Tuesday, 15 January 2013

Discussion: What to do with the bad apples in the Global Compact?

Response to guest blog by Patrick Haack, by Mariƫtte van Huijstee, Corporate Accountability Coordinator and Researcher at SOMO

Photo: Kaptain Kobold
In his guest blog, Patrick Haack raises an interesting question with regard to whether exit criteria for companies in multi-stakeholder initiatives like the Global Compact are beneficial in terms of contributing to sustainable and inclusive development and addressing global governance gaps. He argues that by throwing out the “bad apples” (that is: underperforming companies), the opportunity to inspire and motivate these companies towards better performance in the areas of human rights, labour standards, the environment, and anti-corruption, in dialogue with co-members, is lost. 


In the end, he argues, this means the initiative will fail, as it will have failed to turn around the bad apples in to nice and sweet ones.

I agree that one of the main values of an initiative like the Global Compact is that of shared learning between its members: by sharing experiences, dilemmas and best practices, companies can become inspired and learn...
from each other how to address challenges in the abovementioned areas. Another feature of the Global Compact is the low entry barrier, as unlike some other multi-stakeholder initiatives, it allows “bad apples” to enter the initiative, creating the opportunity for these companies to become inspired and change their behaviour. Unfortunately, some companies do not seem to be interested in such learning experiences, but are most of all interested in “blue washing” their image by means of the UN Global Compact logo.  

The fundamental debate here seems to boil down to whether punishment or reward is the best strategy to change attitudes and behaviour of big business. Attitudinal and behavioural change, Haack argues, is more likely to be achieved through persuasion, learning and dialogue between business firms, government and civil society organizations then through punishment. I argue we need both: reward the well behaving companies, and punish the ones that continue to lag behind and fail to meet minimum standards time and again. In other words: we need the carrot and the stick. Without the stick, the motivation for behavioural change remains absent.

Haack frames the integrity measure of delisting companies from Global Compact membership as a punishment. I think this is a very mild punishment, and as such, indeed won’t be effective in disciplining the bad apples. Alternatively, I frame the Global Compact membership as a reward: by committing to the ten principles, the company is rewarded with a membership and allowed to use the UN Global Compact logo. In my view, only companies that demonstrably intend to improve their practices deserve this reward. Otherwise, the reward itself degrades and looses its legitimacy and inspirational value.

So while I agree with Haack that the low entry barriers of the Global Compact have beneficial aspects, in terms of exit criteria I would argue the other way around: by keeping bad apples in at all times, the initiative loses its legitimacy and appeal for other companies in the long run. Thus motivating bad apples and providing them with time and resources to overcome organizational barriers may indeed be the preferred route to follow in the Global Compact context, but there has to be a clear timeline for verifiable improvements in performance against the ten principles. Mutual persuasion and learning amongst Global Compact members is indeed an important tool, but if it does not materialise, there must be a consequence at a certain point. By allowing for improvement trajectories and clear timelines, the Global Compact will be able to inspire some of the underperforming companies. And if time and again companies fail to meet the principles, they should be delisted to remain the integrity of the Global Compact.


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