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  • 1. Learning, Practice, Results. In Good Company United Nations Global Compact Leading Companies Retreat Summary Report Toward Global Corporate Citizenship
  • 2. Learning, Practice, Results. In Good Company On June 26-27, 2008, representatives from 13 multinational United Nations Global Compact (UNGC) signatory companies, four academics, and representatives of the spon- soring organizations, the Boston College Center for Corporate Citizenship, the United Kingdom’s AccountAbility, and the UN Global Compact (with the support of Accenture and GE Corporation) met in a Leading Companies Retreat. The goals of the two-day meeting were to share best practices, obstacles, and learning among the participants about their movement toward global citizenship and to formulate a non-prescriptive approach to implementation of the UNGC in multina- tional companies By Sandra Waddock Philip H. Mirvis Kwang Ryu With Asya Anderson, Sylvia Kinnicut, and Allison Lee The meeting was sponsored by: Printed on 100% post consumer waste paper manufactured with windpower. Green Seal and For- est Stewardship Council (FSC) certified. UNGC Leading Companies Retreat www.BCCorporateCitizenship.org
  • 3. Learning, Practice, Results. In Good Company Dear friend, The Global Compact Office, in a close and very satisfactory partnership with the Boston College Center for Corporate Citizenship and AccountAbility, invited a group of global companies participating in the Global Compact to a two-day retreat at the end of June 2008. It was the first time we had the opportunity of discussing at length the expectations of transnational companies concerning our initiative and their experience in implementing the Global Compact principles in their complex and vast organizations. The experience has been very rewarding and potentially crucial for the future development of the compact. A vast pool of experience in using the Global Compact as a framework for progress was set on the table during the two-day retreat. In the light of what these companies suggested, our challenge is to systematize the implementation experience while scaling it up and expanding its reach. Their detailed explanation of the implementation process and their current plans illustrates that they are using a strategic approach and practice to integrate the Global Compact principles. Indeed, these companies are well beyond embedding the Global Compact in their business and, rather, the “GC way” is the foundation of their business strategy itself. This, indeed, is very good news for the Global Compact. I would say that the challenge now for the Global Compact is to create, out of the accounts presented and the performance of many other champions that were not present at this event, a narrative based on the experience of these companies and spread it throughout the Global Compact networks. We have also noted that participating companies are willing to take up the challenges posed by the Millennium Development Goals, the new horizon of global crises (such as energy and food) and the need for global business to participate more fully in this global agenda. They demand new forms of global dialogue, they hope for an increasing role in global leadership, and they would like to engage in platforms that can materialize private/public complementarities to build new policy frameworks where companies can operate as good global corporate citizens. In sum, they are ready to support new collaborative strategic formations for global management in a world of constraints. These demands, sprinkled with calls for more proactive engagement platforms convened and facilitated by the Global Compact, are seen, and even requested, as the next big step that needs to be taken to allow for full functionality of the Global Compact to be achieved. All in all, the retreat, the main aspects of which are summarized in this report, opened up a new perspective: through a frank and open dialogue with the champions of the initiative, the Global Compact Office can gain plenty of insight for the future; and in their turn, leading companies can get inspiration out of the contact with their peers and with thought leaders. In that sense, the retreat held in June is a very positive experience that should be repeated and enlarged for the benefit of the Global Compact as a whole. Sincerely, Georg Kell Executive Director UN Global Compact www.BCCorporateCitizenship.org UNGC Leading Companies Retreat
  • 4. Learning, Practice, Results. In Good Company Toward Global Corporate Citizenship What follows are observations on the dialogue and a synthesis of the issues and insights from that meeting that we hope will prove useful to other UN Global Compact signatories as well as to companies considering signing on. IV UNGC Leading Companies Retreat www.BCCorporateCitizenship.org UNGC Leading Companies Retreat IV www.BCCorporateCitizenship.org
  • 5. Learning, Practice, Results. In Good Company The UN Global Compact Two years later, in 2001, the UN Global In 1999 then Secretary General of the United Compact (UNGC) was formally launched as Nations Kofi Annan gave a groundbreaking an organization. At its core were nine (now speech at the World Economic Forum. Annan 10) aspirational principles, all based on glob- issued the following clarion call to the leaders ally agreed UN treaties and declarations. The of the world’s largest and most powerful UNGC provides a framework for businesses companies present: committed to aligning their strategies and operating practices with universally accepted I want to challenge you to join me in principles in the areas of human rights, labor taking our relationship to a still higher rights, the natural environment, and anti- level. I propose that you [corporate corruption (see roster on page 3). leaders] . . . and we, the United Nations, initiate a global compact of shared Today the UNGC is the world’s largest corpo- values and principles, which will give a rate citizenship initiative with 5,600 total human face to the global market. members and 4,300 companies participating as signatories. Globalization is a fact of life. But I believe we have underestimated its A purely voluntary initiative, the Global fragility. The problem is this. The spread Compact has two objectives: internalizing of markets outpaces the ability of soci- the 10 principles in business strategy and eties and their political systems to adjust activities globally, and catalyzing actions by to them, let alone to guide the course business in support of the broader UN goals, they take. History teaches us that such particularly to address the world’s develop- an imbalance between the economic, ment problems, in line with the UN Millen- social, and political realms can never be nium Development Goals. sustained for very long. . . . This meeting of leading multinational compa- We have to choose between a global nies focused on whether and how the Global market driven only by calculations of Compact’s 10 principles are being imple- short-term profit, and one which has mented in companies known to be progres- a human face. Between a world which sive and forward-looking with respect to both condemns a quarter of the human race their own values and their participation in to starvation and squalor, and one which the UNGC. The idea was that what had been offers everyone at least a chance of pros- learned to date about the implementation perity, in a healthy environment. Between process by these leading corporate citizens a selfish free-for-all in which we ignore might prove useful to other companies in the fate of the losers, and a culture in their global citizenship journeys. which the strong and successful accept their responsibilities, showing global vision and leadership. www.BCCorporateCitizenship.org UNGC Leading Companies Retreat 1
  • 6. Learning, Practice, Results. In Good Company June 2008 Leading Companies Retreat Building an Approach to Implement the Global Compact Principles into Core Management Systems in Multinational Companies Participating company representatives: - Ms. Jill Huntley, Accenture - Mr. Tomás Conde, BBVA - Mr. Edgar Rodriguez Gonzalez, CEMEX - Mr. Salvatore Gabola, The Coca-Cola Company - Mr. Bo Miller, Dow Chemical Company - Mr. Vinay Rao, Infosys Technologies Ltd. - Mr. Christian P. Frutiger, Nestlé S.A. - Dr. York Lunau, Novartis Foundation for Sustainable Development - Ms. Susanne Stormer, Novo Nordisk A/S - Mr. Nick Welch, Royal Dutch Shell - Ms. Belén Izquierdo, Telefónica S.A. - Mr. Sean Fitzgerald, Ketchum - Mr. Charles Bartels, Manpower Participating academics: - Dr. Carolyn Woo, Dean, Mendoza School of Business at Notre Dame - Dr. James Walsh, Gerald and Esther Carey Professor of Business Administration of the Stephen M. Ross School of Business at the University of Michigan - Dr. David Cooperrider, Director of University Center for Business as an Agent of World Benefit at Weatherhead School of Business, Case Western Reserve University - Dr. Sandra Waddock, Professor of Management and Senior Research Fellow, Center for Corporate Citizenship, Carroll School of Management, Boston College Hosts - Dr. Manuel Escudero, UN Global Compact - Dr. Bradley Googins, Boston College Center for Corporate Citizenship - Mr. Steven Rochlin, AccountAbility Staff - Dr. Philip Mirvis, meeting facilitator, Boston College Center for Corporate Citizenship - Mr. Kwang Ryu, Boston College Center for Corporate Citizenship - Mr. Joe Sellwood, AccountAbility - Mr. Guy Morgan, AccountAbility - Ms. Asya Anderson, UN Global Compact - Ms. Sylvia Kinnicutt, Boston College Center for Corporate Citizenship - Ms. Allison Lee, Boston College Center for Corporate Citizenship 2 UNGC Leading Companies Retreat www.BCCorporateCitizenship.org
  • 7. Learning, Practice, Results. In Good Company The UN Global Compact’s 10 Principles The Global Compact’s 10 principles in the areas of human rights, labor, the environment, and anti-corruption enjoy universal consensus and are derived from: • The Universal Declaration of Human Rights • The International Labor Organization’s Declaration on Fundamental Principles and Rights at Work • The Rio Declaration on Environment and Development • The United Nations Convention Against Corruption The Global Compact asks companies to embrace, support, and enact, within their sphere of influence, the following set of core values in the areas of human rights, labor standards, the environment, and anti-corruption: Human Rights • Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights • Principle 2: Make sure that they are not complicit in human rights abuses Labor Standards • Principle 3: Businesses should uphold the freedom of association and the effective recog- nition of the right to collective bargaining • Principle 4: The elimination of all forms of forced and compulsory labor • Principle 5: The effective abolition of child labor • Principle 6: The elimination of discrimination in respect of employment and occupation Environment • Principle 7: Businesses should support a precautionary approach to environmental challenges • Principle 8: Undertake initiatives to promote greater environmental responsibility • Principle 9: Encourage the development and diffusion of environmentally friendly technologies Anti-Corruption • Principle 10: Businesses should work against corruption in all its forms, including extor- tion and bribery www.BCCorporateCitizenship.org UNGC Leading Companies Retreat 3
