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January 13, 2009
Investors Request High-Quality Communications on Progress
    by Robert Kropp

Letter to companies that have joined the United Nations Global Compact praise the reporting of some while identifying as laggards those that have not submitted COPs.


The United Nations Global Compact consists of a set of ten principles of corporate responsibility, which address issues of human rights, labor, the environment, and anti-corruption. By joining the UN Global Compact, companies commit to producing an annual corporate responsibility report known as a Communication on Progress (COP).

The COP is an annual public communication to stakeholders on the progress a company has made in implementing the ten principles of the Global Compact. The COP helps to ensure the credibility of corporate engagement and provides a repository of data on corporate responsibility practices.

In order to monitor the corporate responsibility reporting of companies that have joined the Global Compact, an international coalition of investors that manage assets worth over $3 trillion has launched an initiative in the form of a letter to the CEOs of 130 major listed companies.

The investors are all signatories to the UN-backed Principles for Responsible Investment (PRI), a framework for investor management of environmental, social and corporate governance (ESG) issues that can affect the performance of investment portfolios.

In their letter, the investors praised 25 of the companies for producing notably high-quality COPs, while over 100 companies were identified as laggards by the investors for failing to submit a COP this year.

The Global Compact requires companies to post their first COP on its website within two years of joining the initiative. Subsequent COPs are expected annually. If a company fails to meet its deadline, it will be marked as “non-communicating” on the Global Compact web site. If it misses two consecutive deadlines, it will no longer be considered a Global Compact participant.

This new investor initiative builds on a successful shareholder engagement last year which resulted in over 32% of the companies identified as laggards subsequently submitting a COP.

The success of last year's initiative contributed to the launch of the Seoul Initiative in October 2008, a collaboration among 52 PRI signatories asking almost 9,000 companies to join the Global Compact.

 

 
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