CSR, Global Compact, Some History and All That Jazz!

When the World Business Council for Sustainable Development emerged in the aftermath of the 1992 Earth Summit in Rio de Janeiro, it had a clear mandate to address business' role in addressing jeopardized social and environment conditions.  Sustainable development at its core is about balancing economic growth together with the maintenance of a healthy ecosystem and the promotion of social progress.  The concept of Corporate Social Responsibility was thus born and formalized into a framework, which centered on the idea that business can and needs to be part of the solution.

For some time now, national sovereignty has been severely diminished by the borderless nature of global market forces, largely driven by multinational corporations.  The vast global resources of corporations far surpass those of nation states.  In a Fortune magazine list of the 150 biggest economies one third were corporations. The looming issues of climate change, environmental degradation and enduring poverty around the world demanded global attention, but no existing global governance facilities could tackle such a task.  As stated by Juan Somavia, Chile's Representative to the UN Security Council during the 1990's: "The merchant is increasingly replacing the prince, and will have to carry the responsibility this change implies."

Environmental concerns were by far the driving force behind the WBCSD, but social justice emerged as the most contentious issue because developing nations felt they were being asked to forego improving their own living standards.  Developed nations wantonly ignored environmentally harmful extractions and contaminations when they were growing their economies, and environmentalism was considered an almost imperialistic measure which would compromise future economic growth.

The WBCSD had grappled with three different scenarios:  The Frog scenario - First Raise Our Growth,  in which business pursued economic growth while the ecosystem and societal fabric lay in ruin; the  GEOpolity scenario - the Global Ecosystem Organization where governments would strong-arm corporations through global treaties, international law and regulations; The Jazz scenario, which they finally settled on - a decentralized, voluntary cross-sector which would focus on transparency whereby governments would act as facilitators, and consumer choice and public opinion would out any irresponsible players.

The Global Compact was formed in 2000, with 38 signatories, 15 of which were members of the WBCSD. Ten years later, The UNGC is the largest Corporate Responsibility initiative with approximately 7,700 members from over 130 countries. The UNGC has been widely criticized for its lax application policies and the voluntary sign on to its ten basic principles - though there have been cases of companies de-listed from the Compact.  The litigious terror of U.S. based companies would have stalled their participation in signing onto anything stringently enforceable.  The voluntary jazz metaphor allowed for the evolution of a collaborative environment which would not have been otherwise possible.

The UNGC has brought a huge level of legitimacy to CSR which was no small task.  It also offers a valuable forum for constructive cross-sectoral dialogue. Most importantly, the process of moving entrenched mechanizations of global commercial activities into a CSR mindset is a monumental undertaking.  To say that only perfectly responsible companies need apply ignores the complexity  inherent in the transformative task of moving the global economy forward into sustainability.  Sinners need a place to go to learn about redemption -  the UNGC has created a vital space for CSR to grow.

Photo Credit: by pedrosimoes7