U.S. firms wary of U.N. responsible business compact

By Claudia Parsons

UNITED NATIONS (Reuters) - U.S. firms have been slow to join a U.N. initiative on social and environmental responsibility in business because of perceptions it has no teeth, the head of the Global Compact said on Monday.

But Georg Kell, executive director of the Global Compact which is holding a summit next month, said it was making progress and he welcomed the participation of firms such as the Coca Cola Co. and Microsoft.

Formed in 2000 in response to major antiglobalization protests at a World Trade Organization meeting in Seattle, the Global Compact brings companies together with U.N. agencies and civil society groups to promote universal principles on human rights, labor, the environment and fighting corruption.

It has more than 4,000 members including around 110 listed on the FT Global 500 list, Kell said. Many will meet for a summit in Geneva on July 5-6 aimed at spreading the message that being responsible makes financial as well as moral sense.

However, there is no enforcement mechanism beyond public scrutiny and the requirement for participants to report annually on progress in meeting commitments to the principles of the Global Compact, which range from banning child labor to allowing unions and protecting the environment.

"Big corporations here (in the United States) were wary," Kell told a news conference at the United Nations, adding that there was a perception that companies around the world could sign up without taking any practical steps to change policies.

"The situation has obviously improved," Kell said.

He added that 600 firms have been delisted, usually because of a failure to deliver any real changes. "Presumably the CEO has signed on light-heartedly," he said.