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UN Global Compact Expels 657 Companies in 2014

The UN Global Compact expelled 372 companies in the second half of 2014 for failure to communicate progress for at least two consecutive years, bringing the total number of expelled companies in 2014 to 657.

These expelled companies represent 10 percent of the 3,760 participants due to submit a Communication on Progress (COP) within the second half of 2014. A total of 197 companies achieved the GC Advanced level, reflecting an increased commitment to transparency and accountability.

The number of companies joining the UN Global Compact continues to exceed the number of expulsions, with 729 companies from around the world joining the initiative from July through December 2014.

Business participants in the Global Compact commit to make the ten principles part of their business strategies and day-to-day operations. As an integral part of their commitment, companies must issue an annual COP, a public disclosure to stakeholders on progress made in implementing the ten principles and in supporting broader UN goals and issues.

Companies that fail to submit a COP for two consecutive years have not fulfilled their commitment to the Global Compact and face expulsion from the initiative.

A Communication on Engagement (COE) policy, introduced in October 2013, also requires non-business participants to disclose specific activities in support of the initiative to stakeholders every two years, as well as results. Non-business participants that fail to submit a COE every two years will also face expulsion from the initiative.

Business, governments and investors must move quickly to achieve a critical mass of companies acting responsibly, UN Global Compact Executive Director Georg Kell said during the “state of the union” between business and society, last May 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.”

In late 2013, the UN Global Compact 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.