The Role of the Private Sector in Revitalizing the Economy

This entry follows from my post, "Helping Businesses Become Better Global Citizens," where I explained how the UN Global Compact works with businesses worldwide to advance their commitments to sustainability and corporate citizenship. On December 15, 2008, United Nations Secretary General Ban Ki-moon made a statement to the Global Compact Board saying the private sector has an important role in revitalizing the global economy (see below for Mr. Ban's statement in its entirety). (Photo of Ban Ki-moon courtesy of the United Nations Department of Public Information.)

While I agree with Mr. Ban's remarks that there should be a collaboration of governments civil society, and the private sector to "prevent a lasting global recession," the effectiveness of the private sector will be maximized only if governments enforce regulations so that all businesses are operating on an equal level. In addition, international organizations should provide solutions rather than focus on the problems. Understanding the problem is necessary in order to formulate a viable solution, but too many organizations are fixated on pointing the finger to lay blame. In preparing a strategy to revitalize the global economy, we must create and enforce rules to prevent another economic meltdown.

I am a strong supporter of a free market economy, but until all businesses demonstrate the ability to operate prudently and ethically, government rules are necessary to stabilize and protect financial markets. We are in this mess because certain governments eased regulations and businesses took advantage of the lack of governmental oversight. There are lessons we should learn from the mistakes that led to the financial crisis, but we should not wait until the economic turnaround is complete before enacting regulations to prevent a repeat of failed businesses.

New York, 15 December 2008 - Secretary-General's remarks to a meeting of the Global Compact Board

Distinguished business leaders,

Ladies and Gentlemen,

It is a pleasure to join you for this meeting of the Global Compact Board.

We meet at an extraordinary moment. What began as a financial crisis just a few months ago has turned into a full-scale economic downturn that affects economies and societies around the world.

There is no doubt that the current crisis poses a serious threat to our collective well-being. It will require a concerted effort by Governments, international organizations and the private sector to prevent a lasting global recession.

In these challenging circumstances, it is more important than ever that business – and especially the Global Compact – take a leading role in getting out the message that the long-term success of business and the stability of markets and societies are two sides of the same coin.

Most immediately, we must do all we can to bring the global economy back on a track of sustainable growth that will advance development.
This will not be easy, as trust in the capacity of business has been eroded. And trust is essential. Business needs it to create and deliver value. We all need it as a matter of confidence in the system. The Global Compact and the UN values it promotes can help to restore trust and build confidence in markets.

The downturn has also shown that we must shift from an obsession with short-term profits to a focus on long-term sustainability and proactive management of environmental, social and governance risks.

We can turn these challenges into opportunities. For example, I recently proposed a “Green New Deal” to create new employment and foster sustainable markets while safeguarding our environment and natural resources.

Business can and must join in investing in a sustainable future. Many of the long-term issues that we have been tackling, from climate change to water poverty, will not vanish. If left unattended, they will likely be the cause of further global disruptions. Already, recent findings of the Intergovernmental Panel on Climate Change show that climate change is progressing at a much faster rate than previously anticipated.

Through your stewardship of the Global Compact and our universal ideals, you have already done much to advance the case for responsible business. I hope you will use today's meeting to discuss how the Compact can make an even stronger contribution.

When we met for the first time in this room more than a year-and-a-half ago, I called on you to ensure that the momentum of the Global Compact is not lost on the slippery slope of the lowest common denominator. This is now more urgent than ever.

In particular, I will be relying on you to further refine the good measures that have been taken to strengthen the quality and accountability of the corporate commitment to the Compact. As we move forward, it will be critical that the integrity of the initiative and the credibility of this Organization remain beyond reproach.

I also wish to announce that I am asking Sir Mark Moody-Stuart, Mary Robinson and Georg Kell to form an appointment committee to make recommendations for future Board members and to manage smooth transitions when needed.

Finally, as we are gearing up for the Global Compact's tenth anniversary and the next Global Compact Leaders Summit in July 2010, I would like to challenge you to think big and find ways to ensure that business engagement in support of UN goals will reach an even higher level.

Thank you again your dedication to the Compact. You have done great work to advance our shared mission, and I look forward to doing even more as we move ahead.

I wish you all a most productive meeting.

Thank you.