Corporate Eye

Sustainable Business | Still A Long Way To Go

Long Way To GoSchool.  Everyone has their own memories of school, how well they did or didn’t do, and why.

I’ve recently been talking to my eldest about school.  He’s at the end of primary school (year 6) and I was attempting to explain how important it is to take full advantage of your years in school for your future life and prospects.

The chat was successful and we now recognise that a lot of effort is required from both of us over many years before he matures into the job-wielding adult of our dreams and aspirations.

All of which sprung to mind as I looked over a list of the 859 companies kicked out of the United Nations Global Compact (UNGC) at the start of this month: a lot more time and effort is required, by all parties concerned.

United Nations Global Compact – A Potted History

The UNGC was formed in 2000 by the United Nations in order to promote a range of environmental and ethical business practices.  The cornerstone is Ten Principles which a company’s CEO has to personally sign up to in order for a company to be accepted into the scheme.

In theory, each subsequent year the company should then submit a Communication on Progress (COP) detailing what they’ve done to implement these principles.

In practice, what happened is that many companies signed up and happily plastered the good name of the United Nations all over their literature, but never submitted a COP.  The term “bluewashing” was coined to describe this.

In 2004, a set of integrity measures were introduced, which included the threat of delisting for failure to provide a COP.  In 2008, a staggering eight years after the UNGC was established, the first companies were kicked out.

Since then nearly 2,000 companies have been delisted from the UNGC, of which nearly half were announced this year, and a similar amount are classed as “inactive” (meaning they are under threat of being kicked out).  To put this into context, 127 new joiners have been announced this year and the total number of active pariticipants is 5,300.

Should You Report Bad News?

It’s easy to take pot shots at the UNGC: after all, it’s not the scheme which is behaving badly but the participants.  So when the list of 859 was announced I thought I’d give it a quick skim and see what some of the companies had to say about it.

Looking in detail at 12 of the 859 companies (those with greatest name recognition for me) the first thing which struck me was that not one of the companies had reported the delisting on their website.

This isn’t a shocking surprise.  The idea of publicity demands that companies only announce good news unless forced otherwise.  Transparency, on the other hand, demands something else and if a company is delisted surely there is a good, sensible reason for it to no longer engage with the United Nations?

In this era of reputation management, with BAE Systems seeming to escape corruption charges and Toyota having to recall at least 8 million cars, a small, pro-active statement may be worth a company’s while.

The Parent and Child Relationship

Then it struck me that over half of these companies were subsidiaries of larger multinational concerns.

Most of these have parent companies who are members of the UNGC and if the group CEO has signed the Ten Principles it follows that this will cascade down throughout the organisation.

Delisted examples of this include Shell Nigeria, GlaxoSmithKline Ukraine and Royal and Sun Alliance Mexico.  It’s worth noting however that many other subsidiaries remain engaged with the UNGC alongside their parent, and I remain puzzled by Tata which both had some of its subsidiaries delisted in this wave, and yet has others remaining actively engaged.

However in the 12 companies I was looking at I did come across one subsidiary whose parent company is not a member of the UNGC: Singer Bangladesh.

Does It Matter If The Parent Doesn’t Care?

This is worrisome for two reasons.  Firstly, because it implies that the subsidiary is more concerned about sustainability than the parent, and secondly because it implies that that concern was not supported by the parent.

The issue in this case may be the form of ownership.  Singer Bangladesh is owned by Singer Corporation, which was bought in 2004 by Kohlberg & Company, an American Private Equity company, and merged into SVP Worldwide.

Of all of these, only Singer Bangladesh has a CSR section on their website, the irony of which has not escaped me.

I do not know how many other subsidiaries there are in the list, nor how many of the companies are privately owned in such a manner.

Nor do I know whether Singer Corporation, SVP or Kohlberg & Company have any kind of corporate responsibility or sustainability policy: certainly none is published on their websites.

However, had a small news article been released on any of their websites, lamenting the loss of the UNGC listing and pointing to Singer Bangladesh’s admirable work among its own community, then perhaps … perhaps .. I would not be quite as cynical.

Parents And Children Need To Grow Up

10 years after the UNGC was launched, it is finally using its teeth and, to quote one CSR professional I know, “showing a little backbone”.  It’s starting to grow up.

However, the rest of the business world needs to grow up with it.  The UNGC is not the most onerous scheme to be part of and never deserved the abuse it got when it was first established.

A recent study by the Boston College Centre for Corporate Citizenship found that 41% of companies monitor the strategy of their CSR programmes, but only 25% measure the social impact of those programmes.

Social responsibility and sustainability is barely out of primary school.  Adolescence has yet to kick in.  We have a long time and a lot of effort to go before sustainable business reaches maturity.

The twelve organisations examined for this article are GSK Ukraine, Philips Pakistan, RSA Mexico, Singer Bangladesh, Tata Autocomp, Tata Industrials, Tetra Pak Ukraine, Shell Nigeria, Unilever Ghana, Unilever Mozambique, Unilever South East Africa.

Picture Credit: Long way to go by krishnan_sriram14 fom flickr under Creative Commons Attribution ShareAlike License.

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A former CTO, Chris has a broad and varied background. He’s been involved with blue chips, consultancies & SMEs across a wide variety of sectors and has worked in Europe, the Middle East and Australia. In 2007 he decided to combine his knowledge of business and IT with his passion for all things sustainable and has been busy writing ever since. However, his greatest ambition remains to brew the perfect cup of coffee.