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A global pact about corporate social responsibility

By Jorge Emilio Sierra Montoya

Manuel Escudero, is currently serving as the Special Adviser of the Global Pact of United Nations; earlier was the Worldwide director of Social Media.  Escudero explains the commitment of companies and other collective organizations (governments, universities) to Social Responsibility, underlining in particular the multiple benefits that are generated.

A global pact, but local

Manuel Escudero was a professor at the Institute of Entrepreneurship in Madrid (Spain), a school of business that is always included in the ranking of Financial Times, among the best in the world. As he was teaching courses about economic sciences and of the international political analysis, occasionally exercising leadership roles, Escudero led the initiative of the Global Pact in his country, with the support of a few companies and prestigious foundations.

He says that “for two years we have built the Spanish experience.” This has had great results so that the leadership of United Nations nominated him to become the worldwide director of social media within the Global Pact of this organization; where he oversaw firsthand the rise of social networks at a global level.

He explains that “although such a Pact is global, it is practically local throughout the planet as it includes a great diversity of situations, of different political and cultural contexts, with the same rate of interactions from many directions.”

At the present, Prof. Escudero continues to serve as a special adviser to the Global Pact, an initiative of the United Nations that is supported by all of its member nations.

According to Escudero, it is believed that governments have nothing to do with the Global Pact or in dealing with Corporate Social Responsibility, as it is understood as an exclusive responsibility of companies and the private sector.  But this is not true.  The government, in his opinion, has basic elements in order to ensure sustainability or stability in the long run, something indispensable for companies that aspire to become good corporate citizens, socially responsible.

Public companies, on the other hand, should equally subscribe to this Pact, embracing the principles of transparency and respect for human rights, labor and environmental law that are universally accepted by the International Organization of Labor (ILO).

Escudero emphasizes that “on many scenarios, public companies enjoy an equal and sometimes a higher influence than private entities.”

A new entrepreneurial paradigm

Even though Global Pact was established recently, with less than two decades on its shoulders (launched in 1999 during the World Economic Forum in Davos, Switzerland), there are emerging positive results. For example, on its highest leadership structures there is an agreement among highest corporate representatives and union leaders, according to Escudero, this is a faithful testimony, that one and others, in their companies, accept such a new reality that is here to stay: CSR as a management of risks and source of opportunities.

As he observes that no one can escape from such a scenario of changes throughout the world, Escudero notes that “we are in front of a new paradigm of corporate administration, which involves Corporate Social Responsibility.”

He notes that even the main business schools have begun to understand that CSR should be a fundamental element in the education of future professionals, here are included the economic and financial sectors, even more so the retirement funds, that are among the largest investors, they begin to request information to companies on the fulfillment of Global Pact principles, as well as the presentation of reports and briefings in accordance to what has been established by the Global Reporting Initiative – GRI, as a preferred corporate for their investments.

Escudero underlines that “investors begin to say that Social Responsibility represents a financial bonus for companies due to its lower risks, as well as a growing access to investment funds.”  In his opinion, CSR is not only a good investment but also is the best business plan, on a medium range term to any company.

A gradual process

With a didactical spirit that characterizes a university professor, Escudero explains that the Global Pact is a gradual process, through which companies that have signed such an agreement have reflected the principles of the Pact in their strategy and their operations.

Escudero notes that this is not something that can be accomplished overnight, it demands radical changes within a company in order to become responsible in human rights achieve and maintain international standards related to labor aspects and environment, the fight against corruption.

He adverts that “this is a gradual process, but it must be serious.”  The seriousness that he refers to contemplates, above all, a fundamental measure: to oblige companies to publish every year “a progress report,” where they explain the advancements in the implementation of this pact.

Moreover, such reports, that are submitted in the office of Global Impact in New York, it is where its content is evaluated, this task is in charge of the so – called stakeholders, or groups that are affected by the overall activities of a company, including its workers and local communities all the way to the overall civil society and its financial markets.

This way, such a Pact has been converted not only into the largest initiative of corporate citizenship in the world, but also has become an entity that receives the most progress reports, as a result it becomes obligatory to many key investors to consult with this entity before undertaking their respective investment decisions.

On the other hand, Escudero refuses to name such an entity as a club of excellence, of only a few, he is against of those who pretend that only large multinational companies are allowed to participate in this initiative. There are participating many small and medium size enterprises (SME), whose participation is always growing on purpose; meanwhile from United Nations there are attempts to unravel “a gigantic wave of companies that are converted into good corporate citizens.”

