ResponsibleEnterprise (Manila, Philippines: Lifeworth).

(ed.) (2010) Capitalism in Question: The Life-worth Annual Review of Corporate Responsibil-ity in 2009 (Manila, Philippines: Lifeworth).

Coen, D., G. Wyn and G. Wilson (2010)The

Oxford Handbook of Business and Government(Oxford, UK: Oxford University Press).

Dag Hammarskjld Foundation, Durban Groupfor Climate Justice and The Corner House(2006) Carbon Trading: A Critical Conver-sation on Climate Change, Privatisation andPower, www.dhf.uu.se/publications/dd48.html, accessed 28 May 2010.

Kell, G. (2009) Letter to the Editors ofForeignPolicy, 28 April 2009.

Lee-Brago, P. (2009) No Country on Track withMillennium Development Goals, The Philip-

pine Star, 26 April 2009 (www.philstar.com/Article.aspx?articleId=461331&publicationSubCategoryId=63).

Naidoo, K. (2007) MDGs at Midpoint:

The money is there, the political willisnt, IPS, www.ipsnews.net/columns.asp?idnews=38552, accessed 28 May 2010.

UNDESA (2008) Millennium DevelopmentGoals Report 2008, http://mdgs.un.org,accessed 28 May 2010.

UNICEF (2009) State of the Worlds Children2009(Geneva: UNICEF).

World Watch Institute (2009) State of the World2009: Into a Warming World (Washington,DC: World Watch Institute).

q

Since 1995 Dr Jem Bendell has advisedcorporations, NGOs and the UN onresponsible business, in over a dozencountries. In 1997 he co-authored therst book on innovative partnershipsbetween business and NGOs, and hassince written over 100 publications,

including his latest book The Corporate Responsibility

Movement (Greenleaf, 2009). He was instrumental inthe creation of the Marine Stewardship Council and theFinance Innovation Lab. His early writings on NGObusiness partnerships helped inspire the founders ofthe UN Global Compact to engage with business innew ways.

u Asia-PacicCentreforSustainableEnterprise,GrifthBusinessSchool,226GreyStreet,South

Bank,POBox3370,SouthBrisbane,Queensland

4101,Australia

! [email protected]

2010-08 - What if we are failing? - towards a post-crisis Compact for systemic change

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