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Business, Governments and Investors Must Act to Achieve CSR ‘Critical Mass’

Business, governments and investors must move quickly to achieve a critical mass of companies acting responsibly, UN Global Compact (UNGC) Executive Director Georg Kell said during the “state of the union” between business and society, last week at the Oslo Business for Peace Summit and Award 2014 at Oslo City Hall.

Kell stated that while “a global movement is underway, changing markets from within … [and] long-term financial success goes hand-in-hand with social and environmental responsibility and sound ethics,” he argued that “until sustainable business practices are rewarded by markets and supported by Governments, companies devoid of responsibility will keep winning contracts, cutting corners and seeking profits at any cost.”

During his presentation, Kell laid out key developments that point to the transformative potential of the corporate sustainability movement, including the increasing materiality of environmental, social and governance challenges; the move by some companies from resource-takers to market-builders in developing countries; and the global spread of the Global Compact, with companies in over 140 countries taking action.

Kell said more companies are not making a shift towards sustainability because “the enabling environments and economic incentive structures are lacking,” and pointed to three fundamental factors: Governance failures, the erosion of multilateral cooperation and trade, and the short-termism that defines markets and politics.

To push forward, Kell stressed the need for business leaders to align their public policy engagement with sustainability principles. He urged all trade associations to embrace the future and “[move] from a defensive stance to one defined by proactive, pragmatic leadership,” and stated that business could provide powerful momentum in areas such as climate change and public procurement. Kell also outlined actions for Governments, financial markets and citizens and consumers.

“I am confident that the private sector is prepared to deliver on the compact between business and society. We can move from incremental to transformative impact,” Kell said.

In other Global Compact news, in November the organization released released a guide for companies to manage and report on their direct and indirect influences on climate policy. The guide sets baseline expectations for firms to provide proactive, constructive input for governments to create effective climate policies, and helps companies to connect the dots between sustainability commitments, such as efficiency improvements and emissions reductions across their value chains, with their corporate policy positions. UNGC also considers human rights to be a major part of corporate responsibility. And in December, UNGC released another guide, aimed at helping businesses understand the rights of indigenous peoples, and recommends practical actions to respect and support these rights.


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