It was a sunny Sunday afternoon on 31 January 1999 when UN Secretary-General Kofi Annan addressed a packed audience of business leaders at the World Economic Forum and proposed a “global compact” of shared values to make markets more robust and inclusive. The speech was meticulously researched; we knew it would touch the nerve of the zeitgeist. The audience was captured and it was a resounding success. But, we had no idea that with this speech a global initiative was being born.

Nearly eight years after the founding address in Davos, the UN Global Compact has become the world’s premier corporate citizenship initiative thanks to the vision and commitment of Kofi Annan. It took courage, intuition and a big dose of idealistic pragmatism to make this happen. The short history of the Global Compact is full of examples that testify to the Secretary-General’s leadership, but there are two particularly telling anecdotes.

Before the speech was delivered, it was tested on a high-level UN official who proceeded to reject the speech, calling it irrelevant. The Compact easily could have been dead before it was ever born, yet Kofi Annan did not heed the advice. Instead, he intuitively embraced the Global Compact, giving the idea a chance to see the light of the day. Over a year later, after the Compact was launched at United Nations headquarters in New York on 26 July 2000, a number of senior UN officials urged the Secretary-General to distance himself from the initiative due to dissent from NGOs and ideological preachers – both outside and inside the UN – rallying against the idea of the UN working with business. Again, there was a real risk that the Global Compact could be abandoned. And once again, against the advice of UN officials, Kofi Annan discounted such voices, remarking: “If I don’t speak the voice of reason – who will?”

We thank you, Kofi Annan, for your leadership. We are proud to have worked for you and to have given shape to your call for “idealism coupled with sound realism”. You leave behind an important legacy, and we will do our utmost to carry it forward. We look forward to working with Secretary-General designate, Mr. Ban Ki-moon, and are optimistic that he will be equally supportive of the Global Compact.

Certainly, the journey into the future is guided by our past. The Global Compact builds on the foundational spirit of the UN in 1945. When the UN Charter was adopted, there was universal consensus that commerce, investment and trade were indispensable pillars of a peaceful and prosperous world. Reviving this spirit in the 21st century means learning how to work together – across countries, cultures and people. We are confident that the Global Compact’s journey has just begun.

If the voices of reason continue to have the say, if pragmatism continues to trump narrow concepts of past ideologies, present forms of protectionism and other forms of intolerance, if we continue to believe that human nature can benefit from political and economic openness, and if universal principles continue to be respected, then the UN Global Compact will remain an essential meeting ground for business and society.

Georg Kell
Executive Director, UN Global Compact

In the surging advance of Southern multinationals we find considerable cause for hope that globalization can deliver benefits to more of the world’s people. But most are still being left behind. We must avoid simply replacing the old, narrow distributions of power and wealth with new inequitable ones.  Responsible public policy, effective public-private partnerships and good governance are the essential catalysts that can transform the global market from a conduit for corporate profit into an unparalleled force for development. Now, more than ever, in a world of dissolving borders, prosperity for all is within our grasp — provided that not only growth, but also equitable growth, becomes our shared objective.

The International Finance Corporation (IFC) finances private sector projects in developing countries. Often, when deciding whether or not to support a project we are confronted with the following choice: Should we support a project that poses environmental and social risk management challenges, but which can ultimately have a real developmental impact, or should we shy away from such risk taking? The answer lies in the quality of the project sponsor. If the client company has a senior management level and board commitment to its environmental and social responsibilities, if the company is ready to work with us to meet IFC’s environmental and social standards and even go beyond, if the company understands the long-term benefits of managing its environmental and social risks, then yes, we will invest.

Questions abound related to the business practices of emerging market transnational companies (TNCs); practices that have been cultivated in areas renowned for deficient economic, political and social frameworks. There is no clear indication of the prevalence of basic corporate citizenship tenets among these companies; however, it is noteworthy that many of the leading emerging market TNCs are actively implementing responsible practices. These companies are rapidly making history and setting benchmarks for others to meet. Not only are they dispelling traditional notions that business is only driven by the West, they are also making the case for why companies based in developing economies need to take the earliest possible opportunity to address pressing socio-economic obstacles in order to succeed and compete in a globalized world.

At CEMEX, the global building solutions company based in Mexico, the key to success has been a relentless focus on providing value for our stockholders, creating a positive working environment for our employees, fostering the well-being of our communities and protecting the environment. This approach has allowed us to find new business opportunities that fulfill unmet needs. A case in point is the major shortfall of housing in Mexico, due to a complex combination of factors, including high population growth in past decades, internal migration from the countryside to major cities, high mortgage rates and guarantee requirements. Through creative thinking and a deep understanding of local circumstances, CEMEX has been able to make a significant contribution to the low-income housing market through three programs: Patrimonio Hoy, Construmex, and Piso Firme.

