The Employers' Federation of Pakistan (EFP) and International Labour Organisation (ILO) organised a pre-launch workshop on Global Compact (GC) in Karachi in September 2003. According to a UN portal, www.globalcompact.org.pk, GC was proposed by the UN Secretary-General Kofi Annan on 31 January 1999 during an address delivered to the World Economic Forum (WEF).

The straight message of GC is to caution the business leaders to make money in such a way that fundamental human and labour rights are not violated and environment is not damaged. The UN agencies are willing to help the business and industry in this effect and invite them to join GC that asks its members to adhere to nine principles in the areas of human rights, labour and the environment.

EFP is GC's focal point in Pakistan. It is a member of employers' organisation of Bangladesh, India, Nepal and Sri Lanka. EFP wholeheartedly supports the nine principles of GC and works as an activist in this respect. It had brought together hundreds of owners of large companies to the workshop from all parts of Pakistan to enlighten them about GC. Senior representatives of the government, UN, media, and civil society organisations also attended the event that provided each an opportunity to brainstorm on myriad aspects of GC.

GC has yet to be formally launched in Pakistan by President General Musharraf. Till September 2003, around 40 companies had joined it--Pakistan Refinery, Seri Sugar Mills, Agriauto Industries, BASF Pakistan, EFU General Insurance, Pakistan Beverage, Al-Karam Textile Mills, National Refinery, Jehangir Services, Johnson & Johnson, Pakistan Machine Tool Factory, Darbar Soap Works, International Industries, Thal Engineering, Hinopak Motors, Prestige Apparel Manufacturer & Exporters, Premier Sugar Mills & Distillery Co, Pakistan Cables Limited, Nestle Milkpak, Sitara Chemical Industries, Atlas Honda, Rauf Textile & Printing Mills, Malik Auto and Agri Industries, Tourism Promotion Services Pakistan, General Tyre, Packages Limited, Micado, Marriott Karachi, Pakistan Petroleum Ltd, Shabbir Tiles & Ceramics, Ittehad Chemical, Sui Southern Gas, Bosicor Pakistan, Qasim International Container Terminal, Ashraf Industries, Shahsons Ltd, Daudsons Armoury, Dadex Eternit, and Reckitt Benckiser.

EFP plans to enhance the GC members to 100 before requesting President Musharraf to formally launch it.

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The biggest flaw in GC is that it exists without a mechanism that could ensure whether or not its members are following the nine principles. But the UN has a defense to such criticism.

"There is a fundamental issue of implementation in Pakistan," says Onder Yucer, head, United Nations Development Programme (UNDP), Pakistan. "However, let's look at the positive side here. There are 40 companies that have subscribed to GC. That is a very sizable number--most of them are large-scale companies employing very large number of labour. So, in that sense, I would expect that the business acumen, proficiency and effectiveness that they exercise day to day in their own business will also be applied in the implementation of the requirements of GC. There is a lot of capacity within the companies that have subscribed to this team, which goes well and encourages us to think more optimistically about the implementation side. In terms of the UN system, we also have various responsibilities to make sure that we do things that would enhance the capacity for implementation in this particular case of GC."

"We must understand that primarily GC is within the business communities to comply with three sets of human rights--human rights in its most universal form; labour rights, which are embodied in several ILO conventions; and environmental norms and standards. It is voluntary confirmation by participating companies to comply with these rights, norms and standards. The role of the government per se is of course to make sure that the legal environment--the enabling environment, whereby these fundamental rights, whether they are human rights, labour rights or environmental standards are complied with--are strengthened. The Government of Pakistan has ratified a number of international conventions that are relevant--very few, which it may wish to consider ratifying in due course. But by and large, I think it is the internal legal system and also a standard that has to be set for compliance by the business community with respect to human rights, labour rights and environmental norms," Yucer adds.

