Peter Utting’s speech to the International Forum on the Social-Science Policy Nexus highlights a number of institutional developments and forms of regulatory policies to promote corporate accountability

Utting, Peter

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Civil Society Hearing “Whose Partnership 
for Whose Development?: Corporate 
Accountability in the UN System beyond the 
Global Compact” 
4 Jul 2007 
Author(s): Peter Utting 
Source: Global Compact Civil Society Hearing 
 
This hearing is concerned with how the United Nations system might promote corporate 
accountability (CA), and how current approaches, centred on the Global Compact, public-private 
partnerships and corporate social responsibility (CSR), cannot meet this challenge. How then do 
we move “beyond the Global Compact”, as suggested in the title of this hearing?  
 
The panelists have each focused on different aspects of corporate practice, public policy and 
governance arrangements that need to be reformed or transformed. And they have identified 
some current reform initiatives where civil society advocacy might yield results. In these brief 
closing remarks, I would like to highlight a number of institutional developments and forms of 
regulatory politics that are essential in strategies to promote corporate accountability, but which 
are somewhat different to those associated with CSR. 
 
Before doing so, however, we should remind ourselves what corporate accountability means. 
Like CSR, there are various definitions, but for the “movement” of activists and academics 
concerned with taming corporate capitalism it seems to suggest four things: 
 
First, that we can’t rely on companies to put their own house in order through self-regulation and 
voluntary initiatives, or on a combination of CSR and minimalist regulation. As evidenced by 
recent cases of companies such as BP, Siemens and KPMG that had a high profile in CSR circles, 
companies and managers are simply under too much pressure to cut costs; compete and 
maximize profits in ways that inevitably generate perverse social, labour, environmental, 
governance and fiscal effects; as well as to seek out new frontiers where regulations and rights 
can be ignored.  
 
Second, in view of this situation, companies must be held to account. This implies not just 
responsibility but some sort of obligation to answer to others through, for example, mandatory 
reporting and disclosure, as well as more effective independent monitoring and auditing. 
 
Third, companies that fail to comply with agreed standards must incur some sort of penalty or 
cost. This contrasts sharply with CSR practice where such costs are often limited to the 
reputational arena, or where there is impunity. This implies not only that new regulations and 
laws may be needed but that regulatory and legal institutions must have the capacity to 
implement existing standards and prosecute malpractice. 
 
Fourth, victims of corporate wrong-doing must be able to channel grievances, settle disputes and 
seek redress. 
 
The corporate accountability agenda that has developed since the World Summit on Sustainable 
Development in 2002 is, then, quite different to the CSR agenda that took-off internationally 
around the time of the Earth Summit ten years earlier.  
 
Let’s turn now to what needs to be done to overcome the limitations of the approach that is 
symbolized by the Global Compact. I say “symbolized” because any criticism people might have 
of the Global Compact is really a criticism of CSR, i.e. that: 
 
- it provides ample space for companies to engage in window-dressing and to cherry pick among 
standards; 
- it is characterized by weak implementation of agreed standards throughout corporate structures 
and supply chains; 
- reporting standards and procedures are weak;  
- there are no significant penalties for non-compliance; 
- global corporations gain undue influence in the public policy arena and unfair competitive 
advantages through their association with the United Nations and public-private partnerships; 
and 
- key issues that explain why corporate capitalism and its institutions fuel underdevelopment or 
unsustainable development are often ignored. 
 
There are also concerns that CSR in general, and the Global Compact in particular, are a a means 
of diverting attention from harder regulatory alternatives. It should be noted that the Global 
Compact explicitly states that it is not intended to displace other regulatory approaches. But in 
some sense, the Global Compact has become “the only game in town”, given its considerable 
success in expanding the number of participating companies, spreading the word about CSR and 
partnerships throughout the world, and in demonstrating a remarkable capacity to convene 
corporate, political and civil society leaders. 
 
To go beyond this approach, various paths need to be pursued simultaneously.  
 
The first involves the “hardening” or “ratcheting-up” of voluntary initiatives. To some extent this 
is already happening, largely in response to criticism and civil society pressures. CSR standard-
setting, reporting and monitoring institutions have evolved and matured through time, and 
complaints procedures are gradually being developed. Even the Global Compact, which has 
often claimed to be nothing more than a forum for learning and dialogue, has been nudged in this 
direction. Companies must now report on progress; they are rendered “inactive” if they fail to 
report; a mild complaints procedure was introduced last year, and most recently, an external 
review procedure has been established for the “Communications on Progress” that companies 
must submit. These mechanisms need to be tried and tested to prove their worth, but at least on 
paper, such reforms suggest a slight shift in the pendulum away from self-regulation toward 
corporate accountability. 
 
The second path involves expanding the body of national, regional and international norms and 
law related to corporations. International law is now going beyond a focus on state actors and, as 
the lawyers say, is “fixing” increasingly on corporations. There has been a proliferation of so-
called international “soft” law, involving declarations, resolutions, guidelines, and codes related 
to corporate activities. At the national level we see, in some countries, laws mandating various 
forms of reporting and disclosure. But while the body of standards and laws has expanded, there 
are still major weaknesses in regulatory capacity of both states and civil society organizations, 
including trade unions. It is perhaps this feature of the neoliberal paradigm, namely the 
weakening of state regulatory capacity and basic labour rights, that requires the most urgent 
attention. 
 
The third involves enhancing the ability of victims of corporate wrong-doing to use the existing 
regulatory or legal infrastructure to settle disputes and seek redress. This is occurring in countries 
such as the United States and the United Kingdom where cases have been brought against 
companies for wrongs committed abroad, or in India through Public Interest Litigation. The 
Aarhus Convention allows NGOs in countries that host TNCs to obtain information about their 
environmental performance. 
 
