(New York) – 2,048 companies from around the world have been expelled from the United Nations Global Compact for repeated failure to communicate on progress in integratingthe initiative’s ten sustainability principles into their strategies and operations.
The number was reached following the recent expulsion of more than 200 companies at the end of a 2010 moratorium on expulsions in less developed countries, a short-term measure to explore solutions to a systemic lack of disclosure in certain markets. (See the list of expelled companies).
The Global Compact requires participating businesses to communicate every year with stakeholders on their progress in integrating the ten principles. Companies that do not issue a Communication on Progress (COP) for two consecutive years face expulsion and must reapply for participation in the initiative.
“We are moving forward on transparency and disclosure through a dual, complementary approach,” said Jerome Lavigne-Delville, Head of Communication on Progress in the Global Compact Office. “On the one hand, we are driving a strict enforcement of our integrity measures to ensure that every business participant disclose information on its progress, every year. On the other, we are introducing a platform that provides incentives and recognition for businesses at all levels to make meaningful progress towards a comprehensive implementation of the principles in strategy and operations.”
In conjunction with the stronger enforcement of its COP policy, the Global Compact has introduced a differentiation framework to motivate companies at all levels to strive for greater integration of the principles. The framework, which will be officially launched in February of this year, categorizes business participants based on levels of progress disclosure.
As a long-term solution following the moratorium, the differentiation framework represents a new phase of in the Global Compact transparency and disclosure policy, designed not only to improve transparency among smaller and less experienced participants, but also to stimulate continuous progress and performance improvement among the more advanced companies. Please click here for more information on the differentiation framework.
“This is a significant move forward for the Global Compact,” said Georg Kell, Executive Director of the Global Compact. “It will provide deeper incentives at both ends of the performance spectrum, and help stakeholders critically assess the performance and progress of our companies.”
As one of the main outcomes, differentiation will be critical to support investors and other stakeholders in the assessment of companies’ progress, using the COP as a platform to benchmark management systems against global best practices.
Following the recent expulsion, the total number of active business participants in the Global Compact stands at 6,066 companies in 132 countries.