UN "De-lists" Companies from Global Compact Initiative

Global Compact

In early October, the United Nations “de-listed” 335 companies from the UN Global Compact, a voluntary business initiative that brings together companies in support of universal environmental and social principles. The signatories’ removal from the list of participants indicates their failure to submit the required “Communication on Progress” (COP), an annual summary of actions taken toward meeting the Compact’s goals that is shared publicly with stakeholders and used to “safeguard the integrity of the initiative.” Any company that does not submit a COP for two consecutive years is labeled as “inactive” on the UN Global Compact website.

Among the companies listed as inactive as of early November were Air India, China Petroleum and Chemical Corporation, Ernst & Young-Brazil, Moscow City Telephone Network, and NH Hotels of Spain. An inactive label does not necessarily mean that a company is not implementing the Compact’s 10 principles in the areas of human rights, labor, the environment, and anti-corruption. However, being an active participant indicates the company’s commitment to the initiative and offers derivative benefits such as the ability to use the Global Compact name and logo. Participating companies may also see improved access to markets and capital, proactive risk management, reputational gains, improved stakeholder relations, and better employee morale and retention.

By de-listing companies, the Global Compact is demonstrating its credibility and interest in upholding its standards of corporate responsibility, says Sir Mark Moody-Stuart, chair of the Foundation for the Global Compact. “While the Global Compact is a purely voluntary initiative, it is important to protect the investment that seriously committed companies and other stakeholders have made,” he notes. “It is crucial that companies take seriously their commitment and demonstrate performance.” To regain their “active” status, de-listed companies are simply required to submit the missing COP.

UN Secretary-General Kofi Annan, who conceived the Global Compact in 1999 as a way to make global markets more sustainable and inclusive, endorsed the de-listing process, asserting that “success is only possible when business can operate in ways that benefit economies, societies, and people everywhere.” Annan challenged the business and academic communities to “sustain the momentum of the corporate responsibility movement” through responsible practices and universal principles. Since its official launch in July 2000, the Global Compact has grown to some 3,000 participants, including more than 2,500 businesses in 90 countries worldwide.

This story was produced by Eye on Earth, a joint project of the Worldwatch Institute and the blue moon fund. View the complete archive of Eye on Earth stories, or contact Staff Writer Alana Herro at aherro [AT] worldwatch [DOT] org with your questions, comments, and story ideas.