The United Nations Global Compact is the world’s largest voluntary corporate responsibility initiative. Currently it has more than 8,000 business participants from more than 145 countries. Participants are required to support ten universally accepted principles in the areas of human rights, labor, environment and anti-corruption.  In 1999, Kofi Annan, then secretary-general of the United Nations, introduced the concept of a Global Compact to multinational corporations gathered at the annual meeting of the World Economic Forum in Davos. He said: “Globalization is a fact of life. But I believe we have underestimated its fragility. The problem is this. The spread of markets outpaces the ability of societies and their political systems to adjust to them, let alone to guide the course they take. History teaches us that such an imbalance between the economic, social and political realms can never be sustained for very long”.[1]

Understanding Corporate “Moral Purpose”

Discussions about the UN Global Compact form part of a broader conversation about corporate responsibility and the moral purpose of business. There is a growing tendency to acknowledge that corporations have moral responsibilities and that their behavior can be subjected to moral scrutiny. The purpose of business is articulated by the concept of corporate responsibility – which is the idea that the corporation bears a moral responsibility towards society as a whole. The corporation is expected to make a positive contribution to society by extending its impact beyond its shareholders and the exclusive pursuit of short-term profit. But of course, corporations are also interested in a positive contribution to the bottom line.

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Daniel Malan, PhD, is a Senior Lecturer in Ethics and Governance and Director of the Centre for Corporate Governance in Africa at the University of Stellenbosch Business School in South Africa. His focus areas are corporate governance, business ethics and corporate responsibility.  He is a member of the World Economic Forum’s Global Agenda Council on Values, the International Corporate Governance Network’s Integrated Business Reporting Committee and the Anti-Corruption Working Group of the United Nations Principles for Responsible Management Education.  He is also a portfolio partner at the International Centre for Corporate Governance at the University of St Gallen. This article is a summary of his recently completed PhD in Business Administration, obtained from the University of Stellenbosch.

[1] United Nations. 1999. Secretary-General proposes global compact on human rights, labour, environment, in address to World Economic Forum in Davos. [Online] Available: http://www.un.org/press/en/1999/19990201.sgsm6881.html  Accessed: 14 June 2015.