Founded in 2000, the United Nations Global Compact (UNGC) is a response to the global governance gap, a phenomenon created when economic globalisation transcends nation state governance. The UNGC directly feeds into the challenge of increasing political power of global corporations and private global governance in a post-national constellation.
With more than 9000 corporate participants the UNGC is the first approach to include business, through the lens of corporate social responsibility (CSR) in global governance. Participating companies must commit to ten founding principles covering the areas of human rights, labour standards, the environment, and anti-corruption. Participants must report yearly on their CSR progress. However, reports follow no standardised requirements and there is no in-depth review of the content by the UN, resulting in a high level of noncompliance. The UNGC has been publicly accused of a massive promise-performance gap, and ineffective practice. This aside, there are serious concerns over a more public-private UN that should not be swept under the rug. When assessing its effectiveness, we should instead take a step back and question first and foremost the UNGC’s existence.
Firstly, by allowing corporations a proverbial seat at the UN we risk turing the UN into a platform for big business and increased power imbalance between the corporate sector and civil society. These corporations also have, through their membership, the capacity for political agenda setting. UNGC LEAD, an initiative with 55 exclusive corporate participants, have regular luncheons with the UN Secretary-General and provide one of four official reports to the Secretariat.
There is a fundamental conflict of interest between the private sector and the UN system. The gap between seeking profit and being responsible for public goods raises the concern that corporations, as private entities, should not self-regulate CSR or influence global governance, because they cannot be ensured to act within the global public good. Since corporations are all inherently motivated by profit maximisation it would be naive to believe their goals and interests are synonymous with the global public good.
The overrepresentation of not only business interests, but particular business interests at the UN, leads to the problem of having a self-serving, partial analysis of the issues and narrowing of the debate. There is a significant lack of diversity in industry and geographical representation of the UNGC LEAD, with overrepresentation from the mining, oil, gas, chemicals, pharmaceuticals and biotechnology sectors, as well as corporations based in Europe and the US. As a result, the UN becomes an echo chamber for a particular group of business interests. Because the UN Secretary-General sits on the Board of the UNGC, and is a public supporter of it, this rhetoric becomes the legitimate and accepted discourse.
In turn this leads to a business-centric view of sustainable development and a problematic focus on growth and market based solutions at the UN. Although a pragmatic approach to convincing corporations to engage in sustainable development, it raises the question of what happens when efforts cannot necessarily be framed as good investments. Encouraging market-based solutions for sustainable development results in a situation in which the burden falls on consumers to make rational choices to contribute to the public good. This is an economically flawed premise since consumerism is largely dependent on what we produce – and the way we produce – and not the other way around. It is also contingent on consumers being informed (which they often are not) and having the requisite economic power to invest in more sustainable products, which are more expensive. Thus creating a feedback loop where poorer people can only afford products make by cheap labour which ultimately contributes to the continuation of such practices.
Finally, if corporations are treated as, and act as governing institutions that contribute to sustainable development and solutions to other global issues, is this not reducing the responsibility of home states, where these corporations are headquartered, and of intergovernmental efforts? This may displace the responsibility not only for solving global issues, but also for controlling the actions of corporations and their growth of political power given that they are self-regulating. A situation unfolds in which the world becomes reliant on the self-regulated efforts of global corporations, whose motives cannot be established to align with the public good, and whose accountability is opaque.
It would be naive to ignore the rise of global corporations. However, surely there is a better, more regulated alternative than the UNGC, which at present exists as essentially another platform for the increasing power of private over public governance.
Ciara Morris is in her fourth year of a Bachelor of Arts (Honours) at the University of Sydney. After majoring in Government & International Relations and Chinese Studies, she is now writing a thesis on Australia’s diplomatic approach to China. Having spent her high school years volunteering with UN Youth Australia, Ciara has always been passionate about foreign cultures and international affairs. Ciara is currently a National Executive Director of the Australia-China Youth Association, and has been on exchange to Peking University, Beijing and Fudan University, Shanghai. Ciara is interested in Australia’s place in the world and our relationship with neighbouring countries in the Indo-Pacific, including China, as a re-emerging global power.
Ciara is an intern with the Australian Institute of International Affairs NSW.