‘Global Compact’ is a United Nations program comprising of principles regarding such elimination of corruption, adopting environment friendly measures, good governance, and international labor standards. The United Nations’ ‘Global Compact’ is a program which aligns corporate business operations, goals and strategies with its strategic policy initiatives. This alignment encourages both parties to develop, adopt, and implement universally accepted principles in the main areas of good governance, labor, human rights, and environment. The initiative’s main aim is to provide voluntary corporate citizenship with the United Nations and its agencies.
HSBC became a signatory member of the ‘Global Compact’ in the year 2000. HSBC signed to the commitment of the embedded principles of the ‘Global Compact’. HSBC has a global experience as the ‘World’s local bank’. It has over 9500 offices located in over 80 countries with a workforce of over 300,000 employees. HSBC has made tremendous efforts to comply with UN ‘Global Compact’ principle number six, which is: elimination of discrimination in respect to employment and occupation.
HSBC has endeavored through its business practices to comply with global compact principle number six by implementing its corporate social responsibility (CSR) through embracing diversity. The bank is aware that it is ‘world local bank’ and that the world is rich in heritage. The bank has to appeal to its customers of every culture and to do so they need to utilize the value and the power of diversity. The diversity of the customers and in local communities means that HSBC workforce has to reflect the reality of the market. Citigroup, despite being a direct competitor of HSBC, has also aligned its business operations with principle number six of Global Compact.
Citigroup was the first US major bank to sign the world largest and universally accepted corporate citizenship initiative the ‘Global Compact’. Citigroup is a bank with its global tentacles in well over 100 countries and a customer base of 200 million and counting. The bank established a strong diversity program for its employees. It includes 54 different networks for women, persons with disabilities, multicultural network among many other networks.
HSBC has also worked towards the seventh principle, which is environment related. The principle aspires for businesses to support precautionary approaches to environmental challenges. HSBC has developed an environmental management system which, despite being on its infancy stage, is already in place in over 10 countries. In 2000 HSBC launched ‘Investing in Nature Program’, which is a partnership with WWF and EarthWatch.
In 2003 Citigroup was actively involved in development of Equator Principle. This was a voluntary initiative for industries to set guidelines for financing and management of environmental and social risks projects globally. In the year 2010 Citigroup elected the chair of the Equator Principle Steering Committee. Citigroup also implemented Environmental and Social Risk Management (ESRM) policy. The policy had incorporated much of what was advocated and promoted by ‘Global Compact’. It included safeguarding of the human rights, corruption, environments, and labor. These business practices and approaches comes with both merits and demerits to a corporate business.
One of the merits or benefits is that it creates a strong brand presence in a given country or territory of operation. When businesses implement these principles it gives confidence to their customers. This results in increase in bottom lines as they break new grounds.
These business approaches enable communities or countries to benefit from the projects undertaken as well as from employment opportunities in a particular country or region of operation. The communities are able to benefit from various projects which impact them directly. Corporate citizenship provides practical solutions to socio-economic and political challenges such as protection of environment, good governance, and corruption. Another merit is that private sector has the capacity and expertise to tackle the challenges. The demerit of business approaches is the creation of more employment opportunities in host countries rather than in home countries.
Strong political will of governments for execution of various projects is undertaken by private sector. A sharper alignment of corporate social responsibility (CSR) with their commercial objectives is achieved through evaluating carefully risks and opportunities involved for sustainability. To promote globalization, governments should provide an enabling environment for private sector to expand its tentacles. No investor is willing to invest in an environment with risks. My recommendation is that corporate citizenship should embrace a new paradigm shift in terms of values of compassion to humanity. Companies should not profit at the expense of the communities responsible for their success.