More than 2,000 Companies Expelled for Non-reporting

The Global Compact Office announced today that the number of companies expelled from the initiative for repeated failure to communicate on progress in the implementation of the Global Compact principles has passed 2,000. We’ll provide an update soon with a more detailed breakdown of those that have been expelled so far.

10 Years of Setting the Record Straight

In an ill-informed opinion piece (“UN Global Compact: Ten years of greenwashing?”) published in Ethical Corporate Magazine and released on the EC website on 3 November, Jon Entine sets forth a wild array of unsubstantiated claims about the Global Compact that cannot go unchallenged.

Let’s start with some simple corrections. First off, the Global Compact currently has 8,700 participants, roughly 6,200 of which are businesses of all sizes and sectors. It is not one of the initiative’s “key requirements” to “pony up dues”, as Mr. Entine writes. A financial contribution to the Foundation for the Global Compact is entirely voluntary, and the Global Compact Office does not in any way penalize companies that choose not to contribute.

The annual Communication on Progress (COP), which has evolved as the initiative’s central instrument to advance transparency and accountability, is indeed obligatory. But far from mandating “an extraordinarily low level of disclosure”, the COP process offers different levels of reporting, acknowledging that companies of different sectors, sizes and regions find themselves at very different stages of sustainability performance. Our aim has been to offer a manageable entry point to disclosure, with a gradual trajectory towards more comprehensive and material reporting by advanced performers. The COP requirement is strictly enforced and to date, nearly 2,000 companies have been expelled from the Global Compact for repeated failure to disclose information on the performance.

As a voluntary initiative, it is neither within the Global Compact’s mandate nor mission to monitor or enforce corporate performance. However, to suggest that businesses in the Global Compact do not have to act on their commitment is patently absurd. For one, it ignores that the Global Compact does not shroud its work – or the actions of its participants – in secrecy. All corporate reports are placed in the public domain, and over the years, we have seen a variety of actors – civil society organizations, investors, media – take great interest in the substantive information released by corporations. This concept of “social vetting” is an important cornerstone of our work, and it has, in numerous instances, helped separate true sustainability leaders from those where closer scrutiny revealed that corporate practice fell short of the commitment to the Global Compact principles. The bottom line: the Global Compact does not operate in isolation, its success depends to a large degree on stakeholder feedback and engagement. 

Further, Mr. Entine conflates fact and fiction in his description of the case of PetroChina and CNPC that was raised with the Global Compact Office in 2008/2009. Once again, it should be noted that Petrochina is a Global Compact participant, while CNPC, its parent company, is not. At the same time, Petrochina does not operate in Sudan, while CNPC does. The Global Compact Office has explained its position on this case on several occasions and in great detail, and the Global Compact Board has affirmed in July 2009 that no action under the Global Compact’s integrity measures was warranted.

Despite the fact that CNPC is not a Global Compact participant, the company has actively participated in our work on responsible business in conflict-affected countries, particularly Sudan. This eventually led to the establishment of Global Compact Local Network in Sudan and the development of concrete and practical guidance for responsible business and investment in conflict zones.

The Global Compact has never suggested that “it is accomplishment enough being a member of the world’s largest club of well-intentioned corporations”, as Mr. Entine seems to think. To the contrary, we have frequently explained that a commitment to the Global Compact expresses an aspiration to achieve greater sustainability. We expect our participants to undertake every effort to improve their environmental and social performance, and we offer much assistance along the way. That is the Global Compact’s central mission. It is not a seal of approval or a regulatory body. In his shallow analysis of the initiative, Mr. Entine simply tries to assign a role to the Global Compact which it never had. Likewise, Bart Slob, cited by Mr. Entine, continues to bark up the wrong tree. The Global Compact, as a voluntary initiative to advance responsible business practice, is not a substitute for effective regulation. We have created a viable place for innovation and experimentation and a working organizing framework for companies operating in wildly differing operating environments.

On to Drs. Sethi and Schepers. To our knowledge, the paper cited by Mr. Entine has not yet been formally published, yet it has apparently been circulating among a number of people and organizations. The Global Compact Office will, in due time, respond in greater detail to the impressive array of inaccuracies presented in this paper. Obviously, the authors willfully ignore much of the Global Compact’s evolution during the past ten years, instead presenting a self-indulgent series of rhetorical salvos. We have shared some of our substantive concerns about the paper with Mr. Entine, which he chose to ignore.

A Case for Better Headlines?

Over at the Wall Street Journal, Professor Aneel Karnani of the University of Michigan’s School of Business created quite a stir last Tuesday, attempting to argue “the case against corporate social responsibility”.

