Compliance on the UN Global Compact
Citra Hennida
Department of International Relations, Universitas Airlangga, Jl Airlangga 4-6, Surabaya, Indonesia
Keywords: Compliance, UN Global Compact, Reputation, Positive Incentives.
Abstract: The UN Global Compact is an international regime established in July 2000 by Kofi Annan, the UN secretary-
general at the time. The UN Global Compact was formed as an effort to involve corporations in development.
In the journey, the UN Global Compact is much criticized because it is considered more profitable
corporations and lack of compliance due to the absence of sanctions in it. However, the number of
participating companies and countries is increasing every year. Recorded until May 2017, there are 9,388
companies, 165 countries, and 45,581 public reports have been produced. From here it comes the question of
whether sanctions are needed to ensure compliance with the regime. I argue that sanctions are not the only
reason for the regime to adhere to. Using instruments developed by Chayes and Chayes (1993) and Jacobson
and Weiss (1995), I found that there were considerations of reputation and positive incentives expected by
participants by taking part in the international regime.
1 INTRODUCTION
The Secretary General of the United Nations, Kofi
Annan, addressed the UN Global Compact in his
speech in the Davos World Economic Forum in
January 1999. He challenged business leaders to join
a global compact of shared values and principles and
to provide globalization a human face. He added that
shared values provide a stable environment for world
market. Additionally, shared values help business
from antipathy acts such as protectionism, populism,
fanaticism and terrorism.
The UN Global Compact is the largest corporate
initiatives to voluntarily support human rights, good
labour practices, environment protection and fighting
corruption. The Global Compact is coalition to make
globalization work for all involving corporations,
leaders of labour and civic groups, consortium of
NGOs from developing countries, and the UN (ILO,
UNDP, UNEP, OHCHR, UNIDO, and UNODC). It
also learning network that attempt to reach a broad
consensus on good corporate practices. Last, the
Global Compact is set as the global extended level of
corporate social responsibility (CSR).
The ten principles of the Global Compact focus on
human rights, labour rights, concern for environment
and anti-corruption. Principles are taken directly from
commitments made by governments at the UN: the
Universal Declaration of Human Rights (1948); the
Rio Declaration on Environment and Development
(1992); the International Labour Organization’s
Fundamental principles and Rights at Work (1998);
and the UN Convention Against Corruption (2003).
The ten principles that business should do are: (1)
supporting and respecting the protection of
internationally proclaimed human rights within their
sphere of influence; (2) making sure that they are not
complicit in human rights abuses; (3) upholding the
freedom of association and the effective recognition
of the right to collective bargaining; (4) the
elimination of all forms of forced and compulsory
labour; (5) the effective abolition of child labour; (6)
elimination of discrimination in respect of
employment and occupation; (7) supporting a
precautionary approach to environmental challenges;
(8) undertaking initiatives to promote greater
environmental responsibility; (9) encouraging the
development and diffusion of environmentally
friendly technologies; (10) working against
corruption in all its forms including extortion and
bribery.
The Global Compact was designed as voluntarily
initiative. A company subscribing to the principles is
invited to make a clear statement of support and must
include some reference in its annual report or other
public documents on the progress it is making on
internalizing the principles within its operations. The
company must submit its report to the Global
Compact website. Failure to submit within two years
will result in being removed from the list of
184
Hennida, C.
Compliance on the UN Global Compact.
In Proceedings of the 2nd International Conference on Sociology Education (ICSE 2017) - Volume 1, pages 184-189
ISBN: 978-989-758-316-2
Copyright © 2018 by SCITEPRESS – Science and Technology Publications, Lda. All rights reserved

participants. The Global Compact is not designed as
a compliance-based organization. The Global
Compact established several procedures for
businesses to demonstrate their commitment and
initiatives and to facilitate learning processes
concerning the ten principles. These procedures assist
in tracking the learning process of a company
coincide with all necessary subsystems.