  • 8. Learning, Practice, Results. In Good Company The UNGC lists several advantages of increasing oil and energy prices, depleted membership: natural resource stocks, and failing ecological systems, are creating new problems for soci- • Demonstrating leadership by advancing eties and putting new demands on compa- responsible corporate citizenship. nies. • Producing practical solutions to contem- porary problems related to globalization, The increasing power and global reach of sustainable development, and corporate multinational corporations combined with responsibility in a multi-stakeholder the diminishing ability of nation states to context. deal with problems that too frequently reach • Managing risks by taking a proactive across borders has put big business into a stance on critical issues. paradoxical position: blamed for causing • Leveraging the UN’s global reach and or contributing to many of the world’s ills convening power with governments, busi- but looked to for responsible conduct and ness, civil society, and other stakeholders. increasingly for remedies. Global surveys • Sharing good practices and learnings. find that citizens around the world today • Accessing the UN’s broad knowledge in not only hold businesses responsible for the development issues. safety of their products, fair treatment of • Improving corporate/brand management, employees, sustainable use of raw materials, employee morale and productivity, and and reducing their environmental footprint, operational efficiencies. but also for redressing human rights abuses, lessening the rich-poor gap, and preventing Context for global corporate citizenship the spread of HIV/AIDS, among many other Adoption and implementation of the Global matters that might have once resided in the Compact’s 10 principles take place in a context domain of public policy.1 of unprecedented global change and global problems of increasing magnitude. Issues like The past decades have seen concerted efforts climate change, potential water crises, overpop- by MNCs and businesses of all types, under ulation, and the labor and human rights prob- the banners of corporate social responsibility, lems in the extended supply chain of many citizenship, sustainability, etc. to get their large multinational corporations (MNCs) are “own house” in order and begin to assume only some of the pressing matters with which a more proactive and inclusive engagement businesses have to contend in today’s world. with society.2 This takes form variously in Many of these problems and the dynamics they stakeholder consultations, increased corpo- generate are new to business. And many are rate transparency and nonfinancial reporting, beyond solution by any given firm or sector attention to and accountability for triple and require wholly new ways of operating if bottom line performance (economic, social, any solution is to be achieved. environmental), and the like. A select set of leading firms are moving their citizen- Around the world global pandemics like the ship into the commercial marketplace by HIV/AIDS crisis, rising rates of obesity, and producing “green” products and services, chronic malnutrition, plus scarcities in food, reaching the world’s poor through and base- 4 UNGC Leading Companies Retreat www.BCCorporateCitizenship.org
  • 9. Learning, Practice, Results. In Good Company of-the-pyramid innovations, increasing access be abstracted from the conversation without to health services, medicines, communica- attribution to any specific individual or firm. tions, and other technologies, improving the nutritional value of foods-and-beverages, and Background information on specific company in other ways exemplifying the business case actions and implementation strategies are for “doing well by doing good.” presented with the companies’ permission. Evidence of their practices are presented Still, there are big and persistent gaps throughout this document on an anecdotal between the public’s expectations of business basis. and ratings of its social and environmental performance. Recent data from the Reputa- Business in a leadership role tion Institute documents that in 25 countries The Leading Companies Retreat began with studied, an average of just one in five people remarks from representatives of the three agree that “most companies are socially conveners, an introduction of the participants, responsible.”3 Significantly, business leaders and spirited debate about the leadership role themselves acknowledge a significant gap of business in global society. between their rhetoric versus the reality of their firm’s social and environmental perfor- MNCs have come to play a profoundly impor- mance. Along this line, a 2007 survey of 391 tant role in the twenty-first century, signifi- CEOs of UNGC signatory companies found cantly different from at any time in the past. large numbers agreeing that the public expec- Their global reach, ability to efficiently inno- tations have increased in the past five years, vate and problem solve, their knowledge with many believing that they will continue of brand management and how to reach to increase. These CEOs also report gaps in customers, and the vast resources that the embedding citizenship into their strategy and largest of them control place them among the operations and into their Board governance. most powerful institutions in the world. The The gap is even wider when it comes to benefits of globalization to business—open embedding it into their supply chains.4 markets, global labor supply, lower commu- nication and transportation costs, decreased It is in this context that the Leading Compa- regulations—have offered the world rising nies Retreat took place. The insights and standards of living, given consumers lower lessons in this document are drawn from the prices and a greater variety of goods and conversations and presentations that took services, and provided access to technology place over the course of the two-day meeting to ease their life and work burdens. However at Boston College in June 2008. The text these benefits have not come without costs tracks the major subjects discussed at the and criticism, well documented by scholars meeting featuring key points made by each and development groups, and familiar to presenting company and academic discus- attendees of this meeting. The emergence of sant. A synthesis that follows in each area the corporate responsibility movement and is unattributed because the retreat followed the guidance provided by initiatives like the Chatham House rules, in which learning can UNGC attest to movement afoot in these www.BCCorporateCitizenship.org UNGC Leading Companies Retreat 5
  • 10. Learning, Practice, Results. In Good Company regards. corporations. By the time the UNGC was formally launched There are, of course, plenty of examples of in 2001, many MNCs had gone or were going MNCs and domestic corporations that have through significant internal struggle over adopted constructive visions and clear social heightened public expectations, challenges by and ecological values at their highest levels. the media and stakeholders, and uncertainty Still, it is the process of driving down the about their responsible role in society. At vision and values into the everyday actions this retreat in Boston, many of the corporate of the corporation—the implementation participants spoke to their belief in markets task—that is core to making the journey from but added that markets work best with “good rhetoric to reality. The companies represented governance, active civil society, and an under- at the retreat are on this journey. What were standing of and accountability for the social their motives for signing on to the UNGC? and environmental consequences of business activity.” Motivations for Participating in the UNGC Understanding why MNCs choose to adopt Diminishing state resources over the past the UNGC principles—and what motivates decades along with increased globalization their ongoing participation—illustrates of commerce means that MNCs are increas- several drivers of their global citizenship ingly being called upon to deal with issues agenda: that used to be considered primarily in the public policy or civil society arenas. Here, too, • Identification with values: One of the major the participants acknowledged that social and reasons these MNCs joined the Compact environment issues posed material risks for is that the 10 principles represent an their businesses, on the one hand, and also extension and reinforcement of existing select business opportunities, on the other. company values. The decision to embrace But they acknowledged that to truly address the principles reflects “who we are.” MNCs global issues “no business can do it on its are spread out globally, often the product own.” This stimulated reflections about why of multiple acquisitions and mergers. In companies joined the UNGC. key respects, the values they articulate, including commitment to UNGC prin- When Kofi Annan called for a “global compact ciples, serve as a common standard or kind of shared values and principles, which will of “glue” that holds the extended enterprise give a human face to the global market,” he together. Many MNCs have updated their clearly hit a nerve in some leading corpora- values statements and codes of conduct tions, which were already struggling to give over the past decades to speak to their corporate values life and meaning to their global workforce and take account of the employees, shareholders, and customers, and practical dilemmas posed by globaliza- to gain a measure of the trust from others in tion. Participation in the UNGC is a way society who are more skeptical about their of affirming these values and, over time, work and suspect of the motives of large 6 UNGC Leading Companies Retreat www.BCCorporateCitizenship.org
