The United Nations Global Compact as a Global Governance
Mechanism of Corporate Social Responsibility and Sustainable
Iuliia V. Bulgakova
and Sergei D. Nabok
International Relations, Saint Petersburg State University, 13B Universitetskaya Emb., Saint-Petersburg, Russia
Keywords: Sustainable Development, The
United Nations
Global Compact, The
United Nations
Development Goals, Corporate Social Responsibility, Global Governance.
Abstract: The study analyzes the United Nations Global Compact initiative (UNGC) as an attempt to develop a global
governance mechanism to address the issues of corporate social responsibility (CSR) at the global level. The
UN Global Compact is one of the most ambitious attempts to create a global governance system of business-
society relations. Reflecting the Sustainable Development Goals at the corporate level, it strives to create a
flexible self-regulating CSR system in such fields as human rights, labor relations, environmental protection,
and anti-corruption. The key advantage of the GC as a global governance mechanism is its reliance on
institutions and reputation of the UN as a leading platform for international dialogue.
The United Nations Global Compact (UNGC) is an
international initiative based on the voluntary
participation and commitment of the companies’
management to follow common principles and goals
ensuring the sustainable development objectives. The
initiative was defined and proposed by UN Secretary-
General Kofi Annan in 1999. At the World Economic
Forum in Davos, dedicated to the Responsible
globality issue, he pointed out the dangers that
accompany the globalization processes:
“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”
(Annan, 1999). Kofi Annan claimed the need to give
the global market a “human face” and called for an
agreement on common values and principles that
would make it possible to solve this task. As J. Post
noted, “K. Annan has brought the issue to a head:
business cannot expect to benefit from global markets
a 0000-0003-3693-7594
b 0000-0001-7879-8014
without recognizing and accepting its social and
political responsibility” (Post, 2012, pp. 54-55).
In July 2000, the official start was given to the
initiative at the UN headquarters. The agreement is
based on 10 principles governing the companies
activities in such fields as human rights, labor
relations, environmental protection, and anti-
corruption. The treaty’s official mission is “to
mobilize a global movement of sustainable
companies and stakeholders to create the world we
want” (
gc/mission). With this aim, the Global Compact
encourages companies to:
Do business responsibly by aligning their
strategies and operations with Ten Principles of
Take strategic actions to advance broader
societal goals, such as the UN Sustainable
Development Goals (Ibid.)
From a theoretical point of view, the UNGC can
be seen as a global governance initiative in the field
of global corporate social responsibility (Fritsch,
2008; Post, 2012; Voegtlin and Pless, 2014). The
conception of global governance proposes a view on
addressing global issues radically different from that
Bulgakova, I. and Nabok, S.
The United Nations Global Compact as a Global Governance Mechanism of Corporate Social Responsibility and Sustainable Development.
DOI: 10.5220/0010586100590064
In Proceedings of the International Scientific and Practical Conference on Sustainable Development of Regional Infrastructure (ISSDRI 2021), pages 59-64
ISBN: 978-989-758-519-7
2021 by SCITEPRESS Science and Technology Publications, Lda. All rights reserved
of the international relations perspective. Instead of
relying upon the agreements and treaties between
governments, it acknowledges the role of other
influential actors such as businesses, especially
transnational corporations (TNCs), non-
governmental organizations (NGOs), trade unions,
social movements, and others. As a result, the global
governance theory proposes a way of addressing
global issues on the basis of multilateral, multilevel,
voluntary-based and largely horizontal cooperation,
which is able to perform key governmental functions
(e.g. establishing norms and principles, goal setting,
policy development and implementation, conflict
resolution or control) without tight regulation and
hierarchical structures (Weiss, 2013; Zürn, 2018).
Corporate Social Responsibility (CSR) is one of
global issues, in which global governance appears to
be a promising and effective approach. With the
growing impact of TNCs on world economy, social
development and environment, and the gaps in
national regulations, developing effective self-
regulatory initiatives is crucial for sustainable
development. The UNGC pretends to be the most
influential and large-scale attempt to develop a global
governance mechanism for global CSR. The present
study analyses the contemporary state of the initiative
and its actual and potential ability to function as a
global governance mechanism.
