comprehensive guide€¦ · 8 comprehensive guide the differentiation programme the global compact...

GC Active Level GC Advanced LevelInitial

Commitment

Comprehensive Guide Communication on Progress

and Differentiation

About the united nations Global CompactThe United Nations Global Compact is a call to companies everywhere to voluntarily align their operations and strategies with ten universally- accepted principles in the areas of human rights, labour, environment and anti-corruption, and to take action in support of UNgoals, including the Millennium Development Goals. The UN Global Compact is a leadership platform for the development, implementation, and disclosure of responsible corporate policies and practices. Launched in 2000, it is largest corporate responsibil-ity initiative in the world, with over 10,000 signatories based in 140 countries. For more information: www.unglobalcompact.org

un Global Compact project Team: Ana Blancodesigner: Nilou Safavieh, Tannaz Fassihi

Copyright © 2012United Nations Global Compact OfficeTwo United Nations Plaza, New York, NY 10017, USAEmail: [email protected]

disclaimerThis publication is intended strictly for learning purposes. The inclusion of company names and/or examples does not constitute an endorsement of the individual companies by the United Nations Global Compact Office. The material in this publication may be quoted and used provided there is proper attribution.

Comprehensive Guide 33

Setting The Context 4

The Global Compact Commitment 5

The COP Platform: Promoting Transparency, Learning and Progress 7

The Differentiation Programme 8

Communication on Progress Rules and Deadlines 10

From Initial Commitment to Communicating Progress 12

1. Commitment at the Chief Executive Level 14

GC Active Level ➜ Statement of Continued Support 14

Toward GC Advanced ➜ Strategy, Governance 15

2. Make the UN Global Compact and its Principles an Integral Part of Business Strategy, Day-To-Day Operations, and Organizational Culture 18

GC Active Level ➜ Description of Actions and Outcomes 18

Toward GC Advanced ➜ Robust policies, strategies and management systems in all issue areas 21

3. Take Actions in Support of UN Goals and Issues 25

GC Active Level ➜ Contribute to Broad Development Objectives through Partnerships (Optional) 25

Toward GC Advanced ➜ Take Action in Support Broader UN goals 26

4. Advance the UN Global Compact and the case for responsible business practices through advocacy and active outreach 28

GC Active Level ➜ Advocate Corporate Responsibility 28

Toward GC Advanced ➜ Stakeholder Engagement and Value Chain 28

5. Communicate Annually with Stakeholders 30

GC Active Level ➜ Sharing the COP with Stakeholders 30

Toward GC Advanced ➜ Transparency, Disclosure and Verification 30

Annex

GC Advanced level - 24 Advanced Criteria and Best Practices 32

Contents

4 Comprehensive Guide

seTTinG The ConTexT


The United Nations Global Compact was launched in 2000 as a call to companies worldwide to voluntarily align their operations and strategies with ten universally accepted principles in the areas of human rights, labour, environment and anti-corruption (see below), and to take actions in support of broader UN goals. Behind the initiative is the conviction that business practices rooted in universal principles contribute to a more stable and inclusive global market and help build prosperous and thriving societies.

The Ten Principles of the United nations Global Compact:The ten principles are derived from the following sources: the Universal Declaration of Human Rights; the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work; the Rio Declaration on Environment and Development; and the United Nations Convention Against Corruption.

The Global Compact Commitment

humAn riGhTs

Principle 1: Businesses should support and respect the pro-tection of internationally proclaimed human rights; andPrinciple 2: make sure that they are not complicit in human rights abuses.

LAbour

Principle 3: Businesses should uphold the freedom of asso-ciation and the effective recognition of the right to collective bargaining; Principle 4: the elimination of all forms of forced and compul-sory labour;Principle 5: the effective abolition of child labour; andPrinciple 6: the elimination of discrimination in respect of employment and occupation.

environmenT

Principle 7: Businesses should support a precautionary ap-proach to environmental challenges;Principle 8: undertake initiatives to promote greater environ-mental responsibility; andPrinciple 9: encourage the development and diffusion of envi-ronmentally friendly technologies.

AnTi- CorrupTion

Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery.