  • 11. Learning, Practice, Results. In Good Company testing and refining them in practice. • Power of association: Some companies find that it is useful to join because there • Competitive advantage: Some early signa- are issues being raised relevant to their tories found that signing on to the UNGC industries, because new recruits are asking put them into a leadership position and about whether they are involved, and provided a platform for potential competi- because they find that their employees and tive advantage through differentiation. other stakeholders take pride in the fact This means communication about UNGC that the firm has made a commitment to membership within and outside of the principled action through a global associa- firm. Of course, stepping out into the tion. In addition, there is learning occur- lead is not without risks, especially when ring in peer networks that they need access social, environmental, or governance prob- to—being part of the UNGC allows firms lems are found in a company, as is likely to participate in forums where exchanges to happen in all big human enterprises. take place through the convening power of Other sources of competitive advantage the UN and where, on occasion, they can derive from external validation from other even meet with competitors. actors in society and from meeting and exceeding stakeholder expectations by • Being part of the solution: A final reason taking the lead on issues important to their for initial and sustained participation in interests and constituencies. Here the the UNGC is to become part of the process UNGC helps companies put those issues of solving some of the world’s prob- on the table. On the other hand, compa- lems, especially when those problems are nies that joined when the Compact was affecting the corporation itself. The prin- already firmly established noted that they ciples themselves, coupled with the UN were at risk of possible competitive disad- Millennium Development Goals, speak vantage because industry peers and stake- to high human aspirations that appeal holders had joined. to some companies and are embodied in their visions. In addition, since the UNGC • Driving principles into action: Implementa- fosters multisector collaboration, raises tion of the principles can also drive prog- important issues, and provide numerous ress within operational units, through learning forums and tools, it can be a ready more transparent reporting and more and relevant vehicle for MNCs to take structured thinking about the specific action on important global issues. Impor- issues outlined by the 10 UNGC prin- tantly, the concept of becoming part of the ciples. This creates a new role for corpo- solution allows companies to begin taking rate responsibility discussions about what seriously the “what’s next?” question with types of questions need to be asked, what respect to corporate responsibility and reports, analyses, and inquiries need to be their core purpose, as well as dealing with developed internally, and why, how, and specific principles and related social issues. what initiatives should be replicated. www.BCCorporateCitizenship.org UNGC Leading Companies Retreat 7
  • 12. Learning, Practice, Results. In Good Company These pragmatic motives for signing the contend that there may be a new conscious- UNGC principles were discussed openly ness emerging among MNCs and their at the Leading Companies Retreat. Still, it leaders, one that puts business proactively in was acknowledged that the decision to join a leadership role to improve society. In this was not easy or smooth in all cases. For frame, some companies are already serving instance, some of the leaders in a U.S. signa- as role models for others, making signifi- tory had raised objections to the labor prin- cant investments in developing countries to ciple about collective bargaining, concerned help people move out of poverty, while others that this would put the company “on record” work effectively in disaster situations, have in support of labor unions. In others there made fresh commitments to relieve disease were concerns that support for the principles and suffering, or sought to foster other social would open their firm to litigation should any benefits through their businesses.6 “violations” of the principles ensue. There was also mention of peers in companies who At a basic level the aspirational power of the regarded participation in the UNGC more or UN Global Compact is about the animating less as “window dressing”—a “nice but not power of such ideas and about promoting necessary” commitment or even a public rela- such movement within and across firms and tions exercise with little relevance to running sectors around the globe. The next set of the business. discussions focused on how UNGC principles have been integrated with the “value systems” By comparison, other participants found the of firms and might help to transform the very UNGC an “inspiring document” that had purpose and role of leading multinational practical relevance and import for their firms. corporations. The inspiration and practical value is reflected in the motivations of the majority of the Principles and company values participants in the UNGC. A 2007 survey of The companies present, at the leading edge of participants found that many joined because corporate responsibility, found real resonance it “increases trust in the company” (cited by with their corporate values and the UNGC 63 percent of members polled) and helps the principles. Like many firms, moreover, they firm “address humanitarian concerns” (cited are attempting—through word and deed—to by 52 percent).5 determine how the world could be better off because of the company’s business model and While not discounting the short-term finan- resources. Several companies in the midst of cial expectations on companies, and the this transition spoke at the meeting of their limits to virtue in markets, there are some experiences. Nestlé S.A., for instance, is trans- who contend that companies will be both forming from a food and beverage to a nutri- able and willing to deal with the social and tion, health, and wellness brand. Telefónica ecological problems they are implicated in has embraced the “spirit of progress” to and that a new era of business-driven corpo- enhance people’s lives, the performance of rate responsibility has begun. Moreover, some business, and the progress of communities.” 8 UNGC Leading Companies Retreat www.BCCorporateCitizenship.org
  • 13. Learning, Practice, Results. In Good Company A snapshot of their remarks: Experiences: UNGC principles help to prompt reflection, trigger internal debate, • Nestlé S.A., from Switzerland, included inform the scan and update management the UNGC principles directly into its systems, communicate internally and Corporate Business Principles as of 2002. externally and to facilitate a post-merger Compliance with these business prin- need to link the organizational cultures of ciples, which also commit to other guide- the previously separate companies Sandoz lines on specific areas (WHO, ILO, ICC and Ciba. business charter, etc.), is audited internally Challenges: Defining responsibilities clearly and externally. The Corporate Business without isolating them from one another Principles later became the cornerstone of and operations of the business; after Nestlé’s three-layered corporate responsi- several years as a UNGC signatory finding bility model which goes from compliance, new ways to maintain the inspiration of to sustainability, to Creating Shared Value the 10 principles, and creating learning (CSV). As part of its business strategy, the systems. company commits to generating value for both its shareholders and society in the • Telefónica, founded in Spain, used the countries in which it operates. principles to transition from using its Experience: UNGC Principles serve both ethics code as a “defensive tool” to a an “aspirational” and a “catalytic” function. “support tool” for cultural change, from Challenges: Development of comprehen- image improvement to a key driver for sive metrics to measure the company’s generating revenues, reducing costs, and development impact; develop healthier and measuring client satisfaction. more nutritious products that generate Experiences: Business principles, consis- both consumer benefit and create busi- tent with the UNGC framework, help mini- ness value; translate the UNGC labor and mize the company’s impact on its value human rights principles into practical chain and reinforce social aspirations, such guidelines. as digital inclusion and philanthropy. Challenges: Changing attitudes to recog- • Novartis, also based in Switzerland, used nize corporate responsibility as a driver of the principles to spearhead good busi- the business; incorporating diverse stake- ness conduct. This meant refocusing its holder views; ensuring across-the-board citizenship on “how you do business” and communication of ethics and integrity in “what businesses you are engaged in.” The everyday jobs; promoting social inclusion pharmaceutical crated a corporate steering and maximizing social impact. The key committee, devised new, issue-related poli- premise: Doing the business right. cies, conducted audits, revised its appraisal systems to incorporate values and respon- These presentations prompted discussion sible behavior, undertook e-training of about how actual implementation of the staff, and aligned its assessment/incentive UNGC principles demands careful atten- systems. tion to and reflection on the company’s own www.BCCorporateCitizenship.org UNGC Leading Companies Retreat 9