Why? This is a key question.  He responds that “we think that this is the only way in order for globalization to have a positive impact, in the context of being sustainable and inclusive of all citizens, it can be accomplished only through such an initiative.”

Escudero notes that “there will never be a global legislation on this matter.  We should take advantage of the interest of these companies that are willing to embrace such assets,” he clarifies on the enormous benefits that can take place: in the first place, the management of risks, the current educational and information levels demand every enterprise to be responsible in order to operate and, in the second place, the opportunities that are presented within a new social and environmental circle that must be kept stable, if these companies aspire to maintain sustainable benefits in the short run.  To conclude, CSR is a source of generating value for companies whose intention is to become a good corporate citizen.

A guide to a good corporate citizen

According to Escudero, the Global Pact serves as a framework, through its principles, in order to develop policies and specific projects that enable a corporate to become a good corporate citizen.

He explains: such a new concept of a company extends beyond its traditional objective, introduced in the texts of micro economy, according to which the function of utilities must be maximized not only thinking for the short run, but attention should be focused towards the long run, while respecting the environment where a company is operating.

He adds that now we are in front of another paradigm in the world of business: a company should be sustainable, or economically sustainable, a notion that is understood as the generation of value not only for the company but also for the society in which it operates, fully assuming its responsibility as a social organization.

From there the Global Pact precisely obliges companies to commit themselves to adopt its principles through the declaration, signed before the United Nations, ensure respect for Human and Labor Rights, preserving the environment and upholding the war against corruption, among other fundamental aspects.

It is obvious that this is the ideal of a better world.  It is taking shape in reality, taking into practice effective public policies, as it is confirmed by the rapid growth of Global Pact since its creation, which has mostly flourished in the developing nations, because the commitment of companies, expressed in this pact, has to be increasingly tangible due to our social problems (poverty, inequality, violence) that are very important.

Escudero states that “we are building among all, with the support of companies, a sustainable company, socially responsible,” he insists that the Global Pact should not only be global, it should also be regional and local.

Multinational companies, for the sake of importance, should comply with agreements that eradicate the employment of minors and fight corruption, not only in their countries of origin but also in their branches abroad, where these requirements are violated at times.

From Theory into Practice

In synthesis, words must be followed by actions.  Not only staying behind the declaration of principles, regardless of the level of importance this may have.  There must real, responsible action in front of the society, to become responsible in front of different social groups or stakeholders: employees, consumers, providers and community…

To these groups – Escudero reiterates -, companies must file their financial reports, without forgetting that the nucleus of their interest is in their workers or employees.  Let there be, consequently, an alliance among capital and labor, or better said, let there be co-responsibility in the Pact.

According to Escudero, CSR is a new vision of the social pact of the XXI Century, as a result a company is considered not only as a generator of wealth but also as an asset of benefits for the whole society. He observes that “this is the greatest goal of CSR.”

This is why, it is required for companies to provide information, it means, to encourage transparency, reporting their information to all groups of interest, who should undertake the appropriate scrutiny, a social study, in the name of the society, addressing the overall interests of a community or of the common good.

“Companies should be guarded by the society,” as he maintains the analytical vision of a professor: “there is a new structure of might in the world, where the power of the private sector is growing. While taking this into account, companies should make public financial reports to society.”

Well beyond this information – he comments – is the real and concrete work, in social projects that are related to the Global Pact, from the war against poverty or corruption and the protection of environment all the way to the education and investment, a responsible investment just like the one that is required ever more in the prominent stock markets of the world.

Or, finally stated, enable companies to effectively contribute in achieving the Sustainable Development Objectives, among other matters because these and principles of the Global Pact maintain a close relation.  Escudero says that: “they are the two sides of the same coin,” who is also speaking about the “silent revolution,” promoted by the United Nations, so that poor countries can embrace the stages of development.

Lastly, it is required from governments and companies to pursue the same path, in strategic alliances, with social projects.  He concludes that “If we don’t do this, it will be impossible to bring a solution to poverty and under-development.”

Translation from Spanish Language: Peter M. Tase 

Excerpt from the V Book volume of Jorge Emilio Sierra, on Corporate Social Responsibility, published at the Simon Bolivar University, Barranquilla, Colombia.

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