| JOHANNESBURG--United
Nations Secretary General Kofi Annan called on
business leaders today to make the "right
choices" so that the twin objectives of
development and environment could be met simultaneously.
Annan
stressed that profits could be sustained in the
long run, only if business addresses the social
and environmental issues effectively. If companies
failed to do so, the Secretary General warned
that pressures from civil society and governments
would
make their companies unprofitable in the long
run. Annan highlighted the work of 'The Global
Compact,'
a corporate citizenship initiative, launched
by him in July 2000, as a model for bringing
business,
government and civil society together to work
for sustainable development. "Ten years ago, at the Rio
Earth Summit, the role of business in sustainable
development was poorly understood," said Annan,
addressing a gathering of CEO's and managers at
the 'Business Day' organized by Business Action
for Sustainable Development. "It wasn't clear
whether, and in which ways, the private sector
could be a part of the solution to the broad challenges
facing the world, as we struggle to balance between
the development and environment."
The Secretary General noted that much
has changed in the decade since Rio.
He said that mobilizing the corporate
sector and engaging its finances, management
and technology was critical to finding
a solution to the challenges of sustainable
development.
"We now understand that business
and society stand to benefit from working
together, said Annan. "On its side,
business has come to realize that if
it wishes to thrive in a complex and
sometimes hostile global economy, it
must respond to the major social and
environmental trends and challenges that
are reshaping our world."
Citing the example of the environment
as a prime example, the Secretary General
said that greenhouse gas emissions have
historically been viewed by many companies
as a social issue entailing burdensome
costs. Yet, today, there is broad recognition
of the fact that corporate pollution
involves high costs and wastage for business
itself.
"It [pollution] can be very often
addressed with better technologies and
improved methods of production--and firms
that do this become more competitive,
not less," stressed Annan.
The Secretary
General promoted the concept of "values-based management" which
he said was essential in today's world.
He noted that some of the world's leading
companies had expressed strong support
for this concept by joining the Global
Compact.
Georg
Kell, Executive Head of the Global
Compact, added that the compact brings
companies that promote good practices
in the areas of human rights, labor and
environment together with UN agencies,
labor and civil society. The compact
seeks to ultimately influence positive
corporate change, and already has a network
of more than a hundred countries from
all over the world. "However, to
preserve the integrity of the compact,
we do not accept any financial contribution
from these companies and we do not allow
them to use the UN logo either," said
Kell.
At this summit, the Global Compact is
seeking to promote investment in Least
Developed Countries (LDCs). Currently,
only 0.5 percent of global foreign direct
investment goes to the LDCs.
"Markets punish the poor," noted
Kell. "We would like to lower the
economic barriers by bringing together
a coalition of like-minded economic investors
to share the risk and reduce the transaction
costs in this region. Simultaneously,
we are trying to influence the local
governments--through agencies like UNDP--to
push for good governance in this region.
This is a like a mini Marshall Plan that
feeds into the overall plan of NEPAD
(New Partnership for Africa's Development)."
In closing,
the Secretary General said that the
economic development of the
poorest countries is of fundamental long-term
interest to the global community, including
the private sector. "The present
situation is fundamentally unstable," he
said. "Growing sustainable business
in the world's least developed countries
is arguably the most promising pathway
in overcoming the poverty trap."
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