Corporate responsibility is becoming ever more important
zeb is a member of the United Nations Global Compact (UNGC) that helps companies adopt sustainable and socially responsible ways of doing business. As the largest initiative of its kind in the world, the UNGC aims to foster an inclusive and sustainable global economy.
Interview with Marcel Engel, Executive Director of the German Global Compact Network (DGCN).
The UNGC is founded on ten principles that encourage companies to integrate human rights, labor standards, environmental protection and the fight against corruption into business practices. The DGCN helps its members align with these goals. We put four questions to Marcel Engel, Executive Director of the German Global Compact Network (DGCN).
Mr Engel, the DGCN is one of many national networks in the UNGC. How did it come about?
MARCEL ENGEL: Then UN Secretary General Kofi Annan founded the UNGC in 1999. He invited companies to commit to the UNGC's ten principles and combine business with social responsibility. This mandate was broadened in 2015 and the UNGC now also supports its members in implementing global sustainability goals – the UN’s Sustainable Development Goals – that include poverty reduction, gender equality and decent employment.
In Germany, companies got together between 2004 and 2006 to form a national network. It currently boasts about 500 participating organizations, of which 430 are companies. Around the globe, about 13,000 organizations have signed up, including some 10,000 companies. Participating companies have to publish an annual progress report about steps taken in line with the ten principles, which we call the Communication on Progress, or CoP for short.
The initiative is voluntary. Can we rely on corporate idealism to reach the UNGC’s goals?
Of course, it would be great if we could agree binding international rules or standards to ensure uniform parameters worldwide. But many countries simply don’t have the legal or the institutional framework to enforce them. This led Kofi Annan to launch a voluntary initiative to encourage companies to respect human rights, comply with the core labor standards of the International Labour Organization, protect the environment and fight corruption. The UNGC is not about perfection, it’s about continuous improvement – improvements that companies have to report annually as part of the CoPs. All of these annual reports are publicly available and are subject to public scrutiny as a result.
How do consultancies benefit from the UNGC? After all, they’re not big polluters.
Sustainability is increasingly becoming part of companies’ core business – not least because it reduces business risks and opens the way for new opportunities. Initially, many companies focused mainly on environmental issues, but social issues have become just as important over the years. Given this, it’s not surprising that corporate responsibility and sustainability have become a lively and rapidly growing market for consultancies. And that’s why so many consulting companies – from the largest to the smallest – are participating in the UNGC.
They are important partners for companies looking for practical or strategic support to tackle sustainability issues. For example, consultants can help them prepare so-called materiality analyses, introduce compliance systems to monitor adherence to UNGC principles or define ways to work towards global sustainability goals. Ideally, this produces a win-win situation – sustainability advisory is a growing business for expert consultants, which means expert consultants are increasingly important for sustainability. Competent consultants are essential in helping the UNCG create a sustainable global economy.
The UNGC’s mission is more than 20 years old. How close is it to achieving its goals?
UNGC Germany has about 500 members from all over the business community, but there are about 60,000 companies in Germany – so there’s still room for improvement. But luckily the business case for and entrepreneurial logic of responsible action is becoming ever stronger. On the one hand, legal requirements and the expectations of customers, investors and civil society are increasing. On the other hand, more and more companies are coming to recognize how strategically important sustainability issues have become for them.
Companies that do business sustainably are often more robust than less sustainable competitors – they’re more agile in turning to new markets, finance themselves more quickly and cheaply, and more easily attract talented employees. That’s why I’m optimistic that we are getting closer to our goal. But problems like climate change and social division are so large and pressing that this should happen much more quickly. That’s why the interplay of the progressively minded in business, politics and civil society will be crucial.