U.N. global compact targets corruption (Oil for food?)

UPI ^ | 6-24-04 | WILLIAM M. REILLY

[Indy Pendance]

UNITED NATIONS, June 24 (UPI) -- Chief executives from around the globe Thursday agreed at the U.N. Global Compact Summit that "business should work against corruption in all its forms, including extortion and bribery."

The anti-corruption measure joins the nine other principles in initiatives promoting good corporate practices covering human rights, labor and the environment.

The convention is the first globally agreed instrument to provide sweeping measures regarding the prevention of graft, its criminalization and international cooperation against it as well as recovery of illegal assets.

The summit was the largest and highest-level gathering of its kind ever held at U.N. World Headquarters in New York.

"The Global Compact henceforth will include a 10th principle, against corruption, reflecting the recently adopted U.N. convention on that subject," U.N. General-Secretary Kofi Annan told the more than 400 corporate and labor executives, government officials and civil society leaders.

"You felt, and I agreed, that corruption so profoundly corrodes sound business practice and good governance, and thus our ability to realize the other nine principles, that it uniquely deserved to be added to the commitments on which our compact is founded," he said.

Annan was pointed about the effects of globalization.

"For most people, and for the governments they elect, the global village remains a distant and abstract concept, even though everybody's life is profoundly shaped by it," Annan said.

Peter Eigen, chairman of Transparency International, an international non-governmental organization devoted to combating corruption, recalled that until very recently, the world business community regarded corruption as a necessary evil, with some top executives openly defending the practice of bribing foreign firms and officials, saying, "I hate to do it ... and I hate all the problems it will cause down the line ... but I have to."

But, following the wide-scale endorsement of the Convention Against Corruption, "there was now a solid consensus behind the need to fight corruption," Eigen said.

At the summit, a range of specific pledges were made to implement the compact's principles in members' supply chains, defend human rights in zones of conflict, ensure decent working conditions, invest in clean technologies, implement no-bribe policies, combat diseases such as AIDS and grow small businesses in the least developed countries.

"The compact has become the world's largest initiative promoting global corporate citizenship," he said.

"We are travelers on a common, historic journey ... stakeholders of the compact, based on universal principles that have been accepted by all the world's leaders," he said, adding that the compact "engages the developing countries, which are home to half its participating firms, two-thirds of its national networks -- and four-fifths of humanity."

The global compact started four years ago with fewer than 50 companies. Nearly 1,500 firms now participate in it, from 70 countries. So, too, do the major international labor federations, representing more than 150 million workers worldwide.

Executive heads of five U.N. agencies also attended.

Annan said 50 leaders of transnational non-governmental organizations, from the world's North and South, attended the session along with "senior officials from some 20 countries." One of those was Brazil's president Luiz Lula da Silva.

Joining for the first time were members of the investment community.

"That shows there is a growing mainstream interest in aligning market rewards with good corporate practices," said the secretary-general. "It also offers yet another powerful argument to the already strong business case for doing the right thing."

At the summit, Executive Director Klaus Toepfer of the U.N. Environment Program released a telling report in which a group of 12 fund managers, representing $1.6 trillion of assets under management, called on investors, government and business leaders to embed environmental, social and governance best practice at the heart of the world's markets.

Without bold steps taken now, these issues will threaten long-term shareholder value, concluded the summary report, "The Materiality of Social, Environmental and Corporate Governance Issues to Equity Pricing."

"This new report is a crucial recognition from major financial institutions that the environmental and social components of sustainable development, as well as the economic considerations, should sit at the heart of investment and capital market considerations," Toepfer said.

"The financial analysts who undertook the research believe sustainability issues impact long-term shareholder value," he added. "It is clear, however, that to protect shareholder value the response must start with action today by companies serious about our environment and that wish to contribute to thriving communities worldwide."

The summary report was based on 11 sector reports by brokerage-house analysts and was produced for the UNEP Finance Initiative Asset Management Working Group. It was the first time the financial impact of environmental, social and corporate considerations and criteria as they relate to the portfolio management of mutual, pension and other institutional funds, have been studied in this way.

The leading brokerage houses that undertook the work for the UNEP group concluded that aviation, insurance, oil and gas, and utility companies already face material threats linked to climate change, while some sectors were witnessing evolving opportunities in the form of new "Carbon Markets."

Industry sectors covered by the brokerage research included: aviation, clothing, electronics, oil and gas, insurance, pharmaceuticals and utilities. The resulting 11 reports covering eight industry sectors provide a rich insight into how mainstream financial analysts are tackling a range of complex new threats and opportunities in their assessments of corporate performance.

[cripplecreek]

I caught an interesting comment attributed to Paul Volcker today on FOX. (I didn't hear him say it.) The claim was made that Volker is finding evidence of a great many scandals, and the comment attributed to him, "some of which would be better if they just went away".

It just caught my interest.