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Commitment vs. Practice: A Comparison of CSR Performance of the UN Global Compact Signatories and Non-Signatories

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A Comparison of CSR Performance of the UN Global Compact Signatories and Non-Signatories 11 Labor and Human Rights Overall, in EcoVadis database companies demonstrate the highest performance under the Labor and Human Rights theme, which also has the strongest impact on scores. One of the main drivers behind this trend is the fact that issues considered by this theme often carry greater risk worldwide and as a result are significantly regulated and enforced against than other CSR issues. Companies must respond to various global norms and regulations regarding labor and human rights within their management systems and this is reflected positively in their performance under this theme. These results are consistent with findings from the UN Global Compact Progress Report 2018, which shows a strong commitment of UN Global Compact participants with over 90 percent of companies having policies or actions on labor and human rights topics. 3 Within this theme, large companies achieved significantly lower EcoVadis scores compared with small and medium-sized companies. This gap in performance is linked to the complexities of managing a larger and more geographically diverse workforce, which presents large companies with greater operational risks. On the other hand, small and medium-sized companies often operate on a much smaller scale, which inherently exposes them to less risk and gives them more capacity to mitigate labor and human rights violations. The UN Global Compact framework encourages companies to move beyond focusing solely on employee health and safety issues, emphasizing employee wellbeing and broader human rights considerations. Overall, UN Global Compact participants had an average EcoVadis score of 55 in the Labor and Human Rights theme, while non-participants' score averaged at 44. This performance gap of 11 points illustrates the significant room for growth for companies not participating in the UN Global Compact. Arguably, the structured approach to corporate responsibility developed by the UN Global Compact is a driver and a facilitator for companies adopting the Ten Principles to advance its management system on these topics. Furthermore, large companies participating in the UN Global Compact achieved an average EcoVadis score of 53, while their small and medium-sized counterparts achieved a slightly higher average of 57. For non-participants, large companies averaged a score of 40 compared to 44 for small and medium-sized ones. This distribution of Average Scores demonstrates a strong correlation between higher performance in the Labor and Human Rights theme and participation in the UN Global Compact. These findings are consistent with the data reported in the 2018 UN Global Compact Progress Report, in which 72 percen and 62 percent of companies claim that UN Global Compact framework has an impact on how they address human rights and labor issues respectively. 4 However, there is still work to be done on labor and human rights. Even though most UN Global Compact participants assessed by EcoVadis demonstrate higher performance than their nonparticipant counterparts, 5 percent of all UNGC participants score 30 or lower and 20 percent score below average in this theme. This reinforces the significance of a consistent management system approach with focus on actions and reporting. 3 UN Global Compact Progress Report 2018. p. 17 4 Ibid. p. 8

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