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The U.N. Global Compact: When Social Responsibility Meets the Bottom Line

Recorded on May 17, 2007

Location: The Heritage Foundation's Van Andel Center

Few would argue with efforts by businesses to eliminate abusive labor standards, excessive environmental damage, or actions that undermine universally recognized fundamental human rights.  In the United States, such efforts are advanced through "corporate citizenship" or "corporate social responsibility" initiatives.  Though seeking similar objectives, these initiatives are not the same.  While corporate citizenship programs are rooted in how companies express their traditions and values and their desired role in society, corporate social responsibility seeks to impose expectations of outside groups on how companies manage their interactions with and responsibilities to society.  To the extent that these initiatives rely on moral suasion to prevent abuse, they are a positive contribution.  However, when activists seek to compel companies to adopt and advance their social priorities, they can undermine profits and global competitiveness - putting jobs at risk.

 

The flagship for these efforts internationally is the U.N. Global Compact, a program presented as a voluntary cooperative effort by businesses and activists to promote good business practices around the world.  Since its creation, however, activists have been disappointed that the compact is voluntary.  Recently announced management and institutional changes raise the possibility that regulatory measures are being considered.

 

What obligations do businesses have to be socially responsible?  Should American businesses and policymakers be worried about a multinational organization mandating business standards and regulations?  What would be the effects on American competitiveness and prosperity if European-style business regulations became international standards?  Join us as our distinguished panel of experts in corporate responsibility weighs these questions.