Yucer acknowledges, there are apprehensions about GC and the UN is committed to address them. "The question is of information that one has to go through about GC and avoid misunderstandings and confusion. There are some in whose minds GC may be construed as unfettered, unregulated dominance of market forces brutal as they may be if not properly co-ordinated and legally monitored. That may be one of the problems. But we need to talk to each other and have as many events as possible--like this one (EFP workshop). This question should be put to the podium to those who have come to speak and discuss these matters. These are the forums where questions of critical nature must be put and those points must be debated. We are not talking about unfettered, totally unchecked capitalist system ruled by greed. It is a global system that needs to be regulated, reigned in--where level-playing field and stakeholders also have equal rights and powers in negotiating their doubt and qualms."

"GC, as it is conceived, consists of networks, either within themselves or linked with each other--of course the business community in Pakistan, including the EFP is one of the networks. The other network is government departments/divisions concerned with GC, civil society organisations, UN systems--those that are particularly relevant such as ILO, United Nations Environment Programme (UNEP), UN Industrial Development Organisation (UNIDO), United Nations Development Programme (UNDP) as well as UN High Commissioner for Human Rights. The steering board that we have established--the patron is the Minister of Commerce. And the membership is drawn from a wide range of senior government officials and business leaders in Pakistan."

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GC is receiving a positive response from all over the world. "Presently there are 1,240 companies subscribing to GC as of September 2003 and the highest number are in France (180), followed by Poland (176) followed by Spain (118), followed by Philippines (93) and then India (87)," says a paper by Dr Rajen Mehrotra that was circulated among participants of the workshop. Dr Mehrotra is Senior Specialist on Employers' Activities for South Asia, ILO, New Delhi.

GoP fully supports the GC. Muhammad Javed Ashraf Hussain, secretary industries & production says: "To be sustainable, globalisation must be protected with effective promotion of human rights, environmental and labour laws. The government fully supports GC. It has laid down a platform for the business community to work in partnership with UN organisations; to encourage and promote good corporate practices; and learn experiences in the areas of human rights, labour and environment. GC, indeed, provides the basis for structured dialogue to the UN, business, labour and civil society in improving the corporate practices. Pakistani businesses are at the threshold of formally embracing and enacting the GC. Supporting the nine principles of GC is not a good practice only but it also makes good business sense."

How do human rights activists look at GC? "Global Compact is a subject that is not very popular in Pakistan," says veteran rights activist, I A Rehman. "The word 'global' has acquired a negative connotation in Pakistan. We are worried about globalisation. We are worried about its social clauses. We are worried about the impact of the policies of advanced countries on the developing countries. GC is a device to legitimise governments and unfair corporate practices. I hope, EFP and those who sign GC will prove this criticism wrong."

Rehman wants the UN and corporate sectors to come up with initiatives that could eradicate feudalism in the country. "Corporate sector has played an important role all over the world in getting rid of feudalism. Feudalism and market economy cannot co-exist. You (business companies) fight feudalism. The important question is how could we fit our domestic agenda in the nine principles of GC? How could you recognise human rights when you don't recognise the right to work? We don't recognise the right of equal wages to women. It will be a great service to the society if the business leaders could recognise the right to work irrespective of any discrimination and the right to equal wages. Gender issue is a serious issue in Pakistan. There can be no progress in Pakistan if the country considers women as chattels."

Rehman believes that without certain democratic values such as accountability, law and order etc, the results of GC could not be achieved. "The government is doing nothing to abolish child labour. We have not submitted reports on labour conventions. We will become a pariah state if we did not follow the labour conventions. What is the key principle of the corporate sector? The key principle should be fair opportunities of competition on merit. That is possible only if we have rule of law, governance with the consent of people, and transparency. We will not make any progress unless we decide to live in peace--within the society and with our neighbours--regardless of what jingoists are saying around the world or arms dealers' provocation. Our commitment to peace and human rights must be firm. If these elements are in the GC, we will welcome it. If these elements are missing, then GC will run into difficulties."

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Rehman rates GC as an instrument that is void of some important values. "A great ongoing debate in the UN is regarding the code of ethics for multinationals. When multinationals come to a country, they must respect the national interests of the people of that country. They must not interfere with the natural resources. They should not come to a Third World country and employ child labour to manufacture shoes for an advanced country. They should not come to Pakistan for cheap labour for their expansive products. They should respect the sensitivities of the people."

