Global Policy Forum

By Alan Boyd

"Do they listen? Will they learn?" Such was the ringing challenge laid down by the environmental group, Friends of the Earth, when it joined 20,000 anti-globalization protesters in a tempestuous ambush of the World Economic Forum two years ago. Inside, the same message was being delivered by United Nations Secretary General Kofi Annan, who warned that big business ignored the social implications of inequalities in wealth at its peril. "Think of ways that your company can help mobilize global science and technology to tackle the interlocking crises of hunger, disease, environmental degradation and conflict that are holding back the developing world," he lectured. As the forum's members gather again next week in Davos, Switzerland, there will be much soul-searching over whether the movement is living up to its lofty ideal of "improving the state of the world" or, alternatively - as social activists charge - is nothing more than an elitist corporate club.

Since the 2002 confrontation, the guardians of free enterprise have opened a direct dialogue with their critics and promoted core principles that strive to make business more responsive at a social level. Responding to Annan's plea, a handful of multinationals have pledged to set aside a portion of annual earnings to help bridge the technological gap that is contributing to the income gap and breeding poverty. Other executives have forged environmental alliances with the green movement or are sitting down with human-rights groups to hammer out covenants on child labor and low wage levels in the Third World. Their guiding light is a Global Governance Initiative (GGI) established in late 2002 that has seven groups of experts analyzing how business can relate to the Millennium Summit issues of peace and security, poverty, hunger, education, health, environment and human rights. Separate initiatives have been launched for each segment, galvanizing unprecedented levels of debate among the captains of industry, non-government pressure groups and their political masters. But are the boardrooms really listening?

Probably not, according to the first annual review of GGI, released as part of Davos 2004, which suggests that most corporations - as well as governments, international organizations and civil society - have failed to support the goals of the 2000 summit. Convened by the UN, the summit of 189 countries set a deadline of 2015 for achieving substantial progress in those problems that were considered most likely to undermine global stability. The declaration was subsequently adopted by the forum as part of its strategic vision.

Forty GGI consultants found that two-thirds of forum participants were not doing enough to advance the goals; in fact, none of the seven segments merited a score of more than 4 out of 10. Peace and security, hunger, education, environment and human rights all rated a score of 3, representing minimal change from the previous year. Poverty and health were given 4 points. "In other words, for all of its most important goals, the world is failing utterly to put forward the needed effort," the reviewers noted.

What makes the results all the more surprising is that they point to a surprisingly low response by European and North American groups, which are more conscious of the importance of corporate governance than their Third World counterparts and dominate the forum's membership. Europe, home of the Geneva-based forum, accounts for 430 of the 1,007 members and the United States is sending 228. In contrast, the entire continent of Asia has only 131 members, and most of these are from Japan, India or Russia. China and South Korea are deeply under-represented, with a mere seven delegates from each country; Malaysia is sending four delegates this year, Singapore two, while Thailand will have a sole representative at the most influential global economic caucus. Not surprisingly, some independent studies have suggested that regional differences are an important factor, with businesses and governments in advanced countries twice as likely to devote time to social issues as their Asian, South American or African counterparts.

Amnesty International, which has a business dialogue with the forum, reported that Western members were themselves split on the issue: while there had been an encouraging improvement in the attitude of European oil firms toward human rights, North American corporate leaders were slower to respond. And within individual business sectors, larger corporations are far more likely to adopt a more responsible position on key issues, probably because they are more visible and have bigger resources.

One reason advanced by the review team for the lack of progress was the absence of any real partnership, with political leaders often "scarcely trying", while businesses and civil-society groups were "neither able nor willing to compensate for the inadequacies of government efforts". Forum president Klaus Schwab admitted after the 2002 showdown over globalization that business had "lost its credibility as a trustworthy partner" after the collapse of Enron and a host of other corporate scandals that were linked to fraud and greed.

Executives of large corporations have also conceded during forum sessions that they have difficulty balancing the need for social responsibility with their paramount duty toward shareholders. AOL Time Warner chief executive Richard D Parsons told one plenary discussion that while corporate leaders had to think beyond their pursuit of profits, this should not "override a corporation's fundamental obligation to make a reasonable return for investors". The ereviewers for the Global Governance Initiative cautioned that their findings were subjective because of the short evaluation period of 12 months, and that a longer time frame might produce a different outcome.

Yet there have been separate indications that corporate leaders - and their erstwhile allies - are not doing enough. A survey of the environmental standards of business found that reductions in greenhouse emissions by individual firms such as British Petroleum and Du Pont had been nullified by the rampant destruction of tropical forests in Asia and South America. Poverty was exacerbated by corporate backing for protectionist trade policies, especially in the agricultural sector, the withholding of technology transfers and the overzealous enforcement of intellectual property rights.

In December a study on the forum's global health initiative by Harvard University and the Joint UN Program on HIV/AIDS (UNAIDS), based on a survey of 8,000 corporations in 103 countries, concluded that business was not playing a significant role in the fight against AIDS. Only 47 percent felt that the disease would have some impact on their operations, and most of these were situated in southern Africa and Asia, which have the highest incidence of the human immunodeficiency virus (HIV). Although 21 percent of reporting firms said their existing policies and programs were sufficient and effective, a modest 6 percent actually conformed with guidelines laid down by medical agencies. "There is no doubt that in recent years the business community has started waking up to the enormous threat posed by the AIDS epidemic to its workforces and markets," said Dr Peter Piot, executive director of UNAIDS. But he added: "This survey highlights the urgent need for businesses in other parts of the world, particularly in Asia, to take action now."

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