The Global Compact is turning to its corporate participants for funding, but its growth model has its critics

Size matters, according to the United Nations Global Compact. The world’s biggest corporate responsibility initiative has 7,200 business participants, who commit to abide by its principles and to disclose publicly how they are implementing them.

But the aim is to recruit 20,000 by 2020. “Our ambition remains totally unchanged. Our model is scale,” says Georg Kell, the Global Compact’s executive director.

But such ambitions must be paid for. The compact’s government backers have made it clear they cannot fund the expansion, Kell tells Ethical Corporation. Consequently, in a low-key announcement in December, the Global Compact said it would ask business participants for a contribution.

Relatively speaking, the sums requested are small: up to $15,000 annually for the largest companies. The contribution policy takes effect in 2013, but the Global Compact says it will “not be fully enforced until 2014, in order to allow sufficient time for the contributions to be incorporated into budgets and planning processes”.

Payment is not mandatory. “Contributing participants will be publicly recognised and will have access to the full spectrum of Global Compact activities. If a company does not make the annual contribution, it will not receive the benefits of participation, but would still be regarded as a signatory of the Global Compact principles,” the organisation says.

Kell says there have been “overwhelmingly positive replies” from companies asked to contribute. Some issues still have to be ironed out, such as how companies that already support Global Compact local networks will be treated. Kell denies that the levy was introduced without consultation. The measure was two years in preparation, he says.

The money will pay for promotion of the Global Compact’s principles in more languages, and for more training, demand for which is “overwhelming”, Kell says. Global Compact participation has been “exploding”, he adds. “We are the world’s largest disclosure machinery.”

Kell is keen to push in particular for greater observance of the compact’s principles by companies in developing economies. Here, where regulators, campaign groups and the media are sometimes weak, the “case for disclosure can be hard to make”, Kell says. “We want to give them a helping hand.”

He denies any connection with the speeded-up delisting of companies that fail to meet the compact’s disclosure test. The number of expelled business participants reached 4,086 at the end of January 2013, up from 1,766 at the end of 2010. The disclosure requirement is “totally untouched by the fundraising strategy”, says Kell.

‘Quality not quantity’

Bart Slob, of responsible business consultancy Ethics at Work, a frequent critic of the Global Compact, says it “is doing well by trying to become self-sustaining. It is the responsibility neither of the UN nor of national governments to finance an initiative that has focused excessively on helping corporations to showboat their corporate responsibility policies and practices.”

The compact should not over-focus on the 20,000 participants target, Slob says. It should “go for quality instead of quantity” by “submitting prospective members to a screening procedure before they become official participants”.

The Global Compact should especially try to help smaller companies with ethical aspirations, Slob says. “The compact should focus on providing practical tools to ambitious small and medium-sized enterprises in developing countries, rather than offering a public relations platform for big business.”

business strategy  corporate funding  Global Compact  Stephen Gardner 

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