9,000 CEOS urged to sign up to UN Global Compact

Chief executives at 9,000 of the world's largest companies will this week receive letters from a coalition of institutional investors urging them to sign up to the UN Global Compact commitment to adhere to corporate governance, environmental and human rights best practices or explain their decision not to join the initiative.

The investors, whose combined portfolios total $4.4 trillion (£2.7 trillion) of assets, are all signatories to the Principles for Responsible Investment and include Aviva Investors, AXA Investment Managers, Capricorn Investment Group, F &C Asset Management and many large public sector pension funds from across the US, Europe and Australia.

They argue that companies that adhere to the UN Global Compact's 10 principles covering environmental, social and governance issues demonstrate to investors that they are aware of non-financial risks and are committed to addressing them.

"Institutional investors in general are looking for investments that offer good, long-term returns, especially in a financial climate currently marked by uncertainty," said Donald MacDonald, chair of the PRI initiative and trustee of the BT Pension Scheme. "We believe invested companies that take account of environmental, social and governance issues are more likely to offer these returns. As current and potential shareholders in these companies, we want to urge them to take action on these major issues."

Georg Kell, executive director of the UN Global Compact, welcomed the move as a major endorsement of the UN initiative at a time when many investors are focusing on responding to the current economic downturn.

"This is an unprecedented move by institutional investors," he said. "Amid the financial crisis, this underscores the importance of universal principles and the long-term management of environmental, social and governance issues."