With much fanfare, the Global Compact was launched in the Philippines in 2002 with the theme, “Global Compact Initiative: Reaching Out and Making it Work” under the auspices of the Employers Confederation of the Philippines (ECOP).

But five years after the much-heralded initiative, majority of Philippine companies have yet to walk the talk. As such, Philippine companies who subscribed are being delisted.

The Global Compact is a UN-led international initiative where key actors from different sectors converge and commit to protecting human rights, fair labor practice, the environment, and anti-corruption efforts (read more about this here).

It all began when then UN Secretary-General Kofi Annan addressed the World Economic Forum in 1999. He challenged business leaders to join the Global Compact. The International Chamber of Commerce threw its support behind the initiative, which it described as having “great potential.”

Businesses who subscribe to the Global Compact are required to submit a Communication on Progress (COP) two years after signing, and an annual COP in the succeeding years. In the COP, the companies report their standing on the commitments they have subscribed to.

If a company fails to submit its COP, it is delisted and put on the inactive list.

What’s Wrong?

When the Global Compact was launched here, ECOP campaigned mainly among its members to support the initiative and to subscribe to the commitments mentioned above. The Philippines had one of the biggest of signatories to the covenant.

However, as of June 27, 2007, there were 100 companies that have been delisted from the Philippines alone. This translates to 13% of the companies which have been delisted worldwide.

The Global Compact Web site lists only 39 active companies from the Philippines. This figure is a far cry from the 150 that both the UN Global Compact Office Web site and ECOP’s deputy director general Jose Moya mentioned.

The huge number of Philippine companies being delisted is an indication that there is something wrong. Insiders at the UN say that their organization is handicapped since the UN can merely “convince” the businesses to participate in the Compact.

Colin Hubo of the University of Asia and the Pacific's Center for Social Responsibility said that since the Global Compact operates on a voluntary basis, enforcement of requirements is relaxed.

The Compact’s main mechanism for tracking down progress is the COP, a reporting mechanism. A manual released by the Global Compact Office made mention of the fact that the COPs should not be treated as mere “things,” because they are supposed to reflect the progress of a companies action on its commitments.

Whether this is verifiable on the ground by the UN Global Compact Office is another matter altogether.

Dwindling Membership

Moya pointed to many factors that account for the dwindling number of Philippine companies in the Compact. The requirement to have a yearly COP sent to the Global Compact Office in New York has caught many by surprise. Most of these companies were not aware of such a requirement.

Moya said that the companies’ CEOs who attended the launch of the Compact in 2002 were not able to relay the fact that they signed up their companies. This is evidenced, according to Moya, by the fact that when ECOP reminded the companies about the COP, they were at a complete loss as to what the initiative was all about.

Templates for preparing COPs were distributed through the local Compact network to address the problem, Moya said. Aside from this, he added that meetings were held at the regional level outside Manila to encourage the subscribers to continue their support for the Compact.

Ideally, there should be a dedicated team who will help prepare and remind the companies’ submission of COPs on time, Moya said. Extra resources will be required for this, however. ECOP has neither the manpower nor the wherewithal to realize such a team, Moya lamented.

As a response to the lack of resources, ECOP prepared a proposal for the granting of seed money for Global Compact programs at the local level. Moya said that they do not know what happened to the proposal that they submitted to the Global Compact Office in New York.

According to the Global Compact website, the ECOP proposal was given the green light. Seed money was received by UNDP from the Swiss government in 2006 to promote corporate social responsibility (CSR) and to reinvigorate the Compact network in the Philippines.

The UNDP Philippine Office confirmed that they received the grant in 2006. But UNDP's Emmanuel Buendia said that the amount was channeled instead to an international CSR forum in partnership with the Asian Institute of Management's Center for Corporate Social Responsibility.

If it were up to ECOP’s Moya, the Global Compact should continue and intensify the local campaigns and promotions in order to push the businesses who subscribed to own up to their commitments. Resource constraints have prevented them from doing so.

The Global Compact, as mentioned by Moya, clearly focuses on core business practices. This is considered by many as the key to advancing CSR from philanthropy to corporate citizenship. Primarily, this is the underlying reason for the Compact’s existence.

Success Story: Central Azucarera Don Pedro

Nevertheless, there are a few successful cases. Central Azucarera Don Pedro or CADP is one.

In Pedro Roxas's speech in the 2006 League of Corporate Foundations CSR expo, he mentioned that the Global Compact and CSR principles were integrated into their core operation (read full text here), saying that "business practice and decision-making are governed in accordance with the Global Compact principles on human rights, labor, environment and anti-corruption."

CADP has regularly submitted its COP to the Global Compact Office (read the CADP COP here). In fact, they were one of the initial signatories from the Philippines when the initiative was launched here.

Their Nasugbu facility, for example, has invested in its own health care facilities to address the needs of its labor force. It has a 21-bed secondary-level hospital for its employees and dependents. They also cater to the needs of the local community.

CADP has initiated lending programs for community-based livelihood projects and involved itself in youth development and capacity building for the various people's organizations in the area. The Palico training center in Nasugbu, Batangas conducts vocational training for the people in the area in cooperation with the various cooperatives and non-government organizations.

CADP has also partnered with organizations such as the US Agency for International Development in environment protection programs and has invested in composting facilities to transform agricultural by-product into organic fertilizer.

(Photo credit: Jeff Mijares, CADP and USAID)

---

INTERACT WITH THIS ARTICLE