Trends and Developments in Corporate Social Responsibility - The Global Compact Perspective - Tel Aviv, 30 January 2008 Matthias Stausberg, UN Global Compact

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3 The UN and Business: A Partnership of Shared Interests Building Markets Good Governance & Security Environment Profit & Growth Social Inclusion Business Global Health Deepening Interdependencies United Nations Peace & Poverty Reduction

4 The Global Compact – Overview Launched on 26 July 2000 in New York with roughly 40 businesses UN Convention Against Corruption Rooted in universally accepted conventions: Universal Declaration of Human Rights ILO Declaration Rio Declaration Multi-stakeholder platform for collective action “A more sustainable and inclusive global economy.”

5 The 10 Global Compact Principles Human Rights  Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights; and  Principle 2: make sure that they are not complicit in human rights abuses. Labour Standards  Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining;  Principle 4: the elimination of all forms of forced and compulsory labour;  Principle 5: the effective abolition of child labour; and  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; and  Principle 9: encourage the development and diffusion of environmentally friendly technologies Anti-Corruption  Principle 10: Businesses should work against all forms of corruption, including extortion and bribery.

6 Two Complementary Objectives Facilitate partnerships in support of broader UN goals. Make the ten principles part of business strategy, operations and culture everywhere. Implementati on Contribution to Development

7 The GC in 2007: Facts & Figures Over 3700 active business participants in 120+ countries 60+ active local networks around the world Launches in 2007: Jordan, Vietnam, Korea, Senegal, Ivory Coast non-business participants from civil society, labour, academia Equal representation in developed and developing world 147 of the Financial Times Global 500 companies (by market cap) 49 percent small and medium-size enterprises (SMEs) New business participants in 2007: 1087 (as of Oct. 29)

8 Reality Check – The Age of Globalization Globalization Technological Change Uni/Multipolar Power Constellation PhenomenonResult More Wealth and Greater Gaps / Globalization of Minds / Reactive Extremism Reduced Transaction Costs / Transparency Effects / New Organizational Models Shifting centers of power Governance Gaps Human Rights Social Environmental Accountability Weak/Failing States Limited Capacity of international institutions to deal with new scenarios Business expected to do more / fill institutional voids

9 Same Issues – New Drivers Then:  Human Rights in Nigeria  Sweatshop Crisis  Corporate Governance Scandals Now:  Bribery Scandals  Investment in Burma  Investment in Sudan  Product Safety Scandals Moral Case driven by: Pressure Groups Civil Society Media Moral Case driven by: Pressure Groups Civil Society Media Business Case driven by: Market Actors Market Forces

10 CSR in 2008: A Multitude of Questions Consumers Are your products safe? Are they made in a sustainable manner? Governmen t Are you complying with the law? At home and abroad? Media Are you hiding anything? Isn’t this just PR? Employees Is our company “clean”? Are we a sustainable business? Suppliers How does this apply to our work? What do we have to do now? Financial Markets How do you minimize social, environmental and governance risks? Civil Society Are you addressing stakeholder concerns regarding environmental and social challenges? Local Stakehold ers How does your work affect our community and our environment? ACME Inc. What are we supposed to do?

11 Civil Society, Press and Media: Pressure, Expectations Financial Markets: Recognizing the Importance of ESG Public Policy: Recognizing Business Responsibility Penalizing Irresponsible Behavior Consumers: Changing Preferences Education: Changing Mindsets Drivers Shaping the Role of Business Corporate Responsibility Goes Truly Global Increased Reporting on Social and Environmental Issues Changing Relationship: Voluntary and Regulatory Approaches Strategic Philanthropy vs. Corporate Giving From Avoiding Costs to Creating Value Global Trends in Corporate Responsibility Changing Risk and Opportunity Landscape for Corporations The Changing Context for Business

12 Addressing Governance Gaps: New Alliances Corporations Governments Civil Society

13 CSR as Value Creation CSR as Risk Management CSR as Corporate Philanthropy Three Stages of CSR ComplianceMedium to High Operational Impact Fundamental Strategic and Operational Impact Innovation Sustainable Business Models Provide funding and skills Little Strategic or Operational Impact Strategic Philanthropy

14 Some Simple Truths about CSR “Corporate Social Responsibility is not about how money is spent, it’s about how money is made.” -- Anonymous “Done well, though, [CSR] is not some separate activity that companies do on the side, a corner of corporate side reserved for virtue: it is just good business.” – The Economist

15  Introduction to the Global Compact