The new Applied Research Centre in Human Security at Coventry University is focusing on what we see as the greatest threats to human security: climate change, an inequitable global economic system, bad governance, corruption, abuse of human rights and violence. The solutions to these problems will come through understanding planetary ecosystems, through collecting and collating evidence on good practice that produces peaceful and socially just outcomes for people and communities, and on developing systems, policies and strategies for the future that involve the active participation of all stakeholders. The call is out for all participants in business, government and civil society to speed up the development of models of sustainable enterprise based on what we know now works. There is good practice around the world and we know how to make progress, but now is the time to just do it.

In October 2006, the Global Reporting Initiative (GRI) released the third version – “G3” – of its guidelines for sustainability reporting. Since establishing its first full set of guidelines in 2000, GRI has become the de facto standard in a field that, according to Chief Executive Ernst Ligteringen, is still in a comparatively early stage. In a conversation with the Compact Quarterly, Ligteringen discusses current trends in sustainability reporting, notably the broadening demographic of organizations that are engaged. Additionally, he reflects on the complementary nature of the GRI and the Global Compact – a key reason behind the recently announced alliance created by the two initiatives – and responds to pessimists who question the potential of sustainability reporting. Ligteringen is confident that his is a field which will grow, reasoning that: “We will find that in today’s world we need this kind of information to make markets work, to position and prepare companies for a very different kind of future, and also to ensure that there is ongoing trust between this increasingly important institution called business and global society.”

Incorporating inescapable trends found in our world, in our society or in our business into our current practices makes perfect sense: it is essentially taking the Net Present Value of the future, and acting now. Anyone who believes he or she has the wisdom of “the Future is Now”, and has the resources at hand, should immediately act upon it and, hence, create an “early mover advantage”. The premium related has, if proven right, significant value: lower costs, reduced liabilities, early revenue-generation, improved competitive position, and being the preferred client, supplier, employer, investor or license-holder. To bring principles into practice, be practical: “Think big. Start small and focused. Act quickly. And only then, replicate!”

There is significant alignment between the Global Compact’s ten principles and the Global Reporting Initiative's "G3" reporting components. This practical guide provides advice and support for linking sustainability reporting under the G3 Guidelines with the preparation of a Global Compact "Communication on Progress" (COP). Making the Connection outlines the ways in which the G3 Guidelines can enhance Global Compact participants’ communication with their stakeholders.

The Global Compact has launched a comprehensive, web-based tool – OneReport™ Communication on Progress (COP) Publisher – to help participants prepare and publish progress reports on integrating the ten principles into day-to-day business operations and practices. Developed jointly by the Global Compact and SRI World Group Inc., the COP Publisher is based on guidelines outlined in the Global Compact’s COP Policy and is available free of charge to participants of the initiative.

The Danish Ministry of Foreign Affairs has launched a web portal to assist small- and medium-sized enterprises operating in developing countries. Through a public-private partnership, the Danish Development Cooperation Agency (DANIDA) and Global Advice Network have created the Business Anti-Corruption Portal: www.business-anti-corruption.com, offering practical tools and advice in a "one-stop-shop" on anti-corruption. The English-language portal includes case studies, due diligence tools, tools on how to formulate a Code of Conduct and links to local and international organisations.

The 4th Annual Global Compact Local Networks Forum was held on 26-27 September 2006 in Barcelona, Spain, co-hosted by the Global Compact Office and the Barcelona Center for the Support of the Global Compact. The two-day event brought together more than 180 representatives of business, UN agencies, civil society and labour, who serve as focal points for existing and emerging Global Compact Local Networks in more than 60 countries. Through its action-oriented approach, this year’s Forum supported the growing role of Local Networks as “incubators” or catalysts of change on the ground. In several plenary sessions and 14 working group sessions, network representatives identified key challenges and opportunities for their operations and produced a variety of decisions and recommendations for collective action in key areas: Governance; Local Network Activities; Support of Local Networks by Key Partners; and Local Networks Internal Development.

Read Local Network news from around the world including: preparations underway for network launches in Armenia, Jordan, Kenya and Russia; the July launch of the GC for the Turkish-Cypriot community; COP training sessions in Bulgaria and Mozambique; steering committee elections in Pakistan; network-related meetings in South Africa, India, Turkey, Switzerland, France and Kazakhstan; and earthquake relief efforts undertaken by Indonesian network participants.