Review Global Compact partnership with ICC, says study

by Chakravarthi Raghavan

Geneva, 3 Aug 2001 - - The International Chamber of Commerce (ICC), the lobby group with over 7,000 corporate members and a prominent partner in UN Secretary-General Kofi Annan’s Global Compact, has been lobbying in UN environmental negotiations in direct opposition to the principles it is pledged to pursue, and it is ‘high time’ for the UN to break its partnership with the ICC before further damage is done to the UN’s credibility, says a just published study by Corporate Europe Observatory (CEO).

The Amsterdam-based NGO alliance, researches and closely monitors the activities of the Transnational Corporations and has been publishing a series of studies and analysis of the UN’s Global Compact at its website ( The study on the ICC and the Global Compact is its latest.

While the ICC has been a pioneering member of the Compact, with an ICC delegation’s meeting with UN Secretary-General Kofi Annan and senior officials in February 1998, agreeing to form a ‘global partnership’, and officially joining the Compact in March 1999, two months after Mr. Annan launched it in Davos (World Economic Forum meeting), Mr. Annan at a recent ICC conference praised the ICC as a “highly valued partner of the UN.” The UN-ICC is far from limited to the Global Compact. There are far-reaching joint projects between the ICC and UN agencies, including UNCTAD, UNDP and UNEP.

While the ICC has played a key role in shaping the Compact from the start, and the alliance has provided momentum to the Global Compact, it also seriously undermines its credibility, says the CEO study. For, the ICC has a long history of vigorously lobbying to weaken international environmental treaties (for e.g.  the Kyoto Protocol, the Convention on Biodiversity, and the Basel Convention against trade in toxic waste) in direct opposition to the Global Compact principles it has pledged to pursue. These efforts continue even after the ICC pledged support for the principles.

Thus, rather than “supporting a precautionary approach to environmental challenges,” Principle 7 of the Compact, and rather than undertaking “initiatives to promote greater environmental responsibility,” Principle 8, “the ICC promotes a narrow corporate agenda, dominated by the commercial interests of some of the world’s most environmentally irresponsible corporations - an agenda that often effectively undermines a precautionary approach and basic environmental responsibility,” says the CEO report.

According to an ICC fact sheet, published on the UN’s Global Compact website, “the ICC has become a clearinghouse for business contributions to the Global Compact.” The ICC started its own Global Compact website in November 1999, several months before the official UN Global Compact website was launched.

The ICC website consists of a collection of very brief reports on environmental and human rights initiatives by BP-Amoco, Fiat, Unilever and other corporations.  The ICC site even includes reports from companies not associated with the Global Compact such as Nestle and BAT. Combined with the UN’s secrecy about who is and who is not a member of the Global Compact, this leaves the impression that these highly controversial companies are part of the Compact.

The reports, currently just over 20, are presented as “case studies” of “how the private sector is fulfilling the Compact through corporate actions.” The ICC invites companies to submit examples, but doesn’t allow for external comments, for instance from NGOs not convinced by the claims. The ICC wants the Global Compact to stay free of “any monitoring and verification procedure.”

The ICC’s principle interest is in using the Compact to promote a positive image of transnational corporate behaviour. It fiercely opposes proposals for binding elements or enforcement mechanisms, claiming that self-regulation will make its members responsible ‘global corporate citizens’. The ICC Secretary-General Maria Livanos Cattaui, has explained that “business would look askance at any suggestion involving external assessment of corporate performance.” The Compact “must not become a vehicle for governments to burden business with prescriptive regulations.”

The CEO report charges that the ICC has taken the offensive in countering the world-wide movement against corporate-led globalization, and advised last year’s G-8 Summit in Japan, “to stand firm in rejecting demands by publicly unaccountable, and frequently unrepresentative, external groups seeking to impose such codes on ‘multinationals’ and claiming the right to pass judgment on companies’ compliance with them.”

