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Coca Cola, UN Global Compact & Tharoor

Written By Gopal Krishna on Wednesday, April 01, 2009 | 12:53 AM

In March 2006, the UN Global Compact issued a statement noting that Coca-Cola Company has announced that it has officially joined the United Nations Global Compact, the world’s largest voluntary corporate citizenship initiative. Coca-Cola Chairman and Chief Executive Officer E. Neville Isdell informed UN Secretary-General Kofi Annan of the company’s commitment to the Global Compact and its ten principles during a meeting at United Nations Headquarters. The statement also noted that Coca Cola is the world's largest beverage company. Along with Coca-Cola, recognized as the world's most valuable brand, the Company markets four of the world's top five soft drink brands, including Diet Coke, Fanta and Sprite, and a wide range of other beverages, including diet and light soft drinks, waters, juices and juice drinks, teas, coffees and sports drinks. Through the world's largest beverage distribution system, consumers in more than 200 countries enjoy the Company's beverages at a rate exceeding 1.3 billion servings each day.

It is no secret that Business Enterprises in general and Multinational Enterprises in particular do indulge in ethical positioning of their brands through their hollow corporate social responsibility initiatives. NGOisation of such efforts by companies has been underway for quite some time.

Prior to his resignation, Shashi Tharoor defended his association with Coca-Cola India Foundation saying, "I serve, alongside several renowned social activists and human rights leaders, under the chairmanship of the former Supreme Court Chief Justice and former Chairman of the National Human Rights Commission, Justice J.S. Verma, on the advisory board of a purely philanthropic organization.” Is Tharoor really so naive as to believe it is “a purely philanthropic organization”?

Tharoor urges us to look at the "the difference between the Foundation and the company." Is it really the case that the interest of a company's Foundation and company itself really different? Isn’t there a manifest conflict of interest?

Like many such corporate Foundations , Tharoor informs defensively that. "The Foundation is financed by the Coca-Cola Company as part of its corporate social responsibility, which is a practice that I have encouraged around the world since my United Nations days, when UN Secretary-General Kofi Annan launched the “Global Compact” to encourage corporations around the world to adhere to certain globally-accepted principles and practices."

It must be noted that the emptiness of UN's Global Compact that was announced by Kofi Annan in January 1999 at the World Economic Forum in Davos and officially launched at UN headquarters in New York in July, 2000 has been exposed by the “UN Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights” approved in August, 2003, by U.N. Sub-Commission on the Promotion and Protection of Human Rights resolution. The Compact is an impotent voluntary guideline based on nine principles of human rights, labor standards and environmental protection and adherence to it depends on the whims and fancies of the companies based on nine principles. Theoretically, companies cannot become signatories of the UN Global Compact if they violate human rights, tolerate forced or child labor, manufacture or distribute anti-personnel mines, or violate other relevant commitments of the UN. In practice, the UN does not have the wherewithal to check compliance or non-compliance with the UN Global Compact. Not surprisingly, no company has been removed from UN Global Compact membership because of guideline violation. In effect, UN has allowed the sale of its logo (blue-washing) in the interests of major corporations like Nestle, Shell, Nike, Rio Tinto and BP Amoco whose poor track record with regard to commitments to environmental sustainability, social protection and human rights is well known.

On the other hand UN Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights was a step to ensure corporate accountability. According to Article 14 of the UN Norms drafted by Prof. David Weissbrodt and other co-authors as member of the UN Sub-commission on Human Rights, transnational corporations and other business enterprises are responsible for the environmental and human health impact of their activities. Article 18 of the Norms called on transnational corporations and other business enterprises to make reparations for damage done through their failure to meet the standards spelled out: "Transnational corporations and other business enterprises shall provide prompt, effective and adequate reparation to those persons, entities and communities that have been adversely affected by failures to comply with these Norms through, inter alia, reparations, restitution, compensation and rehabilitation for any damage done or property taken. In connection with determining damages, in regard to criminal sanctions, and in all other respects, these Norms shall be applied by national courts and/or international tribunals, pursuant to national and international law."

Article 17 calls on states to have in place the necessary legal and administrative framework to give effect to the Norms: "States should establish and reinforce the necessary legal and administrative framework for ensuring that the Norms and other relevant national and international laws are implemented by transnational corporations and other business enterprises."

But in July 2005, in an effort to ensure that corporations do not have to follow any mandatory norms and escape corporate accountability Kofi Annan appointed Prof. John Ruggie to be Special Representative of the UN Secretary-General on business & human rights under the manifest influence of International Chamber of Commerce (ICC) and the International Organization of Employers (IOE), non-governmental organizations in general consultative status with the UN who had submitted a joint written statement saying, UN Norms “are counterproductive to the UN's ongoing efforts to encourage companies to support and observe human rights norms by participating in the Global Compact; and they risk inviting a negative reaction from business, at a time when companies are increasingly engaging in voluntary initiatives to promote responsible business conduct.”

