Thousands of businesses have been thrown out of the Global Compact club, but membership hardly guarantees exemplary practices
The UN Global Compact’s expulsion of its 3,000th business participant is an accomplishment of sorts that should be applauded.
Announced in late February, the milestone moment comes amid ongoing criticism of an organisation big on aspirational talk but short on clear accounting mechanisms and rigorous enforcement of standards among its own members.
It’s an open secret that of the roughly 7,000 business participants held in good standing, a certain percentage continue to use the compact for dialogue and learning but often without any discernible follow-up actions.
“The fact that they have delisted 3,000 is encouraging,” says John Elkington, a leading sustainable business thinker and consultant. “It signals an intent to make sure that companies don’t use this as a camouflage or an alibi. Whether that means the 7,000 who are still in there are doing the right thing is very much in doubt.”
Long-time observers say the compact is hindered by a limited mandate: spurring on companies to carry out a set of core values in the areas of human rights, labour, environment and anti-corruption, while also serving as a forum whose aim is to facilitate co-operation among various economic and social actors.
“It is neither our mandate nor our intention to monitor compliance or non-compliance with the Global Compact principles,” says Matthias Stausberg, the compact’s head of public affairs.
Stausberg cites the Global Compact’s ever-expanding action portfolio as an indication of the organisation’s “dynamic development”. It’s a list that ranges from the CEO Water Mandate and Caring for Climate to the Women’s Empowerment Principles and the recently launched Children’s Rights and Business Principles.
Delisting occurs when there is an external complaint or when a participant fails to submit an annual self-assessment report within a two-year deadline. It’s an automated process that captures data, Stausberg says.
Since instituting the delisting programme in January 2008, most of the ejected companies have not reapplied. But, is this down to a troubling lack of dedication rather than an inability to communicate progress on the compact’s core principles?
Participants can be expelled for failing to comply with or make substantive progress on one or more of the compact’s core principles. “But company performance is not assessed by the Global Compact so that membership mainly amounts to a declaration of intention,” says Mariëtte van Huijstee of the Netherlands-based Centre for Research on Multinational Corporations, Somo.
Somo administrates the Global Compact Critics blog, which offers a forum for critical information exchange on the performance of the Global Compact and its members.
But near-exclusive reliance on civil society is only a patchwork solution, says van Huijstee. Alternative accountability mechanisms such as a peer review network organised according to participant sectors have been proposed in the past but have gone nowhere.
“It’s possible for companies to underperform and still be a part of the Global Compact,” says van Huijstee.
Rather than aiming to expand the organisation’s membership rolls to the 20,000 target set for 2020, the Global Compact would be better served by actively and strategically recruiting members that can deliver against the expressed targets, Elkington says.
In particular, Elkington says he’s troubled by a 2010 joint report issued by Accenture and the Global Compact indicating greater embedding of sustainability into core business initiatives. Of 766 chief executives surveyed, 81% said they had already embedded sustainability.
“To me that spoke of both the mainstreaming of the [sustainability] language and the radical dilution of the concepts,” Elkington argues. “Insofar as the Global Compact initiative enables CEOs to think that they are already on top of this agenda, I think that is extremely dangerous.”
Most agree that business would be worse off without the Global Compact. The next step, though, may not be just to shake out poorly performing members, but to properly refresh its mission.