The United Nations Global Compact (UNGC) is a voluntary initiative set up in 2000 under the auspices of the United Nations. Its aim is to involve commercial and 'non-business' organisations, such as academic institutions, not-for-profits and public sector organisations, in the promotion of responsible and sustainable business. Organisations which sign up to the UNGC pledge to:
• operate responsibly, in accordance with ten principles of sustainability encompassing human rights, labour, the environment, and anti-corruption
• advance the principles within their sphere of influence
• demonstrate top-level commitment, including a published commitment from the CEO or equivalent to:
◦ embed the ten principles in the strategy, culture and day-to-day operations of the organisation
◦ engage in projects to advance the 17 broader UN Sustainable Development Goals (SDGs)
• report annually on the organisation's efforts and progress
Over 9,000 businesses and 3,000 non-business participants are signed up to the UNGC, including such diverse organisations as The Coca Cola Company, Grant Thornton and RELX Group plc.
The ten principles of the UN Global Compact
Signatories to the UNGC agree to operate in accordance with ten principles derived from the:
The principles are split into four categories covering human rights, labour, the environment and anti-corruption:
References: UNGC: The ten principles
Principle 1: businesses should support and respect the protection of internationally proclaimed human rights
Principle 2: businesses should make sure that they are not complicit in human rights abuses
Principle 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
Principle 6: the elimination of discrimination in respect of employment and occupation
Principle 7: businesses should support a precautionary approach to environmental challenges
Principle 8: undertake initiatives to promote greater environmental responsibility
Principle 9: encourage the development and diffusion of environmentally friendly technologies
Principle 10: businesses should work against corruption in all its forms, including extortion and bribery
The UN Sustainable Development Goals
The UN Sustainable Development Goals (SDGs) follow on from the Millennium Development Goals (MDGs) set by the UN in 2000 with the aim of meeting the development needs of the world's poorest people. The MDGs had a target deadline of 2015. In 2015, agreement was reached by all 193 members of the UN to adopt 'Agenda 2030', including a new set of seventeen goals to be achieved by 2030.
The SDGs are broader in scope than the MDGs. They apply to all countries and cover more areas, including labour, climate change and the environment, justice, and sustainable consumption and production. One of the key differences between the MDGs and the SDGs is that the SDGs explicitly call on private sector businesses to take action to realise them—whether or not they have signed up to the UNGC.
Organisations that have signed up to the UNGC must commit to engage in projects to advance the SDGs.
What are the Sustainable Development Goals?
The 17 SDGs are:
Good health and well-being
Clean water and sanitation
Affordable and clean energy
Decent work and economic growth
Industry, innovation and infrastructure
Sustainable cities and communities
Responsible consumption and production
Life below water
Life on land
Peace, justice and strong institutions
Partnerships for the goals
Who do the Sustainable Development Goals apply to?
The SDGs apply to everyone in every country, including:
• governments and the public sector
• private sector organisations
Are the Sustainable Development Goals legally binding?
Although the SDGs are stated to apply to everyone in every country, this does not mean to say they are legally binding. Rather, they represent an ambitious call to action to tackle global issues such as eradicating poverty, promoting health, education and equality, and protecting the environment.
Business and the Sustainable Development Goals
The UN sees the involvement of private sector business as crucial to achievement of the SDGs. The first element for an organisation, it says, is to act responsibly, including incorporating the ten UNGC principles into the organisation's strategy and operations. Beyond that, however, it is for individual organisations to find opportunities to engage in projects that support the goals.
The UNGC has published what it calls the 'SDG Toolbox', with extensive materials to help organisations identify opportunities to advance the SDGs. The SDG Toolbox includes guidance, case studies, project ideas and other resources for each of the SDGs. There are also sector-specific materials/examples for some industry sectors, such as food, beverages and consumer goods, financial services and healthcare and life sciences.
The SDG Toolbox contains numerous examples of sustainability projects an organisation might consider supporting or participating in. As such, it is not exclusively targeted at UNGC signatories and any organisation might find it useful as part of a corporate responsibility initiative.
The UN Global Compact and human rights issues
Human rights are not the prime focus of the UNGC—the UNGC and the SDGs are concerned more broadly with issues of sustainability and the responsibility of organisations, individuals and governments to promote a sustainable global economy and advance broader societal goals.
However, the responsibility of business to respect human rights, as set out in the UN Guiding Principles on Business and Human Rights, is now widely recognised. It is also increasingly reflected in domestic legislation and industry guidance. A key factor in respecting human rights is avoiding complicity or being implicated in abuses.
With this in mind, the first two principles of the UNGC relate explicitly to human rights—businesses should support and respect the protection of internationally proclaimed human rights and make sure that they are not complicit in human rights abuses. Principles 3 to 6 (Labour) also cover human rights issues.