To be fair, it is doubtful that the essay’s provocative headline was chosen by Karnani himself. One surmises that this was the work of the WSJ’s editors, eager to stir the pot a little. Mission accomplished.

But headlines aside, Karnani’s forceful opening salvo quickly disintegrates. The greatest flaw of his argument lies in the old saw that responsibility and profitability are, for the most part, mutually exclusive concepts and that appeals for greater responsibility ultimately undermine any other avenue available to “strike a balance between profits and the public good”. Karnani fails to present any supporting evidence, but the truth is that awareness of material risks and opportunities (“financial calculations”, in Karnani’s words), voluntary action (“self-restraint”), civil society pressure (“watchdogs and advocates”) and regulation are all part of the mix. There are circumstances where none may be sufficient on its own to drive real change, but understanding corporate responsibility also means understanding their complementarities.

A good example is the large number of countries that are – for a variety of reasons – unable or unwilling to introduce or enforce effective regulation. In these regulatory voids, corporate responsibility can serve as an indispensable organizing principle to avert disaster. Why? Because companies have real choices to make: they can join the race to the bottom or they can uphold what they believe to be universally applicable principles of good behavior. No doubt, too many still choose the former (and get away with it), but the choice (and risk) is both moral and material: today’s cell phone video of poor working conditions can easily become tomorrow’s headline, often triggering a fateful sequence of negative consequences, from civil society protests to consumer boycotts to investor action, litigation and stricter regulation at home. Increasingly, principles and profits are two side of the same coin.

More reactions to Professor Karnani’s essay here, here, here and here.
Update: Professor Karnani’s response to critics and supporters.

Leaders Summit Photos Now Online

(Photo: UN Global Compact/Michael Dames)

All photos taken at the Global Compact Leaders Summit 2010 are now available online.  Click here to view.

Videos of all plenary sessions, press briefings and Leaders Livestream commitments are also archived here.

Matten’s Take – The Wrap-Up

For a concluding perspective by Prof. Dirk Matten, the official blogger of the Leaders Summit, visit his excellent blog.

Global Compact Leaders Summit Issues New York Declaration by Business

In the Leaders Summit’s closing session today, Global Compact participants adopted, by acclamation, a “New York Declaration by Business”, pledging to renew their commitment to the Global Compact principles, deepen their engagement, strengthen their support for critical development goals, and increase transparency and dialogue. The Declaration further calls on governments to “cultivate enabling environments for entrepreneurship and innovation” and to set clear regulatory signals, especially on climate change.

Download the New York Declaration by Business.

GRI and UN Global Compact Join Forces in New Alliance

The world’s two largest corporate social responsibility initiatives forged an alliance to help build a universal standard on corporate sustainability and disclosure. The alliance hopes to transform business practices on a global scale.

Under the terms of the Memorandum of Understanding, GRI, which is subject to due process, will integrate the Global Compact’s 10 principles and issues in its next Sustainability Reporting Guidelines. Similarly, the Global Compact will use the GRI Guidelines as the recommended framework for companies to communicate on progress.

Together, the two initiatives hope to provide companies with clear direction to sustainable performance and transparency.

Read the specific commitments of the alliance here.

Sustainability is in the Investor’s Hands, Says New Study by Global Compact, Accenture

CEOs believe investors are the key in creating a more sustainable global economy, according to a new study by Accenture and the UN Global Compact.  The results of a survey of more than 766 CEOs found that 86% of CEOs want investors to value sustainability in their long-term investments. 

“The momentum is there from both companies and investors to create a sustainable economy. In particular it is remarkable that in just four years over US$20 trillion of assets have been signed to the Principles for Responsible Investment,” said Gavin Power, deputy director of the UN Global Compact.

Since 2006 the UN-backed Principles for Responsible Investment Initiative (PRI) have been encouraging investors to integrate environmental, social and governance issues in their investments.

Download the study here: A New Era of Sustainability: UN Global Compact-Accenture CEO Study 2010

Read more about the sustainability tipping point here.

Speeches and Statements – Leaders Summit Day 1 (24 June)

Earlier today, the UN released the official transcript of UN Secretary-General Ban Ki-moon’s opening address to the Global Compact Leaders Summit. Also available: the Secretary-General’s remarks at the press conference following the opening session. To follow the webcast of today’s meeting, including Mayor Bloomberg’s speech, visit the UN webcast site for the Leaders Summit.

Matten’s Perspective

Prof. Dirk Matten, the Leaders Summit’s official guest blogger, has spent day a hard day’s work following plenary sessions, press briefings, roundtable discussions and side events. To read his take on the Summit, visit the Crane and Matten blog.

