The gathering of corporate leaders at the United Nations Global Compact Summit last week provided a wealth of research and declarations reinforcing a private sector commitment to environmental and social issues. Executives spoke strongly on issues relating to climate change, clean water and poverty reduction, and cited studies showing positive links between sustainability and profitability. Despite such progress, enormous challenges remain as the business community strives to address these issues, and there are questions on whether bold words will be supported by actions. Yet it is clear that corporate responsibility has moved into the mainstream to become a matter of strategic importance for leading firms, an evolution that should not be discounted.
Founded in 2000 by then-UN Secretary General Kofi Annan, the Global Compact was envisioned as part a new wave of corporate responsibility, based on voluntary commitment by the world's leading businesses to ten universal principles in the areas of human rights, labour, the environment and anti-corruption. Seven years later, its membership boasts nearly 4000 companies and stakeholders in 116 countries.
The initiative is voluntary, with organizations required to communicate progress in implementing the 10 principles. The Compact relies on public accountability, transparency, and the “enlightened self-interest of companies” to ensure compliance. Sometimes criticized for its lack of power and the potential hypocrisy of members that adhered to the principles only in public declaration, the Compact has in fact delisted more than 500 members over the past year for repeated failures to communicate on progress in sustainability areas, lending more weight to membership.
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