Mind the gap: Actions and intentions are still not aligned

Companies are becoming increasingly systematic and proactive about integrating sustainability into their operations. However, implementation varies significantly between companies, progress is slow, and a large gap remains between talk and action.

MORE SYSTEMATIC GOVERNANCE

A clear trend is that an increasing number of businesses globally are integrating sustainability issues into formal governing documents. An overwhelming majority of Global Compact participants surveyed – 90 per cent - say they now have policies and practices in place encompassing all the Global Compact principle areas.

In general, larger companies tend to have advanced further in integrating sustainability issues into their governance structures and related documentation. This is most true when it comes to governance of environmental and labour risks, mainly related to health and safety of their own employees. The most significant change is seen in the area of anti-corruption – an increase from 81 per cent in 2008 to 91 per cent in 2015.

Sustainability policies are also becoming more specific. The percentage of surveyed companies that establish specific policies on issues such as corruption or forced labour is growing, albeit at a slow pace.

However, survey results relating to the degree to which companies are conducting activities such as risk and impact assessments, foot-printing and training suggest that policies are still not yet being translated into action. For instance, only 22 per cent of respondents conduct human rights risks assessments, despite 94 per cent saying they have policies and practices in place.


RISK ASSESSMENTS: A MIXED PICTURE

There seems to be a general tendency towards a greater use of risk assessments to enable proactive management of companies’ sustainability risks, yet results from the survey show only a marginal increase in recent years. However, the difference is significant between issues.

A higher percentage of Global Compact companies surveyed state that they perform risk assessments on labour and environmental issues, while a much lower percentage conduct a similar exercise on human rights and anti-corruption. The most significant increase has been in the area of anti-corruption, with a notable rise of 18 percentage points in only four years.

Results show that while smaller companies have policies and practices in place, they are lagging behind in terms of proactive management of issues.


A STRONGER EMPHASIS ON PERFORMANCE MONITORING

Whereas risk assessment relates to how proactively a company is managing impacts, monitoring performance is key for enabling continuous improvement - a fundamental underlying principle for participation in the Global Compact.

Around half of all survey respondents evaluate performance related to environment and labour, while less than a third do the same for human rights and anti-corruption. This is despite the fact 90 per cent of respondents have policies or practices for these areas.

Results from the survey show a substantial difference between the practices of large and small companies. In the area of human rights where business practices are generally considered less mature, there is very little difference between large and small companies.

THE ROLE OF THE UN GLOBAL COMPACT:

KICK-STARTING THE JOURNEY OF CHANGE

As business is gradually starting to integrate sustainability into operations, what has been the role of the Global Compact in catalysing this change?

Progress on integrating sustainability into operations has been slow overall. However, the Global Compact together with its partners has over the years delivered a significant amount of work which inspires, encourages and supports companies on their journey to sustainability.


ADVANCING ACTION

In the early days, the Global Compact focused primarily on facilitating multi-stakeholder discussions on good practice related to difficult sustainability risks. Over the years, the initiative has moved to producing an increasing amount of guidance on how to manage and disclose sustainability performance.

A remarkable total of 251 tools and guidance resources have been produced over the past 15 years, helping to clarify good corporate practice on a wide range of environmental, social and governance issues, such as operating in zones of conflict or handling child labour risk in the supply chain. The Global Compact has also produced several practical frameworks and specific tools for companies to conduct risk and other types of assessments, for instance to measure and report on performance.

In addition, a total of 349 global and 9,171 local events have been recorded by the Global Compact and its Local Networks. These constitute important platforms – both globally and at the national level – for multi-stakeholder dialogue and knowledge-exchange on challenges as well as approaches for how business can improve its positive impact.


DEEPENING ENGAGEMENT

Since mid-2000, the Global Compact has launched a number of specific issue engagement platforms which offer opportunities for companies to be more active and take a stronger leadership position on issues of particular importance. Caring for Climate, the CEO Water Mandate and the Women’s Empowerment Principles are examples of these platforms (see separate Spotlight sections). They primarily do two things: the framework defines what is good practice related to an issue, and they also enable like-minded participants to collaborate through local actions, initiatives and projects.


DRIVING THE DRIVERS OF CHANGE

Possibly the most significant impact of the Global Compact in this area concerns its activities to influence the external operating environment. It has played a critical role in mobilising the financial and educational sectors, as well as through advancing sustainable business practices through inspiring regulation and advancing responsible policy engagement (see finding on Level 2 for more details).

“If we had to pay consultants to deliver all of the guides, resources and tools that the Global Compact provides, it would be very expensive. The Global Compact is a goldmine. To get the most out of it, companies must not only sign on to the initiative; they must understand that being a proactive participant is crucial.”
FEDERICO BERNALDO DE QUIRÓS CEO, RESTAURANTES TOKS
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