  • 14. Learning, Practice, Results. In Good Company core values to determine where and how the issues, and by stimulating attention to corpo- principles can drive a firm’s economic, social, rate policies and performance in these areas. and environmental agenda. It was noted, for Several of the companies at the retreat used example, that for companies seeking to make the UNGC principles to raise needed ques- their own values come alive, the core prin- tions, undertake analyses, dialogue with staff ciples of human rights, labor rights, sustain- and critics, prepare reports, and consider ability, and anti-corruption embedded in the what kinds of initiatives should be under- Global Compact provide both a supportive taken or replicated. Here are some examples: and enabling framework that can enhance what is already developing in a firm. By • Dialogue about “Who We Are:” “What kind comparison, for companies new to the of company are we?” “What do we stand demands of global citizenship, the principles for?” “Where are the gaps between stated provide guidelines that help them move more values and operating practices?” Adopting quickly down a path of greater responsibility. principles of responsibility as broad and as fundamental as those of the UNGC invites For much of the world outside of corpora- companies to consider their values and tions, the credibility of corporate responsi- purpose afresh and to dig deeper into the bility initiatives is questioned, particularly content of their business principles, codes when there is a sense that companies are of conduct, and compliance frameworks. using them to enhance their reputations or deflect criticisms, or solely for the purposes • Surface issues and challenges: Some issues of profit-taking. Motivations do matter and, are not clear, and moral dilemmas arise in despite tensions that might exist between the business world even when there are doing good and doing well, both sets of principles, values, or a code of conduct to motivations are typically at play when firms help guide decision making. Should, for adopt responsibility principles. There was example, UNGC member companies work in the meeting a view that reputation-based in countries where there are human rights approaches to corporate responsibility and abuses? What happens if they acquire or “signing up” to the UNGC principles could contract with a subsidiary that is working only take a company so far. How do compa- in one of those places, or that doesn’t nies integrate the UNGC principles into their conform to other UNGC principles? Under company value systems and visions? these circumstances, companies can use their own codes, the UNGC principles, and How to Bring Vision and Values to Life such to consider the moral, commercial, The process of implementing Global Compact and values-based risks in handling these Principles can serve as a “lever” for driving matters. Outcomes may not satisfy all progress within companies and into opera- stakeholders. tional units by putting matters like human and labor rights, environmental concerns, • Communicate with stakeholders: Many and corruption onto the corporate agenda, companies face skepticism and a lack of by structuring thinking and debate on these trust from critics who believe that corpo- 10 UNGC Leading Companies Retreat www.BCCorporateCitizenship.org
  • 15. Learning, Practice, Results. In Good Company rations, particularly MNCs, care only companies might not be used to define or about self-interest. Creating authenticity redefine values but rather to test them in a in large corporations involves moving global context and add nuances to existing away from PR spin toward embracing real thinking, language, and frameworks. principles and values that translate into action. At the same time, companies are However, other companies, even very large profit-making entities and seek business ones, are considerably less far along this path continuity, a form of sustainability for the of bringing values to life—or have yet to even firm. Reporting on the UNGC principles begin. And many small and medium-sized and the public disclosure of progress enterprises (SMEs) have neither a framework made can help companies to “walk the nor many tools and resources available to talk” and show responsiveness to external help. There are clear opportunities in these stakeholders, including other businesses, cases to spread these best practices and scale- customers, potential recruits, and NGOs. up the implementation of principles like the UNGC’s and to assist companies to take • Lift up corporate purpose: The 10 UNGC steps, appropriate to their culture, values, and principles speak primarily to business particular strengths and limitations. conduct. A discussion of the principles– –internally and with stakeholders—can Another concern centered on the role of also generate new possibilities for action middle managers and employees in effecting and innovation. Several companies keyed needed change. For middle managers and aspects of their corporation vision to the employees, driving down the UNGC’s prin- UN Millennium Goals and other goals with ciples into the corporation means finding new wide societal and global impact. This takes templates for action that incorporate things companies to the fundamental question: like stakeholder input, sustainability objec- “What will it take to go beyond compliance tives, and accountability tools. Supportive to true transformation based on principles structures, like an organization-wide steering and values?” committee, responsibility goals, and training were emphasized. In bringing values to life, This discussion on the UNGC principles and it is not just the principles that need to be corporate value systems led to diverse reflec- taught and understood, but also the “how to” tions on how MNCs can (and do) work. Many of making change in operating practices. One firms present at the retreat have corporate example raised in the meeting was that of visions supported by strong statements of line managers who attended a workshop on values, drive their internal codes of conduct sustainability prior to a major new construc- into supply and distribution chains, and use, tion project, were excited about the concepts, among other tools, key performance indica- then went out and did things exactly as tors (KPIs) to motivate and document imple- before. The message back to management: mentation of the company’s own values. It “Look, we go out to work with a template was agreed that UNGC principles in such telling us how to do this work and that’s how www.BCCorporateCitizenship.org UNGC Leading Companies Retreat 11
  • 16. Learning, Practice, Results. In Good Company it needs to get done. If you want things to • Aspiration: A final theme centered on change, you have to tell us how to do things the aspirations of an enterprise. Discus- differently.” sant David Cooperrider reflected how the UNGC had sought to unite the strengths of In summing this discussion three themes markets with the power of universal ideals. about vision and value systems associated A new corporate responsibility agenda is with global citizenship were stressed: moving firms from a stance of “doing less bad” to “doing more good.” This involves • Authenticity: One broad theme that replenishment and regeneration in society emerged clearly was that adoption of the and the natural environment. It means principles and implementation of values connecting principles to policies to opera- needed to be based in authenticity. One tional practices and learning mechanisms. change that demonstrates authenticity It also means setting bold goals. is when questions are raised related to values or principles, like “Does this specific Principles as a business driver action really fit with our values or social The next section of the retreat concerned how commitments?” “Have you thought about companies used the principles as a driver of an alternative approach?” These types business activities and value creation. Three of questions come up in decisions about main avenues were highlighted: 1) incor- recruiting, hiring, and promotions, about porating the principles into compliance, making investments where considerations accountability, and management control for energy, water, human rights, or sustain- systems; 2) representing the principles in ability are in play, and about many other internal and external communication and matters. Companies can gauge to what social reporting; and 3) addressing the prin- extent core values have been driven into ciples in new kinds of products and services, operations when every employee can—and both philanthropic and commercial. often does—ask those types of questions. Three of the MNCs, based in mature markets, • Alignment: A second theme concerned spoke of how they used their principles to the alignment of values throughout an shape their business agenda. BBVA’s agenda, enterprise. The UNGC principles and a for one, includes financial inclusion, respon- company’s values provide a template that sible lending, and community investment, helps guide action at the corporate level. among others. Dow Chemical, seeking to The principles also need grounding at the be the “largest, most profitable, and most local level, where different geographies, respected chemical company in the world,” cultures, and specific issues, such as child was inspired by the UN Millennium Develop- labor, human rights, and land manage- ment Goals when it set its 2015 Sustainability ment, necessarily raise new questions and Goals. Royal Dutch Shell, a leader in transpar- may mean different implementation strate- ency and social reporting, is focusing its exper- gies—all guided by principles. tise on a CO2 management strategy which is 12 UNGC Leading Companies Retreat www.BCCorporateCitizenship.org
  • 17. Learning, Practice, Results. In Good Company influenced by values and principles. A brief food, housing, and human health. look at each: Experiences: UNGC helps to reinforce a strategy focused on four themes: 1) driving • BBVA (Banco Bilbao Vizcaya Argentaria), financial discipline and low cost; 2) setting based in Spain, emphasizes “sustain- the standard for sustainability; 3) investing able value creation” based on “profitability for strategic growth; and 4) building a adjusted to principles,” and three strategic “people-centric performance culture”; pillars: principles, innovation, people. partnerships with other UN agencies and Beyond a commitment to developing groups; multi-party ventures. society, corporate responsibility is a driver Challenges: Overcoming past controversies for “differentiation and sustainable value and reputational difficulties in the face of generation.” a rapidly changing product-market busi- Experiences: UNGC is a framework to ness model; building a principle-centered improve business by increasing the compa- performance culture; creating a culture ny’s chances of being selected for socially and strategy that uses chemistry to address responsible investment portfolios, working the world’s most pressing challenges—in through human resources to make the an environmentally sustainable way. financial sector more attractive, particu- larly in Latin America; working on finan- • Royal Dutch Shell, based in the Nether- cial inclusion and financial literacy to help lands and the U.K., revised its Business create future markets. Principles in 1997 after environmental Challenges: Overcoming reputational risk by and sociopolitical crises. UNGC prin- delivering value in a balanced way to stake- ciples are overlaid on existing strategies holders; using community investments and standards, and are managed through and product innovations to build a strong a management control framework that license to operate; pragmatically deter- includes assurance, reporting, and trans- mining how to operate responsibly across parency. Company core values emphasize numerous countries. integrity, respect for people, honesty. The company also has made a commitment to • Dow Chemical Company, from the U.S., contribute to sustainable development and has focused on improving what is essential to help secure a responsible and sustain- to human progress by mastering science able energy future. and technology––and also the human Experiences: Developing and testing element, the one not found on the peri- scenarios on energy futures. odic table. Dow is not only continuously Challenges: Moving forward based on working to minimize the impacts of its possible scenarios that deal with hard operations but is also striving to provide truths, e.g., global energy demand is society with greater value by producing rapidly growing, while supplies cannot products that help mankind address its keep up, and more energy means more most pressing problems such as water, CO2 (global warming); determining what www.BCCorporateCitizenship.org UNGC Leading Companies Retreat 13
