UN group to measure companies’ social virtues

Source: Financial Times, 3 March 2004

The United Nations Global Compact, a voluntary grouping of companies and pressure groups that promotes corporate social responsibility, is preparing its first in-depth study of whether the initiative is having any measurable impact on businesses.
The exercise comes as analysts increasingly question whether the current fad for public-private partnerships is anything more than a public relations exercise. Christian Aid, for example, recently claimed the "image of companies working hard to make the world a better place is too often just that – a carefully manufactured image".

In a report released for this year’s Davos summit, it warned: "Some of those shouting the loudest about their corporate virtues are also among those inflicting continuing damage on communities where they work – particularly poor communities."

The question has received fresh scrutiny following the announcement of a joint project between the UN and Microsoft, and will be discussed at a "Global Compact leaders’ summit" to be held in June in New York, bringing together corporate, political and civic leaders.

Companies taking part in the study, being conducted by McKinsey, include BP, Pfizer, Hewlett-Packard, Tata and Eskom. Georg Kell, the organisations’s executive head, stresses it will not attempt exhaustively to measure the performance of every company. He also insists the Compact, launched in July 2000, is not a certification agency.

But the study is an attempt to determine whether the Compact is adding value to a debate hitherto characterised more by anecdotal evidence than hard fact.

Mr Kell says some things are already becoming clear: that the picture will be mixed; and that companies cannot bring about social change on their own.

"Unless governments play their role, there are limits to what you can do with voluntary initiatives," he says. It is a similar conclusion to that reached in the aid sector: that individual projects achieve little unless countries are governed properly.

But Mr Kell does believe the Compact is changing the debate, as companies come to realise corporate social responsibility is less a public relations exercise, and more a new tool to analyse risk and talk to stakeholders.

A study last March by Lee Tavis, from the University of Notre Dame, claimed that the top management of Novartis, the life sciences company, had taken up the Global Compact’s principles to a degree that was "measurable in terms of drugs discovered, patients served and rights protected".

But "the goal of integrating corporate citizenship into the mindset of the operating manager remains a work in progress".

According to Mr Kell, the Compact’s main achievement is in opening new windows through which local pressure groups can scrutinise corporate behaviour, and a forum for focused dialogue.

The compact is already pressing companies to produce public reports on their social impact, preferably using standards advocated by the Global Reporting Initiative.