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Ten years ago, businesses struggled to explain the link between sustainability principles and business, but an era of responsible corporate practices is dawning
Dramatic change always seems elusive. Major social and economic problems appear intractable, destined to be with us forever. Yet even a cursory study of recent history teaches us that we live in an extraordinary period, where the lives of millions of people throughout the world are dramatically improving. With significant reductions in poverty, progress in key health indicators and greater economic opportunity, an increasingly well-integrated, technologically empowering, private-sector driven international economy is turning into the most transformational force since the Industrial Revolution.
Business, the world’s main source of economic activity, is setting the pace in supercharging the productivity of human endeavour, defeating disease, reinventing communications and drawing more nutrients from the soil. Guided by the desire to leverage worldwide economic activity to the benefit of both markets and societies, the United Nations Global Compact was created more than a decade ago. Our objective was to foster a new narrative that conveyed the power and potential of responsible corporate practices.
Our mission to mainstream corporate sustainability started with the articulation of a set of universal principles on human rights, labour, environment and anti-corruption that could be embedded within business strategies and operations everywhere. Methodologies for business engagement, following the “commit, act, report” model, were then instituted. Country networks made up of business participants and civil society signatories emerged, now totaling 101. Eventually, global platforms were established for business to lead the way on key challenges. Currently, our climate and women’s empowerment initiatives are the world’s largest for corporate action.
Today, the Global Corporate Sustainability Report 2013 was released, providing an in-depth examination on the progress of companies around the world to incorporate responsible practices into their strategies, operations and cultures and realise a more equitable, prosperous and sustainable future.
As this year’s study indicates, companies throughout the world infuse national, regional and local economies with core values that build trust in markets, drive growth and spur development. With adherence to U.N. Global Compact principles growing from 40 companies at our launch to more than 8,000 from 140 countries today, corporate leaders - representing nearly every industry and sector, and from developed, emerging and developing economies - are embracing the fundamental premise that responsible conduct, sustainable development and long-term business growth are mutually reinforcing.
For these enlightened private sector leaders, working towards the common good is no longer the main “selling point”. They understand that sustainability issues – as covered by the UN Global Compact principles – are major factors in the long-term viability and success of companies, whether small suppliers or large trans-nationals. They also recognise that market disturbances, social unrest or ecological devastation – no matter how near or far away – have real impacts on the supply chain, capital flows, public opinion and employee productivity.
These corporate sustainability efforts have been given a major boost by mainstream investors and business schools due to the activities of groups such as the Principles for Responsible Investment, with its 1,000 investors managing assets up to $35 trillion, and the Principles for Responsible Management Education, supported by more than 500 business schools and management institutions.
This is promising progress, but we will only have a real chance at systemic change if 20,000 or more companies are fully committed to the U.N. Global Compact principles. At that point, the private sector will begin to embrace a true global consciousness reflecting that sustainability is a best business practice.
However, this will only happen if we address the increasing gap between the adoption and implementation of principles. Too often, CEOs and board members make significant commitments to pursue a more sustainable course of action and then encounter an array of barriers in implementing their good intentions.
To close the gap between “say” and “do”, chief executives must take a sophisticated and comprehensive approach to integrate sustainability practices vertically and horizontally – from the board, down through the organisation and subsidiaries and out into the supply chain. As part of this effort, clear targets and accountability measures must be established.
Achieving real progress will also require that companies move beyond silos and join U.N. Global Compact issue platforms on climate, water, gender, children’s rights and peace. Commitment to these platforms will drive performance and enhance impact by placing greater emphasis on collaborating, partnering and co-investing with civil society, other companies, governments, local communities, employees and academia.
Already, with more than half of companies reporting partnerships, we see unprecedented collaboration and cooperation with NGOs and corporate competitors. They are coming together in ways not previously imagined to fight collective challenges such as corruption and climate change.
As we look ahead, our efforts will benefit from the fact that it is becoming even easier to measure and assess progress with companies becoming far more transparent in communicating their sustainability work. Ten years ago, it was a challenge for businesses to explain the connection between sustainability principles and business. Now, thousands are doing so annually in public reports on topics like human rights, water and anti-corruption. Soon these efforts will be providing us all with a front row seat in the dawning of an era of global consciousness and responsible corporate practices.
Georg Kell is the executive director of the U.N. Global Compact, the world's largest voluntary corporate sustainability initiative with 7,000 corporate participants in 135 countries. A key architect of the Global Compact, he has led the initiative since its founding in 2000, establishing the most widely recognised multi-stakeholder network and action platform to advance responsible business practices.