The fourth path, involves connecting the issue of corporate performance with economic policy. 
The signals and incentives that companies are receiving from governments often encourage them 
to externalize costs; transfer risk to employees and suppliers; avoid taxes through regulatory 
loopholes, transfer pricing and off-shoring; and seek out new frontiers around the world or along 
supply chains where regulatory institutions and labour rights are weakest. 
 
A fifth path involves forms of activism that vary to some extent from those that characterize CSR, 
where considerable attention has been focused on strengthening NGO-business relations or 
partnerships, and “stakeholder dialogues”. The difference relates not only to the types of issues 
and demands, but also to patterns of social mobilization. Modes of organizing and mobilizing 
associated with “transnational” or “multi-scalar” activism, which involve linking organizations 
and networks at local, national, regional and international levels, are particularly important, and 
have played a key role in efforts to prosecute corporate wrong-doing, as well as in campaigns 
where activists “name and shame” companies. Multi-scalar approaches are also a prominent 
feature of the strategies of Global Union Federations, several of which have signed Framework 
Agreements with TNCs, that extend union/company relations beyond the local and national 
levels to the global level. Civil society organizations, operating at different levels, must also 
focus on reconnecting with local and national governments, to develop complementarities and 
synergies in regulatory capacity. 
 
Last but not least, the process of change requires keeping the institutional and policy agenda 
alive with ideas for reform or more fundamental restructuring of development models. In this 
respect, it is important that civil society organizations engage actively with the UN business and 
human rights agenda that involves the work of the Secretary-General’s Special Representative on 
Business and Human Rights, and the Norms on the Responsibilities of TNCs and Other Business 
Enterprises with regard to Human Rights. Whilst declared a “distraction” by the Special 
Representative, the standards and mechanisms proposed in the Norms – i.e. monitoring, 
reporting and redress – have considerable backing within civil society, and some aspects of the 
Norms are even being tested by a groups of global companies. 
 
Other ideas that have emerged in the past should also be kept alive, such as that of expanding the 
remit of the International Criminal Court to address corporate crimes; setting up new UN 
activities including institutions information systems on corporate accountability initiatives and 
laws, as well as on business practices associated with maldevelopment; new institutions such as a 
Special Rapporteur on TNCs, or a Corporate Accountability Convention or Organization; the 
(re)chartering and down-sizing of corporations; a set of Civil Society Rules for TNCs;, or even 
revisiting the principle of limited liability.  
 
In this hearing we are supposed to be focusing on the role of the UN in the field of corporate 
accountability. But we also need to consider whether civil society is up to the challenge. Is there 
the capacity among NGOs and trade unions to operationalize or activate complaints procedures, 
such as those that exist at least on paper in the OECD Guidelines on Multinational Corporations? 
Will NGOs test the new Global Compact complaints procedure? Serious doubts indeed exist 
about their capacity to do so, but perhaps more significant is a bigger question: Can civil society 
organizations, and NGOs in particular, forge the types of alliances necessary to really exert 
pressure for change? Despite advances in networking and transnational activism, civil society is 
often fragmented, with too many internal divisions – between large and small, between North 
and South, between NGOs and trade unions. In contrast to the labour movement, NGOs and their 
networks are often distanced from parliamentarians, political parties and mainstream democratic 
politics. Civil society, then, as much as the UN and national governments, also needs to face up 
to key challenges if progress on the corporate accountability front is to be made. 
 
Regarding the United Nations, from my perspective as a social science researcher, a central issue 
relates to the need for the UN to recoup its capacity for so-called “critical thinking”. This 
involves questioning dominant policy approaches and, patterns of development, and exposing 
power relations ; exposingand injustice, and identifying the winners and losers of development 
policies and processes,; and imagining and proposing alternatives. 
 
A large project on the history of ideas in the United Nations, the UN Intellectual History Project, 
has recently documented numerous instances where individuals and agencies associated with the 
UN have exercised bold intellectual leadership, questioned conventional wisdom, and promoted 
ideas and policies associated with alternative visions of development and harder regulation of 
powerful interests. Notable examples include , whether this be UNCTAD’s questioning of North-
South relations in the 1960s, the ILO’s focus on “basic needs” in the 1970s; UNICEF’s critique 
of structural adjustment in the 1980s; the rights-based perspectives of the Human Development 
Report, or of the High Commissioner for Human Rights’ in the late 1990s; and more recently, 
the World Health Organization taking on the tobacco companies. 
 
The Global Compact and much of the UN today, largely ignores critical thinking. Instead there is 
a tendency to focus narrowly on learning about best practices. i.e. trying to identify the positive 
things that big business does, and disseminating this information in the hope that such practices 
will be replicated elsewhere. This, of course, is an essential activity for international 
development organizations, but it should not be at the cost of other types of analysis and learning, 
which are needed to understand the other half of the story – if not the main story – that we have 
heard about during this hearing. There is a danger, then,, that best practice learning is 
marginalizing, if not stifling, critical thinking.  
 
The Global Compact states that it is a learning forum, and international development agencies 
increasingly refer to themselves as “knowledge agencies”. If they are really to fulfil this role, 
then the nature of learning, and the choice of academic disciplines, institutions and experts 
engaged in learning networks, need to change. 
 
Thank you. 
 


Civil Society Hearing “Whose Partnership for Whose Development?: Corporate Accountability in the UN System beyond the Global Compact”

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Civil Society Hearing “Whose Partnership for Whose Development?: Corporate Accountability in the UN System beyond the Global Compact”

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