The UN Global Compact: Fair Competition and Environmental and Labour Justice in International Markets: Volume 16

The chapter examines the role of the UN Global Compact inspired Principles for Responsible Management Education (PRME) initiative, how it operates, and the role that signatory schools and regional chapters play in its continued development and evolution.

The chapter conceptualizes the PRME engagement model (a learning network, reporting to stakeholders, commitment to continuous improvement), and uses three case vignettes to illustrate the type of programs and activities that signatory schools and regional chapters have developed and how these endeavors contribute to PRME’s evolution and development.

As a way of thinking about the ability of PRME to achieve its intended goals, it is important to look at higher education (thought leadership) within the context of the world of practice in both business (practice leadership) and civil society (practice leadership). PRME signatories and regional chapters need to more fully engage in this “sustainable praxis triad,” extending the growing network of signatories and chapters within the academic community to include businesses and civil society organizations.

The chapter focuses on three vignettes to illustrate different activities and involvement in PRME signatory schools and regional chapters. More extensive comparative analysis across business schools and regional chapters throughout the world is needed to ensure broader dissemination of current practices and innovations.

Beyond teaching and a focus on the current generation of students, PRME has the potential for more immediate impact through student-based consulting activities, the transfer of research results to the business community and larger society, and ensuring that university campuses and operations are exemplars of sustainable practice. PRME signatories and regional chapters can work to ensure that relevance and rigor in research are not polar extremes but rather as praxis – the integration of academic thought leadership with needed stewardship and practice leadership in the larger society.

Transparency and communication are important first steps for change. As business schools and universities openly share their research, curricula and pedagogical innovations, and best practices for their campus operations, they contribute to a vivid and stimulating intellectual climate, through which society and all stakeholders will benefit. PRME can facilitate the ability of higher education to serve as a nucleus and crystallization for innovative solutions for a more sustainable future.

PRME is still a relatively young initiative. First evidence shows that the PRME initiative is successfully contributing to educating a new generation of managers who are better prepared for the global challenges of sustainable development.

The United Nations Global Compact initiative is presented for businesses and nonbusiness as a universally accepted set of principles. The aim of the 10 principles in the areas of Human Rights, Labor, Environment, and Anticorruption is to encourage businesses to align their operations and strategies with committed values. The Global Compact network involves not only companies but also governments, labor, and civil society organizations. Corporations, community, and environment are integral parts of a system that correlate to each other. In light of the assumption that business operations have increasingly observable effects on the environment, economy, and social life on a global scale, it is necessary to have accountable and sustainable firms. The Global Compact is a voluntary strategic policy initiative, and it has become more important in where interactions between organizations and stakeholders to be more dynamic. On the other hand, sustainability has economic, social, and environmental dimensions, and in accordance with these dimensions, it is necessary for firms to take into account the influence of their operations on their stakeholders. Thereby, from theoretical perspectives, the primary objective of this chapter is to illustrate the role of Global Compact in corporate accountability and sustainability.

An extensive literature research is conducted in order to understand the relationship between Global Compact principles and corporate accountability and sustainability.

From a theoretical point of view, there are some conditions for the advancement of the corporate accountability and sustainability. For instance, there is need for stakeholders’ insistence about incorporating social and environmental values into the business economic decisions. Thus firms could contribute to not only worlds’ economic but also social as well as environmental future.

The research is a theoretical study, but for further studies, empirical studies can be conducted to understand the interactions between Global Compact principles and corporate accountability and sustainability.

This study may be useful for managers to realize the role of Global Compact principles on corporate accountability and its contribution to being a sustainable firm.

There is a lack of studies that analyze the role of Global Compact principles on corporate accountability and sustainability. Examining the principles in light of corporate accountability and sustainability will add a value to the literature in this area.

This chapter discusses how businesses can create alignment between their corporate sustainability (CS) efforts that focus on the triple bottom line of the financial, environmental, and social, and the 10 principles of the UN Global Compact in the four core areas of environment, human rights, labor standards, and anticorruption.

Based on the literature review, the relationship between CS and corporate responsibility is presented. Creating alignment between CS management and Global Compact initiatives requires knowledge of the Global Reporting Initiative (G4-GRI), third-party CS rankings, green supply chain management, and anticorruption strategies.