There are some critics on the Global Compact.
Some argues that global compact as political
concordance to multinational companies’ criticism.
They use Global Compact as an effort to protect
multinational company’s brand and the Global
Compact function as a “blue wash” for corporate
branding. The Global Compact was criticized for
enhancing the image and legitimacy of big business,
rather than enforcing social and environmental
standards. Likewise, the Compact can expel members
for violations but it does not have a regular
monitoring and verification feature.
Even though there are many critics on the Global
Compact, it develops enormously. Recorded until
May 2017, there are 9, 388 companies, 165 countries,
and 45,581 public reports have been produced. From
here it comes the question of whether sanctions are
needed to ensure compliance with the international
regime. By taking the case in developed and
developing countries, I argue that sanctions are not
the only reason for the regime to adhere to. Using
instruments developed by Chayes and Chayes (1993)
and Jacobson and Weiss (1995), I found that there
were considerations of the reputation and positive
incentives expected by participants by taking part in
the international regime.
2 COMPLIANCE ON
INTERNATIONAL REGIME
As an entity that is followed voluntarily, the
sustainability of the international regime depends on
its members’ compliance. It is necessary to have a
bond or rule that can regulate or control the actor's
behaviour. This bond is set in an international regime.
But by joining the international regime does not mean
that the actor will always follow the rules or
regulations set automatically. Oran Young (1979 in
Simmons 1998) said that compliance can be said to
occur when the actual behavior of a given subject
conforms to prescribed behavior, and non-
compliance or violation occurs when actual behavior
departs significantly from prescribed behavior.
Meanwhile, non-compliance is when the real
behavior differs significantly from the expected
behavior. Thus it can be said that obedience is an
attitude where the existence of individual behavior
that obeys the rules established, without any coercion.
Chayes and Chayes (1993) are somewhat
different from Young. They emphasize that
compliance issues are not the presence or absence of
coercive mechanisms. The regime is not adhered to
because of management problems. Management
problems such as regimes contain ambiguous
sentences; lack of actor’s capacity (administratively,
technically and financially) for the implementation of
the regime; the social and political conditions at
which the regime is formed are irrelevant to the time
at which the regime is formed and adhered to; as well
as limited government agenda and priorities. Beyond
management issues, Chayes and Chayes (1993) also
add a personal interest factor that affects the
obedience or not of the actor.
On the contrary, a regime will be adhered to
because it is influenced by several driving factors,
namely efficiency, importance, and norms (Chayes
and Chayes 1993). First, efficiency is referred to as
being able to encourage the application of a regime's
policies because each member of the regime must
effectively and sustainably adhere to the established
rules so that the decisions can run efficiently and a
regime can produce an action and a real action in its
function as an international institution. Second,
interest is an absolute thing that is brought by each
country in forming a collective agreement, so that a
country does not need to join an agreement if the
direction and purpose of the agreement is against its
interests. Third is the existence of a fundamental
international legal norm pact sunt servanda
(agreement must be kept), describing that the
countries must obey an agreement involved.
Jacobson and Weiss (1995) established three
categories of international legal strategies to foster
adherence. First, provide a negative incentive in the
form of a penalty, sanction, or withdrawal from an
exclusive membership. Second, apply sunshine
methods such as monitoring, reporting, transparency,
and involving NGOs. This sunshine method focuses
on reputation, that the actor will respond when it is
associated with his reputation in international
relations. Third, provide positive incentives in the
form of financial and technical assistance, access to
technology, and provision of training. This strategy is
based on the idea that compliance issues are caused
by a lack of capacity to make them obedient.
Subsequently there are four categories linking the
state's desire to obey and the capacity to do: (1) a
country that has the desire and capacity to obey; (2) a
country that desires to adhere to low but has capacity
Compliance on the UN Global Compact
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to do so; (3) a country that has a desire to obey but
has low capacity; and (4) a country that has no desire
to be obedient and has no capacity. For the first
category, the implementation of the sunshine strategy
is deemed appropriate where supervision is carried
out by the state government as well as by non-state
actors. Sanctions can be an option, mainly to ensure
that the state does not change its commitments. In the
second category, giving incentives is more
appropriate. Another option is to apply sunshine. In
the third category the right strategy is to apply
sanction and application of sunshine as an alternative.
