UN Global Compact

“To help create a more sustainable and inclusive global economy”

2006 AVCA Conference

Dakar, Senegal

Why the UN & Business Different Purposes, Overlapping Objectives

Building Markets

Good Governance& Security

Environment

Peace

Poverty Reduction

Profit

Growth Social Inclusion

Business

Global Health

Deepening Interdependencies

Why the UN and Business

Business at the heart of developmentPublic-Private partnership : human rights, environment,

corruption, disease, poverty, etc. Globalization: companies confronting these issuesEnlightened self-interest to care:

societal expectations risk management business opportunities

Sustainable societies and markets for all

Voluntary corporate citizenship initiativeBased on 10 universal principles:Human RightsLabour ConditionsEnvironmentAnti-Corruption

A multi-stakeholder platform

UN Global Compact

The Objectives

Make the 10 principles part of business strategy, operations and culture everywhere

Facilitate partnerships toward UN goals – MDGs

Vision:

“Sustainable and inclusive global economy”

How the Global Compact Works:The Global Compact asks companies to embrace, support and enact, within their sphere of influence, a set of core values in the areas of human rights, labour standards, the environment, and anti-corruption:

Human Rights

Principle 1 : Businesses should support and respect the protection of internationally proclaimed human rights; andPrinciple 2 : Make sure that they are not complicit in human rights abuses.  

Labour StandardsPrinciple 3 : Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining;Principle 4 : The elimination of all forms of forced and compulsory labour;Principle 5 : The effective abolition of child labour; andPrinciple 6 : The elimination of discrimination in respect of employment and occupation.  

EnvironmentPrinciple 7 : Businesses should support a precautionary approach to environmental challenges;Principle 8 : Undertake initiatives to promote greater environmental responsibility; andPrinciple 9 : Encourage the development and diffusion of environmentally friendly technologies.   

Anti-CorruptionPrinciple 10 : Businesses should work against all forms of corruption, including extortion and bribery.

Organisational Change

Actions, Projects

Communication on Progress

Leadership committee to embrace and enact

3,200 companies from over 100 countries Global labour and civil society organizations Academic networks and other partners

Global Compact Network Key Components

Leaders Summittriennial

UNGCOAgenciesGovernments

BoardBusinessLabourCivil Society

Local Networks Forum

Argentina (205)

Brazil (164)

U.S.A. (144)

UK (91)

Nordic Group (80)

Spain (346)Italy (132)

China (70)

Switzerland (40)France (424)

Egypt (38)India (121)

Japan (47)

GC networksGC networks with a governance model GC participants but no network

Philippines (143)Panama (88)

Peru (66)

Bulgaria (73)Turkey (73)

Sri Lanka (44)

Mexico (195)

Lithuania (39)Germany (82)

\

Smaller Networks:

• Austria• Belgium• Bosnia and Herzegovina• Chile• Cameroon• Dominican Republic• Ghana• Hungary• Indonesia• Kazakhstan• Kenya• Macedonia• Mozambique• Netherlands• Nigeria• Poland• Romania• Singapore• South Africa• South Korea• Thailand• Ukraine• Venezuela• Zambia

GC networks < 35 participants

Colombia (60)Pakistan (61)

Country Networks

Financial Markets are Catching Up

Beyond “Ethical Investing” (Screening)Mainstream investment actors:

asset management firmsinvestment banking – sell-side analystspension funds – public and privatere-insurance companiesprivate equity

Stock exchanges – SRI Indices Multilaterals: IFC (Equator Principles)

Financial Markets: Mission Critical

Capital and finance drive global economy

New approach on Investor responsibility -Pockets of SRI, but not mainstream.

From “trading” to “investing”.

ESG factors material in long-range investing

Expanding Risk Management- Why?

Geopolitical

Regulatory

Currency/Credit

Peace/SocialEnvironment

Governance

Terrorism

Poverty

Health/Disease

Short-Term focus……

Revenue

Quarterly Earnings

Cost Control

Asset Deployment

Misc.

Business Success Drivers

…to a Longer-Term View

Short-Term Drivers

Environmental

Social

Corporate Governance

Ethical

Business Success Drivers

The Principles for Responsible Investment

Developed by global institutions (public pensions)

Address investment mandates, ownership

Launch: 27 April, New York Stock Exchange

Global rollout: public and private funds

Who Cares Wins - Principles for Responsible Investment

“Better investment markets and more sustainable societies”

US $5 Trillion aligned with PRI as of June 2006

New York Stock Exchange April 27th, 2006

Signatories to the Principles

There are three main categories of signatory: Commitment - top-level leadership of the organisation across the whole

investment business.Asset owners:

principal category - pension funds, government reserve funds, foundations, endowments, insurance and reinsurance companies and depository organizations - BT Pension Scheme, UN Pension FundInvestment managers:

Investment management companies that serve an institutional and/or retail market and manage assets as a third-party provider) - ABN AMRO Asset Management, Advantage Asset Managers (Pty) Limited, SA.Professional service partners: Organizations that offer products or services to asset owners and/or investment managers -FTSE-UK, Vigeo, France.

Principles for Responsible Investment (PRI)

1. We will incorporate ESG issues into investment analysis and decision-making processes.

2. We will be active owners and incorporate ESG issues into our ownership policies and practices.

3. We will seek appropriate disclosure on ESG issues by the entities in which we invest.

Ask for standardised reporting on ESG issues (using tools such as the Global Reporting Initiative) Ask for ESG issues to be integrated within annual financial reports Ask for information from companies regarding adoption of/adherence to relevant norms, standards, codes of conduct or international initiatives (such as the UN Global Compact) Support shareholder initiatives and resolutions promoting ESG disclosure

4. We will promote acceptance and implementation of the Principles within the investment industry.

5. We will work together to enhance our effectiveness in implementing the Principles.6. We will each report on our activities and progress towards implementing the

Principles.

The Global Compact - Benefits of Participation

Good corporate governance - creation of an enabling environment for investment opportunities

Multi-stakeholder dialogue and problem-solvingAddressing issues before crisis (e.g. Anti -corruption, environmental care)Manage globalization’s new risks/opportunities

Improved risk profile (legal liabilities)Role of the private sector is central to national development and poverty alleviation - contribution to economic growth, income generation & etc.

Restore trust - corporate reputation - Trust-building in the developing countries

Public-Private sector alliance - partnership in infrastructure projects.

An invitation……..

“Let us choose to unite the power of markets with the authority of universal ideals. Let us choose to reconcile the creative forces of private entrepreneurship with the needs of the disadvantaged and the requirements of future generations”

Secretary-General Kofi Annan

For more information, please visit:

www. unglobalcompact. org