UN Global Compact is an international forum to promote and self-report CS and corporate social responsibility [Bitanga & Bridwell, 2010. CS is achieved through a triple bottom line – financial, environmental, and social (Hutchins & Sutherland, 2008). For CS management, businesses use four strategies including defensive, cost-benefit, strategic, and innovation/learning [Buchholtz & Carroll, 2008; Egbeleke, Journal of Management and Sustainability, 4(2), 92–105 (2014); Epstein, 2008; Epstein, Buhovac, & Yuthas, 2010]. The UN G4-GRI is the most widely used comprehensive sustainability reporting standard in the world (G4-GRI, 2013). Third-party, industry sector-specific CS ratings reinforce the self-reported sustainability reports. Each firm has to conduct their own CS cost-benefit analysis to determine how CS practices can lead to value creation for sustained competitive advantage. Creating alignment with Global Compact initiatives offers firms a marketing advantage. Conducting business in accordance with the Global Compact is a value-increasing business strategy [Kaspereit & Lopatta, 2011; Lopatta & Kaspereit, 2014; Michelon, Corporate Reputation Review, 14(2), 79–96 (2011)]. Green supply chain management is essential for CS (Penfield, 2014). Four prevailing anticorruption frameworks or intervention policy approaches include law enforcement, economics, moralism, and cultural relativism (Bellows, 2013). There is little sustainability reporting in the government and public-sector organizations (Adams, Muir, & Hoque, 2014).

It is difficult to quantify the financial and social benefits of aligning the CS efforts with the 10 principles of UN Global Compact [Parisi, Journal of Management and Governance, 17(1), 71–97 (2013); Nilipour & Nilipour, Interdisciplinary Journal of Contemporary Research in Business, 3(9), 1084–1092 (2012)]. The environmental impact can be easily quantified.

As the primary driver of globalization, businesses and other organizations can help ensure that markets, commerce, technology, and finance advance in ways that benefit environment, economies, and societies in both developed and developing countries leading to sustained development.

The role of green supply chain management and anticorruption strategies in CS management is explored.

The chapter aims to clarify the relationship between corporate governance structure and corporate subscription to Global Compact standards. Part one of the chapter looks at the relationship between different models of board governance and active Global Compact participation by publicly listed companies. Part two of the chapter examines a number of external mechanisms aimed at bringing corporate behavior in line with Global Compact principles, and argues that there is a mutually reinforcing relationship between internal governance structures and external provisions aimed at influencing corporate behavior.

Part one of the chapter uses an independent T-test to compare the average (mean) proportion of publicly listed companies from unitary board countries with an active Global Compact Communication on Progress status with the average proportion of publicly listed companies from two-tier/hybrid corporate governance systems listed as active Global Compact participants. Part two of the chapter uses primary and secondary sources to examine external mechanisms operating across national borders aimed at influencing corporate behavior.

The chapter finds that a higher proportion of public companies from countries with two-tier/hybrid corporate governance structures have become active Global Compact participants compared to public companies from legal systems with unitary board corporate governance structures. Part two of the chapter examines the potentially mutually reinforcing relationship between internal governance structures and external mechanisms for modifying corporate behavior.

While external codes and standards such as the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises appear to be influencing corporate behavior worldwide, quantitative data confirming and recording the extent and nature of this influence (if any) remains limited.

The chapter provides useful insights for policy makers and corporate leaders into the relationship between internal corporate governance structures and external codes, standards and guidelines aimed at influencing corporate behavior.

This chapter provides original insights into whether and how internal governance structures can complement and reinforce social standards regarding global corporate citizenship, and the legal guidelines reflecting those standards.

This chapter discusses the influence of the United Nations Global Compact (UNGC) 10 Principles on multinational mining companies’ (mining multinational enterprise (MNE)) corporate social responsibility (CSR) activities and strategies.

Business ethics, mining management, CSR, stakeholder, and social contracting literatures are integrated with case vignettes to examine the UNGC’s role in motivating efficacious, benevolent CSR in mining.

Mining industry groups and some mining MNEs have adopted and fully implemented UNGC principles while other mining MNEs have not. The variation manifests as a gap between CSR form and CSR substance. Mining industry bodies such as International Council for Mining and Minerals, stakeholders, and private monitors have increased pressure to narrow this gap. The UNGC acts as a catalyst to create and codify valid hypernorms and to build trust and managerial buy-in in mining MNEs’ CSR.