In the last category, the implementation of the three
strategies is considered necessary.
The concept of compliance with international
organizations differs from international law (Downs,
Rocke, and Barsoom 1996). The concept of
compliance in international organizations further
explains how countries can form a relationship in
cooperation, without coercion in it. Compliance here
is more emphasis on further cooperation in order to
apply effectively. Downs, Rocke, and Barsoom
(1996) add that non-compliance can occur when
international cooperation begins to be ambiguous as
well as non-transparency between its members. On
the contrary, state compliance will be high in
international cooperation when there is an
atmosphere of building transparency, and so on in the
relationships among its members.
Furthermore, to see the compliance of a country
can be seen from the achievement of the function of
international organizations. If the function is running
and achieved, then it is possible that its members have
a high level of compliance. Compliance here is a
similarity between the behaviour of state actors and
the previously ordered behavioural rules (Young in
Simmons 1998). While effectiveness is how
successful organizations are formed by these
countries in achieving its objectives or addressing the
initial issues underlying the establishment of the
organization. That is why organizational
effectiveness, though not entirely the result of state
compliance, but compliance also influences
effectiveness. But keep in mind is that if the function
of the organization can not be achieved effectively
does not mean that its compliance is low. Especially
if there are violations or abnormal conditions that
hinder the achievement of organizational functions
that the organization can not overcome even if the
state is compliant. That is, these two things do not
always go hand in hand or have a causal interaction.
Full member compliance with organizational rules
does not necessarily make the organization achieve its
ultimate goal; and vice versa, organizational success
is not always only due to the compliance of member
states. Young (in Downs, Rocke, and Barsoom 1996)
says it is more of a management issue than
enforcement.
Chayes and Chayes (1993) describe the
difficulties that arise on compliance. First,
compliance is difficult to measure empirically
because the state on an issue can be adherent to a
particular situation, but in different circumstances it
may be that it is not compliant even though the issue
is the same. This is because the state essentially aims
to pursue its interests. But compliance can be
predicted by recognizing the assumptions.
Assumptions are not understood as true false but as a
form of adaptation to a particular problem. Second,
compliance issues do not necessarily imply a decision
to violate international commitments. There are many
reasons why the state denies its international
obligations and why in some circumstances those
reasons are accepted by many. Third, the overall
treaty regime need not be seen as compliance
standard but as an acceptable level of compliance or
in line with the interests of the state. So speaking of
compliance is talking about the level of acceptance,
how the level of acceptance is determined and
adjusted.
Several important points, one of which is the
aspect of interest and efficiency, support the
argument that countries tend to comply with an
international organization. State ratification of a
treaty must have passed the procedures and
considerations mature and have been in accordance
with the interests being pursued by the country.
Therefore, when the state enters the organization, it
will comply with all rules that have been established
to achieve its interests earlier. Chayes and Chayes
(1993) also explained that in the process of
consideration of the ratification of an agreement, the
state undergoes a learning process in which the
interests and position of the state begin to change
gradually in accordance with the new conceptions
offered in international organizations as well as
adjustment of these positions and interests with rules
and regulations agreed in the organization. In the
efficiency aspect, international organizations are an
efficient means for countries to engage multinational
in a forum. In addition, decisions taken within an
international organization are certainly more efficient
because all members then carry out the decisions
jointly and the division of tasks is done equally. Thus,
if all member states adhere to established rules,
efficiency in policy implementation and the
achievement of collective goals will be achieved.
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Background assumptions can be taken on the
basis of the following considerations. First is
efficiency. Every decision is cost-effective, therefore
chosen the most urgent and most profitable. Every
commitment to an international agreement is
considered calculated and there is always an
alternative calculation of it. Second is the interest.