The study analyses the content and results of the
UNGC from a theoretical perspective of global
governance (Weiss, 2013; Zürn, 2018). We use the
methods of historical and comparative analysis as
well as statistical data and documentation from the
official UNGC resources
( to describe the
normative principles underlying the initiative, key
actors involved it their spreading and implementation,
and the institutions through which it functions as a
global governance mechanism.
The normative core of the UN Global Compact
consists of 10 principles, whose promotion and
implementation are considered to be the main goal of
all the participants’ activities. Initially, the Treaty
included nine principles related to three areas of
concern: human rights, labor relations, and
environmental protection and sustainable
development. These principles were defined based on
existing supreme-level international legal documents:
the Universal Declaration of Human Rights, the
Declaration of the International Labour Organization
on Fundamental Principles and Rights at Work, the
Rio Declaration on Environment and Development.
According to G. Kell and J. Ruggie (1999, p.104),
regulatory areas and specific principles were selected
based on the fact that they were most relevant at the
corporate level, while meeting the global rulemaking
goals and are based on existing international
agreements at the same time, with many of which
being binding. A little later, in 2004, another principle
was included in the Global Compact, which addresses
issues of financial integrity and anti-corruption. The
source of this principle was another existing
international document – the UN Convention against
Corruption. Thus, the current normative basis of the
UNGC includes the following ten principles
1. Businesses should support and respect the
protection of internationally proclaimed human
2. Businesses should make sure that they are not
complicit in human rights abuses.
3. Businesses should uphold the freedom of
association and the effective recognition of the right
of collective bargaining.
4. Businesses support the elimination of all forms
of forced and compulsory labor.
5. Businesses should support the effective
abolition of child labor.
6. Businesses should support the elimination of
discrimination in respect of employment and
7. Businesses should support a precautionary
approach to environmental changes.
8. Businesses should undertake initiatives to
promote greater environmental responsibility.
9. Businesses should encourage the development
and diffusion of environmentally friendly
10. Businesses should work against corruption in
all its forms, including extortion and bribery.
The ten principles forming the normative core of
the Global Compact are not reduced to the extremely
general formulations outlined above. For each
principle, there is a detailed definition of what is
meant by it, how a business should implement it in its
activities, and why it may be important for it.
Participation in the UNGC is voluntary and is
based on commitment of the organization’s
management to comply with the Treaty principles and
ISSDRI 2021 - International Scientific and Practical Conference on Sustainable Development of Regional Infrastructure
report on the progress on an annual basis. Companies
joining the UNGC sign a letter addressed to the
Secretary-General containing their commitment to
the ten principles of the Treaty and their commitment
to integrate them into their strategy and operations
and undertaking to send an annual Communication on
Progress (CoP), which describes the actions taken by
the company to implement the principles. In turn,
when applying for membership, the non-profit
organizations also make commitments to comply
with the UNGC principles and to be ready to send a
Communication on Engagement (CoE) on a regular
basis (every 2 years), describing the organization’s
activity aimed at promoting the UNGC principles.
The UNGC participants are primarily commercial
companies, both large and small, as well as non-
governmental organizations, representatives of
authorities and the UN structures. As of early 2021,
the number of participants exceeds 13 thousand,
making the UNGC the largest CSR initiative. In early
2021, more than 12 thousand commercial companies
and more than 500 business associations have joined
the UN GC initiative worldwide
( About 90%
of them remain active. The dynamics of the joined
participants number remains steadily positive. In
2000, the initiative was launched with 44 participants
registered; in 2005 there were more than 2.2 thousand
of them, and in 2010 their number exceed 6.3
thousand, in 2015 – 8.4 thousand, and in 2019 – 10.5
thousand (UNGC, 2020, p.27). The local GC
networks are present on every continent, with their
number reaching 68, which makes it possible to talk
about the global coverage of the GC system.
According to the annual progress report, more than 77
million people work in the organizations participating
in the GC (Ibid.)
