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The United Nations has taken its most decisive action yet on ‘free
rider’ signatories to the Global Compact by de-listing from its ranks
335 businesses that have failed, for at least two years running, to
issue an annual report on how they are putting the compact’s ten
principles into practice.
The action, which is the first visible sign of the compact showing its teeth, classes the companies as ‘inactive participants’, and has been taken under ‘integrity measures’ established last year to deal with those that sign up but do nothing.
Most of the companies, which are named on the compact website, are relatively small and from developing countries. However, some prominent businesses are among them, including the Spanish food and drink group Actel; Air India; Ernst & Young Brazil; French household products business Piganiol; Triumph International (Europe’s largest lingerie manufacturer); Honda Cars Pangasinan, and Tata Industries and Tata Tea, members of the Tata Group. They will no longer be able to use the compact logo or attend its events.
The de-listed companies have either failed to publish a ‘communication on progress’ within three years of joining the compact or have not submitted a communication for at least two years. A communication is an account of actions taken by participants in support of the compact. All participating companies are expected to produce one each year and to include the information in a prominent public report.
Georg Kell, executive director of the compact, predicted 200 more would be de-listed by the end of this year and many more next year. He expects the number of signatories to be around 1100 by the end of 2006, which suggests that almost half will be de-listed. ‘I think there is a significant share of de-listed companies who joined too lightly,’ said Kell. ‘They thought, “This is easy – I just have to sign a letter and then I’m a participant – no fees attached, no obligation.” This is now a wake-up call.’
Kell added that smaller companies had been de-listed at twice the rate of larger ones and that the compact has set up a ‘capacity-building project’ in 63 countries to run training programmes to remedy this.
Kell said de-listed companies have been ‘put in the deep freezer’, but will be readmitted as soon as they communicate how they are realizing the ten principles of the compact.
The action, which is the first visible sign of the compact showing its teeth, classes the companies as ‘inactive participants’, and has been taken under ‘integrity measures’ established last year to deal with those that sign up but do nothing.
Most of the companies, which are named on the compact website, are relatively small and from developing countries. However, some prominent businesses are among them, including the Spanish food and drink group Actel; Air India; Ernst & Young Brazil; French household products business Piganiol; Triumph International (Europe’s largest lingerie manufacturer); Honda Cars Pangasinan, and Tata Industries and Tata Tea, members of the Tata Group. They will no longer be able to use the compact logo or attend its events.
The de-listed companies have either failed to publish a ‘communication on progress’ within three years of joining the compact or have not submitted a communication for at least two years. A communication is an account of actions taken by participants in support of the compact. All participating companies are expected to produce one each year and to include the information in a prominent public report.
Georg Kell, executive director of the compact, predicted 200 more would be de-listed by the end of this year and many more next year. He expects the number of signatories to be around 1100 by the end of 2006, which suggests that almost half will be de-listed. ‘I think there is a significant share of de-listed companies who joined too lightly,’ said Kell. ‘They thought, “This is easy – I just have to sign a letter and then I’m a participant – no fees attached, no obligation.” This is now a wake-up call.’
Kell added that smaller companies had been de-listed at twice the rate of larger ones and that the compact has set up a ‘capacity-building project’ in 63 countries to run training programmes to remedy this.
Kell said de-listed companies have been ‘put in the deep freezer’, but will be readmitted as soon as they communicate how they are realizing the ten principles of the compact.
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