Organisations that sign up to the UNGC therefore need to investigate, analyse and, crucially, understand, the human rights impact of their operations and business relationships. They then need to address any adverse issues that arise. Participants should have human rights policies in place and should report meaningfully on their performance, including in their annual Communication on Progress (see: Annual reporting below).
Signing up to the UN Global Compact
There is no obligation to sign up to the UNGC. However, many thousands of organisations have chosen to do so.
The signing up process itself is relatively straightforward, although the work required 'behind the scenes' to then embed the principles and SDGs within the organisation will be considerable.
CEO commitment letter
The first step in signing up to the UNGC is for the organisation's CEO (or equivalent in a public sector, non-profit or similar organisation) to publish a 'commitment letter'. A template letter is available on the UNGC website. The letter, which must be addressed to the UN Secretary General, should commit the organisation to:
• support the UNGC and the ten principles
• take action to advance the SDGs
• publish a Communication on Progress (COP) within one year of the initial commitment and annually thereafter
The letter must be on the organisation's official letterhead and it must be issued with full support of the governing board of the organisation.
Online application form
The organisation must complete an online application form. There are two different forms on the UNGC website, depending on whether the organisation is commercial or 'non-business'. The organisation must supply information on:
References: UNGC website: Application page
• employee numbers
• ownership/organisation type
• annual sales/revenue (business organisations only)
• business sector (business organisations) or mission statement (non-business organisations)
• the main contact point within the organisation, and
• contact details for the CEO or equivalent.
There is no mandatory financial contribution to join the UNGC, but companies are strongly encouraged by the UNGC to make a voluntary contribution. A page on the business organisation online application form sets out suggested amounts for different turnover brackets.
Details of how to make a financial contribution are sent to the main organisation contact once the organisation has been accepted to the UNGC.
Information on financial contributions made by participating organisations is published on the UNGC website.
Organisations that cannot join the UN Global Compact
The UNGC does not accept applications from companies:
• involved in the sale, manufacture and distribution of antipersonnel landmines or cluster bombs
• on UN sanctions lists
• blacklisted by UN Procurement for ethical reasons
Special policies apply to certain other types of organisation:
• micro-entities with less than ten employees cannot be listed as participants on the UNGC website, but can participate through local network groups
• subsidiaries of participating organisations can either participate through their parent company or can sign up in their own right alongside their parent
• tobacco companies can be signatories to the UNGC, but are not actively encouraged to join and the UNGC will not accept any funding from them
The UN Global Compact Management Model
The UN Global Compact Management Model was launched in 2010. Once an organisation has decided to commit to the UNGC, the Management Model sets out a framework the organisation can use to help incorporate the ten principles into its business strategy and translate them into operational practice.
References: UN Global Compact: Management Model
Depending on the sector and geography in which the organisation operates, the scale of this task cannot be underestimated.
On signing up to the UNGC, business organisations commit to publish a Communication on Progress (COP) within one year of the date they join, and then annually thereafter. The date by which each subsequent COP must be published is taken from the date of the previous COP.
Non-business organisations must publish a Communication on Engagement (COE) within two years of the date they join and then at least every two years thereafter, although annual reporting is encouraged.
The COP or COE must as a minimum include:
• a statement from the CEO or equivalent role-holder setting out the organisation's continuing support and ongoing commitment to the UNGC and its principles
• a description of the practical actions the organisation has taken to implement the ten principles in each of the four areas they cover (human rights, labour, environment, anti-corruption), or an explanation if the organisation has not taken action in any particular area
• a measurement of outcomes (eg to what degree targets/performance indicators have been met by the organisation)
There is no set format for the COP or COE and it can be prepared in any language. It may be a standalone document, or form part of a wider social responsibility or sustainability report or the organisation's annual report to shareholders.
COPs are classified by the UNGC as:
• GC advanced—COP meets the minimum requirements plus covers the organisation’s implementation of advanced criteria and best practice
• GC active—COP meets the minimum requirements
• GC learner—COP does not meet one or more of the minimum requirements
In this context GC stands for Global Compact, rather than General Counsel.
As soon as the COP or COE is submitted it will appear on the UNGC website. The UNGC also strongly encourages organisations to communicate the terms of their COP/COE directly to stakeholders, eg as part of the annual reporting exercise, through stakeholder forums or on the organisation's website.
If an organisation is going to miss its deadline for submitting the COP/COE, it can request an extension of time by a further three months. The reasons for late submission must be included in the extension request or 'grace letter'. The UNGC has a template grace letter for this purpose. If the deadline is missed, the organisation is classified as 'non-communicating' and if it remains non-communicating for more than a year, can be expelled from the UNGC. A grace letter can be submitted more than once, but not in two consecutive years.
References: UN Global Compact, Grace letter submission guide
All COPs, COEs and grace letters are available on the UNGC website as are details of non-communicating and expelled organisations.