Firms that sign up to industry-wide CSR initiatives only to fail to deliver on their commitments have been given a wake-up call after the UN named and shamed the 630 companies it has now kicked out of its Global Compact scheme.
Businesses signing up to the scheme are required to adhere to 10 principles governing corporate behaviour and commit to adopting best practices on human rights, the workplace, the environment and anti-corruption. In return, they are allowed to publicise themselves as a member of the global compact, access UN development resources and share best practices with other signatories to the initiative.
To ensure the "accountability and credibility" of the scheme, firms have two years from joining to issue a "communication" reporting on the progress they are making toward delivering on CSR best practices. Following this first submission, they are then required to issue communications on an annual basis.
Earlier this year, the UN Global Compact Office announced that 394 companies had been removed from the list of participants for failing to communicate their progress and last week an additional 236 firms had been delisted – taking to 630 the number of companies excluded from the scheme.
The list of firms removed from the scheme features a wide range of companies, including Groupe Fiat France and the subsidiaries and affiliates of a number of high-profile multinationals, such as Ernst & Young, Brazil, Barclays Bank of Ghana Ltd, L'Oreal Argentina SA, and Mitsubishi Motors Cebu Corporation.
The UN also revealed that a further 317 companies are currently regarded as "inactive" by the UN and are at risk of being delisted, having missed one deadline for issuing a communication on their progress.
Georg Kell, executive director of the UN Global Compact Office, said the delisting of firms from the initiative was "regrettable", but argued that it was essential that firms adhere to their CSR commitments. "This helps protect the integrity of the initiative as a whole, while also protecting the engagement of seriously committed companies," he added.
The UN also insisted that despite the clearout of firms that had failed to adhere to the criteria set out by the initiative, the Global Compact was continuing to expand. It said that during the first six months of the year 701 new firms signed up to the Compact, increasing the total number of business participants to 4,619, and the number of all participants, which includes non-business stakeholders, to 5,982.
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