Civil society organisations support GC despite certain reservations. "There should not be a simple letter to Kofi Annan to become the GC member but an undertaking that companies are not violating any of the nine principles and are making progress on at least one," says Ali Tauqeer Sheikh, head, Leadership for Environment And Development (LEAD) Pakistan. "Non-violation of any principle has to be the starting point of GC's membership. Also, there is a need for a provision for a third party validation. Otherwise, one could make exaggerated claims. To make GC membership prestigious, such validation is extremely essential. At present, GC is too vague a thing. No company should be offered membership unless it ensures, it is not violating laws of the land, including GC's nine principles and it is making progress on one of them. Imagine a situation where you have a company, that claims to follow one of the principles, but at the same time, it is not following GoP's laws on effluents."

Analysing Principle 7, Sheikh says: "It was a warning to the US president George Bush that he should not say, climate change is not happening only because the scientists had not come to him with scientific evidence. Don't withdraw from Koyoto Protocol Mr Bush! Environmental-friendly technologies could be cheap and at the same time they could be cutting edge and extremely expansive. If we subscribe to conventional wisdom, it will say, allow polluting technologies and manufacturing practices till the time your per capita exceeds $5,000. And that's when you will start cleaning up the environment. Then you will probably need hi-technologies that will be un-affordably expansive."

"There needs to be a triangle between a very dynamic and active corporate sector that is socially responsible, working closely with civil society organisations and the government instead of sitting on the backseat and waiting for the day when governments will improve. It is in this context the assumption is that corporate sector could be responsible. If legislative framework and their accountability is not strong and stringent; if the civil society watchdogs are not vigilant; if they don't enjoy support from the government, even very civilised multinationals could play havoc with this country. Therefore, GC provides us an opportunity to see if we could strike to form a triangle whereby each one is looking at the other in a supportive fashion and to the extent possible the business sector serves as engine of change," Sheikh says.

What GC is asking the business communities to adhere to is not something new. In this respect, it is wrong to say, it is the brainchild of Kofi Anan. Principle 1-6 are based on declarations and treaties related to human and labour rights. Principles 7-9 have been replicated either from the Rio Declaration or Agenda 21.

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The UN claims to be a broker between the civil society, corporate sector and the government in the context of GC and expects the government to ensure the implementation of the nine principles. The dilemma is, state is the biggest criminal in violating the human rights. The state is a clique of military, civil bureaucracy and the feudals--who monopolise the businesses and the land. It is not in their interest to respect human laws, alleviate poverty, reduce environmental pollution, abolish forced and child labour and do anything that empowers the people.

There is no dearth of legislation that asks the members of the Pakistani society to not violate the laws that GC propagates. The saddest aspect is, these laws are never implemented across the board.

The Environment Minister, Tahir Iqbal said on 28 August 2003, EIA reports of mega development projects would not be made public. This is in clear violation of globally established environmental impact assessment (EIA) procedures and even Pakistan Environmental Protection Act 1997. Clause 12.3 of the Act says, public consultation is mandatory for all EIAs. The retraction or denial of this proclamation by any senior government functionary is still awaited.

Principles of GC

GC asks the corporate sector to respect nine principles in three areas: human rights [1-2]; labour standards [3-6] and environment [7-9].

Principle 1 asks the companies to support and respect the protection of international human rights within their sphere of influence.

Principle 2 demands, they should not be complicit in human rights abuses.

Principle 3 is about freedom of association and the effective recognition of the right to collective bargaining.

Principle 4 advocates the elimination of all forms of forced and compulsory labour.

Principle 5 is on the effective abolition of child labour.

Principle 6 is regarding the elimination of discrimination in respect to employment and occupation.

Principle 7 asks the companies to support a precautionary approach to environmental challenges.

Principle 8 advises them to undertake initiatives to promote greater environmental responsibility.

Principle 9 encourages the development and diffusion of environmentally friendly technologies.

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A company can join GC by sending a letter and company information from the CEO to the Secretary-General expressing support for GC or by providing, once a year, a concrete 'example' of how the company is internalising one or more of the nine principles into management practices and policies. -- MS

"The nine principles of GC can define the new code of business and industrial relations in the 21st Century in the wake of growing challenges of globalisation," says Ashraf W Tabani, president, Employers' Federation of Paksitan. Tabani was one of the participants who attended Kofi Annan's address of 31 January 1999 to the World Economic Forum in which GC was proposed.