  • 18. Learning, Practice, Results. In Good Company each unit can contribute to positive energy their values, such a framework ensures outcomes through a process of enlightened that companies “walk the talk.” Corporate self-interest. responsibility can be implemented through the management framework used to drive As participants debated how values could other types of change, which include drive business activity, one leader present decision making criteria and methods reminded, “Strategy isn’t set by a code or prin- for monitoring, reporting, and transpar- ciples, but by what the world needs and what ency. One company spoke of connecting we’re capable of delivering.” On this count, its corporate responsibility implementa- another observed that companies have a tion to a risk-management framework. In choice: they can basically leave it to society to turn, one of the academics presented an figure out what is going on, or they can create approach to “total responsibility manage- a set of business principles that frame how ment” that provides a comprehensive the company wants to do business respon- implementation framework.7 sibly and roll them out company wide. This sharpened conversation about how compa- • Connect actions to mission: In the most nies might move from a “value- or principle- successful cases where principles have based” commitment to corporate responsi- become a core driver for value creation and bility to effective on-the-ground practices. business growth, mission is the key lever, as it represents “What we do.” Mission How to Put Principles into Practice connects corporate aims to capabilities, Several “levers” crucial to implementation and aspirations with resources. Several were noted: noted how the compliance and reporting systems of leading MNCs are beginning to • Lead the process: Select companies spoke “look the same.” about the need for and value of leadership in implementing corporate responsibility. • Take an integrated approach: Discussant One company used a CEO-driven, top- Carolyn Woo noted that each company’s down approach to integrate its principles, approach to implementation was built developing training sessions at all levels, on its unique personality, the salience of and building on labor, safety, environment, particular issues for the business, and the and anti-corruption policies and practices development of an integrated approach to create a business-based platform of to corporate responsibility. Recognizing shared value. differences in timing and circumstances, the conferees noted that this involves • Establish a framework: For other com- embedding corporate responsibility into panies, the key was developing a manage- policies and processes, making it part of ment framework that places at its core the the corporate governance system, and value proposition of responsibility and using it to create value propositions in the sustainability. In situations where compa- marketplace. In one company corporate nies have already worked hard to articulate responsibility is positioned as a driver for 14 UNGC Leading Companies Retreat www.BCCorporateCitizenship.org
  • 19. Learning, Practice, Results. In Good Company generating revenues, reducing costs, and management is crucial; operating with growing the firm into a leadership position multicultural workforce and multiple legal in its industry. This reflects a company- frameworks; extending company ethos to wide effort that began with redefining its suppliers and vendors. vision and then devising the machinery needed to ensure that the company could • CEMEX, based in Mexico, is a leader in do its business right. social innovation and wants to deepen its employee engagement and build middle It was acknowledged that there are multiple management understanding of corporate drivers of the corporate responsibility agenda citizenship. and that these, too, vary from firm to firm Experiences: UNGC provides a mechanism and in different markets and social contexts. for companies to learn from one another. Accordingly, we heard next from two compa- CEMEX built out its Patrimonio Hoy nies not based in OECD (Organization for program to provide small loans for families Economic Cooperation and Development) to build houses, a combined business and countries. social strategy. Challenges: Developing measures of social • Infosys, established in 1981 in India before impact; developing in-house systems to liberalization and reforms, the company move strategy globally; linking short-term joined because the UNGC principles and long-term needs and interests, particu- reflect the company’s philosophy toward larly in tough economic times; training employees, clients and all other stake- and educating middle management; and holders. The company’s values encompass integrating the web 2.0 culture into the customer delight, leadership by example, company’s culture. integrity and transparency, fairness, and pursuit of excellence. It was the first These two presentations resurfaced the company in India to provide audited quar- importance of UNGC principles in emerging terly reports (a practice now mandatory in markets where they help to signal to host India). It also shows human resources as governments the responsible role that private an asset on its balance sheet. enterprise can play. In the same way, they Experiences: UNGC principles aligned inform a framework for “soft-governance” with business drivers: employee recruit- within the firm. Noting the use of principles ment/retention/development, supporting to frame implementation of corporate respon- local communities, resource management sibility in these cases, discussant James Walsh (energy, water, paper), green building prac- reminded that corporate responsibility hinges tices, pursuing fair and transparent busi- importantly on the business needs of com- ness practices, and abiding by the law of panies. Many, in turn, spoke of its import to the land. customers, business partners, and employees Challenges: Local environment has not and the need to apply continuous improve- always been conducive to operating with ment to corporate responsibility. A company principles, so maintaining leadership exemplifying this presented last. on ethics, fairness, and human resource www.BCCorporateCitizenship.org UNGC Leading Companies Retreat 15
  • 20. Learning, Practice, Results. In Good Company Novo Nordisk, based in Denmark, offers Considerations on putting principles an integrative approach to principle-based into practice management: corporate responsibility is Integration of the 10 UN Global Compact represented in its values and practices (the principles into company strategies and oper- Novo Nordisk Way of Management) and ating practices is critically important to the its products, services, and partnerships. Its long-run effectiveness of the UNGC initiative. values are: accountable, ambitious, respon- The 2007 UNGC survey of member compa- sible, engaged with stakeholders, open and nies finds that large majorities are embed- honest, ready for change. ding key principles into codes of conduct and Experiences: Incorporated UN Millennium policies, but fewer are doing so in regard to Goals into its objectives and audits its “triple management and employee training, and bottom line” performance through internal measurement and accountability, and fewer value audits, employee involvement and still in commercial strategies and practices. external assurance. Collaborates with major NGOs or multi-lateral organizations on For the majority of companies at this retreat, specific initiatives. the Global Compact principles aligned with Challenges: Dilemmas, interactions, and trade- their values and have become embedded, offs in operating with the triple bottom line more often than not in a explicit way, into within an industry that has low public trust; their mission, management systems, and emphasizing innovation but simultaneously market development strategies. These com- dealing with risks; building the ‘business panies have covered a first stage of the case’ to support full embedding of the triple journey from adopting the Global Compact bottom line across organizational areas and Principles as a framework for continuous business tasks. progress on corporate citizenship to the beginnings of a second stage where the prin- Other companies at the retreat that signed the ciples have helped to generate the strategies UNGC early on used it to help unite cultures of the business itself. after a merger, drive a new strategy or corpo- rate vision, or create a systematic approach Still, several factors seemed to be important to to implementation. For one company, that address along the way: involved internal reflection on company values, analysis and research on social issues, • The DNA question: In many companies, building a leadership structure that connects corporate responsibility issues and prin- across functions and areas of expertise, estab- ciples are still not driven down into the lishing a help desk, elaborating relevant poli- middle and lower levels of the organi- cies with detailed guidelines that help define zation. Further, it is clear that in many responsibilities clearly, and linking principles companies values inform but do not drive to management systems. strategies, which can raise some question about their relevance when “reality bites” or tough times hit. To the extent that values 16 UNGC Leading Companies Retreat www.BCCorporateCitizenship.org