Reliance on selected cases and extant literature indicates, but does not fully support, conclusions.

Mining MNEs are advised to pursue CSR activities which integrate social contracting and precepts of the UNGC. The results would be happier, less antagonistic to stakeholder communities, and less questioning of mining MNEs’ legitimacy.

This chapter integrates above-mentioned literature and cases to advise academics, governance officials and private monitors, and mining MNE managers on effective integration of the UNGC into mining through social contracting.

Pension funds are demanding increasingly more information about the levels of corporate social responsibility achieved by companies through the use of corporate social responsibility reports to select which firms’ stocks to invest in. This could improve or reduce the financial performance achieved by pension plans. Therefore, this chapter examines the financial performance obtained by equity pension plans, distinguishing between solidarity pension plans, ethical pension plans and conventional pension plans.

We use a sample of 153 individual system pension plans (129 conventional pension plans, 6 solidarity pension plans and 18 ethical pension plans). Using these sample data, we implement the robust random effects panel data methodology.

The results show that ethical pension plans perform similarly to traditional pension plans, while solidarity pension plans significantly outperform conventional pension plans.

We do not know what weights managers give to environmental, social and corporate governance criteria, which may influence the financial performance of pension plans.

The results of this study could be relevant for pension plan managers that may be considering the integration of ethical screening in their management strategies in order to offer differentiated products and for investors who would like to invest in ethical pension plans without compromising their financial performance.

Previous studies have analysed the financial performance obtained by traditional and ethical funds, but in this chapter we compare the financial performance of traditional, solidarity and ethical pension plans.

This chapter seeks to explain why Spanish companies are so active in Global Compact (GC) initiative, while their external environment is worse than other European countries. From 2010 onwards, Spain ranks first in business participants in GC initiative, ahead of European countries with higher levels of transparency and higher quality of governance.

In this chapter we relate the Spanish evolution of GC signatories and external uncertainty (measured by Worldwide Governance Indicators and Corruption Perception Index); pointing out two theoretical approaches: Institutional and Social Identity Theories.

Economic perspective is not sufficient to explain the companies’ adhesion to the GC initiative. In this chapter we explain the companies’ behaviour regarding to the Corporate Social Responsibility (CSR) activities from a social perspective.

This chapter provides a response to understand the active behaviour of Spanish companies regarding to GC initiative.

This is the first study that analyses the relationship between the GC evolution in a country and its external uncertainty. Moreover it contributes to the CSR field by providing two theoretical approaches that offer complementary explanation and advance our knowledge about the GC motivations.

This chapter proposes that social clauses within International Investments Agreements shall explicitly refer to the Global Compact initiative to be more effective at engaging foreign investors with the sustainable development policies of recipient States. Therefore, it analyzes the interaction between investment treaties and sustainability, evidencing an ongoing trend aimed at including corporate social responsibility provisions into these instruments, in order to address social goals from the perspective of foreign investors and Transnational Corporations.

The argument of this chapter relies mostly on literature review, but it also takes into account evidence provided by some selected International Investment Agreements. It is out of these sources that I infer that the Global Compact initiative can contribute the most to engage investors with the promotion of sustainable development goals within States recipient of Foreign Direct Investment.

The main finding of this chapter is that labor and environmental provisions in International Investment Agreements should make explicit reference to the U.N. Global Compact initiative. Certainly, because of its universality, legitimacy, and flexible implementation, this initiative constitutes the best approach for helping host States to achieve their sustainable development goals without losing their allure for foreign investors.

Although there are some International Investment Agreements whose labor and environmental clauses call for the voluntary adoption of corporate social responsibility provisions among foreign investors and Transnational Corporations, none of them makes explicit reference to the U.N. Global Compact initiative nor reflects the universal scope of its 10 principles. Thus, this chapter could serve as a departing point to discuss the inclusion of the U.N. Global Compact principles within International Investment Agreements.

Even though there is literature about the inclusion of instruments of corporate social responsibility in International Investment Agreements, the originality of this chapter consists in approaching this subject matter from the perspective of the U.N. Global Compact initiative.

