Global Policy Forum

UN Global Compact Participants Report Progress So Far

July 19, 2005

The United Nations Global Compact Office has announced the results of the first phase of a policy requiring corporate participants to disclose to their stakeholders progress in implementing the Global Compact's ten principles.

"This is an important milestone in the evolution of the Global Compact and voluntary initiatives generally," said Georg Kell, executive head of the Global Compact. "We now have in place a tool that will promote transparency and make companies more accountable to their stakeholders with respect to their commitment."

The so-called Communication on Progress policy requires that participants -- in order to avoid being identified as inactive on the Global Compact Web site -- develop an annual disclosure to their stakeholders on implementation actions within two years of joining the Global Compact initiative. In joining the Global Compact, companies commit to embrace and act upon 10 principles in the areas of human rights, labor standards, environmental stewardship and anti-corruption.

The policy went into effect on June 30 for the 977 participants that have been in the Global Compact for at least two years. (The Global Compact today includes nearly 2,200 companies from more than 80 countries.) Among the key results for the 977 companies:

  • 98% of the 73 "Financial Times Global 500" companies produced Communications on Progress for their stakeholders, via annual "sustainability" or financial reports, or other key communications. These companies have a combined market capitalization of more than $4.5 trillion.
  • 38% overall -- or 367 companies -- developed Communications on Progress for their stakeholders.
  • 609% companies either did not develop a Communication on Progress by the deadline or did not inform the Global Compact Office that such a communication had been developed. This represents 62% of the 977 companies affected by the deadline, or 28% of the total number of Global Compact participants.

Among the total number of Global Compact participants -- including the more recent participants not yet affected by the 30 June 2005 deadline -- 550 companies developed more than 700 Communications on Progress.

"Communicating to stakeholders about performance in sustainability issues is critical for transparency and public accountability, and the Global Compact principles provide a very good framework for this," said Laurel Colless, director of financial communications and corporate reporting at Nokia. "In addition to adding a new dimension to stakeholder engagement, Communications on Progress offer companies an opportunity to showcase actions and practices that can inspire others. In this sense, they represent a learning tool that can help raise the bar on performance."

Kell, executive head of the Global Compact, said that the initial results are "encouraging as they represent the beginning of a long-range process." He emphasized that many companies around the world are actively implementing the Global Compact principles but may have not yet developed Communications on Progress.

"Overcoming language and cultural issues, resources constraints and other factors will be critical in the next phase in terms of broadening adoption of this important transparency policy," said Kell. "This process will be helped by the active involvement of Global Compact country networks, of which there are nearly 50 worldwide."

In a separate announcement yesterday, GlobeScan, an international opinion research company, released the results of a survey showing that three in four people around the world -- and majorities in each of the 18 countries surveyed -- say that their respect for a company would go up if it partnered with the United Nations to address social problems.

Immediately following the June 30 deadline, the Global Compact Office convened an "expert group" composed of corporate participants, country networks, and UN core agencies to assess the first phase and agree on next steps. The status report and recommendations from the expert group are available on the Global Compact Web site.

"Investors, financial analysts, and money managers are increasingly demanding that companies disclose how they are turning their corporate responsibility commitments into policies and actions," said Matthew Kiernan, CEO of Innovest Strategic Value Advisors, a global investment research company. "The Global Compact is today the largest corporate responsibility initiative in the world so these Communications on Progress will be increasingly important as financial markets evaluate corporate performance on the range of environmental, social, and governance issues."



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