In many ways, the environment for corporate responsibility (CR) has never been more promising in the six years since launching the Global Compact. There are several recent and rapidly-unfolding trends with potential to elevate the CR agenda as a whole: (1) the increasingly global nature of corporate citizenship; (2) a shift in CR mindset from avoiding costs to creating value; (3) financial markets are tying CR to long-term corporate viability and financial performance; (4) recognition that voluntary and regulatory efforts are complementary; and (5) a new symbiosis between corporate governance and CR. Each of these trends on its own is significant, but in combination they are quickly changing the context within which the Global Compact operates.

Just today – 27 April 2006 – we are witnessing what I consider to be another crucial step toward wide-spread recognition and implementation of responsible business practices with the announcement that institutional investors from 16 countries, representing more than $2 trillion in assets-owned, have committed to bring economic, social and governance considerations into their investment activities. The Principles for Responsible Investment (PRI) are being launched today by Secretary-General Kofi Annan at the New York Stock Exchange – and are proof that open dialogue among stakeholders can lead to meaningful outcomes. The PRI initiative is being carried-out through close coordination between the UN Environment Programme Finance Initiative and the Global Compact. (More on PRI).

The Global Compact’s governance structure was, in fact, developed to help manage the growth and impact of the initiative within an ever-advancing global economy. The recent appointment of the Global Compact Board by the Secretary-General and the creation of the Foundation for the Global Compact are two important elements in the GC governance structure. In particular, the Board endows the Global Compact with a wide range of expertise on which to draw – Board members come from numerous countries, industries and sectors – as well as pronounced champions for our initiative. With the required support structure for the Global Compact now in place, we are well-placed to move with, and at times ahead, of the changing business-society nexus. For the Global Compact, this means continuous efforts to strengthen our global-local dynamic, recognizing that producing widespread positive change depends on the ability to connect global issues and advocacy with local know-how and context. (More on the new Board and Foundation).

Sincerely,

Georg Kell
Executive Head

The impact of the rise of China on employment and labour standards worldwide is the salient dynamic factor in the global economy today. What happens in China determines the life and work experience of that great proportion of humanity that lives there. Also of great concern is China’s strong influence on the overall working of the global economy. What is needed is greatly enhanced global action to tackle the manifest employment and labour standards problems deriving from China’s expanding role.

Business is under rising pressure to address discrimination and promote equality in the workforce – a difficult task in today’s extremely dynamic environment. Globalization and recent social phenomena, such as ageing of population and intensification of migration flows, have changed the patterns of inequality and discrimination and pose new challenges to their elimination. The Global Compact Policy Dialogue, to be held in October 2006, will address topics that are the centerpiece of current debates on non-discrimination.

The story of London is truly a tale of two cities. On the one hand, London is a place of enormous wealth and affluence, and has few rivals in terms of sheer economic success. The City's commercial success belies a city of great disadvantage, deprivation, inequality of opportunity and exclusion. “Diversity Works for London” is not simply a title, but also the mantra which underpins The London Development Agency’s efforts to demonstrate the nexus between equality of opportunity, London’s status as a world class city and the competitiveness of businesses operating within London.

The IFC will be applying new environmental and social requirements to all of its new investments from 30 April 2006. The performance standards contain new requirements for labour conditions; community health, safety, and security; pollution prevention and abatement; integrated social and environmental assessments; and management systems. The review was triggered both by the realization that the old safeguards had proved inadequate in complex project situations, and by IFC’s transition to a new business model which is based on the premise that long-term profitability and strong project outcomes are better secured by companies that manage all of their risks well. To support the IFC’s new performance standard on Labour and Working Conditions, it has published a Good Practice Note on Non-Discrimination and Equal Opportunity.

E. Kaufman

P. Sharma

Today, the quality of the workplace is increasingly considered as important to business as product quality. Whilst there is, generally speaking, agreement on product and service specifications, the atmosphere and environment in which these are to be achieved is often not considered as a point of business focus. Yet it should be, considering the correlation between poor product quality and poor workplace quality, which often results in a negative impact on the bottom-line directly through defects and rejection, and indirectly by way of costs related to rework, asset burnout, safety and occupational health issues, and liability costs, among others.

