Global Policy Forum

Jessica Matthews

Ms. Belen Balayna
CEO Corporate Europe Observatory
Paulus Potterstraat 20
1071 DA Amsterdam
THE NETHERLANDS

Dear Ms. Balayna,
I appreciate your letter of October 19 th and apologize for my delay in responding. It has not been for lack of interest, but only time. Indeed, because it is essential for civil society organizations everywhere to be engaged on these issues, I warmly applaud your collective interest and concern.

However, some of the assumptions on which the issues raised in your letter are based are incorrect. First, the Global Compact is not a joint initiative with the ICC. The ICC is not a member of the Advisory Council and to my knowledge its engagement is no different from that of any other intermediaries (business associations, academic institutions, think tanks, etc). Second, and most importantly, the Global Compact is not designed to be a compliance-based initiative. The Compact is, first of all, a learning and dialogue platform for the private sector role in finding practical solutions to the many problems the United Nations is trying to address. As a voluntary initiative it serves a very important purpose but does not substitute for effective regulation. I am convinced that there is a need for both approaches at the same time. They complement each other. Third, the Global Compact does not give companies a disproportionate opportunity to influence the sustainable development debate or the agenda of the United Nations. Like many other of the United Nation's partnership projects, the Compact asks companies to implement what member states have already agreed to. This distinction between rule making and agenda setting on the one hand and implementation on the other, is essential.

As a voluntary learning and dialogue platform, the Compact cannot exercise selection criteria for engagement. If it were to do so, then indeed it would convey undue recognition. To address your bottom line. I am modestly encouraged by the progress made so far, although it is early days yet. The Compact quickly grew beyond its original expectations and its management (and the Advisory Council!) have been playing catch up for the last year. The issue dialogues that the Compact organizes are useful. The first dialogue addressing "the role of business in zones of conflict" produced practical guides and transparency measures that are currently being implemented by many companies. The issue dialogue on "business and sustainable development" has produced a new collective effort in least developed countries where the poor stand to gain the most. These are tangible results though, again, only beginnings.

The Compact can, I think, give practical meaning and new reach to universal values. Already it has brought human rights, labor issues and environmental priorities into the boardrooms of many companies that previously have shied away from them. Getting this process going is a necessary and significant first step. But I would agree that it is not enough. The internal change process is long and uneven. The U.N. cannot be a guardian of this. Even if it had 1,000 analysts at its disposal, it could not do the job. The only viable option is public accountability and reinforcement by broader societal forces. The Advisory Council has given much thought to this and a major change is in the making. The Global Compact will make every effort to prevent companies from reaping inappropriate advantage from the Compact. When companies take a stand on the Compact and its principles they do so at their own risk. The U.N. merely takes note of the commitment but does not endorse or reward companies for doing so. Already, several precautions have been taken. In addition, a major policy change towards public accountability and the enhanced use of reporting frameworks such as the GRI will be soon introduced. Bringing the issues from the boardrooms into annual reports is probably the most effective way forward.

I would agree that the Global Compact office has been slow in making the list of companies public. This issue has been discussed at length. Initially, arguments were made not to list the names of companies precisely in order to avoid any notion of giving recognition. But as the new model of public accountability and participation through engagement (as opposed to a membership based approach) takes shape, I understand that the names will be made public shortly.

The Global Compact is an ambitious undertaking and civil society plays an important role in it. Certainly, one role is to monitor the public statements of companies and to measure their behavior against those statements. But probably more important is to challenge the many companies that remain aloof (particularly notable is the small number of U.S.-based companies). Getting the fence-sitters to start addressing human rights, labor and environmental issues should be an absolute priority. In this sense, I believe that the Compact - and you – should particularly welcome the participation of poorer performers: they are ones most in need of improvement, advice, culture exchange, etc.

Finally, your letter raised a question I can't yet answer, namely when is the right time to judge the effectiveness of this whole effort? Whatever the answer is, it is certainly not now. The Compact, as I see it, is still inventing itself. As it evolves it can benefit greatly from outside advice and criticism so long as that is based on an understanding of what it is trying to be and do (i.e., not an enforcement mechanism.) So please do stay interested. I and, more to the point, the Compact's management, are more than open to your input.
Sincerely,
Jessica T. Mathews
President
Carnegie Endowment for International Peace
1779 Massachusetts avenue, NW Washington, DC 20036
www.ceip.org