This week, business leaders gathered virtually to celebrate the 20th anniversary of the United Nations Global Compact (UNGC). Having launched with just 44 companies in 2000, today, the UNGC has more than 13,000 member organizations, spanning companies and initiatives across all continents, sectors and sizes. However, despite this tremendous global support, delivering on the UNGC’s key agenda and achieving the Sustainable Development Goals (SDGs) by 2030 appears to be an increasingly challenging task. Action to meet the goals simply isn’t progressing at the speed and scale required.
With only 10 years left, the UNGC has kicked off the Decade of Action to mobilize resources and corporate action toward the SDGs. Given that only 21% of signatory CEOs feel that business currently plays a critical role in contributing to the SDGs and 71% believe that increased commitment and action would be possible, there’s room for optimism.
As we celebrate the UNGC anniversary and its impact and inspiration over two decades, it is important that all companies continue to do their part – starting in their own communities and networks. At EcoVadis, we see the tremendous impact of the UNGC reflected in our supplier sustainability ratings. Globally, UNGC signatories have a higher sustainability performance than their non-signatory peers, achieving average EcoVadis scores of 54 and 42, respectively.
Two Decades of Principle-Based Business
The anniversary celebrations reflect on two decades of principle-based business at the UNGC. Principle-based refers to the Ten Principles that signatories endorse and implement through their actions and policies. Based on this value system, the UNGC has paved the way for a comprehensive paradigm of corporate sustainability that includes human and labor rights, anti-corruption, and environmental standards alike.
From its very beginnings, the EcoVadis methodology was inspired by, and continues to align with the UNGC principles. In fact, in 2018 the Foundation for the UNGC selected EcoVadis Ratings to assess its partner organizations. We are proud to share this holistic view of corporate sustainability, and build on the legacy of leadership that the UNGC has helped to initiate and nurture since its founding. We firmly believe that private sector companies in all sectors as well as public and government organizations can benefit from the Ten Principles on their sustainability journeys.
On the occasion of the 20-year anniversary, signatories are asked to spread the word about the UNGC in their communities and inspire stakeholders to commit to the Ten Principles and the SDGs. The UNGC is open to all companies, with opportunities to contribute for each sector. Through educating and informing their audiences, sustainability leaders can drive other companies in their networks and challenge them to make bold commitments for sustainability.
Engaging Supply Chain Partners in the Decade of Action
The global community has ten years left to achieve the SDGs, and the UN proclaimed the Decade of Action to use this time collectively. One action gap among UNGC participants (and even more so among non-participants) is the engagement of supply chain partners in their sustainability efforts. Across current UNGC participants, 61% include corporate responsibility expectations in relevant documents (e.g., contracts, proposal requests and purchase orders), while only 50% train their staff on responsible purchasing practices. A mere 13% of participants use their leverage over suppliers to require their commitment to the Ten Principles.
At the launch of the Decade of Action, the UNGC asks its community to take ambitious steps toward the SDGs. Within today’s complex and global supply chains, engaging with trading partners and suppliers is a meaningful way to mobilize on networks and follow the call. Using sustainability assessments in procurement management can be the first crucial step in engaging with supply chain partners and showing their commitment to the Ten Principles along their supply chain.
Why Sustainability Assessments Matter
The UNGC has also emphasized the importance of sustainability assessments when it comes to embedding the Ten Principles into business operations. “Broader sustainability risk and impact assessments happen infrequently, with just 38% of [participant] companies conducting a general sustainability risk assessment,” found the UNGC’s Progress Report 2019, with only limited progress made since 2015. Sustainability reporting and evaluation are inconsistent, as only about 55% of signatories monitor their performance over time. Recent trends saw reporting across the Ten Principles decreasing. While companies have taken broad action towards achieving the SDGs, the global business community needs to continue planning, measuring and communicating its progress. If not based on comprehensive impact analysis and reporting, corporate sustainability initiatives are in danger of missing aim on the very issues that are most material to business operations. The UNGC considers sustainability assessments an integral step that helps companies understand their context and sustainability impact in order to guide strategic action.
Overcoming Challenges in Sustainability Reporting
The UNGC signatories cite a lack of standard performance metrics (40%) and too many reporting standards and frameworks (37%) as the most common challenges in their sustainability reporting. In addition, small and medium sized enterprises find it difficult to work with their resources when it comes to monitoring and reporting sustainability progress.
Companies we work with give us feedback that they receive far too many bespoke assessment surveys each year (outside the EcoVadis network) – often 25, 50, and some receive 100 or more per year! – and it is overwhelming. That is why we offer one assessment, customized to each company’s context, that lets businesses benchmark, showcase and report their results to their stakeholders. The EcoVadis methodology covers the Ten Principles and beyond, going into sustainable procurement practices to help ensure that the Ten Principles are embedded in the supply chain. Our rating also allows companies to benchmark their performance against industry peers, establishing actionable performance metrics for their corporate sustainability progress. Most importantly, our EcoVadis methodology supports companies of all sizes. In fact, small and medium-sized enterprises (26-999 employees) on average perform better than large ones (over 1,000 employees) in the EcoVadis rating, achieving overall scores of 42.4 and 39.6 respectively.
Let us know if you’re looking to get your company started in the Decade of Action -- we’ll be happy to help.
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