At the turn of the millennium, the United Nations launched the Global Compact, an initiative aimed at encouraging corporate sustainability and social responsibility. While voluntary, it has grown to become the world’s largest such initiative, with thousands of businesses and various stakeholders from nearly every country participating.
The UN Global Compact has two primary objectives. First is to encourage businesses to adopt Ten Principles in the areas of Human Rights, Labour Rights, the Environment and Anti-Corruption. The second is to be a catalyst for the UN’s broader principles, such as the Sustainable Development Goals (SDGs).
One of the first to sign on from the US was Nike. Other big names include Microsoft, Dow Chemicals, Citibank, GM, Royal Dutch Shell, Airbus and many more from a whole gamut of industries. Some of these companies have been in the news for the wrong reasons, so the Global Compact is not without its critics. Bluewashing, a term similar to Greenwashing, is often used in connection with companies who form collaborations with the United Nations allowing the appearance of being compliant with the principles of social responsibility without actually doing so in reality. Blue (along with White) is one of the primary colours used in the UN’s logo, flag and emblems.
The UN isn’t completely toothless, however, in its ability to take action against non-compliant companies who have signed on. Yes, the Global Compact is non-binding from a legal perspective, but the highest executive (usually the CEO) of each company is required to sign a Letter of Commitment to the principles of the Global Compact, which is then made publicly available on the UN’s dedicated website. This commitment requires a company to submit a ‘Communication on Progress’ (COP) annually. There is a very basic format for small businesses, but more extensive for larger companies, and must include actions the company has taken or plans to take towards meeting the Ten Principles, as well as a measurement of outcomes. The contents of the COP also need to be included in main stakeholder communications, such as annual or sustainability reports.
The biggest leverage the UN has is Delisting. Companies that have failed to report progress can be removed from the database, causing embarrassment at the least, and potentially reputational harm. Historically, however, these have tended to be smaller companies in countries with weaker governance institutions and policies, as opposed to large international firms.
Whatever one may think of the initiative, it remains an enduring vision. 2020 represents the 20th Anniversary of the UN Global Compact, including a Leaders Summit in July to discuss how principles-based businesses can be a driving force for good. The next decade is expected to be about action and implementation, linked to the UN’s 2030 Agenda for its Sustainable Development Goals. Ultimately, the UN wants to create peace and prosperity for people and the planet. The Global Compact is part of that lofty goal by encouraging companies, institutions and investors to lead the way.
Featured Images: UN Global Compact 20th Anniversary Presentation; Bluewashing Photo from Mabucom (Switzerland)