Easy subscription makes compliance a casualty

Updated: Jan 30 2007, 05:30am hrs
When the United Nations Global Compact delisted 203 inactive companies for failing to submit their communication on progress earlier this month, it surprised by numbers as well as names.

The delisted companies comprised leading Indian companies like Associated Cement Companies, Hindalco Industries, Hindustan Lever, Mahindra & Mahindra, Oil & Natural Gas Corporation, Paharpur Business Centre, Tata Steel, Titan Industries, Voltas Limited, etc.

Launched in 2000, the Global Compact is a voluntary initiative for promoting responsible corporate citizenship with the help of UN agencies, civil society and labour to promote universally proclaimed principles on human rights, labour, environment and anti-corruption.

The first two principles on human rights require businesses to support and protect internationally proclaimed human rights. The next four principles on labour standards require businesses to uphold freedom of association, eliminate forced labour, abolish child labour, and eliminate discrimination.

Its next three principles on environment require business to shoulder greater environmental responsibility, support precautionary approach and develop environmental friendly technologies. The last principle of anti-corruption asks businesses to work against all forms of corruption.

The Global Compacts Integrity Measures require all members to communicate annually their progress in implementing the Global Compact principles. Participants that fail to do so for two consecutive years are labeled inactive and prohibited from using the Global Compact name and logo and participating in its events.

Failure to communicate progress doesnt mean non-performance, though. Explains Uddesh Kohli, Global Compacts special adviser in India, One of the major reasons for failure to submit communication on progress is because participating companies have not internalised their subscription to the Global Compact principles, which means that even when the principles are followed, its not reported.

Insisting that the delisting doesnt mean that the company has stopped believing in the Global Compact principles, Roopali Shahaney, general manager, Paharpur Business Centre & Software Technology Incubator Park, attributes it to the stringent rule from this year to delist companies, which do not report their progress on the Global Compact principles, on a daily basis.

Delisted companies can become active by submitting their communication on progress. Says Viraf Mehta, chief executive officer, Partners in Change, Firstly, the board of a company is where the Global Compact should be discussed.

Mehta adds, However, I do think that UN agencies, apex bodies of industry and the indigenous Global Compact Society also need to do more to promote the Global Compact principles and provide direction and support to interested companies.

The Global Compact is already working on this aspect. Says Jeff Senne, manager, Communication on Progress, UN Global Compact: In order to help overcome these challenges we are working hard to create guidance tools in order to simplify the process and help first time reporters.

Adds Herman Mulder, senior adviser to the UN Global Compact, Companies too need to be serious when they are participating in the Global Compact. Its in their own interest because participation in the Global Compact helps companies leverage the UNs influence over governments, businesses and civil society, learn from good practices of others and take advantage of the UNs knowledge base in development at no additional cost, he adds.