  • 21. Learning, Practice, Results. In Good Company actually are baked into the strategy and part across the company, generating alignment of the value proposition of the firm, they of values and strategic approaches, while are more apt to endure. still providing necessary flexibility at the local level, if basic operational processes • Soft values and hard structures: There have been developed that help drive those is some tension between implementing values throughout the enterprise. principles via a values-driven versus more structured, metrics-based approach. Vision • The role of metrics: One thing that can be and values can bring the principles to life, effective for companies trying to integrate but structural arrangements reflect how principles into practice is to ensure that power is allocated in the company. Only they are incorporated into the company’s when values are embedded in operating “dashboard,” “key performance indica- strategies can they effectively be trans- tors,” balanced scorecard, and similar lated into goals and everyday business mechanisms which are used to manage practices. To make this work requires and control the enterprise. In many cases supportive structures with real authority data are available, but need to be consoli- and centrality. In many companies, the dated and analyzed for decision making. individuals responsible for implementing It is particularly important that results responsibility are located in staff jobs on values-driven metrics be included in and have scant connection to operations. the reward system, since managers and This is what makes coordinative struc- employees will work toward metrics on tures, responsibility matrices, and oper- which they are being rewarded. Further, ating reviews a crucial part of integrating and importantly, if metrics are to be useful, principles into practice. In this way, the they need strong constituencies who need shift toward high-impact implementation and understand them, and who can—and is accompanied by a parallel shift from will—use them. Just as the quality move- communicating performance to a new ment was driven in part by customer emphasis on governance arrangements. demands, so is it helpful in the first stages to identify constituencies interested in key • Global policies and strategies and local social and ecological issues. engagement and operations: Other issues arise between what happens at The leap in implementation observed—truly headquarters and what needs to happen a new stage in implementation where the within different business, functional Global Compact principles have become part and geographical units of an MNC— of the business strategy itself—is happening that is between the global and the local as a new stage develops, one which is likely to or “glocal.” Cultural issues, and different encompass innovations developed in collabo- business models in different units (or ration with actors across sectors and to foster functions), can be guided by a common a capacity and willingness to engage in novel set of values, core strategies, and policies ways around problems whose magnitude goes www.BCCorporateCitizenship.org UNGC Leading Companies Retreat 17
  • 22. Learning, Practice, Results. In Good Company beyond any one nation’s or institution’s capac- Many of the companies at the Leadership ities. A summary of the collective conversa- Retreat are venturing into this socio-commer- tion on these matters follows. cial frontier, validating the point made by Peter Drucker that social and ecological To the frontiers of global corporate problems are often business opportunities in disguise.8 The key is innovation, whether citizenship technological, bottom of the pyramid, social In a very real sense, serious efforts to imple- entrepreneurial, or collaborative, yet the ques- ment the UNGC’s 10 principles demand tion is how to scale up successful initiatives. significant organizational change that goes well beyond traditional notions of corporate The corporation’s role in solving global prob- social responsibility in the form of compli- lems remains unclear, with acknowledgement ance or philanthropy. The challenges in the that there are limits to what companies can world today, many MNC leaders are coming or should actually do. At the societal level, it to recognize, are not simply about how things appears that there are not many companies are produced (though important), but also willing to stick their metaphoric heads up lest, about what goods and services are produced, like the sunflower that rises above the rest, what purposes they serve, and for whom. those heads get chopped off by social critics Companies’ offerings, along with consumers’ or leave the company at a competitive disad- choices, create major consequences for the vantage. And there are few CEOs doing that natural environment, resource use and distri- today, with some notable exceptions, some bution, and societal health, making the funda- among the companies attending the retreat. mental issue one of transformation. The Certainly, there is some risk involved in step- Boston College Center for Corporate Citizen- ping forward, particularly in an era of intense ship has termed this a movement that takes competition and heightened attention to firms beyond current criteria associated with short-term financial results, yet the pressing being a “good company.” needs of the world demand courageous and more creative leadership from corporate On this count, there are clear shifts in the leaders as companies continue to assume marketplace demands for healthier, more greater global responsibility. energy efficient, and socially useful prod- ucts and services. Studies suggest that the This challenge is compounded with the fact LOHAS (Lifestyles of Health and Sustain- that partnerships (public/private, sectoral or ability) market will grow from $200 billion across sectors, or related to a specific issue) in sales today to $420 billion in three years with a broad scope and wide societal impact to $845 billion by 2015. The related “ethical are not very well developed; differing agendas consumer” market is also growing, not only of public authorities and companies, lack of in western societies but around the world. trust among potential partners, and the lack For leading companies, the combination of of a truly multilateral dialogue are obstacles in market opportunities and value-based princi- this area. ples has become a means of optimizing both shareholder and stakeholder value. 18 UNGC Leading Companies Retreat www.BCCorporateCitizenship.org
  • 23. Learning, Practice, Results. In Good Company Yet, for many years, the state role in gover- • Co-create multi-sector partnerships and nance has been diminishing. Now there is innovation: In the context of the retreat, increasing recognition, particularly on the the willingness of MNCs to undertake part of leading companies, that the rules of new partnerships for specific issues and markets, the rules of competition, the rules of regions became apparent—“Business can’t the game for business—as well as supports do it alone.” This theme resonated through and infrastructure––demand better global discussions but led several of the compa- governance. Certainly there is an emerging nies present to form partnerships with need for global governance to deal with big other businesses, NGOs and governments, issues—the food crisis, a water crisis in the and to take the lead in forming multi- future, climate change, humanity pushing the sector alliances aimed variously at respon- limits of natural resources, and similar issues sible supply chain practices, lending, that go well beyond the ability of any single health care, and environmental sustain- nation-state to handle. Given the global clout ability. Plainly co-creative multisector of corporations, it is evident that nation-states collaborations need to go well beyond and multi-lateral institutions cannot establish traditional approaches to public-private or any kind of global governance without corpo- social partnerships, but they demand new rations participating in the process. understandings of the language, culture, operating dynamics, and goals of each Reflecting on these developments, four items sector involved. Many collaborations fail on rise in prominence on the evolving agenda of just these grounds, and there are of course leading MNCs: many significant barriers to multiple orga- nizations working together effectively to • Take a leadership role: How do companies address big problems like climate change, deal with the risk imposed by “sticking the coming water crisis, or social equity. their heads up” above the crowd and One important skill to develop involves assuming a leadership position? How learning how to lead-in-partnership. do individual leaders gain the courage and credibility to step forward? One step, • Establish or join new forms of global highlighted at the meeting, is defining an governance: The move toward multisector ennobling mission and setting far-reaching innovations hinges on business gaining goals. This was evident among attendees a clear and compelling voice in public in their embrace of select UN Millennium policy. It was noted that too often the Development Goals, in setting ambitious corporate responsibility and government corporate responsibility agendas, and in relations arms of MNCs are not aligned public commitments to “make a better and that companies often “talk” about posi- world” in their areas of expertise through tive social change but put their “money” the business models and offerings. behind politicians and policies that impede it. Many of the leading companies at the retreat recognize the need for better public www.BCCorporateCitizenship.org UNGC Leading Companies Retreat 19
