A Transatlantic Comparison on Corporate Responsibility: UN Global Compact Networks in Germany and the U.S.
By Nicole Kranz

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Rationale
Businesses are currently experiencing the challenge of re-defining their role in society as they are increasingly accused of environmental destruction, human rights violations, and corporate governance failures. In this context, concepts such as responsible corporate citizenship and corporate social responsibility (CSR) have emerged over the past few years, along with a widespread discussion among business actors, academics, and representatives from civil society about the validity, legitimacy, and accountability of these concepts.

While discussions on the forms and even the meaning of the term corporate responsibility continue, it is widely accepted that "CSR is here to stay." There is a growing awareness that the degradation of eco- and social systems and unacceptable human rights conditions significantly affect the way businesses conduct their affairs, as these lead to increased risks and instabilities. Businesses are thus more and more looking for ways to control these risks and appear as responsible citizens, while shareholders and stakeholders are following this development critically from their perspective.

The approaches and strategies employed by businesses across the world differ considerably in terms of focus area, rigor, and last but not least success.

While businesses certainly become increasingly globalized, examining business actors from Germany and the U.S., as two major Western economies, reveals differing responses to the challenge of corporate responsibility. These differences originate in part from the diverging business philosophies in the two countries as well as from other societal factors.

With the influence of national governments diminishing and the challenges of corporate responsibility taking on a global dimension, numerous initiatives and alliances started by a wide range of institutions aimed at promoting the concept of responsible corporate citizenship through voluntary approaches have become an integral part of the worldwide movement for CSR.

One of the most prominent initiatives, while certainly not the only one, is the UN Global Compact, launched by UN Secretary General Kofi Annan in 1999. This compact currently includes roughly 2,000 participating businesses that subscribe to ten principles in the areas of environmental protection, human and labor rights, and anti-corruption.

Also with respect to this worldwide initiative, one finds considerable differences between situations in Germany and the U.S.; while the concept is fairly well received in Germany, reflecting an overall positive acceptance of the initiative, it is just about to gain considerable momentum in the U.S.

It is, however, obvious that the success of the Global Compact will critically depend on its ability to initiate a process of constant improvement of corporate practice and a discussion on the evolving concept of corporate citizenship among business actors and with other stakeholders. And, as with any global initiative, the Global Compact can only make an impact through local action in its local networks. Analyzing the different approaches to the Global Compact in Germany and the U.S. allows for insight into the respective nature of the debate and process in the area of responsible corporate citizenship. In addition, such insights could also be helpful in increasing the impact of the initiative in the U.S. as well as in maintaining and enhancing its momentum in Germany.

Looking at the evolution of the same initiative in the two countries forms a good basis for direct comparison and the identification of driving forces. However, it should also be noted that the analysis of the respective popularity and acceptance of the Global Compact in the two economies can only serve as a proxy to the highly diverse situation in each context.

In any case, this short analysis contributes to the discussion and reflection on the topic of responsible corporate citizenship from a new perspective. It complements the ongoing debate of scholars and practitioners and also aims to bridge this gap by offering a short overview of the main aspects.

Network Activities
Through direct comparison of the network activities in Germany and the U.S., it is possible to identify differences and potentials for synergy and collaboration.

1. The Situation in Germany
The German UNGC network currently consists of 62 members, half of which are actively participating in network activities. Among those participating, about sixteen are listed among the DAX 30. Companies working together in the UNGC network are usually faced with varying challenges in terms of corporate responsibility, varying from anti-corruption to human rights. The strength of the German network is its focus on development cooperation, which is mostly related to the network being run by the gtz, Germany's Agency for Development Cooperation.

Running the network poses a considerable administrative challenge, as the network is no legal association but is based on input and consensus from the individual member companies. The staff and office at the gtz house in Berlin are currently supported by the German Ministry for Development Cooperation.

The activities in the context of the UNGC are usually initiated through the gtz contact point in Berlin and then discussed at the bi-annual general meetings. Activities will be pursued further only if a consensus can be found among the participating companies. In the past years, the German network has developed considerable momentum. It hosted an international learning forum in 2002, translated the guidance on preparing the communication on progress reports into German, and co-hosted an international conference on public-private partnerships in the context of the Global Compact.

Companies participating in the network value the activities as useful in the context of their overall corporate responsibility strategy. The Global Compact is mostly considered as an overarching framework which is tied into and combined with the participation in other programs.

Through its secretariat, the UNGC network in Germany is actively seeking to collaborate with other related programs and campaigns. For example, the network closely collaborates with the national focal point for the OECD guidelines for multi-national companies, which is hosted by the NGO Germanwatch. At the same time, the UNGC as an initiative is in healthy competition with initiatives like Econsense (1) or the German Network for Business Ethics (2). It is complemented on the European level by further activities, such as CSR Europe (3) or the newly introduced European Alliance for a Competitive and Sustainable Enterprise (4).

From the perspective of many participating companies, the UNGC principles mirror already existing codes of conduct, allowing these companies to sign on to the Compact at a low cost and to use the additional momentum provided by the Global Compact to further develop their CSR strategies.

Companies' representatives praised the German UNGC network as a good place for networking. This is also augmented by its convener, the gtz, as it opens up new networking possibilities for companies through its partnership programs with developing countries. More concrete initiatives, however, are then developed in 'business only' working groups which take place outside of the official general meeting.

While the German network is still strong on performance, participants of the German network voice increasing concern about the large number of worldwide non-reporting companies in the Compact. Reducing the number of non-reporting companies is now seen as the main challenge for the Compact at the international level and also in the German context.

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Footnotes:
1. Econsense.
2. German Network for Business Ethics.
3. CSR Europe.
4. The alliance was introduced in March 2006 as an innovative partnership of the EU Commission and businesses.

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Nicole Kranz was a DAAD/AICGS Fellow in Spring 2006, and this essay is the result of her research stay.  Currently she is a Fellow at Ecologic – Institute for International and European Environmental Policy in Berlin, Germany.

This essay appeared in the May 12, 2006 AICGS Advisor.