A Two-Tier Global Compact?

21/10/2013 12:19 | Updated 18 December 2013

I've never been a massive fan of the UN Global Compact. My main bugbear has been the fact that there is no formal mechanism in place to make sure signatories are actually complying with the 10 Principles. In recent years, the Compact has become much more active, quite rightly kicking out a number of freeriders. Even so, it is still perfectly possible to be a member and make liberal use of the shiny blue UN logo, yet not demonstrate year-on-year progress.

Despite its challenges, many of which come with the territory of being a voluntary initiative, the Compact has scale in its favour. It has more than 8,000 corporate participants from over 145 countries around the world. Few other voluntary initiatives can boast this kind of reach, certainly not in the sustainability space.

In my view, the Compact has now reached a tipping point. Over its 13-year history, it can surely never have been of greater relevance. Corporate behavior is today more closely scrutinised than ever before and, certainly in my lifetime, there has never been more interest in different models of business - where consideration is given to purpose beyond profit.

That's why I was interested to read Accenture's new study of Global Compact CEOs' views on sustainability. Given the pressure that many of them must be feeling, I was interested to understand what is at the front of their minds. Three things came through for me as being key conclusions.

Firstly, there was a sense that CEOs feel as though they have made a great deal of progress on the sustainability agenda in recent times, but have now reached a plateau in what they can realistically achieve without concerted government action to adjust public policy

Secondly, there appears to be widespread acknowledgement from CEOs that the global economy is not on track to meet the demands of a growing population - that the global economy in its current form is not sustainable, in other words, and that business is not doing enough to be transformational.

Thirdly, as one digs into the results, so one can start to see real regional differences in terms of sustainability priorities. It's quite obvious when you think about it, but priorities in SE Asia are quite different to those in Europe. What has become apparent throughout the financial crisis is that CEOs' focus has moved away from global issues that are difficult to get a grip on, and focused instead on issues that have more salience locally.

Now these three conclusions are, I appreciate, quite confusing. On the one hand, you have businesses appreciating that more needs to be done, but on the other hand they are shifting the blame for action onto governments (and in some cases consumers).

As it happens, I think there is much governments can do to provide incentives, but as you read through the report you are struck by the fact that this stumbling block - so vertiginous for some - does not appear to have been a problem for a number of progressive businesses.

The report is peppered with quotes and examples of businesses that are clearly continuing to advance the agenda, irrespective of government focus. For example the boss of Mahindra & Mahindra, the Indian giant, said that "Today there is no distinction between what you do for profit and how you drive positive change. The more you drive positive change, the more enhanced your business model." I remember hearing from him at the FT's Boldness in Business Awards earlier this year, and being really impressed with his enlightened approach, the purpose of his business being simply to use all its resources to drive positive change in the lives of stakeholders and communities across the world, to enable them to rise. In a similar vein, Paul Walsh at Diageo is quoted as saying that "Sustainability has moved from something that feels good, to something that's far more integrated with what is required for future success." In other words, if it's required for future success, we are just going to get on with it irrespective of what others do.

So, one the one hand, reading the report one could become a little depressed. However, businesses like Diageo and Mahindra & Mahindra show us that the Global Compact has several tiers of membership. Given this discontinuity, I think there's an argument for the Compact to make this distinction a bit more explicit and perhaps develop a mentoring scheme empowering the progressive to influence their excuse-making contemporaries in other industries.