Cleaning up the Global Compact: Dealing with Corporate Free Riders

[Sidney Vianna]

If you want to know whether greenwash is alive and well, look no further than the thousands of companies being thrown out of the world's largest voluntary corporate sustainability initiative, the UN Global Compact. More than 750 businesses, including major corporations in Europe and America are likely to be kicked out in the next six months alone, with hundreds more to follow. These are on top of the 3,100 businesses already delisted in the past few years.

Executive director Georg Kell is on a mission to clean up the organisation and ensure that members are building sustainability into their core activities and not using the Global Compact for PR purposes. While some companies have been removed because of bankruptcies and mergers, Kell says he is dealing with "free riders who joined but had no intention to stay engaged."

Non-governmental organisations have long criticised the Global Compact, which promotes 10 principles in the areas of human rights, labour, the environment and anti-corruption, because it has no effective monitoring and enforcement provisions.

They also accuse businesses of using it to oppose any binding international regulation on corporate accountability and for benefitting from the Global Compact's logo, a blue globe and a laurel wreath, which is very similar to the UN logo, while continuing to perpetrate human rights and environmental abuses.

Read the whole story...

[Jim Wynne]

It's an old story--everyone wants to go to heaven, but no one wants to have to die first.

[Sidney Vianna]

As long as corporate officers (and shareholders) get financially rewarded primarily for short term financial performance, the long term aspects of social and environmental performance will be given lukewarm support (at best).

As I delve deeper in the world of sustainability reporting and external assurance, I can not help but making the mental comparison with with the management system accredited certification process we have. With ALL the weaknesses and dysfunctions we have with accredited certification, at least some basic notions of conflict of interest exist.

In the business of sustainability reporting, there are very little in terms of rules and even less in terms of oversight.

I came across one recent example where a mainstream organization in the US Aviation Sector engaged with an outside firm to prepare their sustainability report, but also engaged with the same firm to issue an assurance statement about the report. In the accredited certification world would be the same as engaging with a consultant to develop a QMS and pay the consultant to issue a certificate that the QMS complies with ISO 9001.

As the article states, many organizations are not really doing anything to incorporate sustainability efforts in their business. And, some there are, are free to report as much or as little, as they see fit, and there is NO MANDATE for independent assurance of what is being reported. Until the pressure of sustainability investment indices change the remuneration model for corporate officers, there is little hope.