According to the UNGC report, in 2020 more than
half (54%) of the corporations from the largest global
companies list comprised by the Financial Times
participated in the initiative (Ibid.) We analyzed the
2020 ranking of the world’s largest companies, which
is regularly published by Fortune magazine and takes
such indicators into account as the revenue and profit
volume and dynamics, asset value, and the staff
number (Fortune, 2020). The results roughly
correspond to this data. Thus, out of 50 largest TNCs
from the Fortune Global-500 list (by the annual
revenue amount), 19 corporations have joined the
Global Compact, including Cinopec, Royal Dutch
Shell, BP, Daimler, AT&T, Total, Ford Motor,
General Motors, Glencore, Microsoft, and others. A
few other large TNCs are represented by their
regional divisions or subsidiaries only. In particular,
this is the case of Walmart retailer, holding the top
line in the rating, as well as of the Brazilian division
of China Construction Bank. More than half of the top
50 TNCs has not joined the initiative. These include
the largest Internet companies (Amazon, Alphabet),
high-tech corporations Samsung, Volkswagen, and
Honda, resource corporations CNCP, Saudi Aramco,
and Exxon Mobil, financial corporations, and medical
sector TNCs.
In terms of institutional arrangement and
governance, the UNGC initiative is neither a
hierarchical structure nor an organization with a
clearly defined structure. It is a mechanism for
organizing multilateral cooperation and promoting 10
Principles, which is based on the network principle.
However, the initiative features a set of tools defining
the organization and administration process of such
interaction. From 2002 to 2004, the initiative was
controlled by the Advisory Board consisting of 20
representatives of business, governmental, and non-
governmental organizations, appointed directly by
the UN Secretary-General. The Advisory Board
activities contributed to the development of a new
specific area related to combating corruption and
defining the corresponding principle.
With the GC expansion and development, a need
for new organizational mechanisms arose to ensure
achievement of the Treaty objectives. In 2005, the
Global Compact governance framework was
developed, providing for establishing several
governing bodies, including the UN Global Compact
Council chaired by the UN Secretary-General, which
acts as a strategic and political body specifying the
main directions for the initiative development. In
2017, the governing structure was updated in
compliance with the new Strategy and following
intense consulting with stakeholders. The operational
governance of the initiative is performed by the UN
GC Management (Main Office) currently headed by
S. Ojiambo.
Aimed at financing the UNGC activities, the
Global Compact Fund was established in 2006, which
provides the required financial, operational, and
software support for the initiative activities. The Fund
receives finance from the contributions from
commercial companies participating in the UN
Global Compact; in 2017, the number of key donors
exceeded 1.5 thousand
Besides, financial support is provided by
government contributions through a specially
established trust fund. The key donor states form a
Government Group that currently includes China,
Denmark, Finland, France, Germany, Italy, the
The United Nations Global Compact as a Global Governance Mechanism of Corporate Social Responsibility and Sustainable Development
Netherlands, Norway, Spain, Sweden, Switzerland,
and the United Kingdom. The Global Compact does
not receive any funds from the UN budget.
Local networks play a special role in the UNGC
structure, which include national or regional
associations of the parties to the Treaty, established to
promote its principles in particular geographical
regions. Such networks are self-governing structures
that can nominate candidates for being elected to the
GC Council and participate in activities of the
regional and global network councils.
The most important milestones of the initiative
development over the recent decades are related to its
integration with the UN sustainable development
activities. In 2015, the UN General Assembly
approved a key strategic document on sustainable
development the Sustainable Development Goals
(SDGs) (United Nations, 2015). It is an ambitious 15-
year action plan aimed at poverty eradication and
creating conditions for sustainable development. The
Plan covers 17 specific goals, which the Member
States commit to make efforts for. The document
contains such goals as poverty and hunger
eradication, healthy lifestyle, high-quality education,
gender equality, decent employment and economic
growth, responsible consumption and production,
war on climate change, etc.