Voluntary standards and certification systems can create bridges between sustainable production and sustainable consumption practices. These tools link producers with consumers, using market-mechanisms to reward producers for more socially and environmentally sustainable practices. However, a number of concerns have been raised about whether voluntary standards and certification systems are technical barriers to trade, particularly for developing countries. To explore such concerns, it is necessary to consider the sector as a whole, recognizing that there are tremendous differences among initiatives. Credible voluntary certification systems can indeed facilitate trade while creating positive social and environmental change for developed and developing countries alike.

As The Coca-Cola Company's Director of Global Labour Relations, one of Ed Potter's key priorities is to implement a more robust global Workplace Rights Policy throughout the company, which spans over 200 countries and 500,000 employees. In a conversation with the Compact Quarterly, Potter shares his plans to bring the new workplace policy to life across the system and his thoughts on overcoming lingering concerns over labour practices.

Cooking with the CleanCook Stove at Kebrebeyah Camp

Like so many Sub-Saharan African countries, Ethiopia is experiencing an energy crisis characterized by severe fuelwood shortages, even as the nation remains dependent on biomass fuels. To address this need, Dometic AB, the world’s leading alcohol appliance manufacturer, commenced a pilot study – named Project Gaia – to make locally produced ethanol commercially available by introducing an ethanol fuelled stove, known as the CleanCook (CC) Stove. The project is now moving from pilot study to commercialization, and has the potential to revolutionize the household energy economy of Ethiopia – and perhaps other developing nations – by utilizing alcohol fuels derived from currently wasted or under-used resources.

105 of the world's 500 largest companies by market capitalization are Global Compact participants (source Financial Times Global 500 ranking). The economic and social impact of this group of companies is immense, with direct employment of close to 10 million employees, market capitalization of approximately USD 4.8 trillion, and revenues of approximately USD 3.5 trillion recorded in 2005. See further information on the Economic Impact of the “Global 105”.

See the “Global 105” listed by industry, with country of incorporation and FT Global 500 ranking for 2005. To assess the social and environmental impact of these companies, click on the individual company name to view a Communication on Progress (where currently available).

This Guide offers practical guidance for business on how to internalize human rights principles in company operations and activities. It demonstrates that advancing human rights is as much about realizing new opportunities as it is about managing risks and meeting standards and expectations. Prepared by business for business, the Guide is user-friendly and is laid out in a systematic manner, offering advice and real-life examples on matters such as: developing the business case for human rights, integrating human rights in company strategy, human rights training, measuring impact and reporting on human rights.

This new publication showcases more than twenty-five examples from business and civil society, giving guidance on how to deal with difficult situations when implementing the 10th principle of the Global Compact. Among the issues comprehensively addressed are: the implementation of anti-bribery programs; selection criteria for agents and consultants; how to handle facilitation payments and gifts; corruption in partnership projects; and collective action against corruption.

Can corporate marketing foster sustainable consumption? What are the business drivers? What are the key tips to communicate effectively?

To address these questions, "Talk the Walk" provides an overview of the existing research and statistics on consumers’ attitudes and behaviors, and studies it in the context of the actual success of “green” products and sustainable lifestyles marketing strategies. Then, based on an in-depth analysis of various marketing strategies and campaigns from both small alternative companies to mainstream groups in industries such as clothing, cosmetics, detergents, food retail, automotive, and water management, the study identifies the key factors of success and provides a toolbox to practitioners.

Since launching in June 2005, the Global Compact’s Mexico Network now includes over 400 members from the “Fortune 500”, small- and medium-sized enterprises (SMEs), academic institutions, civil society organizations and public entities. The Network has developed learning and training materials that illustrate how the Global Compact can be an innovative tool for Mexican organizations. Two notable products have been developed: a "Practical Guide" for implementing the Global Compact into business practices and an SME training course on the Global Compact. The Guide includes not just background on the intitiative and its principles, but also examples of good practices by Mexican organizations for each principle – the result of extensive research and one-on-one interviews with organizations.

Read news from Global Compact networks located in Europe, the Americas, Africa and Asia. Recent news includes network launches in Indonesia, Morocco and Ukraine, a "Business Against Corruption" national forum in Bulgaria, a non-discrimination working group meeting in Hungary and a network "General Assembly" meeting in Panama.