UN ejects 657 companies from Global Compact

The United Nations has ejected 657 companies from its Global Compact scheme for failing to report on environmental progress.

The environmental and social governance scheme requires companies to sign up to 10 principles covering human rights, labour rights, anti-corruption and environmental performance.

The UN completed its annual revision of firms signed up to the business initiative this week and a total of 657 firms were ejected from the scheme in 2014.

The initiative calls for signatories to commit to supporting the "precautionary approach to environmental challenges", undertaking "initiatives to promote greater environmental responsibility", and encouraging the "development and diffusion of environmentally friendly technologies".

To maintain their place in the Global Compact companies are required to publicly report at least once every two years on their progress against the 10 principles through a UN-endorsed Communication on Progress (COP).

The UN announced this week that it has ejected 372 companies from the initiative during the second half of 2014 for failure to submit a COP in the past two years.

The expulsions represent 10 per cent of the 3,760 companies due to submit a COP during the second half of last year.

The UN has insisted that the membership base for the scheme continued to expand last year as 729 companies signed up during the second half of 2014.

197 companies were awarded the Global Compact Advanced Level, which is given to firms that report on progress against the UN's 10 principles and also submit information on how they are taking broader action to support environmental and development goals.

A Communication on Engagement (COE) policy, introduced in October 2013, also requires non-business participants to disclose specific activities in support of the initiative to stakeholders every two years, as well as results.

Non-business signatories that fail to submit a COE every two years will also face ejection from the scheme.

UN Global Compact Executive Director Georg Kell (pictured) attended the “state of the union” between business and society in May at the Oslo Business for Peace Summit and Award 2014 at Oslo City Hall and said that while “a global movement is underway, changing markets from within … [and] long-term financial success goes hand-in-hand with social and environmental responsibility and sound ethics…until sustainable business practices are rewarded by markets and supported by governments, companies devoid of responsibility will keep winning contracts, cutting corners and seeking profits at any cost.”

In late 2013, the Global Compact released a guide for firms to manage and report on their direct and indirect impacts on environmental and climate policy.

The guide outlines baseline expectations for firms to provide proactive, constructive input for governments to create effective climate policies, and helps companies to connect the dots between sustainability commitments, such as efficiency improvements and emissions reductions across their value chains, with their corporate policy positions.