Group targets reporting “laggards” that risk ejection.

Signatories to the $2.1 trillion United Nations Principles for Responsible Investment are writing to 86 major companies to pull them up over their failure to meet this year’s deadline to produce an annual corporate responsibility report in line with their membership of the UN Global Compact. The UNPRI has not named the targeted companies, but said the “laggards” had failed to produce the mandatory Communication on Progress, or COP, on implementation of the Global Compact’s ten corporate principles, which include policies on human rights, workplace standards, the environment and anti-corruption. The investors said new regulation was increasingly making clear corporate reporting on environmental, social and governance (ESG) issues essential. One example, they said, were new guidelines issued last month by the US Securities and Exchange Commission on information that public companies should disclose to investors about ‘material’ effects on their business of climate-related issues. Investors use corporate adherence to the Global Compact as a basic standard of good environmental, social and governance practice. They have become concerned that companies

are signing up to the Compact and vaunting membership but failing to deliver on action. Failure to produce a COP for two years running leads to ejection from the Global Compact. Last year, 859 signatories were removed between 1 October 2009 and 1 January 2010 for not producing reports. The UNPRI investor coalition also praised 44 companies, including Bayer, Nikon and Inditex, for producing high quality sustainability reports deemed useful for investors. This is the third year that investors have engaged with UN Global Compact companies on the issue of transparency. In 2009, the UNPRI coalition targeted 105 companies. It said it had subsequently seen positive results from 50 out of 105 targeted companies, including high-profile names such as GAP, Severn Trent and LVMH, which it named and shamed last year. In 2008, the engagement resulted in 33 per cent of “laggard” companies subsequently submitting their reports. In 2008, the UNPRI and UN Global Compact signed the ‘Seoul Initiative’, an investor engagement urging companies around the world to sign the UN Global Compact. 
Link to UN Global Compact