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The Great Twitter Debate: The UN Global Compact – Part 2

October 29, 2009

Click here to read Part 1.

JAMES ( @JEPSTEINREEVES )

Elaine & Bart, what do you think of making it a requirement that companies must provide their first report before they can be members?

Photo credit: United Nations Photo via Flickr.

Anyone know why the UNGC only recently started delisting?

Michelle (@MBernhart)

Hi all. Nice to “meet” you James and Chris. Elaine and Bart, happy to chat with you, as always. James, brilliant way to “converse” on this topic.

Yes, requiring an initial COP would be a good first step, and could serve as that signatory’s baseline record of performance. I love Elaine’s approach to helping companies assess their readiness and level of commitment to the UNGC principles before signing on. Preparing an initial COP is a great way to help them do so, assuming they take the exercise seriously, asking themselves the hard questions and acknowledging the places where improvement is needed. I’ve known more than a few companies that use GRI for this purpose, and the process can be overwhelming to them because of that instrument’s complexity. While I’ve nothing against this back-door approach to sustainability implementation (i.e., let’s take a look at what we will want to eventually report and then build our sustainability implementation approach with that ultimate goal in mind) if it’s done thoroughly, deliberately, and systematically. Of course, it only works in conjunction with a true materiality assessment and real commitment to integrating sustainability into the organization, and these are sometimes lacking, as others have noted in this thread.

So, while I don’t mean to compare the UNGC with GRI—they are different initiatives—it is often important to discuss them together because the primary way in which performance is made visible to stakeholders is the report. And when the COP gets subsumed by the GRI report (as is almost always the case for organizations that produce a GRI report and are also signatories to the Compact), they should be discussed together. My experience is that companies focus much  more on meeting the GRI guideline than communicating on their UNGC commitment, and some signatories aren’t aware of (or have forgotten) the guidance provided through the Compact. The “welcome kit” provided to new signatories languishes on someone’s hard drive, never to be reviewed again, and the additional resources never get downloaded. Meanwhile GRI, with its coveted application levels, gets all the attention, and reporting teams are quick to relegate the COP to an index within the GRI report. That’s too bad because the UNGCO does provide some helpful, freely available guidance that can be used to make more of the Compact, and because the 10 principles are powerful in both simplicity and breadth.

Do I think the Compact lacks teeth? Yes, and I hope the public shame associated with being dropped will motivate more organizations to take its principles to heart. But is there any public shame to be had? Companies fall off the Dow Jones Sustainability Indexes every year, and little seems to get made of that in the press. Perhaps the investors who are paying close attention notice, but does getting bumped off the list really hurt reputation? Similarly, will being delisted from the Compact hurt? Does anyone notice?

It’s worth noting that the UNGC does require delisted companies to provide a COP as part of re-upping, but I’m not aware of any other requirements beyond a new CEO commitment. Shouldn’t there be a probationary period, or a provision that if you fail again to produce the following year’s COP you’re dropped in perpetuity? It’s interesting to see that even though it has taken the step to delist  so many companies, the process for getting back in the Compact’s good graces is de minimis.

As a final note in this overly long comment, does anyone else find the logic lacking in the following statement (from the UNGCO, 7 October, 2009)?

Photo credit: UN Photo / Mark Garten via Flickr

“The now more than 1,000 delisted companies include both small and medium-size enterprises (SMEs) and larger companies, and are also proportionally represented among industry sectors and countries in the Global Compact – indicating that the COP framework is equally relevant across business size, sector and geographic region.”

Overlooking for a moment that it contradicts GCcritics’ finding about the Philippines, how does demographic distribution among delisted companies equal relevance? It would seem to me it indicates IRrelevance or at least disregard….

Elaine (@elainecohen) 28th october 2009

hiya Michelle, Great comments. de minimis – i LOVE that. Gonna use that all the time now. And i agree about the principles guidance tools. They are really very good. I also wonder who notices if companies get dropped. I believe the UNGC could make more of this and work in partnership with local CSR organiations and/or governments or whatever to draw attention to these companies who do not deliver on their commitments.

Bart (@UNGCcritics):

I really like Elaine’s idea of requiring an initial COP for companies that wish to participate in the Global Compact. The current policy on delisting companies is ineffective. Business participants are delisted only after failing to report within three years of signing up. Besides the delisted companies, there are currently 940 “non-communicating” and 729 “inactive” participants. Mexico champions the list of countries with most inactive business participants. There are 203 inactive Mexican companies against 77 active companies.

I agree with Michelle’s analysis that there is little logic to the UNGC’s statement on the “equal” relevance of the COP framework for different business sizes, sectors and geographical regions. Our research clearly shows that participants in developing countries and fragile states report significantly less than companies from countries like Spain, France and Denmark.

Elaine (@elainecohen) still on 28th October

Bart, how can we influence the UNGC to move towards accepting Companies only when they have their first COP ready to publish? Should we compose a joint letter to Georg Kell ? Or what would you recomend?

Michelle (@MBernhart)

I’m all for a letter. Count me in.

Michelle (@MBernhart)

Just doing the math in Bart’s comment. There are 1669 non-communicating or inactive organizations out of a total 4200 signatories. That’s nearly 40%!

Bart (@UNGCCritics):

Good idea, we could write a letter to the Global Compact Office as the concrete output of this Twitter debate. If I understand Elaine correctly, our suggestion would be to only admit a company after it has published its first COP.

Michelle, the total number of business participants now is 5.908 (active + non-communicating + inactive companies). The number of active companies, according to the database, is 4242. This means that about 28 percent of the current participants are either non-communicating or inactive.

If you look at the total of active participants (4242) in relation to the companies that are not communicating, inactive or have been delisted (2671), it is safe to say that about 39 percent of the current and past business participants have not complied or are not complying with the COP requirements.

James (@Jepsteinreeves)

Simply amazing. When I started this “debate” – I struggled with how we were going to come to a close. I thought it would end with a phrase similar to “let’s all agree to disagree” — I never thought we would find consensus nevermind come out with something concrete in the end. I’ll send you all a message about next steps, but I think we can conclude this part of the discussion. Thank you all so much for participating in this experiment and proving that Twitter can in fact bring us all closer together.

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