Markets working to support sustainable development

United Nations Global Compact

The UN Global Compact  (GC) was launched in July 2000 and is a commitment by companies to incorporating environment and development principles within their business structures. Open to any company, The UN Global Compact is a ‘practical framework for the development, implementation, and disclosure of sustainability policies and practices’.

The principles detailed below are founded on a number of internationally agreed conventions. The rationale is that businesses are recognised as ‘the primary driver of globalisation’ and as such are in a unique position to contribute to sustainable development. The 2 key objectives of the Global Compact are

  1. Mainstreaming the 10 principles into business activities
  2. Catalysing actions in support of broader UN goals such as the Millennium development Goals.

The principles are drawn from 4 key areas, and are detailed below:

Human Rights

  • Businesses should support and respect the protection of internationally proclaimed human rights.
  • Make sure that they are not complicit in human rights abuses.

Labour

  • Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining.
  • The elimination of all forms of forced and compulsory labour.
  • The effective abolition of child labour.
  • The elimination of discrimination in respect of employment and occupation.

Environment

  • Businesses should support a precautionary approach to environmental challenges.
  • Undertake initiatives to promote greater environmental responsibility.
  • Encourage the development and diffusion of environmentally friendly technologies.

Anti-Corruption

  • Businesses should work against corruption in all its forms, including extortion and bribery

GC Levels

The Global Compact also incorporates a transparency and accountability policy - the ‘Communication on Progress’ (COP) which is to be published annually by participating organisations. Based on a self-assessment of the COP, Members of the compact are classed into 3 categories; GC Active members, who meet the minimum requirements, GC Advanced Members, who provide information on advanced criteria. Organisations that do not meet the minimum requirements of the 10 principles are classed as 'GC Learners'.

Market coverage: 

There are over 12,000 participants in the Global Compact from over 145 countries, of which 8000 are business. This makes it the largest voluntary corporate responsibility initiative in the world. Membership types include: UN Agencies; business associations; labour groups; civil society; academic; public sector; cities.

Europe has by far the highest number of signatories, followed by Latin America and Asia. North American companies represent less than 500 members, the US has a roughly equivalent number of members as Mexico.

Background information: 

The Foundation for the Global Compact was established in 2006 and is a non-profit organisation that raises funding for the Global Compact and exists to support the work of the UN Global Compact Office and its related activities. Funding is secured through voluntary member contirubutions.

Funding source: 

Participants of the Global compact donate a fee annually to the Foundation for the Global Compact. This fee is relative to the revenue/turnover of the participant.Greater than USD 1billion = USD 10,000Between USD 250 millionandUSD 1billion = USD 5,000Less than 250 million = USD 500Full details of contributors can be seen through the links below.

Notable information: 

There is no monitoring or enforcement of companies’ activities. The only requirement is that organisations publish their progress report annually. It is believed that this transparency will drive compliance between participants.