The Commitment The Global Compact is a leadership initiative requiring the commitment of a company’s chief executive and support from the organization’s highest-level governance body (e.g., the Board). By participating in the Global Compact, a company makes a public commitment to the imple-mentation, disclosure and promotion of the ten universal principles and agrees to take the following steps:

•Make the Un Global Compact and its principles an integral part of business strategy, day-to-day operations, and organizational culture;

• Incorporate the Un Global Compact and its principles in the decision- making processes of the highest-level governance body (e.g., Board);

•Take actions in support of Un goals and issues, including the Millennium De-velopment Goals;

•Communicate annually with its stakeholders on progress made to implement the principles, ideally integrated into the annual report or similar public document (known as the Communication on Progress – COP –); and

•Advance the Un Global Compact and the case for responsible business practices through advocacy and active outreach to peers, partners, clients, consumers, and the public at large.


The COP Platform: Promoting Transparency, Learning and Progress

Participating companies are required to report annually to stakeholders on the progress made to advance their commitment to the Global Compact. The Commu-nication on Progress (COP) allows businesses of all types and sizes to disclose their sustainability efforts and achievements in line with the Global Compact principles and best practices. Through the COP, businesses have an opportunity to gradually progress toward – and get recognition for – a full implementation of the initial commitment to the Global Compact (see page 12 for commitment details).

Communicating progress systematically and periodically helps businesses to assess and increase the effectiveness of their sustainability strategy while allowing stakeholders to make informed decisions. The COP is an essential element in achieving the ultimate objective of effective incor-poration and implementation of universal sustainability principles by businesses worldwide.

By requiring companies to communicate publicly with stakeholders on their progress, the COP acts as a platform for transparency and integrity. The COP encourages companies to develop a culture of transparency and accountability with their own stakeholders by providing insight into the process and the results of Global Compact integration. The COP also contrib-utes to the wide diffusion of key data on corporate performance in the environmental, social and governance realms.

The COP acts as a platform for learning and progress by promoting the sharing and wide adoption of best practices related to implementing and reporting on principles in the areas of human rights, labour, environment and anti-corruption, as well as on actions to advance broader UN goals. Through the COP, companies of all sizes and locations disclose their corporate sustain-ability practices, helping other participants and stakeholders to advance their own efforts towards sustainability.

To spur progress on implementation and reporting, the Global Compact introduced a Dif-ferentiation Programme in 2011 to categorize business participants according to the level of advancement in their most recent COP (see page 8). The criteria for differentiation is based on key Global Compact resources that guide and support business action on corporate sustainability. Key resources include the Blueprint for Corporate Sustainability Leadership, a suggested pathway for companies aspiring to a higher level of sustainability performance, and The Global Compact Man-agement Model, a tool to align core operations and strategies with the Global Compact principles.

Specialized resources provide guidance for integrating and reporting on human rights, labour, environmental and anti-corruption practices, including: the UN Guiding Principles on Business and Human Rights; the International Labour Organization Declaration on Fundamental Prin-ciples and Rights at Work; the Environmental Stewardship Strategy; and the Anti-Corruption Reporting Guidance.


The Differentiation Programme

The Global Compact Differentiation Programme reinforces the initiative’s objective to change business practices through transparency, dialogue, and stakeholder vetting. The COP measures progress along two critical dimensions:

• Global Compact implementation. Companies are expected to make continuous progress in implementing the Global Compact principles, and, ultimately, to achieve the best practices described in the Blueprint for Corporate Sustainability Leadership.

• Transparency and disclosure. Companies are expected to communicate directly with their stakeholders and to be transparent about the policies and processes they have put in place to implement the principles. Companies are also expected to progress towards the use of stan-dardreportingguidelines(e.g.,theGlobalReportingInitiative),verification,andintegratedreporting.

The Differentiation Programme provides a framework for companies and stakeholders to benchmark sustainability performance against best practicesandidentifyextrafinancialop-portunities and risks.

Depending on the timing and content of their Communication on Progress, busi-ness participants are classified in one of the following four categories: GC Ad-vanced, GC Active, Learner or Non-Communicating. The category desgination is based on a self-assessment completed by the company when posting its COP to the Global Compact website.

The Global Compact encourages participants to pursue the GC Advanced level, which sets a higher standard for corporate sustainability performance and disclosure. GC Advanced compa-nies report on their adoption of sustainability strategy, governance and management practices, many of which are rooted in the Blueprint for Corporate Sustainability Leadership. (For com-plete GC Advanced Criteria, see the annex).