  • 24. Learning, Practice, Results. In Good Company policy and for regulatory frameworks that orative formations for global management in create a level playing field on which they a new world of constraints. can operate successfully, without loss of competitive advantage if they take social UNGC––where to from here? risks, adopt higher standards, or engage in What are the prospects for progress on these collaborative activities. An initiative like the four fronts? Some might argue, as Micro- Global Compact could play a significant soft founder and former CEO Bill Gates did role concerning this new frontier. in January 2008 at the World Economic Forum, that there is a need for a new form • Get ready for corporate citizenship 2.0: of capitalism—a “warm” version, or what Finally, the firms present also acknowl- Gates termed a more “caring capitalism,” to edge being neophytes on capitalizing complement the “cold.” One conclusion of the on the internet and web social networks two-day Leading Companies Retreat is that and technologies for purposes of iden- principle-driven approaches fall on the warm tifying issues, communicating intent, side because they emphasize an enlightened dialoguing with stakeholders, and mobi- self-interest that squarely places businesses in lizing global involvement in pressing the societies and ecologies in which they exist, social issues. Some of the urgency arises working for the betterment of all. from the “power of one,” that is, the power of a single individual or a few, to use the The UNGC principles have, in some leading internet in ways that damage a brand glob- corporations, reached the point where they ally, no matter what the facts might be have begun to significantly inform business or the context involved. But more critical strategies and operating practices. Communi- was the unrealized opportunity to scale up cation of this progress has been and remains corporate responsibility and shared valued important. Included here are some “lessons” creation that citizenship 2.0 ( a term from these leading companies on implemen- coined by Telefónica) could offer. tation of the UNGC principles (See box on page 21.) Summing up, we see among these compa- nies a shift from internalization of the Global Is it advisable for multi-lateral organizations Compact principles, which will continue, to express views on the subject of corporate toward tangible action on their societal and strategy and regulation beyond “universal global impact. There is a sense of increasing principles”? Devising the world’s leadership challenges and pressures on MNCs to be part framework and best practices on corporate of global solutions. There is a latent demand citizenship is a bold agenda. Demand for for new forms of global dialogue, for leader- corporate responsibility and sustainability ship in the global arena, and for new forms has grown rapidly for the past 20 years, and of complementarity with nation-states and companies are responding to those demands multi-lateral organizations in order to jointly in many and different ways. The UNGC has produce new policy frameworks and collab- been one important agent helping to accel- 20 UNGC Leading Companies Retreat www.BCCorporateCitizenship.org
  • 25. Learning, Practice, Results. In Good Company Implementing the UNGC Principles: Best Practices While some leading corporations have developed rigorous and systematic approaches to managing their corporate responsibilities, using the Global Compact as a critical support, many are considerably less far along this path. What has been learned and already written about in numerous other UNGC documents, toolkits, and frameworks of action on corporate citizen- ship, however, already provides a significant foundation for implementation, as do the experi- ences of companies that have taken the lead on the implementation process. Rather than rein- vent this wheel (although, of course, new ideas and additions are always welcomed), what is really needed is to figure out how to convey the lessons that have already been learned by the leaders to others less far along and to small and medium-sized enterprises (SMEs), which typi- cally do not have the resources of an MNC to devote to social or ecological programs. Clearly, many more companies need to learn what the leading companies have already learned so that some of the social and ecological ills of the world can be better handled. Interestingly, one conclusion from the practices of companies already engaged in imple- menting the UNGC principles was that the tools, frameworks, and approaches needed may already exist. Like other management approaches (e.g., total quality management or environ- mental management), systemic approaches are needed and they need to be put into place with the same kind of clarity and operationalization that these other systems have. These approaches share certain characteristics: • They are usually based on values, core principles, or value-based new developments. • Dialogue with stakeholders, internal (employees) and external, is an integral part of all of them. • Most take a continuous improvement approach. • Transparency and reporting are very important. • Rigorous analysis, similar to that for any other business problem, is required of companies implementing corporate responsibility programs, whether internally around business prac- tices or externally. • Companies need to determine the relevance of issues and their significance to the company and establish priorities. • Corporate responsibility is typically integrated via the mission, vision, and code of conduct, which when done effectively become core elements of the strategic framework of the company. This integration implies changes in processes and procedures that ensure that responsibilities are taken seriously. • Leadership commitment and change of culture throughout the organization, as well as structural changes to locate institutional oversight of corporate citizenship in the company, are all needed. www.BCCorporateCitizenship.org UNGC Leading Companies Retreat 21
  • 26. Learning, Practice, Results. In Good Company erate and, to some extent, align this response among business school faculty at Case through its principles of corporate respon- Western Reserve and among human rights sibility, initiatives in the financial sector and experts at Harvard University, provide the business education, and with select stake- kind of in-depth engagement that deepens holders from NGOs and governments. Can it understanding and motivates action. do more? Should it? 3. Promote partnerships and power sharing: During the retreat, many of the MNCs high- The next stage will require stating bold lighted a number of areas for potential action. goals, bigger than any one company can do These include: alone, and requires “power sharing” across firms and sectors. None of the current 1. Vigorously disseminate what we already UNGC’s 10 principles speak to partnership know: We don’t really need new tools; the or power sharing across firms. Perhaps it existing ones work, and there are exem- is time to develop the second goal of the plar companies. Many of the tools and best Global Compact (to contribute to broader practices of the MNCs have relevance for goals for development and a sustainable not only other big companies, but also for and fairer globalization) into a roster of subsidiaries and SMEs around the world. corporate responsibilities for consideration The UNGC has recently developed and by members? made available a toolkit on environmental management. Development of other prac- 4. Establish policy and governance frame- tical tools and dissemination of existing works: When issues are too big for one ones is essential to the widespread implan- company—or one government—to deal tation of UNGC principles. Tools also with, corporate responsibility principles need to be applied across functional areas, are insufficient to address them. For issues not just at the corporate level (e.g., within like climate change, the food crisis, or marketing, procurement, accounting, child labor which transcend corporate and R&D, operations) country boundaries, the UNGC is posi- tioned to help develop and disseminate 2. Increase member collaboration: The next guidance on policy and governance frame- stage for the UNGC and its progressive works. Perhaps these subjects, too, could participating companies is one of innova- be part of the UNGC’s platform? tion, co-creation, and joint work on social problems. This requires collaboration Future Directions for the UNGC: Three across sectors and across the business Scenarios community, even working with competi- With these directions in mind, inspired by tors. The UNGC annually has a full roster the two-day conversation at the Leading of hosted or co-hosted meetings to develop Companies Retreat, we suggest three possible and disseminate knowledge and prac- scenarios for the future of the UN Global tices. Very targeted ones, such as meetings Compact. 22 UNGC Leading Companies Retreat www.BCCorporateCitizenship.org
  • 27. Learning, Practice, Results. In Good Company Scenario 1: UNGC principles remain goals of place a new emphasis in setting out inclu- aspiration and intent. sive initiatives and guidelines for corporate collective action with regional and/or global In this scenario, the UNGC continues to impact—that is, the Global Compact develops focus on dissemination of its principles a new emphasis and global tools for prog- and their continued application through ress concerning its second goal (catalyzing dialogue and convenings. To a certain extent, actions by business in support of the broader the UNGC principles have begun and will UN goals, particularly to address the world’s continue to help to bring a wave of political development problems, in line with the UN and economic reform, especially in devel- Millennium Development Goals). oping countries, by guiding the conduct of MNCs and informing the practices of Development and articulation of guidelines emerging market corporations and industries. on the operation of extended supply chains, protection of cross-national ecosystems, scal- However, there are limits to this approach. able partnerships for development, and other Over the next decades the price of commod- areas of global concern could help to inform ities—oil, cotton, copper, etc.—will continue the principle-based decision making of to escalate and the sustainability of the global companies. Many other groups have expertise economy will be called further into ques- and a voice in these regards, but the UNGC is tion. Imbalances in the global economy will uniquely positioned to identify and articulate threaten the profitability of businesses and the scalable approach behind the practices sovereignty of nations. Business leaders and and give them global authority.9 policy makers cannot afford to ignore the implications. A key question is whether the Multinational companies are faced with chal- UNGC and the actions and initiatives it facili- lenges of integrating two factors that affect tates now will speak to these conditions. corporate behavior: different cultures and peoples. Setting universal guidelines can help Many foresee a need for a new era of global companies “think through” global operations governance for corporate responsibility. and the practical implications of how they Unless the UNGC expands its agenda and source materials and labor, produce products scope, its principles could become less signifi- and services, and distribute their earnings. cant for driving changes inside of business. UNGC signatories will remain a part of the Many new management techniques such as “club,” but will seek elsewhere for solutions to open-innovation, stakeholder consultation, global problems of business and society. employee engagement, dynamic pricing, and triple bottom line accountability schemes are Scenario 2: UNGC sets guidelines for practical helping firms to achieve greater corporate business applications on corporate collective responsibility. In many instances, however, action with regional and/or global impact. there are no overarching principles behind these practices that are agreed upon nor are In this scenario, the UNGC and its members there any principle-based guidelines on their responsible implementation and use. www.BCCorporateCitizenship.org UNGC Leading Companies Retreat 23