The United Nations Global Compact is a voluntary initiative in four areas as human rights, labor, environment, and anticorruption with 10 universal principles. This network brings corporations, nongovernmental organizations, employees, and people together. There is a need to have responsible and committed leaders to promote good corporate citizenship in the framework of Global Compact. Leaders have a unique position through which they can influence factors concerning organizations’ and employees’ behavior. According to the areas of UN Global Compact, some leadership styles seem to better suit to benefit economies, societies, markets, and people all over the world than the others. By this way, from the theoretical perspectives, the primary purpose of this chapter is to investigate the leader’s behavior and different leadership styles in organizations that are the part of Global Compact platform. There are certain leadership theories – transactional, transformational, sustainable, ethical, and servant – which are examined in Global Compact initiatives.

An extensive literature research is conducted in order to understand the different types of leadership styles while organizations are adapting and understanding the Global Compact principles.

Modern leadership styles especially ethical leadership behavior should be effective to comply with universal principles and organizations can also have commitment to disclose a report with powerful leadership.

However, this research is a theoretical study; for further studies, longitudinal studies can be conducted to understand the leadership styles from the perspective of Global Compact principles, and these different managers’ behaviors can be measured.

This study may be useful for the board of directors and managers since they should participate and adapt themselves to this initiative about how they should behave in the right way.

There is a lack of behavioral studies while analyzing Global Compact principles. Especially examining leadership theories that are complied with these principles will add a value to the literature in this area.

To study the values espoused by top MNEs operating in Colombia, through their vision and mission statements, in order to interpret their ethical orientation and to examine their concern toward diverse stakeholders.

Content analysis – an analytical framework was crafted from the literature review, while allowing room for emergent phenomena. Thus a combination of deduction and induction was enacted.

Most values are either teleologically oriented or grounded in deontological values, with a significant amount of values that could be related to a virtue ethics. Regarding stakeholders, narrow definitions tend to prevail.

The comparability of the vision and mission statements could be affected because sometimes they are offered at the national level and others at corporate level.

By offering a critical regard at the values that are publicly espoused by some of the most influential companies in Colombia, we enhance the comprehension of the prevailing ethical environment and the compatibility with the principles of the Global Compact.

We have studied key actors in a growing emerging market, which could advance Global Compact principles. Besides we have crafted a pedagogic and systemic prism through which values can be taught and thought. Thus, the methodological and theoretical framework facilitates subsequent empirical research, both in comparative and longitudinal ways.

The purpose of this chapter is to describe the First Contact Pilot Program carried out in collaborative work between ISAGEN, a partly government-owned firm within the energy sector, and Universidad EAFIT, a private university in the city of Medellin.

The First Contact Pilot Program was developed following an existing model implemented at the Universidad Externado de Colombia, a private university located in Bogotá. Nevertheless this pilot program took methodology elements from ISAGEN and its suppliers relationship policy. Additionally content concerning the Global Compact and its principles was provided within the subject “Senior Seminar.” Students from this subject were voluntary participants in the pilot program.

The chapter provides a brief survey conducted by ISAGEN wherein some findings are visible. In this survey the First Contact Pilot Program participating entrepreneurs were asked about their motivations in order to voluntarily be part of the program and they recognized the great importance of this initiative for their businesses to change lots of practices and to become part of a global market culture.

This first version of the program was at the same time a way to invite other big organizations in the city of Medellin to take part in such activities. Massive participation, not only from the big players but also from small and medium enterprises, is necessary to achieve the goal of spreading the Global Compact’s principles. In the longer run it assures the creation of a fairer market place where all players in all sizes contribute to respect and promote a core of best practices in business.

One of the most remarkable implications by designing and implementing the pilot program was the fact of having interactions between International Business Students and local small and medium firm managers together talking about the Global Compact and the way it may improve many aspects within the firm and toward stakeholders.

A particular feature of this chapter to be considered as original and valuable is the establishing of networks for the dissemination of the Global Compact’s principles. Collaborative work among private and public sectors and with higher education institutions in fostering the transformation of business practices to achieve a fairer global market place constitutes the aim of this particular pilot program. At the same time this pilot program embodies the spirit of the UN PRME in giving the students of International Business the opportunity to develop their capabilities to become the future managers aware of the sustainability value for business.