Adoption of the Plan laid the basis for including
the SDGs as an important element of the Global
Compact. Since most of the goals cannot be achieved
without active and responsible participation of
business, the UN considers the UNGC as a
mechanism for involving the corporate sector in the
implementation of this plan, with the reference to the
SDGs becoming a part of the initiative’s official
A new role of the UN Global Compact was
enshrined in the Global Strategy 2020 adopted in
2017 (UNGC, 2017). This political document
outlines the key steps required to enable all the parties
to the Compact to develop an SDG-consistent
mindset and organizational culture. The strategy
involves developing the coordination between the
participants, responsible business practices, and
building a strong brand of the UNGC as a global
“platform of platforms” for accumulating and
spreading the business experience compliant with the
key principles of the treaty. According to the
developers, the Strategy was expected to result in
forming a global movement in the SDGs field among
the world’s leading companies.
To understand whether the UN Global Compact
performs the function of the global governance
mechanism, we must evaluate its normative
principles, actors and institutions in terms of their
ability to balance the interests of business and society
at the global scale, and on the principles of
multilateral, multilevel and largely horizontal
As regards the normative core of the UNGC, we
must conclude that it only partially corresponds to the
goals of global CSR. This is especially evident when
comparing the Ten Principles with other major
initiatives in CSR, such as Global Reporting Initiative
or ISO 26000 international standard (GRI & ISO,
2014). The four areas covered by the Ten Principles,
are all present in other CSR initiatives and are
considered as important indeed. However, there are
several other areas of responsibility, important for
both society and corporations’ strategic interests,
which are not reflected in the UNGC normative core.
Particularly, relations with customers and local
communities are increasingly important for
companies – and this is properly reflected in the
survey among the UNGC participants conducted by
the initiative officials (UNGC & Accenture Strategy,
2019, p.25). The fact that some of the strategically
important responsibilities issues are not reflected in
the normative system of the Global Compact,
objectively reduces its potential as a mechanism of
global governance in CSR.
As regards the actors’ composition and dynamics,
several observations are essential. The positive
dynamics and geography of the UNGC membership
indicate a gradually increasing coverage of this
initiative and, accordingly, its capability of acting as
a mechanism of governing the relations between
business and society on the global scale. At the same
time, when assessing the observed results, it is
necessary to consider not only absolute, but relative
statistics as well. Currently, the number of active
companies-participants and signatories of the UNGC
is around 12 thousand. At the same time, more than
100 thousand companies are registered in Russia
alone disregarding their branches, as well as small
businesses, financial organizations, budget and
government agencies (Rosstat, 2020). Given that only
50 organizations represent Russian business in the
GC, including business associations, the commercial
sector coverage is less than 0.05%. It is doubtful that
the system, covering such a small share of the
corporate sector, can become an effective mechanism
ISSDRI 2021 - International Scientific and Practical Conference on Sustainable Development of Regional Infrastructure
for balancing the interests of business and society and
promote the CSR principles dissemination.
It should also be kept in mind that the Global
Compact was launched more than 20 years ago and is
supported by the largest international organization,
whose status enables it to be treated as the main
contender for the role of the global governance
moderator. Despite this fact and the positive
dynamics, the total number of enterprises involved
remains insignificant across the globe, thus,
objectively limiting the possibility of using even
those simplest mechanisms being applied within the
GC for shaping the corporate policies and activities in
compliance with the CSR principles.
At the same time, when assessing the results of the
UNGC activities by the number of organizations
joined, it is necessary to consider their different scales
of operation. It is obvious that large corporations are
more influential regarding the general nature of the
relations between business and society on the global
scale, adoption and dissemination of certain CSR
practices and standards. Therefore, participation of
large TNCs is a more meaningful indicator. Even
though many of the world’s largest TNCs have
refused to join the UNGC so far, their average
involvement in the initiative is much higher than in
other business categories, including large-scale ones.
The fact that a large number of leading TNCs that
set the industry standards and rules of market
behavior participate in the Global Compact is a factor
contributing to adoption of its principles, at least
declaratively. This promotes achievement of the
UNGC goals, regardless of the extent, to which these
companies de facto follow the declared principles in
their activities.