  • 28. Learning, Practice, Results. In Good Company Imagine that to improve the sustainability of will form alliances with industry peers to supply chains, MNCs institute new UNGC mobilize technology and resources and form guidelines on supplier conduct and insist that global social innovation community. Univer- suppliers become UNGC signatories; or the sities, too, will have new roles to play and report cards of front line managers include a groups to partner with and indeed the global check list of best practices reflecting UNGC community, connected on the web to corpo- guidelines; or that executives be rewarded on rate citizenship 2.0, will be watching and the basis of principle-led decisions about the waiting to participate. Will the UNGC with its commercial development of their enterprise. convening power and legitimacy provide lead- ership to global citizenship? The practical challenge for UNGC signatories today is how to move principles to practice in This is a complex and expansive venture the boardroom, executive suite, and the front for any business. Recognizing that busi- lines of their organization. By linking the ness tends to resist regulation and mandated principles to practical business applications governance reform, the UNGC can nonethe- which go beyond the pure internalization of less use its convening power and responsible the principles by the company, the UNGC conduct guidelines to frame the importance could provide corporations with a coherent of multisector partnering and affirm the and consistent framework and criteria to legitimacy of “soft regulation” schemes. More guide operational choices and resource allo- than this, it can use its connections to the cation decisions. This alternative does not U.N. General Assembly, as well as the World need to go against the voluntary nature of the Economic Forum and other global forums, Global Compact, if these guidelines are done to help to reinvent the practice of multisector in conjunction with the participating leading cooperation. companies and they are presented as higher and desirable levels of excellence in the imple- By partnering with the public and civic sectors mentation of the Global Compact principles. in combined efforts to combat global sustain- ability challenges, the business sector will Scenario 3: The UNGC becomes a mechanism ensure its own sustainability. The risks for to change the world. any one business or even a sector doing so are significant. Leadership from the UNGC on In this ambitious scenario, the UNGC these counts is not only important, it may be becomes an instrument of collective leader- essential. ship. As big challenges—like chronic poverty, unequal access to health and education, climate change, demographic shifts, and so on—continue to threaten global security, the private sector will step up to partner with varied public and civil society organizations to pilot initiatives to create innovative solutions to those challenges. Multinational companies 24 UNGC Leading Companies Retreat www.BCCorporateCitizenship.org
  • 29. Learning, Practice, Results. In Good Company Endnotes 1GlobeScan, Corporate Social Responsibility Monitor (2001-2006), http://www.globescan.com. 2Note on terminology, citizenship and corporate responsibility, local language. There is a lot of misunderstanding about what is meant by corporate citizenship and its namesakes, corporate responsibility, CSR, sustainability, and so on. Perhaps this shouldn’t surprise—not too long ago, corporate citizenship was equated with philanthropy and handled mainly by the community affairs function in companies. The field is still in what scholars call a “pre-paradigmatic” phase, where there is scant agreement on definitions and terms and no consensus has been reached about what it includes and does not include in its boundaries. What are the common features of most views? To begin, the field has its roots in ethics. This stresses the importance of moral conduct and associated ideals that a corporation be a responsible employer, neighbor, and contributor to the common good. At a minimum, this translates into compliance: behaving in line with current law, accepted business principles, and codes of conduct. Beyond compliance, philanthropy is an important part of the business-society equation. Firms, in the United States in particular, are more or less expected to “give back” a portion of their profits to help the disadvantaged, support community life, and, when necessary, provide disaster relief. This translates into a voluntary contribution to society in exchange for societal benefits. Still, business has its biggest impact on society through (1) its own operations and (2) its interactions with myriad suppliers, distributors, and partners through the entire value chain to end users (business customers and/or consumers). Most would agree then that corporate citizenship and CSR also encompass the harms and benefits of a company’s commercial activities on society. This all translates into two criteria: 1) Minimize harm: This means taking account of and minimizing the negative impact of a firm’s footprint in society. The main injunction is “do no harm” and 2)Maximize benefit: this means creating shared value in the form of economic wealth and social welfare, including reduction of poverty, improved health and well-being, development of people, care of the natural environment, etc. Here the message is “do good.” All of this, of course, is in the context of the sustainability of the corporation itself which includes securing profits for shareholders and for future purposes. 3Reputation Institute, RepTrak Pulse 2006: Social Responsibility, ,http://www.reputationinstitute.com; also see The Center’s recent survey of business leaders in The State of Corporate Citizenship in the U.S.: Rhetoric versus Reality, 2007. 4McKinsey & Company. Shaping the new rules of competition. UN Global Compact Participant Mirror, July, 2007. 5UNGC Annual Report, 2007. 6See Googins, B., P. H. Mirvis, and S. Rochlin. Beyond Good Company: Next Generation Corporate Citizenship. New York: Palgrave, 2007. 7See Waddock, S. A. and C. Bodwell. Total Responsibility Management: The Manual. Sheffield, U.K.: Greenleaf, 2007. 8Drucker, Peter F., “Management: Revised Edition” Harper Collins, New York, 2008. 9In pursuit of making principles more industry relevant, the UNGC could partner with groups like the International Council on Mining and Metals and the Global Reporting Initiative. As a result, UNGC principles, which historically have been goals of aspiration, could become integrative and applicable to business operations and outputs. See, for example, Ruggie, J., “Promotion and Protection of All Human Rights, Civil, Political, Economic, Social and Cultural Rights, including the Right to Development.” A/HRC/8/5 Agenda item 3 submitted to United Nations Human Rights Council, April 2008. www.BCCorporateCitizenship.org UNGC Leading Companies Retreat 25
  • 30. Learning, Practice, Results. In Good Company Challenging questions and issues going forward How can the principles be present in the boardroom, executive suite and the front lines of global companies? In what ways can adherence to the principles serve as a driver for quality management and performance? How can global platforms be created to encourage collaboration among signatories? If the business case for corporate responsibility is now self-evident what are the implications for the ways in which companies practice corporate citizenship? How can the best practices of implementation be shared globally and spread through GC Networks? How should signatories design governance and management processes to live up to this accountability? 26 UNGC Leading Companies Retreat www.BCCorporateCitizenship.org
  • 31. Front (l-r): Kat Cooley, Kwang Ryu, Tomás Conde, Manuel Escudero, Sandra Waddock, Carolyn Woo, Suzanne Stormer, David Cooper- rider, Allison Lee, Sylvia Kinnicutt, Bradley Googins and Philip Mirvis Back: York Lunau, Vinay Rao, Jill Huntley, Joe Sellwood, Edgar Rodriguez, James Walsh, Chris Pinney, Diana Chavez, Charles Bartels, Bo Miller, Nick Welch, Salvatore Gabola, Belén Izquierdo, Steve Rochlin, Asya Anderson, Christian Frutiger, Sean Fitzgerald, Sean Gilbert and Guy Morgan
  • 32. AccountAbility AccountAbility is an international nonprofit organization, with bases in Beijing, Geneva, London, Sao Paulo and Washington, established in 1995 to “promote accountability innovations that advance sustainable development.” Account- Ability’s work focuses on responsible business practices and the governance of collaborations between public and private institutions, and is exemplified by our groundbreaking standards work, including the world’s only assurance standard for sustainability performance (AA1000AS), our annual Accountability Rating with Fortune magazine of the world’s largest companies, and our annual Responsible Competitiveness Index of progress of over 100 countries in building a responsible approach to international competitiveness and trade. www.accountability21.net Boston College Center for Corporate Citizenship The Boston College Center for Corporate Citizenship is a membership-based re- search organization associated with the Carroll School of Management. As a lead- ing resource on corporate citizenship, the Center works with global corporations to help them define, plan, and operationalize their corporate citizenship. The Center offers publications including a newsletter, research reports, and white papers; ex- ecutive education, including three Certificate programs; events that include an an- nual conference, round-tables and regional meetings; peer-to-peer learning forums and a corporate membership program. www.BCCorporateCitizenship.org United Nations Global Compact The UN Global Compact brings business together with UN agencies, labor, civil society and governments to advance 10 universal principles in the areas of human rights, labor, environment and anti-corruption. Through the power of collective action, the Global Compact seeks to mainstream these 10 principles in business activities around the world and to catalyze actions in support of broader UN goals. With over 4,000 stakeholders from more than 100 countries, it is the world’s larg- est voluntary corporate citizenship initiative. www.unglobalcompact.org. Boston College Center for Corporate Citizenship 55 Lee Road, Chestnut Hill, MA 02467 Phone 617-552-4545 Fax 617-552-8499 Email ccc@bc.edu Web site www.BCCorporateCitizenship.org