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February 06, 2009
UN Global Compact Calls on Corporations to Address Climate Change
    by Robert Kropp

Marking the tenth anniversary of its formation, the initiative focuses its corporate sustainability efforts on collaboration for a low-carbon economy.


In conjunction with a speech by UN Secretary-General Ban Ki-moon at the World Economic Forum in Davos, Switzerland on January 29, the UN Global Compact issued a paper entitled Global Sustainability in the 21st Century: An Action Plan for Business. The Global Compact is a strategic policy initiative for businesses committed to the adoption of sustainable and socially responsible policies.

In his speech, Ban called climate change the "one truly existential threat, the great moral imperative of our era." Noting that on the tenth anniversary of its formation the Global Compact involves over 6,000 business participants in more than 130 countries pioneering new standards in best practice, Ban said, "Our times demand a new constellation of international cooperation. By tackling climate change head-on we can solve many of our current troubles, including the threat of global recession."

Stating in its paper that "Key factors in the financial crisis were inadequate assessment of risk and focus on short-term returns," the Global Compact continued, "Our globalized marketplace requires a stronger ethical orientation and more comprehensive understanding, assessment and management of risks that include not only traditional business and financial factors, but also material extra-financial issues in the environmental, social and governance (ESG) realms."

The paper listed a number of pertinent lessons from the current economic crisis. An obsession with short-term gains, as well as insufficient respect for ESG issues, played important roles in the destabilization of financial markets. Companies operating in the new global context must not only deliver rewards to a relative few at the expense of taxpayers, but also consider the interests of employees, communities and other key groups.

Lack of corporate transparency and disclosure allowed too many organizations to hide poor practices that led to the financial crisis. The subsequent collapse has affected economies throughout the world, including many countries that face threats of increased poverty and other social ills.

The paper concluded with a framework for an action plan for business. Companies need to engage more deeply on ESG issues and disclose their efforts, from boardroom policy making to deeper penetration throughout supply chains, and more actively communicate their ESG policies and performance with investors. A requirement that listed companies disclose ESG performance should be supported.

Business must answer the call to create a future based on a low-carbon economy and advance corporate water sustainability stewardship. Business must join in the movement for a comprehensive and meaningful agreement at COP 15, the climate change summit in Copenhagen at the end of 2009.

Stronger collaboration between governments, civil society and the private sector is necessary to overcome dilemmas that are too difficult or complex for one organization or sector to address alone.

 

 
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