10 Years of Setting the Record Straight

4 November 2010

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.