Overview of the UN Global Compact

The UN Global Compact is a strategic policy initiative for businesses that are committed to aligning their operations and strategies with ten universally accepted principles in the areas of human rights, labour, environment and anti-corruption. By doing so, business, as a primary driver of globalization, can help ensure that markets, commerce, technology and finance advance in ways that benefit economies and societies everywhere.

As social, political and economic challenges (and opportunities) — whether occurring at home or in other regions — affect business more than ever before, many companies recognize the need to collaborate and partner with governments, civil society, labour and the United Nations.

This ever-increasing understanding is reflected in the Global Compact's rapid growth. With over 8700 corporate participants and other stakeholders from over 130 countries, it is the largest voluntary corporate responsibility initiative in the world.

Endorsed by chief executives, the Global Compact is a practical framework for the development, implementation, and disclosure of sustainability policies and practices, offering participants a wide spectrum of workstreams, management tools and resources — all designed to help advance sustainable business models and markets. (See How to Participate.)

Overall, the Global Compact pursues two complementary objectives:

1. Mainstream the ten principles in business activities around the world
2. Catalyze actions in support of broader UN goals, including the Millennium Development Goals (MDGs)
   

With these objectives in mind, the Global Compact has shaped an initiative that provides collaborative solutions to the most fundamental challenges facing both business and society. The initiative seeks to combine the best properties of the UN, such as moral authority and convening power, with the private sector’s solution-finding strengths, and the expertise and capacities of a range of key stakeholders. The Global Compact is global and local; private and public; voluntary yet accountable.

The benefits of engagement include the following:

• Adopting an established and globally recognized policy framework for the development, implementation, and disclosure of environmental, social, and governance policies and practices.
• Sharing best and emerging practices to advance practical solutions and strategies to common challenges.
• Advancing sustainability solutions in partnership with a range of stakeholders, including UN agencies, governments, civil society, labour, and other non-business interests.
• Linking business units and subsidiaries across the value chain with the Global Compact's Local Networks around the world — many of these in developing and emerging markets.
• Accessing the United Nations' extensive knowledge of and experience with sustainability and development issues.
• Utilizing UN Global Compact management tools and resources, and the opportunity to engage in specialized workstreams in the environmental, social and governance realms.
  

A more detailed analysis of the benefits of participation in the Global Compact can be found in The Importance of Voluntarism — which also focuses on the importance of the Global Compact as a complement rather than substitute for regulatory regimes

Finally, the Global Compact incorporates a transparency and accountability policy known as the Communication on Progress (COP). The annual posting of a COP is an important demonstration of a participant's commitment to the UN Global Compact and its principles. Participating companies are required to follow this policy, as a commitment to transparency and disclosure is critical to the success of the initiative. Failure to communicate will result in a change in participant status and possible expulsion.

In summary, the Global Compact exists to assist the private sector in the management of increasingly complex risks and opportunities in the environmental, social and governance realms, seeking to embed markets and societies with universal principles and values for the benefit of all.

Following a comprehensive review of the United Nations Global Compact’s governance during 2004–2005, a new governance framework was adopted in August 2005. In keeping with the Global Compact’s voluntary and network-based character, the governance framework (download the current Global Compact Governance Framework or the 2008 Governance Update) is light, non-bureaucratic and designed to foster greater involvement in, and ownership of, the initiative by participants and other stakeholders themselves. In November 2008, the Global Compact Donor Group adopted its own Terms of Reference. Governance functions are shared by seven entities, each with differentiated tasks within a multi-centric framework:

• Global Compact Leaders Summit
  The Leaders Summit is a triennial (next to be held in 2013) gathering of the top executives of all Global Compact participants and other stakeholders. As the largest gathering of its kind, the Leaders Summit represents a unique opportunity for Global Compact participants to discuss the Global Compact and corporate citizenship at the highest level, and to produce strategic recommendations and action imperatives related to the future evolution of the initiative.
  
  More broadly, the Leaders Summit aims to deepen the commitment of participating leaders from business, labour and civil society to the Global Compact and its principles; to build and scale up momentum within the business sector; and to foster enabling environments and collective action.
  
  
• Local Networks
  Local Networks are groups of participants that come together to advance the Global Compact and its principles within a particular country or geographic region. They perform increasingly important roles in rooting the Global Compact within different national, cultural and linguistic contexts, and also in helping to manage the organizational consequences of rapid expansion. Their role is to facilitate the progress of companies (both local firms and subsidiaries of foreign corporations) engaged in the Compact with respect to implementation of the ten principles, while also creating opportunities for multi-stakeholder engagement and collective action. There are currently more than 90 Local Networks around the world.
  