It further said, “The binding and legalistic approach of the draft norms will not meet the diverse needs and circumstances of companies and will limit the innovation and creativity shown by companies in addressing human rights issues in the context of their efforts to find practical and workable solutions to corporate responsibility challenges. The approach taken by the draft norms is bound to conflict with company policies and practices based on history, culture, philosophy and laws and regulations of the countries in which they operate. To be effective and relevant to a company's specific circumstances, business principles and responsibilities should be developed and implemented by the companies themselves.”

Adding, “Indeed, the IOE, ICC and their member companies are already demonstrating their commitment to encourage good corporate practice and responsible business conduct through actions taken by individual companies -- as well as through their participation in the Global Compact, their constructive contribution to the revised OECD Guidelines for Multinational Enterprises, and various other initiatives such as the Global Sullivan Principles. The IOE and ICC strongly believe that the establishment of the legal framework for protecting human rights and its enforcement is a task for national governments. Indeed, to the extent that the draft norms divert the attention and resources of national governments away from implementing their existing obligations on human rights – obligations intended to protect all citizens not just those doing business with foreign enterprises – they would do more harm than good. The IOE and ICC recognize nonetheless that, beyond being obligated to act in accordance with the laws and regulations of the countries within which it operates, business has an interest in encouraging the improvement of social conditions, which are an important factor for stable development, and in providing an example of good human rights practices.”

IOE and ICC submitted conclusively that “the way to ensure a greater business contribution to social progress is not through more – and more prescriptive – norms and regulations. Voluntary business initiatives, be they formal or informal, play an important role in bridging cultural diversity within companies and in enhancing awareness of societal values and concerns. This is primarily a matter of persuasion and peer pressure rather than prescription.”

Subsequently, John Ruggie the United Nations Secretary-General's Special Representative for Business and Human Rights killed the UN Norms of on Transnational Corporations. In February, 2006, Ruggie had submitted an interim report to the UN Commission on Human Rights wherein he noted that the Norms would “undermine efforts to build indigenous social capacity and to make Governments more responsible to their own citizenry.”

It was after the submission of the interim report that Coca-Cola Company that it has officially joined the United Nations Global Compact, the world’s largest voluntary corporate citizenship initiative. How about ensuring compliance with Criminal Procedures Codes and Penal Codes voluntary? Why should there be a distinction between corporate criminals and petty criminals?. Aren’t likes of Ruggie and Tharoor supported UN Global Compact supporting voluntary regulation and corporate social responsibility of likes of Bernard Madoff who is notorious for $50 billion investment scandal or Ramalinga Raju’s scam that exposed PricewaterhouseCoopers supported Satyam company that was ranked 185 of the Fortune 500 companies and which won Golden Peacock award given by the London-based World Council for Corporate Governance.

After the submission of the final report in April 2008 titled “Protect, Respect and Remedy: a Framework for Business and Human Rights” that in effect mutilated and butchered the UN Norms on corporate accountability, Ruggie underlined the need for voluntary regulation and self compliance by the companies saying, “While corporations may be considered “organs of society,” they are specialized economic organs, not democratic public interest institutions. As such, their responsibilities cannot and should not simply mirror states’ duties, as the draft Norms would have had it” in an interview to Compact Quarterly published by Global Compact.

While corporate funding of political parties and the consequent benefits reaped by the companies and politicians amassing wealth in Switzerland is not a secret but the secrecy about the names of individuals and companies that is in the process of being revealed to the discomfort of Swiss Banking Association and other tax havens makes a case for mandatory and transparent regulations as proposed by the Norms and not the voluntary approach advocated by Ruggie, ICC, IOE and the dinosaurs of pre-financial crisis era.

Coca-Cola company has been using 3.8 litres of freshwater to generate a litre of carbonated drink, it has been entering into long-term partnership with the World-wide Fund for Nature and supporting of $1 million to the Global Water Initiative among other things. In an interview to Business Line, Shashi Tharoor was asked:"About your recent resignation from membership of the Advisory Board of the Coca-Cola India Foundation. Do you think you were wrong initially in trying to defend the company in Kerala? Were you misguided (by the company) initially?"

Tharoor responded, "I was not misled. It was not that at all. I resigned on the 14th of March and it was not as soon as the controversy erupted either. Some controversy does not bother me. But by March 14 it was clear to me that I would be a candidate from either Palakkad or Thiruvananthapuram. So I said it was not reasonable for me to continue with that politically controversial engagement. I would rather be free to speak my own mind... But on the merits of my defence, it was not so much of a defence of the company as a regretful response to the tone of a letter that was sent to me."

The fact remains that resignation of Tharoor from the Advisory Board of the Coca-Cola India Foundation is incomplete until and unless he denounces the UN Global Compact that was cited by him while defending his presence on the Coca Cola India Foundation Board.
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