United Nations Global Compact (UNGC)

November 21, 2023

Latest updates

For updated changes to the Communication on Progress (CoP) questionnaire for 2025, check out our other blog post here.

Overview

The United Nations Global Compact (UNGC) is a voluntary initiative launched in 2000, pushing companies and stakeholders to adopt sustainable and socially responsible policies. By aligning their business operations with the Ten Principles, businesses can contribute to a more sustainable and inclusive global economy, while also enhancing their own potential financial performance and corporate governance through responsible business conduct.

Principles and Objectives

The United Nations Global Compact (UNGC) is guided by a set of principles and objectives that aim to promote responsible business practices and sustainable development. The Ten Principles of the UNGC serve as a foundation for businesses to operate in a socially responsible and sustainable manner. These principles cover critical areas such as human rights, labour standards, environmental protection, and anti-corruption measures. By adhering to these principles, companies commit to upholding internationally proclaimed human rights, fostering safe and fair labour practices, addressing environmental challenges, and combating corruption in all its forms.

The objectives of the UNGC are to encourage businesses worldwide to adopt sustainable and socially responsible policies, and to report on their implementation. This initiative not only helps companies meet fundamental responsibilities but also supports the broader goals of the United Nations in promoting peace, development, and human rights. By aligning their operations with the Ten Principles, businesses can contribute to a more sustainable and inclusive global economy, while also enhancing their own potential financial performance and corporate governance.

Scope & Adoption

Organisations are encouraged to align their operations and strategies with the Ten Principles of the UNGC and the Sustainable Development Goals (SDGs). They should operate in ways that meet fundamental responsibilities in the areas of human rights, labour, environment, and anti-corruption. These principles provide a universal language for corporate responsibility and a framework to guide all businesses regardless of size, complexity, or location. With over 18,000 companies and 3,800 non-business participants from 160 countries, the UNGC is the largest corporate sustainability initiative globally.

It is important to note that the UNGC is not a substitute for existing regulatory approaches but rather a complementary voluntary initiative. Additionally, it addresses emerging challenges in sustainability, such as adapting to new ESG expectations and the broader implications of social responsibility, climate change, and economic instability. Sustainable investment is also emphasized, aligning business practices with global sustainability goals and enhancing financial performance while meeting stakeholder expectations.

Why it Matters

The UNGC provides a standardised framework through its Ten Principles, helping create a level playing field, promoting fair competition, and enabling investors to evaluate potential financial performance through an ESG perspective.

Scoring & How to report

Companies participating in the UNGC commit to regular reporting on their progress. The Communication on Progress (CoP) is a disclosure statement that details a company's implementation of the Ten Principles. While there is no scoring system, the CoP serves as a public disclosure of a company's commitment and progress toward sustainable practices.

Alignment with other frameworks

The UNGC aligns with other ESG frameworks by providing a set of foundational principles on responsible business practices. Other frameworks such as the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB), and the Task Force on Climate-Related Disclosures (TCFD) often have specific standards and guidelines that can be mapped back to the broader principles outlined by the UNGC. For instance, in assessing ESG controversies, the principles of the UNGC are mapped to global norms like the UN General Principles of Business and Human Rights (UNGP) and the International Labour Organisation (ILO) Conventions.

The UNGC serves as a broad framework, and its principles often underpin or are harmonised with the more detailed or specific standards and guidelines provided by other ESG frameworks. Additionally, the integration of environmentally friendly technologies is crucial in promoting greater environmental responsibility and addressing environmental challenges through initiatives that align with UN principles.