  Apart from acting in accordance with the Global Compact’s principles and objectives, Local Networks are self-governing. They have the opportunity to nominate members for election to the Global Compact Board, provide input on major activities undertaken by the Global Compact Office and convene the Annual Local Networks Forum. Their input is also sought on the agenda for the triennial Leaders Summit. Furthermore, Local Networks play an important role in support of the communications on progress and integrity measures.
  
  
• Annual Local Networks Forum
  The Annual Local Networks Forum is the main occasion for Local Networks from around the world to share experiences, review and compare progress, identify best practices, and adopt recommendations intended to enhance the effectiveness of Local Networks. The Forum is hosted by the Barcelona Center for the Support of the Global Compact.
  
  
• Global Compact Board
  The Global Compact Board is a multi-stakeholder advisory body that meets annually (first meeting in June 2006) to provide ongoing strategic and policy advice for the initiative as a whole and make recommendations to the Global Compact Office, participants and other stakeholders. The Board is comprised of four constituency groups — business, civil society, labour and the United Nations — with differentiated roles and responsibilities apart from their overall advisory function. While the Board as a whole holds an annual formal meeting, the constituency groups are expected to interact with the Global Compact Office on an ongoing basis. The Secretary-General, the Chair of the Foundation for the Global Compact, the Chair of the Principles for Responsible Investment and the Executive Director of the Global Compact Office have ex-officio seats on the Board.
  
  The 31 Board members are champions willing and able to advance the Global Compact’s mission. Members of the Board act in a personal, honorary and unpaid capacity. Their Board membership does not render them UN officials.
  
  Drawing in particular on the expertise and recommendations of its business members, the Board is also expected to play a role in the implementation of the Global Compact’s integrity measures. In addition to their overall Board responsibilities, the civil society and labour constituency groups are expected to provide close liaison to their communities and share with the Board as a whole, and the Global Compact Office and Inter-Agency Team in particular, insights into the most recent trends and best practices of corporate citizenship in their respective domains.
  
  
• Global Compact Office
  The Global Compact Office is the UN entity formally entrusted with the support and overall management of the Global Compact initiative. It has received the endorsement of the UN General Assembly (A/RES/60/215) and has been given UN system-wide responsibilities for promoting the sharing of best practices. The Global Compact Office also has responsibilities with regard to advocacy and issue leadership, fostering network development and maintaining the Global Compact communications infrastructure. Furthermore, the Global Compat Office plays a central role in advancing the partnership agenda across the UN system and has overall responsibility for brand management and implementation of the integrity measures.
  
  The Global Compact Office represents itself and the other members of the Inter-Agency Team on the Board. It also services the Leaders Summit, the Global Compact Board and the Annual Local Networks Forum.
  
  
• Inter-Agency Team
  Within the governance framework and daily operations of the initiative, the Inter-Agency Team is responsible for ensuring coherent support for the internalization of the principles within the United Nations and among all participants. The agencies most closely associated with the ten principles also have an advisory role with respect to the management of the integrity measures complaints procedure. Seven UN agencies are represented in the Inter-Agency Team. They are: the Office of the UN High Commissioner for Human Rights (OHCHR), the International Labour Organization (ILO), the United Nations Environment Programme (UNEP), the United Nations Office on Drugs and Crime (UNODC), the United Nations Development Programme (UNDP), the United Nations Industrial Development Organization (UNIDO) and the United Nations Entity for Gender Equality and the Empowerment of Women (UN Women). Terms of Reference (download the Global Compact Inter-Agency Team: Terms of Reference) describe the rules governing the Inter-Agency Team.
  
  The Inter-Agency Team is represented on the Global Compact Board through the Global Compact Office’s Executive Director. The seven core UN agencies participate in the Leaders Summit and the Annual Local Networks Forum. UN agencies, especially UNDP, also play a very important role in many Local Networks around the world.
  
  
• Global Compact Donor Group
  The Global Compact Office is funded by voluntary contributions from Governments to a UN Trust Fund. Contributions from any Government are welcome. Current Donors are: China, Colombia, Denmark, Finland, France, Germany, Italy, Republic of Korea, Norway, Spain, Sweden, Switzerland and the United Kingdom. The Donor Group meets twice annually at capital level to review progress made and ensure the effective and efficient use of the contributions that Donor Governments have provided to the Global Compact Trust Fund. The Terms of Reference for the Donor Group can be downloaded here. Donors and other interested Governments are also welcome to participate in a Friends Group that meets more frequently in New York to be kept informed of developments in the initiative.