Ethical Performance
inside intelligence for responsible business


Compact may raise the bar

September 2008

Signatories to the United Nations Global Compact may soon have to meet a minimum standard for the content of their annual ‘communications on progress’ (COPs), which are public statements of how they abide by the compact’s ten principles on the environment, corruption and human rights.

The board instructed the Global Compact Office to ‘explore the development’ of a minimum standard at its latest meeting in New York. The decision reflects concern at the UN both about the quality of COPs and the rate at which companies are failing even to produce them.

The number of ‘free rider’ companies de-listed by the Compact Office recently reached 630 after another cull of businesses that have failed to produce COPs according to Compact rules.

The cull began in January, when 394 companies were removed for not issuing an annual COP. The ‘integrity measures’ were introduced three years ago to deal with companies that were signing up to the principles but doing little if anything to observe them. Failure to produce a COP initially results in a company being listed as ‘non-communicating’.

If the company defaults for two consecutive years it is de-listed. So far 317 companies have been listed as ‘inactive’. Of these, 184 are at risk of being de-listed later this year.

Georg Kell, the Compact’s executive director, said the overall number of participants continues to rise even though many companies are being removed from the list. During the first half of this year, 701 companies joined, bringing the number of business participants to 4619, and the number of all participants – companies plus ‘non-business stakeholders’ – to 5982.

Many of the newly de-listed companies are from developing nations, particularly in the Asia Pacific region. However, 70, or ten per cent, are from France, and 47 are based in Spain. By contrast, only six of the de-listed are from the UK, three from Germany and one from the Netherlands.

Few household names feature in the list, but regional units of the electronics company Actel (in Spain), the car manufacturer Honda (in the Philippines), and the advertising agency Saatchi & Saatchi (in Bulgaria) do appear.

Global Compact | Global | Codes of conduct

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