UN Global Compact: turning rhetoric into results

The United Nations Global Compact has come a long way since its establishment 15 years ago as a worldwide initiative to advocate responsible business. What it does over the next decade will help decide if the planet can be put on a path of sustainable development.

Sustainability is now firmly on the corporate agenda worldwide but more needs to be done to turn rhetoric and understanding into action so that there is further adoption of sustainability principles such as the safeguarding of human and labour rights and environmental conservation, said a new report by certification and standards company DNV GL.

The report titled “Impact – Transforming Business, Changing the World” was prepared by DNV GL for the United Nations Global Compact to mark the 15th anniversary of the Compact in June.

Since it was first set up in 2000 with 44 founding members, the Compact has grown to become the world’s largest initiative on corporate responsibility.

Companies that sign on to the Compact agree to operate within United Nations’ principles on human rights, labour, environment and anti-corruption, among others. They also have to support their local communities and report transparently on their efforts to comply with the principles each year.

Currently, more than 8,300 companies across 156 countries are part of this programme and they include some of the world’s largest companies such as Danish shipping firm Maersk, Chinese oil producer Sinopec, Swiss food company Nestle and British-Dutch consumer goods giant Unilever.

Georg Kell, UN Global Compact executive director said that over the past 15 years, companies around the world have been awakening to their role in society and are starting to make important strides to operate more responsibly and innovate for a greener, more sustainable future.

“But there is still a long way to go, and the UN Global Compact remains strongly committed to mobilizing business everywhere to be a force for good,” he said.

The report, released last Thursday found that sustainability is gradually taking hold in markets and sectors all around the world, with about 25 per cent of the world’s largest companies having signed up to the Compact. 

Companies are also beginning to understand that sustainability and other global challenges are complex and inter-linked. Many companies said that partnerships and collaborations are the new norm in finding solutions to such problems.

Furthermore, sustainability issues such as equality, climate change and corruption are now on the corporate agenda because they impact corporate performance.

Other findings 

  • The report also found that businesses have become “more strategic, systematic, integrated, transparent and collaborative regarding sustainability”. 
  • Leading companies are ahead of regulation and drive the debate to make regulations smarter. Yet these companies are in the minority, and less progressive companies are blocking positive change.
  • The financial sector has shown positive developments – through the rapid growth of green bonds and its support for UN programmes such as the Principles for Responsible Investment, and Sustainable Stock Exchanges Initiative, which was convened in 2009 by Principles for Responsible Investment, the United Nations Conference on Trade and Development, the UN Environment Programme Finance Initiative. 
  • Local Global Compact networks are very effective in engaging local businesses around the issues that are important for specific countries or regions.
  • The jury is still out on whether a sustainable and inclusive economy will be achieved. But the UN Global Compact has undoubtedly helped to change the understanding of corporate responsibility all around the world. 
  • Some companies are talking about a ‘net zero footprint’ in terms of carbon, water and waste, and business leaders have established concrete goals for reaching zero footprint levels. This is highly promising and such companies will win many followers. 
  • Finally, leading companies in the Compact are beginning to look for ways to turn sustainability risks into new business opportunities.

The report also made recommendations on the steps forward, such as urging governments to enact policies that support sustainable business practices and investing in women’s education and economic empowerment. 

For the report, DNV GL, a certification and research company based in Oslo, interviewed 214 representatives from business, academia, civil society, labour unions, government and the United Nations. Of these, 56 were top executives, it said.

The firm also spoke to more than 1,500 Compact participants and local chapters of the Compact, as well as UN agencies.

New Compact board members to drive growth

To drive the next stage of the Compact’s growth, the board of the organisation will have a new head: Lise Kingo. Kingo will succeed Kell who retires later this year after over 25 years at the United Nations.

Kell has also led the Compact since its launch in 2000.

Kingo, who assumes the role on 1 September, was most recently the chief of staff and executive vice-president at Danish pharmaceutical company Novo Nordisk from 2002 to 2014. She also served as senior vice-president of stakeholder relations from 1999 to 2002 and as director of environmental affairs from 1988 to 1999.

She currently serves as the deputy chair of the Danish Nature Foundation, chairperson of the Danish Council for Corporate Social Responsibility, and is a member of the boards of Grieg Star Group and C3 Collaborating for Health.

The Compact board will also have a new member, Dr Henrik O. Madsen, president and chief executive officer of DNV GL. Dr Madsen will act in a personal and honorary capacity for a period of three years, starting from 1 June.

He noted in a statement that businesses hold the key to implementation of sustainability programmes and projects and has the potential to move further and faster than governments.

“It is well placed to innovate and transform,” Dr Madsen said. ”At the same time, the transition will not be easy; there are significant challenges to be overcome in addition to financial short-termism.”

These include the need to move away from regulations that encourage unsustainable practices, increase leadership knowledge of the business imperative in sustainability and improve international standards, he said.    

With 35 years of experience, Dr Madsen has insights into sustainable business research. He began his career in 1982 at DNV, a one of two companies that eventually became DNV GL, as chief scientist in structural reliability analysis in Oslo, Norway.

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