The UN Global Compact is the biggest voluntary corporate responsibility initiative in the world, which encourages companies to align their operations with its ten principles on human rights, labour, environment and anti-corruption. Besides, the Global Compact is working with companies to accelerate achievement of the Millennium Development Goals (MDGs). Led by a board of eminent global leaders including Jamshed Irani, a director on the board of Tata Sons, it has 236 participants, including 138 companies. from India. In a telephonic interview from New York, executive director Georg Kell talks to FE’s Rajiv Tikoo about the edge responsible companies from India enjoy abroad and why such companies must be a rule rather than an exception. Excerpts:
UN Global Compact has been working for 10 years on business and human rights and sustainable development issues, but we dont see a transformational change yet. Why is it so?
We have come a long way, but a lot remains to be done. Even today only a comparatively small fraction of the global business community is interested in human rights or sustainable development issues. We must really bring corporate responsibility to true scale in order to achieve our mission.
Since the business case for integrating sustainability in business strategy is well established now, why are not companies following up?
While science and technology have made dramatic progress in the past decades, models of business thinking are often still rooted in old paradigms. Business education has yet to catch up. Much of the business world still sees a disconnect between long-term sustainability and short-term profit maximization.
While new companies from India keep on subscribing to the UN Global Compact, some older members keep getting expelled How do you explain this paradox?
Expulsion is an eye-opener for many companies because they join with the expectation that no effort would be required to retain membership. They are the ones that dont follow correct policies and practices in disclosure.
Having said this, Indian businesses have an advantage. Many have a strong sense of community welfare. Social imperatives are deeply embedded in their DNA. It gives them an edge even when they go abroad to buy companies and connect with local communities there.
Of course, there is no one India. There are many Indias within India. Alongside the formal sector exists a big informal sector. Similarly, the situation varies from state to state and industry to industry.
How are businesses from India faring in comparison with the rest?
India is not an outlayer. Compared to companies worldwide, Indian companies are doing better in retaining their membership. But Indian companies are seeing it in local context. Being local is not good enough. You have to be local everywhere. The global landscape has changed. There are environmental and social challenges everywhere, which can escalate into serious financial risks.
How do you rate Voluntary Guidelines on Corporate Governance in India?
Its an important contribution. But environmental, social and governance (ESG) issues have not been sufficiently covered. Issues like transparency and anti-corruption need more elevation. Corporate governance is very important for companies.
UN Global Compact has come under criticism from a fellow UN body for insufficient monitoring of human rights and environmental commitments of participating companies, and in turn helping some companies in greenwashing. What are you doing to address such criticism?
We are disappointed that this agency has not updated its records since 2009. They have come out with a dated analysis. Besides, they are not seeing us as a public-private initiative, which is being different from a UN organisation. We have just conducted a comprehensive implementation survey – the largest of its kind covering more than 1,000 companies from 90 countries. The results will be released next month and I am certain it will more than answer their criticism.
Source: The Financial Express
Published on 23 April 2011