"GC actually supports some of our advocacy for good business practices badly required in our country to improve micro level business performance which would, in turn, feed into the country's overall macroeconomic performance," says Dr Mahnaz Fatima, a Karachi-based economist. "Macro economy cannot be improved single-handedly by the finance ministry unless and until the micro constituents rev up whose cumulative performance would add to the strength at the macroeconomic level. By the same logic, the macro economy will be as weak as the micro organisations are whose strength would emanate from good business practices, which are principles of business administration at the very basic level. A sticky issue, however, is that of child labour, which is not a mere function of their employment by business and industry but is a function of the level of country's underdevelopment. To this extent, the onus remains on the country's development strategists who should be providing integrated solutions by first getting to the root cause of underdevelopment."

"Global Compact is part of the new concern that globalisation requires some form of consensus and that different social actors need to develop a minimal agenda where long term interests of all--capital, labour and environmentalists--do not collide," says Dr Asad Sayeed, another Karachi-based economist. "Generally, the problem is that without a state (or any other entity) short-term concern will override long-term commitments? Say if there is a profitablity squeeze, will capital act in a 'socially responsible' way? Or similarly, if there is an opportunity to seek higher wages or stop layoffs, will labour look for long term benefits for all or to pursue its own short-term concerns? In the Pakistani context, the notion of GC, I feel, is rather irrelevant. With such lax regulation on the part of government and the virtual absence of strong and upright trade unions or an environmental movement, such international initiatives do not amount to much."

Dr Shaheen Rafi Khan, visiting research fellow at Sustainable Development Policy Institute (SDPI) looks at GC in the context of Corporate Social Responsibility (CSR). Khan has conducted a research on Global Compact that is under publication. He says: "CSR in developing countries is governed by market requirements. If goods and services produced cater to domestic markets, then social and environmental compliance is contingent upon effective national governance (laws, implemented policies and regulations). MNCs may be accountable to their governments (mandatory compliance) or civil society/consumers (voluntary compliance) but in the absence of mirror accountability in the host countries, MNCs tend to connive with national governments to manipulate national laws for commercial gain."            

"In this part of the world, the government has really disappointed the UN, forcing her to look at the private sector that is capable of delivering on the issues of the UN's interests. That's why, the UN has come up with GC," says Dr Parvez Tahir, chief economist, Planning Commission.

Giving GoP's reaction to GC, Muhammad Javed Ashraf Hussain, federal secretary, Ministry of Industries & Production says: "There are two sides to it. Of course, we are for GC. We are for the environment's improvement. We want labour to get its due rights. Human rights should be there. But at the same time, industry should also be given the opportunity to prosper because they produce money. They earn profit and they should send back some part of it for poverty alleviation. We will do everything possible to ensure that the principles of GC are promoted. Business industry also wants a clean environment and workers should be paid fairly but sometimes in the Third World, they come under pressure. Because they are not in the same state of advancement as Western Europe or the US is."

"The level of UN's naivety is simply breathtaking. It expects from the corporate sector to become socially responsible, which is so avaricious and selfish that it is hell-bent on selling drinking water--a natural right of the people!" says a development expert who does not want to be named.

In a letter addressed to the UN, the Third World Network states: "The UN is endorsing a specific vision of corporate-led globalisation that is opposed by many sectors of civil society. The purely voluntary nature of the GC may distract from the need for a legal framework to hold corporations accountable internationally. GC and related partnerships threaten the mission and integrity of the UN. Some of the companies in the partnership are simply inappropriate for partnerships with the UN. GC partnership and the guidelines for co-operation do not 'ensure the integrity and independence' of the UN. They allow business entities with poor records to 'blue-wash' their image by wrapping themselves in the flag of the UN. They favour corporate-driven globalisation rather than the environment, human health, local communities, workers, farmers, women and the poor. We urge the Secretary General to re-assess GC and its partners. We urge him to re-evaluate his overall approach to UN--corporate partnerships. The mission and integrity of the United Nations are at stake."

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