Attacks on the legitimacy of non-governmental organizations is a standard feature of the ICC’s efforts to counter the growing criticism of corporate abuse of power around the world. Ignoring the growing body of evidence to the contrary, the ICC argues that “there is no demonstrable need for further government-mandated detailed rules.” However, the UN’s Research Institute for Social Development (UNRISD), in a July 2000 report, has concluded that voluntary environmental initiatives by industry, “often result in ‘non-compliance, double standards, inadequate targets or standards, or greenwashing’.”

The ICC sees the Global Compact as a powerful PR tool in the raging ideological battles over economic globalization. Through decades of lobbying, the ICC has itself been instrumental in promoting the set of corporate-biased international trade and investment rules that are currently in place. As a result, the group is in absolute denial about the serious social and ecological problems that are becoming increasingly manifest. Rather than accepting that radical changes in the global economic system are needed, the ICC sees only public “fears and misconceptions” and discusses how to counter what it terms “globaphobia.”

As long as it is free of monitoring and enforcement, the Global Compact offers the ICC an ideal tool to improve the image of its member corporations. It is therefore hardly surprising that the ICC is using the Global Compact in its marketing campaign for economic globalization. At its May 2000 World Congress, the ICC announced plans to fully exploit the PR potential of the Compact, including enlisting “the support of international media organizations to make the business response to the Global Compact even more widely known.”

Apart from avoiding enforceable elements in the Global Compact, the ICC also wants to keep non-business groups out of the Global Compact, and demands that the Compact “remains a two-way compact between business and the UN,” excluding trade unions and NGOs.

The ICC clearly prefers the Global Compact to other UN processes where it has to operate on an equal footing with non-profit civil society groups like NGOs and trade unions. In the UN’s Commission on Sustainable Development (CSD), for instance, the ICC is one of several ‘major groups’ of stakeholders that are consulted closely. But the Compact brings the ICC a step closer to its ambition of business being granted a privileged position in the UN.

In March 2000, the ICC withdrew from the CSD’s Multi-stakeholder Review of Voluntary Initiatives, an evaluation process created in 1998 by the CSD’s sixth session (UNCSD6). In a letter to CSD director JoAnne DiSano, the ICC explained that it felt that its resources “may be allocated to greater effect in other current initiatives we are undertaking with the United Nations,” and as an example, mentioned that the ICC “is heavily engaged in the Secretary-General’s Global Compact project.” The Voluntary Initiatives project, the ICC wrote, had “progressed as far as it can at the present time.”

In fact, the review has not even started yet. Knowing that a review of the effectiveness of voluntary action would reveal dubious practices of numerous ICC member corporations, the ICC lobbied hard during CSD6 to water down the mandate.  As a result, the mandate is no more than an “exploration” of the elements of a “potential” review. Still, the ICC felt it was safer to step out. “Any effort to police or monitor voluntary initiatives on an adversarial basis which assumes lack of commitment by industry,” the ICC letter stated, “ought not to be supported by us.”

The Global Compact has offered the ICC an easy escape route. The Compact’s absence of monitoring and enforcement are ideal for the ICC’s attempts to escape transparency and accountability.

The ICC’s self-regulation mantra comes up in virtually all international negotiations. This has been so in the UN negotiations on the rules for implementing the Kyoto climate change Protocol, with the ICC lobbying against international rules to force corporations to reduce their greenhouse gas emissions. These efforts are in direct contradiction with the environmental principles of the Global Compact, says the CEO report.

With over 100 accredited lobbyists, the ICC was one of the most visible industry lobby groups at the November 2000 UN climate negotiations in The Hague (COP-6).  While trying hard to portray itself as environmentally responsible, the ICC’s lobbying efforts aimed to undermine the effectiveness of the Kyoto Protocol, and warning against, “a ‘quick-fix, look-good’ deal that would cause a dramatic and costly shift in the way industrialized countries use energy. The ICC’s “alternative” to government regulation is voluntary action by industry , plus the dramatic expansion of the role of the Protocol’s ‘market-based mechanisms’ (such as through global emissions trading and the accounting of ‘carbon sinks’ ) that would allow corporations to escape reducing their greenhouse gas emissions,.

