The UN Global Compact Network Structure
By Nicole Kranz

In its seventh year of existence the UN Global Compact (UNGC) has gained considerable momentum. This is not only evidenced by the numerous countries that have joined the initiative and engaged in its learning forum and dialogue activities, but also through the debate that has been spurred among businesses, civil society groups, and academia about this international governance framework for advancing responsible business behavior. The Compact has grown and it has survived severe criticism as well. Critics mostly address the lack of an effective enforcement mechanism of the Compact's ten principles, which thus inspires inefficient performance from the participating companies. With the Compact being a voluntary initiative, it is not likely that strict enforcement mechanisms will be introduced. Georg Kell, chief executive of the Global Compact, instead highlights the positive aspects of the voluntary nature of the UNGC (1). Nevertheless, the Compact is evolving and is currently implementing a new governance structure, which was developed after several consultations.

In this new governance structure, local networks will play an even more important role than before. National networks have so far sprung up in 82 countries, each showing different stages of development. While networks are initiated by a variety of different actors, such as innovative companies, UN agencies or national government agencies, they need to fulfill the following prerequisites in order to be recognized as an official network. One, there should be a strong commitment to the principles of the Global Compact and its modes of engagement with their own agenda and approach. Two, networks should be led by businesses, but be open to other stakeholders as well and offer opportunities for engagement. Third, networks are expected to hold at least one general meeting each year and establish a focal point in order to ensure communication with the Global Compact office in New York. Finally, the preparation of an Annual Report on its activities is required from the local networks.

Networks have emerged in several waves, with the most established networks currently existing in European countries. The occurrence of strong networks also reflects the success of the Global Compact in developing and emerging economies with networks having been set up in Nigeria, South Africa, India, China, and Mexico.

Local networks usually experience a number of evolutionary stages, which starts with the formation of the network and the establishment of a focal point. At this stage a few companies form the network, which are then joined by more companies, thus forming a 'critical mass.' Most networks are currently at or approaching this stage. Further stages would comprise the formation of a steering committee, or the formalization of the network and then the recruitment of further member companies. Over the course of this development, collective action is expected to evolve from a mere networking activity into collective learning regarding local CSR challenges and issues and later also regarding transnational CSR issues. Participants will increasingly accept the Global Compact as a brand value which they nurture through their respective contribution to the ten principles.

Local network are considered key in promoting the Compact's Integrity Measures and encourage the Communication on Progress among their member companies. National networks are expected to be the main drivers of compliance monitoring in the context of the Global Compact. While world-wide standards cannot be expected to be introduced at a global level, local or regional networks can contribute to compliance monitoring the attainment of the principles. Other interpretations (2) see national networks as platforms for the development of norms pertaining and geared to the respective region or nation, which at the same time are in accordance with the overarching 'hyper norms' established by the Global Compact principles.

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Footnotes:
1. PriceWaterhouseCoopers [2005]: The UN Global Compact: Moving to the Business Mainstream, an Interview with Georg Kell, Executive Head, PriceWaterhouseCoopers, The Corporate Responsibility Report, Volume II, Winter 2005.
2. Williams O.F. [2004] The UN Global Compact: the challenge and the promise, Business Ethics Quarterly, 14, 4.

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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.