The investors, from 12 countries and with more than $3 trillion in assets under
management, have identified 29 companies that are members of the UN Global Compact (UNGC) but "have failed to produce the
mandatory annual report that communicates their progress on corporate sustainability." The
investors have written to the 29 companies, challenging them to produce the annual corporate
responsibility report known as a Communication on Progress (COP) that is required of the more than
7,000 corporate members of UNGC.
A press release declines to identify
the 29 laggards contacted by the coalition. In 2010, Gavin Power of UNGC told SocialFunds.com, "The
investors feel strongly that they get better results through private negotiations. Given their
success rates, we’re comfortable with that policy."
The coalition has met with a measure
of success over the years of its engagement. From 2008 through 2011, an average of 40.1% of laggard
companies submitted sustainability reports after being contacted by the investors. Last year's
engagement identified 33 laggards, 13 of which subsequently submitted COPs. Ten laggards were
expelled from UNGC.
Since 2005, UNGC has expelled more than 3,000 companies for failing to
produce a COP, which reports on corporations' efforts to implement UNGC's ten sustainability
principles. Last year, in order "to motivate companies at all levels to strive for greater
integration of the principles," the Global Compact introduced a Differentiation Framework, which
aims to mainstream sustainability reporting and improve transparency and disclosure.
Notwithstanding the admirable goals of UNGC, the markedly high expulsion rate has raised
eyebrows among some corporate responsibility observers. Mallen Baker, the founder of Business Respect, wrote in a blog post
entitled Global Compact
keeps fishing the bodies out the river, "CSR membership organizations—some of them with real
commitments and obligations—do not see such high drop-out rates."
"Some NGOs have
criticized the organization for not having enough teeth to enforce standards on its members," Baker
wrote. "What is simply not good enough is the Global Compact trumpeting its high expulsion rate as
a badge of honor."
The investors wrote to 89 additional companies, acknowledging their
advanced levels of reporting. Of the 89 leaders, only two—Symantec and Dow Chemical—are
headquartered in the US, and Dow is currently embroiled in a widely reported controversy over its
sponsorship of the 2012 Olympic Games in London. Dow is the owner of Union Carbide, whose factory
in Bhopal, India, leaked poisonous gas in 1984, killing 15,000 people. Dow bought Union Carbide in
2001, and disavows any legal responsibility for liabilities relating to the Bhopal disaster.