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UN Global Compact Delists Hundreds of CompaniesPost Published: 16 February 2010 Found in s ection: Global Ci tizenship, Socially Respons ible Investing, The Blog PreviousTopic: NewNet Clean Energy Investor News letter Next Topic: NEW ON ETHICSWORLD

Rosalinda Sanquiche, Executive Director, Ethical Markets Media, February 2010

The UN Global Compact, started in 2000, is a strategic policy initiative for businesses committed to aligningtheir practices with ten universally accepted principles in the areas of human rights, labor, environment andanti-corruption. Since its inception, the UN Global Compact has added 7700 participants from 135 countries,with more than 5,300 active business participants. The UN Global Compact demonstrates that companiesaround the world are willing and able to incorporate sustainable practices that consider people, planet andprofit.

Companies belonging to the compact are identified as global leaders in adhering to the precepts of goodcorporate citizenship. This reputation is a valuable commodity in addition to the Compact membershipbenefits of large information resources and linking with other sustainability oriented organizations, UNagencies and businesses around the world. Once a company joins, it agrees to annually disclose how itadheres to and incorporates the principles of the Compact. The statement, often placed in annual reports, isa demonstration of commitment to transparency and accountability. More than a hundred companies monthlycommit to the Global Compact.

This month, 859 companies were delisted from the UN Global Compact for failure to submit a Communicationon Progress (COP), the disclosure statement. Companies from almost 80 countries, including 15 companiesfrom the USA were delisted. Companies based in the United Kingdom, France, Germany, Brazil, China, India,Latin America, Africa and the Middle East also appear. Mexico has the greatest number of delistedcompanies, followed by the Dominican Republic and Columbia. Many countries, such as Japan (1 company)and Canada (2 companies) have very few companies delisted this round.

Some companies are little known internationally, while others like Merck in South Africa and Tata in Indiahave wide name recognition and are part of far-reaching multi-national corporations. According to a

statement by the UN Global Compact, delisted companies include both small and medium-size enterprises(SMEs) and larger companies, and are also proportionally represented among industry sectors andcountries indicating that the COP framework is equally relevant across business size, sector andgeographic region.

Delisted companies in the USA range from heavy industrial (4 companies) to financial services (3companies). Globally, no sector is spared with food and energy producers, biotech, software, personal,household and construction goods, media and telecommunications, healthcare, travel and leisure, retailersand utilities all subject to removal.

Becoming a member of the UN Global Compact is a voluntary process. A companys chief executive and itshighest governance body make a written commitment to employ the Global Compact and its principles as an

integral part of its organizational culture. A company serious about its responsibility to the Global Compact,once delisted, can petition to the UN Secretary General and submit its COP to a public database for possiblereinstatement.

Even though the Global Compact makes clear that it is not a vehicle to enforce compliance nor to assessperformance, delisting and this most recent move, bringing the total of delisted companies to 1840,strengthens its credibility. If companies are lauded for making a commitment, they should then be held to thehigh standards to which they themselves agreed. Without oversight and sanctions, the Global Compact is nomore than a wish list for how companies should act rather than a commendation for companies practicingcorporate social responsibility. The integrity of the UN itself as well as the Global Compact and thosecompanies acting within the initiative can only be maintained if companies outside compliance are removed.

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