The state is involved in international regimes and
organizations because it is appropriate and can
support its interests. This is understood also in the
mechanism of international law, which states that the
state cannot be bound without any prior consent. It
should be understood also that in an agreement is not
black and white between signatures or not
The next question is then what can be done.
Management theories suggest that punishment does
not even need to be done because the cost is too big,
too political, and too pushy (Downs, Rocke, and
Barsoom 1996). Young added that coercive
mechanisms for compliance are also rare or unusual
in international interactions. Chayes and Chayes
(1993) add that the sanctions legitimacy is questioned
because sanctions are only successful when applied to
a weak state and unilateral sanctions can only be done
by a large country. Furthermore, sanctions also harm
the emergence of future cooperation.
Therefore, disobedience is more of a problem to
be solved together than seen as a form of offense that
must be punished and sanctioned (Downs, Rocke and
Barsoom 1996). Downs, Rocke, and Barsoom (1996)
suggest three strategies that can be used to achieve
compliance while maintaining cooperation: (1)
improving dispute resolution procedures; (2) provide
technical and financial assistance; (3) increase
transparency. While Chayes and Chayes (1993) say
that to overcome the problem of non-compliance then
what is needed is a mutually beneficial consultation
that emphasizes the persuasion and argumentation.
3 BEYOND SANCTION
From the above explanation it can be concluded that
the compliance of members in the international
regime is not merely with coercive measures such as
sanctions. There are two other decisive things. Firstly
by providing sunshine policies that focus on
improving the reputation of the actor. This sunshine
policy can include monitoring, reporting,
transparency, and NGOs engagement. The second is
to provide positive incentives such as financial and
technical assistance, access to technology, and
training.
4 SUNSHINE’S POLICY AND
REPUTATION
Sunshine's policy focuses on improving the
reputation of the actor. This sunshine policy can
include monitoring, reporting, transparency, and
NGOs engagement. The Global Compact provides a
reputation for the company. The values promoted by
the Global Compact are universal values such as
human rights, labour standards, environmental
stewardship and the fight against corruption. Sharing
that universal value will enhance the company image
and strengthen the brand. The Global Compact also
reduces many negative publications by non-state
actors. The Global Compact connects companies with
state and non-state actors such as environmental
activists, working groups and human rights based
organizations. Engaging and consulting these actors
can avoid the negative publicity of these groups,
especially for companies operating in countries that
have tremendous human rights violations (Potoski
and Prakash 2005). The company's vulnerable
position also exists in companies engaged in
extractive industries where the country's host is very
large and prone to corruption. Here, the Global
Compact not only benefits in improving the negative
reputation of non-government actors but can also
protect the company from corrupt behaviour of state
actors.
It was said at the beginning that the Global
Compact was not designed as a compliance-based
international regime. Instead, the Global Compact
provides rules and procedures for businesses to make
what they do in accordance with the ten principles of
the Global Compact. The Communication on
Progress (COP) is the main thing that shows the
company's commitment to be involved in the UN
Global Compact. COP shows the reporting and
transparency process that has been done by the
company. COP is reported through the website. For
companies from OECD countries COP is collected no
later than one year after they are incorporated in the
Global Compact. As for companies coming from non-
OECD countries, the submission of COP is not later
than three years after they are incorporated in the
Global Compact.
Although there is no specific format in the COP,
the COP at least contains a statement from the chief
executive to continue to commit to the Global
Compact, any description that has been made by the
company related to the 10 principles, and includes a
measurement tool to achieve outcomes. The company
is then divided into three categories based on its COP
report. The lowest category is the GC Learner where
Compliance on the UN Global Compact
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the COP has not met the minimum requirements. The
second level is GC active where the COP is compiled
to meet minimum standards. The top level is GC
advanced where COP has complied with minimum
standards plus an explanation of implementation and
best practices.
