The United Nations Global Compact is the largest corporate social responsibility initiative in the world.
It was founded as a strategic policy initiative for businesses committed to aligning their operations and strategies with ten universally accepted principles in the areas of human rights, labour, the environment and anti-corruption.
Under the compact, companies are brought together with UN agencies, labour groups and civil society, with the aim of facilitating the adoption of social and environmental norms into global business practices through learning and dialogue.
By combining the moral authority and convening power of the UN with the private sector’s solution-finding strengths, the UNGC aims to be a voluntary yet accountable multistakeholder forum.
The UN Global Compact Board is responsible for providing ongoing strategic and policy advice for the initiative.
Members of the board are appointed by the chair – the United Nations Secretary-General. The Board is a component of the broader Global Compact governance framework, which divides functions into main elements, each with differentiated tasks: the Global Compact Leaders Summit, Local Networks, the Annual Local Networks Forum, the Global Compact Board, Global Compact Headquarters, the Global Compact Government Group and Friends of the Global Compact.
The UNGC is funded by voluntary contributions from Governments to a UN Trust Fund (53% in 2010) and from the private sector via the Foundation for the Global Compact (47%).
As of 2015 UNGC has around 8,000 business participants, including over 100 from the Financial Times Global 500 firms list. It also has some 4,000 non-business participants.
While encouraging participants to implement the Ten Principles in all production sites, UNGC does not administer a direct or indirect system of monitoring / auditing. This raises questions about its relative effectiveness on the ground.
One study, however, did find that membership of UNGC was significantly linked to the inclusion of measurable performance indicators in CSR reports*.
The UN Global Compact asks companies to support and enact a set of core values derived from various UN agency conventions.
The Ten Principles relate to four key areas:
1) Respecting human rights
2) Non-complicity in human rights abuses.
3) Freedom of association and collective bargaining,
4) Forced labour,
5) Child labour,
7) Precautionary approach to environmental challenges,
8) Promoting environmental responsibility,
9) Using environmentally friendly technologies.
10) Working against corruption in all its forms.
In order to demonstrate performance against these principles, UNGC participants are required to produce an annual Communication on Progress (COP).
Although it claims not to have the mandate or resources to monitor participants’ progress, members can be expelled for persistent failure to communicate and/or systemic or egregious abuses.
For example, in 2008 UNGC delisted 600 members for failure to communicate progress.
Three key critiques have been voiced
1. For the lack of a sanctioning method for non-compliance;
2. For allowing companies that have not demonstrated concrete progress to remain as members;
3. For admitting companies with dubious human rights records.
Dissent has also come from within the UN system. For example, Maude Barlow, senior adviser on water issues to the President of the UN General Assembly, has criticised the UNGP for 'bluewashing' its members.
From an academic perspective, UNGC has been criticized for aligning the UN too closely with business interests and in turn for sacrificing its relative effectiveness. It has also been criticized for not monitoring members’ production sites, and for its focus on voluntarism, learning, and dialogue, which by themselves do not provide sufficient incentives to leverage significant changes in business behaviour**.
UNGC is not a certification body, and does not endorse particular participants.
However participants can endorse the UNGC, and, subject to the Global Compact Logo Policy can use the UNGC logo on pertinent material or corporate websites.
It is possible to view the annual Communication On Progress for every participant on the UNGC website, and to find out which companies are failing to communicate.
* Chen, S. and Bouvain, P. (2009) ‘Is Corporate Responsibility Converging? A Comparison of Corporate Responsibility Reporting in the USA, UK, Australia, and Germany’, Journal of Business Ethics, 87: 299-317.
**Hale, T. (2011) ‘United Nations Global Compact’, in T. Hale and D. Held (Eds.) Handbook of Transnational Governance: Institutions and Innovations. Cambridge: Polity Press.