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.