This COP is transparent and accessible to all
members and other stakeholders. COP at the same
time responds to the demands of transparency from
key stakeholders such as investors, community
groups, governments and consumers. Companies can
communicate steps that have been and will be made
to support commitments to human rights, labour
standards, environmental protection, and anti-
corruption. The public can read it in the company
profile, which has not been done much before. The
Global Compact also encourages members to always
communicate the principles that exist within the
media communications owned by companies such as
press releases, speeches, etc.
5 POSITIVE INCENTIVES
Positive incentives are diverse, such as financial and
technical assistance, access to technology, training,
and consulting. By joining the Global Compact, the
company can meet with other companies, NGOs, UN
agencies, and other government organizations. This
allows for access to technology, training and
consultation. It also reduces transaction costs when it
comes to communicating separately. The Global
Compact provides engagement mechanisms,
including policy dialogues, learning, local networks
and partnership projects such as the UN Global
Compact Leaders’ Summit, the UN Private Sector
Forum, the UN Forum on Business and Human
Rights.
The Global Compact provides a framework of
reference for best practices sharing by companies that
fall into the advanced GC category. In addition, the
company will become more careful because of the
transparency nature of the reports made within the
framework of the Global Compact. The Company
conducts discussions and consultations related to the
compact-related activities undertaken. The media and
NGOs oversee accountability reports. So when
companies fail to meet existing ethical standards, the
public will criticize them through media and NGOs.
This criticism can appear as a trigger for the company
to do better for example what Royal Dutch / Shell and
Nike do. Royal Dutch / Shell made major policy
changes and business practices after getting criticized
for its activities in Nigeria (Paine 2003). Nike had
previously been heavily criticized for sweatshop
practices in several countries. Reflecting on the Nike
case, multinational corporations are now also
required to oversee business practice in supply chains
to avoid sweatshop practices (Giron 2003). In the
SDG Compass reporting guide (SDG Compass) for
example, the UN Global Compact describes the steps
that can be taken by the company as well as the supply
chains underneath it to create a humane working
environment and adequate wages such as the
availability of breastfeeding places, smoke free
environment, leave childbirth, loans and insurance for
workers.
6 CONCLUSIONS
The UN Global Compact is an international regime
established in July 2000 by Kofi Annan, the UN
secretary-general at the time. The UN Global
Compact was formed as an effort to involve
corporations in development. The Global Compact
engages firms with a set of actors that includes states,
environmental groups, labour unions, and human
rights organizations.
The Global Compact is voluntary initiatives and
does not have authority to enforce sanctions. Rather,
it is designed to stimulate behaviour change and share
businesses’ innovative practices. Even though there is
no sanction mechanism, recorded until May 2017,
there are 9,388 companies, 165 countries, and 45,581
public reports have been produced. Research finds
that sanctions are not the only reason for the regime
to adhere to, there were considerations of reputation
and positive incentives expected by participants by
taking part in the international regime.
REFERENCES
Chayes, A., Chayes, A. 1993. “On Compliance”.
International Organization, 47(2): 175 – 205
Downs, G., Rocke, D., Barsoom, P. 1996, “Is the good news
about compliance about cooperation?”, International
organization, 50(3): 379-406.
Giron, Lisa. 2003. “Nike settles lawsuit over labor claims”.
Los Angeles Times, 13 September 2003
Jacobson, H., Weiss, E. 1995. “Strengthening Compliance
with International Environmental Accords: Preliminary
Observations from a Collaborative Project”. Global
Governance,1(2): 119-148.
Paine, Lynn Sharp. 2003. Value shift: why companies must
merge social and financial imperatives to achieve
superior performance. New York: McGraw-Hill
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Potoski, Matthew., Asem Prakash. 2005. “Green Clubs and
Voluntary Governance: ISO14001 and Firms’s
Regulatory Compliance.” American Journal of
Political Science. 49(2): 235-248.
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