Far from taking the environmental high road, the ICC plays a coordinating role in all business lobbying at UN negotiations, including daily strategy meetings.  The ICC’s working group on climate change consists of over 70 lobbyists from European, US and Japanese corporations, including major oil corporations (such as ExxonMobil) which are openly campaigning against the Kyoto Protocol.

The ICC’s lobbying around UN negotiations on global biodiversity is no less out of line with the Global Compact principles. The ICC has systematically obstructed the implementation of the 1992 Convention on Biodiversity (CBD) and the subsequent negotiations for a Biosafety Protocol. The ICC is uncompromising in its defense of the World Trade Organization’s (WTO) controversial rules under the TRIPS Agreement which are heavily biased towards corporate interests.

The vast majority of developing countries and environmental campaigners have long since pointed out the conflict between the Convention on Biodiversity (CBD) and the TRIPS agreement. While the CBD seeks to reserve the sovereignty of countries on biological resources, such as plants and seeds, to the countries that possess them, and provides for local communities to benefit from the use of this resource, TRIPS weakens such provisions by allowing corporations to patent these resources. The ICC strategy has been to claim that both agreements are totally compatible, while lobbying against any attempt to strengthen the position of the CBD vis-a-vis TRIPS.

The ICC has played a “particularly obstructive role” at the negotiations for a Biosafety Protocol. In contradiction to the Global Compact Principle 7, which advocates a “precautionary approach,” the ICC has campaigned against the inclusion of the Precautionary Principle into the Protocol. Another major demand was that the business-friendly WTO rules would overrule the Biosafety Protocol -- an environmentally irresponsible, if commercially sound proposition. The ICC’s US branch, the US Council for International Business, the USCIB, has played a particularly obstructive role in the battle over the biosafety negotiations, through its defense of the commercial interests of the US biotech industry. USCIB, part of the Global Industry Coalition, has worked systematically to prevent the adoption of the Biosafety Protocol, and lobbied the US government to put pressure on the European Union and other governments to change their stance at the negotiations. Determined to push bio-engineered products into foreign markets, the GIC managed to disrupt the UN talks in Cartagena in February 1999 and significantly weakened the final Protocol.

In relation to the Basel Convention, and in direct contradiction with the principles of the Global Compact, the ICC is campaigning against the UN Basel Convention’s ban of the export of hazardous waste from the richer industrialized countries (OECD) to developing countries and Eastern Europe (non-OECD countries). The ban, agreed to in 1994 after a boom in North to South shipments of dangerous waste in the 1980’s, has already had a dramatic impact. Waste trade scandals became rare in the 1990’s as governments had de facto implemented the ban, thereby cutting off possibilities for Northern industry to get rid of its waste at low cost. The ban however goes into full legal force only when 62 countries have ratified it. Meanwhile, the ICC continues to work hard to attack the ban and prevent it from entering into force. In its November 1999 (latest ) position paper on the Basel Convention, the ICC has even called for the ban to be stopped by the World Trade Organization (WTO), on the ground that the ban on trade in hazardous waste is “trade disruptive” as it “would arbitrarily and unjustifiably discriminate among countries.”

The ICC, charges the CEO study, has never been an enlightened or progressive business organization, nor has it become one since joining the Global Compact.  The debate about the social and environmental impacts of economic globalization has never been more intense and it increasingly hones in on the role of TNCs.  The call for political action to rein-in their economic and political power, for instance through enforceable UN rules on corporate behaviour, is gaining strength. However, the ICC is vehemently against such rules.

“In this debate, the UN leadership has unfortunately chosen the wrong side,” says the CEO. “In the next years it will become increasingly apparent (and embarrassing) to the UN that it has chosen the wrong partner. The ICC has already announced that it will use the Global Compact in ‘preparing the business contribution’ for the Rio-plus-ten conference in 2002. The ICC will once again promote ‘free markets’ and corporate self-regulation in a proactive attempt to avoid or water-down civil society demands for policies to counter the accelerating social and environmental crisis.

“The abuse of the UN’s Global Compact will undoubtedly be taken to hitherto unknown heights. Clearly, there is little time left for Mr. Kofi Annan to break with the ICC before the UN’s credibility suffers permanent damage,” the CEO report concludes. – SUNS4950

The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.

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