The United Nations Global Compact office has delisted 630 companies, including 39 Indian companies, as part of its Integrity Measures for failing to communicate progress in following its principles on social and environmental responsibility.
The latest round of delisted companies includes prominent names like Apollo Hospitals, Excel Industries, Hindalco Industries, Hindustan Aeronautics, Hindustan Organic Chemicals, MMTC, National Textile Corporation and Unit Trust of India. It takes the number of total delisted Indian companies to 67 out of 239 companies that have become members of the Global Compact so far.
A voluntary initiative, the eight-year-old Global Compact seeks to promote responsible corporate citizenship through its Integrity Measures, which were introduced in 2004 and require member companies to submit communication of progress (COP) on 10 principles related to human rights, labour, environment and anti-corruption.
While the principles on human rights encourage businesses to follow internationally proclaimed human rights, the principles on labour stress on businesses to permit freedom of association, eliminate forced and abolish child labour and eliminate discrimination. The principles on environment call upon businesses to become responsible, undertake precautionary approach and focus on developing eco-friendly technologies. The last principle requires businesses to discourage corruption.
Member countries that fail to report COP for two consecutive years are put in the inactive category. It implies that they can’t use the compact name and logo. Active membership is important because it helps companies take a leadership position in responsible citizenship, share experiences and learn from others and delve into the UN knowledge pool.
Elaborates Arun Maira, Global Compacts special adviser in India, “Companies all over the world, including India, are attracted to join the Global Compact because of the value of being associated with a very respected global enterprise. Most of the members join for this reason.” The compact also offers networking services amongst members globally so that they can learn from the best practices of others. It posts the members COP on its website so that members can benchmark vis–vis others also.
The compact works closely with the Global Reporting Initiative, the Principles of Responsible Investing, and the Principle of Responsible Management Education. Each of these organisations has members from companies, financial institutions and business schools respectively. “It helps these organisations and others associated with the compact to form collaborative networks to create the institutional norms that can provide businesses the incentives and support they require to become more effective in meeting their societal responsibilities,” adds Maira. He is talking not only as a representative of the compact, but also as an industry opinion leader. He is the chairman of Boston Consulting Group, India.
Delisting due to lack of submission of COP doesnt necessarily mean non-performance. Ashwin C Shroff, CMD, Excel Industries, says that they have been engaged in community work for over 30 years even before the Global Compact initiative was floated. He adds, “We participated in the few meetings that took place initially. The meetings were rather infrequent probably because the India chapter was getting organised and was not fully geared to hold regular meetings. This resulted in lack of enthusiasm from Excels side as far as Global Compact is concerned.” He adds, “This is not to say that our involvement and enthusiasm for community development activities has declined. If anything, it has increased. While I take note of the delisting, we are carrying on the activities regardless.”
Explains Uddesh Kohli, Global Compact’s special advisor in India, “In most of the cases it’s observed that companies do not send COP in time more by default rather than by intention of not continuing in the compact. In some cases, there is change of personnel and the new persons are not even aware of the compact. In some cases they do not know that they are required to send COP in time.” Kohli is also chairman emeritus, Construction Industry Development Council, and appreciates the practical difficulties in internalising the membership obligations at the institutional level. So, does the compact office. It’s little wonder that becoming active again is not difficult. All that the delisted companies have to do is to submit their COP regularly to the compact office.
It’s here that the role of the country-specific Global Compact societies is important. Says Kohli, who also heads the Global Compact Society in India, “The Global Compact Society has been constantly reminding members. We feel there is a need to continuously follow up and we have appointed a full-time person for this purpose. We hope that the situation will improve.”
The Global Compact Society in India is not stopping here. It has joined hands with CII to further its cause. Says Maira, “In India, CII and the Global Compact Society of India are taking the lead to propagate the value of being socially responsible and are enrolling companies to join the Global Compact.” Any company, big or small, that wishes to join must send a letter to the UN secretary general signed by its CEO, who has been authorised by its board to accept the principles of the compact and commit to send COP every year.
Source: The Financial Express
Published on 05 August 2008