Membership to UN ethical business initiative swells, but much work still to be done

A record number of companies joined the United Nations alliance for responsible business last year, and while participants are making progress towards adopting ethical practices, the head of the UN Global Compact today stressed that significant room for improvement remains.

Nearly 1,500 new businesses joined the Global Compact in 2008, a 30 per cent increase on the previous year, “reinforcing the notion that in times of economic downturn and crisis there is an increased search for ethics and sustainability,” Georg Kell, Executive Director of the Global Compact, told journalists at UN Headquarters in New York.

“We also saw last year an enormous growth in emerging markets, particular in China and India. Both countries now constitute some of our largest networks,” Mr. Kell noted, as he presented the results of the initiative’s annual review.

The growing number of businesses signing up to the Global Compact, which have now topped 5,000 from over 130 countries since its creation in 2000, pledge to align their practices to 10 universally accepted principles concerning human rights, labour, environmental sustainability and the fight against corruption.

A key finding of the review was that the corporate world is taking non-financial matters – such as the environment, and social and governance issues – seriously and “participants don’t engage [with the Global Compact] for brand differentiation or public relations purposes,” said Mr. Kell.

“Business today increasingly understands that unless you address these issues, there are very high costs and you miss out on opportunities,” he added.

Mr. Kell stressed that although the annual review underscored the Compact’s positive contribution in spreading responsible business practices around the world, companies must do more to ensure that environmental, social and governance challenges are understood and properly addressed.

The UN Global Compact Annual Review 2008, based on survey responses from more than 700 participating businesses in 90 countries, noted that only 30 per cent of companies with subsidiaries required their regional branches and suppliers to implement the scheme’s principles, and only nine per cent of companies with subsidiaries even considered spreading their Compact commitments beyond headquarters.

“For corporate responsibility to deliver tangible results, suppliers and subsidiaries must be made part of the equation,” according to a news release issued by the Global Compact office.