UN Secretary-General Opens Proceedings Along with Mayor Bloomberg

(Photo: UN Global Compact/Paulo Filgueiras)

More than 1,200 corporate leaders from around the world convened today in New York City for the tenth anniversary of The UN Global Compact Leaders Summit. The two-day summit was kicked off by UN Secretary-General Ban Ki-moon and New York City Mayor Michael Bloomberg.

In his address, The Secretary General urged the business, civil society and government leaders to lead a “race to the top”, embracing openness, anchoring profit-making in social principles and favouring long-term horizons over pursuit of short-term profits.

Mayor Bloomberg – noting that he was speaking as a former CEO as well as an elected official – said that good corporate citizens recognize that support for human rights is in their enlightened self interest.

Watch the live webcast.

Read today’s complete announcement.

Businesses Asked to Help Protect and Promote Children’s Rights

At the UN Global Compact Leaders Summit, UNICEF, the UN Global Compact and Save the Children called on the business community to work together to build universal principles that will place children’s rights at the top of the global corporate responsibility agenda.

The three organizations are asking business leaders to work with them to develop principles – to be known as the Children’s Principles for Business – so that they can avoid the negative impacts that their activities may have on children, and contribute to a better future for everyone.

Watch the live webcast.

Read today’s complete announcement.

Leaders Summit Official Broadcast Partner CNBC to Host First-ever Live Broadcast from the Floor of the UN General Assembly

As the Official Broadcast partner of the UN Global Compact Leaders Summit, leading business cable network CNBC will broadcast a live special “CNBC Global Summit: The World’s Financial Future”—the first-ever live show from the floor of the UN General Assembly at 8 p.m. tonight.

From CNBC:  “Hosted by CNBC’s Erin Burnett, the special will bring together world business leaders to provide insight on topics such as the future of oil; whether BRIC nations can still be the growth engines they once were and continue to lead the way; and what CEOs think is a critical factor to the future success of their companies.”

Secretary-General Ban Ki-moon is the keynote guest for the program, which will be hosted by anchor Erin Burnett. Other Summit participants who will appear on the program include Jamshed Irani, Director of Tata Sons; Andrei Galaev, CEO of Sakhalin Energy; Martha Tilaar of The Martha Tilaar Company; and Antonio De Abreau, CEO of EDP Brazil.

CNBC’s coverage of the Summit will continue throughout the Global Compact Leaders Summit on Thursday, 24 June.

UN Global Compact and Accenture Release Findings of Largest CEO Study on Corporate Sustainability

In advance of the Leaders Summit to be held this week in New York, the United Nations Global Compact and Accenture have released findings of a survey of over 766 CEOs around the globe – the largest research study of top executives ever conducted on sustainability.

In response to the survey, an overwhelming majority of corporate CEOs – 93 percent – say that sustainability is critical to the future success of their companies—in spite of the recent economic downturn.  CEOs also believe that, within a decade, a tipping point could be reached that fully meshes sustainability with core business – its capabilities, processes and systems, and throughout global supply chains and subsidiaries.

In addition to an online survey, the study included extensive interviews with 50 of the world’s leading CEOs.

Read today’s complete announcement.

Download the entire survey here –  A New Era of Sustainability: UN Global Compact-Accenture CEO Study 2010.

Leaders Summit 2010: The Countdown Begins

With just a few days until the UN Global Compact Leaders Summit 2010 convenes in New York City, registration has closed and more than 1,200 executives from nearly 100 countries are confirmed to attend this historic event. Final preparations are being made, including a number of exciting side events to take place at the Marriott Marquis Hotel in Times Square and other locations.

Already, the first two of an array of new resources have been launched – the 10th anniversary edition of the Global Compact Annual Review and the Global Compact Management Model, developed in collaboration with Deloitte.

In addition, widely acclaimed author and blogger Dirk Matten will serve as an official Summit blogger, delivering independent coverage and analysis through the highly respected Crane and Matten Blog. An expert on issues of corporate social responsibility, Professor Matten holds the Hewlett-Packard Chair in Corporate Social Responsibility and is a Professor of Strategy at the Schulich School of Business (York University, Toronto), which is ranked number one globally by the Aspen Institute for integrating issues of social and environmental stewardship into curricula and research. Dirk was recently ranked among the ‘Top 100 CSR Leaders’ globally in an independent poll by the Cambridge based think tank CSR International.

As a reminder, for those unable to participate in person, the Leaders Summit will be streamed live on the UN Webcast site and here on the Global Compact blog. You can also follow the Summit on Twitter (#GCLS2010) and Facebook.