Although the dominance of TNCs in UNGC is
important for the promotion of its principles, its side
effect is devaluation of other actors participating in
the initiative or affected by it. Many types of actors
including small businesses, NGOs, municipalities
and academic sector are underrepresented in UNGC
and especially in its governing bodies responsible for
agenda setting and policy development. Such
disbalances contradict the very idea of global
governance as multilateral, network-based
mechanism, where different voices can be heard and
decisions are made on consensus and shared values.
Finally, the UNGC should be evaluated in terms
of its institutions and their ability to ensure the
principles of global governance. The very fact that the
company participates in the Global Compact cannot
be treated as an unambiguous evidence of its
compliance with its principles in practice and with the
CSR concept in its everyday activities. Nevertheless,
the decision to participate in the UNGC system and
make certain commitments is an indirect indicator of
companies’ recognition of CSR as a strategically
important field of activity.
In terms of achieving the Global Compact goals,
regular reporting is more important than a formal
declaration of commitment to the principles (Amer-
Maistriau, 2009). Unlike the latter, it requires some
effort from the company to justify how its policies
have changed and contributed to sustainable
development. Regardless of the extent to which the
information contained in the progress report is true,
participation in the preparation and reporting means
involvement in governance, even in its simplest and
most passive forms.
The Global Compact institutional infrastructure
creates conditions for interaction between various
groups of actors (large and small businesses, non-
profit organizations, governments, and international
organizations) at various levels: from local (national)
networks to global ones. Within the UNGC system,
certain mechanisms have been created for addressing
a wide range of management tasks: defining the
global CSR principles and goals, transferring
knowledge, and exchanging experience, adopting
voluntary commitments, and publishing reports,
cooperating, and coordinating various stakeholders’
opinions and activities. By operating within the UN
system, the initiative gains high-quality management
and organizational support, access to the decision-
making system for supreme global political decisions,
a high expertise level, and strong brand.
At the same time, the UNGC has important
system limitations. Stakeholders have unequal
opportunities to represent their interests and
participate in policymaking. The existing system
promotes preferential representation of TNCs and the
UN to the detriment of many other actors (SMEs,
local NGOs, employees and trade unions, the research
community, consumers, local communities). Such
unequal influence and actors’ capabilities endanger
provision of the UNGC system with unbiased
expertise and assessments, as well as shifting
institutional mechanisms in favor of the most
influential actors’ interests. Most of the UNGC
participants are deprived of real opportunities to
participate in forming the regulatory core of the
initiative and influence the programs and
recommendations content. The existence of serious
structural constraints creates prerequisites for
reducing the UNGC effectiveness and efficiency.
The United Nations Global Compact as a Global Governance Mechanism of Corporate Social Responsibility and Sustainable Development
The UN Global Compact is one of the most ambitious
attempts to create a global governance system of
business-society relations. Reflecting the Sustainable
Development Goals at the corporate level, it strives to
create a flexible self-regulating CSR system in such
fields as human rights, labor relations, environmental
protection, and anti-corruption. The key advantage of
the UNGC as a global governance mechanism is its
reliance on institutions and reputation of the UN as a
leading platform for international dialogue.
In many important aspects UNGC corresponds to
the idea of global governance. It has a consensual
normative foundation, voluntary participation of key
stakeholders, the independent local networks ensures
the multilevel coordination and importance of
horizontal interactions, and it relies mainly upon
‘soft’ governance methods. However, it also has
several important structural limitations. They include
unequal representation of stakeholders with the
dominance of TNCs an UN-related structures, limited
coverage of the CSR issues by the Ten Principles, a
number of important governance functions
(implementation of the UNGC principles and
policies, assessment and monitoring of compliance
with these principles, moderation of stakeholder
relations, conflict resolution) not being provided by
the existing mechanisms.
Despite these limitations, UNGC is an important
attempt to develop a global governance mechanism to
address the increasingly important issues of global
CSR. Its basic institutional infrastructure and steadily
growing population of participating companies and
organizations create opportunities for further success
and the promise to develop a truly self-regulatory
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ISSDRI 2021 - International Scientific and Practical Conference on Sustainable Development of Regional Infrastructure