RI response to global campaign for good corporate governance

Budiono Kusumohamidjojo, Jakarta

The United Nations launched the operational phase of the Global Compact on July 26, 2000. The UN Secretary-General Kofi Annan proposed the Global Compact at The World Economic Forum in January 1999. The Global Compact challenged business leaders to join an international initiative with the UN agencies, labor and civil society to work on nine principles (which have since grown to 10) to work toward better conditions in the fields of human rights, labor and environment.

The concept aims at managing global growth in a responsible manner for the interest of a broad spectrum of stakeholders that, in the end, would involve all peoples of the world. In essence, the ten principles focus on business practices that should lead to better respect for human rights, make labor circumstances more humane and deal with the environment more responsibly.

The Global Compact is a mechanism that works through the Global Compact Office at the UN in cooperation with the United Nations High Commissioner for Human Rights (UNHCR), the United Nations Environment Program (UNEP), the International Labor Organization (ILO) and the United Nations Development Program (UNDP).

Besides relying on the UN, the Global Compact seeks to involve governments, companies, labor and civil society organizations to work toward the objective whereby "business can be part of the solution to the challenges of globalization".

Although the concept is an effort to amplify the reasoning that doing business responsibly is the right thing in a business perspective, it apparently attempts to "drag" the business community into endeavors to solve daunting problems emanating from the inevitable process of globalization.

There is no doubt that globalization has its benefits. The problem is, only a few fortunate ones are enjoying the fruits, mostly those working in the business field. This fact has contributed to the continuously widening gap between the powerful and the haves of the world on the one hand and the desperate masses on the other hand.

No wonder responsible Indonesian leaders are scrambling to find the best ways and means to cope with the effect of globalization. Therefore, the Global Compact should be conceived in this respect as an attempt to revitalize social ethics in the business realm and to remind the business community that they have a set of ethical responsibilities vis-a-vis people and the environment in a global perspective.

Albeit rather slow, leaders of the most affluent countries have come to recognize that their societies cannot exist peacefully side by side with countries suffering under poverty.

This was underlined when an African leader put it in a straightforward manner while responding to the G-8 summit at Gleneagles in Scotland recently: you cannot build a firewall to isolate Africa and its problems from the rest of the world. The global trend of urbanization has proven that perennial suffering in many parts of the world would somehow eventually spill over to territories that are more prosperous.

Although it is an accepted truism that poverty is as old as human history, the same holds for aspirations and ventures toward overcoming human sufferings. Mankind has always been striving toward better achievements in medicine and food production in order to quell human sufferings and poverty.

Unfortunately, these endeavors are not always in line with the drive for economic power and wealth that have always been instrumental in achieving political power and regional or even global dominance. Nonetheless, businesspeople have rarely been involved in institutionalized efforts to overcome crises where political actors have failed. This situation seems to have commenced a change, however, and this change should not sideline Indonesia as an exception.

Although the UN is infamous for producing numerous resolutions via the General Assembly that mostly have failed to sell in a world that becomes more and more troubled, the Global Compact might fit into a new strategic setting in world history. To date about 1,000 world-class companies along with numerous labor and civil society organizations have joined the Global Compact network, and the rate of participation tends to be increasing.

Being a network, it relies on the inescapable demand for public accountability, transparency and the enlightened self- interests of companies, as well as of labor and civil societies. Sooner or later, Indonesia's business community will be compelled to abide by this pattern of doing business as well.

It is indeed high time that we now also get businesspeople involved in institutionalized endeavors toward coping with poor conditions in respect of human rights, labor and depletion of the environment. This is particularly relevant for Indonesia as we do not avail over a good record in all these three sectors of governance.

There is no doubt that Indonesia's business community cannot escape its obligation to take part in this movement, particularly as business practices in Indonesia still fall short of reasonable, let alone, best practices.

It is true that resonance of the Global Compact in Indonesia is still in its embryonic level. Though, large companies have indeed started to give more attention to the need for improving standards on human rights, labor and environment. Not all do so necessarily in respect of the Global Compact, however. While companies with international networks have started to implement business standards commensurate with requirements of the Global Compact, others do so mostly because they simply cannot escape stakeholders' demands.

As businesspeople know best how to work efficiently and effectively towards accumulating wealth, we cannot expect that they also know the best way to increase prosperity and distribute wealth more evenly. It is indeed a field where political leaders and army generals have apparently failed to perform.

As involvement of business actors in the Global Compact is increasing, perhaps the Indonesian Chamber of Commerce and Industry (Kadin) can take the lead in the initiative for the Indonesian business community to share its part in this global mission. If Kadin does not take the lead to make "business part of the solution to the poverty that Indonesia has to cope with", who else can?