BANGKOK (Thomson Reuters Foundation) - Progress in making companies more environmentally and socially responsible has been slow and too many still focus on short-term financial gain rather than their long-term impact on people and nature, the head of the U.N. Global Compact said on Thursday.
The Compact, which celebrates its 15th anniversary this month, is the world’s largest voluntary corporate sustainability initiative, with more than 8,000 members from over 150 countries.
“There has been a truly global, silent revolution of businesses taking on environmental, social and governance issues, and this is a total change compared to 15 years ago,” its executive director, Georg Kell, told the Thomson Reuters Foundation in an interview.
“But progress has been slow and there is still a long way to go,” Kell said, noting that the Compact would like many more of the world’s roughly 50,000 publicly listed companies to join.
The Compact seeks to align its members’ business operations and strategies by committing them to abide by 10 principles in the areas of human rights, environment and anti-corruption.
Only about 10 percent of its members are “truly cutting-edge” in thinking about the longer-term implications of their business operations, Kell said.
“Too many companies still focus on short-term financial gains and just react when they are hit by bad news about human rights abuses in their supply chains or environmental scandals.”
The demand for ethical corporate leadership is bigger than ever due to the continued erosion of public trust in institutions and the “overwhelming evidence” that man-made global warming threatens the survival of our planet, Kell said.
The business case for corporate sustainability is also getting stronger as evidence shows that long-term financial success goes hand in hand with social responsibility, environmental stewardship and good governance, he added.
Kell said he was confident the corporate sustainability movement would grow but stressed the financial sector was lagging behind other companies’ efforts amid growing concern about banks’ role in funding companies that harm the planet.
One of the Compact’s goals is to have 20,000 members by 2020, a number Kell hopes will be large enough to lead to catalytic changes and transform markets.
Kell, who will hand over to Lise Kingo in September after 15 years at the helm, said he hoped that by 2030 there would no longer be any need for an initiative like the Global Compact.
“My wish is that by then it doesn’t exist any more because markets have changed fundamentally,” said Kell. “Market transformation is our goal and if that were achieved then indeed the Global Compact would no longer need to exist - mission accomplished.”
Reporting by Bangkok newsroom; Editing by Tim Pearce; Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers humanitarian news, women's rights, trafficking, corruption and climate change. Visit www.trust.org