Implementation of UNGC principles

Implementing theTen Principles into

Strategies and Operations

Engaging withthe UN Global Compact

Taking Actionin Support of BroaderUN Goals and Issues

1. Full Coverage andIntegration Across Principles

2. Robust Management Policiesand Procedures

3. Mainstreaming intoCorporate Functions andBusiness Units

4. Value ChainImplementation

1. Local Networks and Subsidiary Engagement

2. Global and Local Working Groups

4. Promotion and Support ofthe UN Global Compact

1. Core Business Contributionsto UN Goals and Issues

2. Strategic Social Investmentsand Philanthropy

3. Advocacy and PublicPolicy Engagement

4. Partnerships andCollective Action

CEO Commitmentand Leadership

Board Adoption andOversight

Stakeholder Engagement

Transparencyand Disclosure

3. Issue-Based and Sector Initiatives

Learner Platform

Transparency& disclosure

GC Active

GC Advanced

Leadership

diFFerenTiATion LeveLs


Blue rintFor Corporate Sustainability Leadership

bLueprinT For CorporATe susTAinAbiLiTy LeAdershipOffers companies a model for achieving higher levels of performance and gen-erating enhanced value through the Global Compact. The Blueprint is designed to inspire advanced performers to reach the next level of sustainability, yet sets targets that all companies can work towards in order to ascend the learning and performance curve. The model identifies leadership criteria linked to implemen-tation of principles, efforts to support development objectives, and engagement in the Global Compact.

The GC Active levelreflectstheinitialcommitmenttotheGlobalCompactbyestablishingminimum reporting requirements. GC Active companies report on their continued commit-ment as well as on their efforts and achievements in incorporating the Global Compact princi-ples into their strategies and operations. Companies that fail to annually commit at the highest executive level, report on all four issue areas, and make their progress available to stakeholders through the COP platform will not be listed as “GC Active” and can eventually be expelled from the programme if compliance is not enhanced in a timely manner. The Learner Platform helpscompanieswhosefirstCOPdoesnotmeettheminimumrequire-ments to achieve a higher level of performance and disclosure (GC Active or GC Advanced). CompaniesthatsubmittheirfirstCOPwithinthedeadline,butdonotmeetalltheminimumrequirements, have a one-time 12-month “learner” grace period to submit a complete COP. Dur-ing this time, the company receives support from the Global Compact.

Participants that do not meet all of the COP requirements by the deadline, and that do not qualifyforagraceLearnerperiod,willbeclassifiedas“non-communicating”. These partici-pants will ultimately be expelled from the initiative if they fail to submit a comprehensive COP by the applicable deadline.

pArTiCipAnT sTATus

GC Advanced level

Companies that qualify for the GC Active level and, in addition, report on their implementation of advanced criteria and best practices related to strategy, governance, stakeholder engagement, contribution to UN goals, implementation of the principles, value chain and transparency.

GC Active level

Companies that submit an annual COP that meets all requirements, including a letter of commitment by the chief executive, a description of actions on all four issue areas (or an explanation as to why an issue area is not addressed), and measurement of outcomes.

Learner platformCompanies that submit a COP within the deadline but do not meet all minimum COP content requirements benefit from a one-time 12-month “learner” grace period.

non- communicating

Companies that fail to submit a COP within the appropriate deadline or the COP fails to meet all content requirements beyond the ”learner” grace period.

10 name of publication

A COP is an annual public communication to stakeholders (e.g., consumers, employees, organized labour, civil society, investors, media, and government) on a company’s progress in implementing the ten principles and, where appropriate, in supporting broader UN goals. The COP policy is based on the concepts of public accountability, transparency and continuous improvement.

COnTenT.EachCOPmustcontainthefollowingthreeelements:

1. A statement by the chief executive expressing continued support for the Global Compact and renewing the participant’s ongoing commitment to the initiative and its principles.

2. A description of practical actions (i.e., disclosure of any relevant policies, pro-cedures, activities) that the company has taken and plans to take to implement the Global Compact principles in each of the four issue areas (human rights, labour, environment and anti-corruption). Note: In cases where a COP does not address one or more of the four issue areas, an explana-tion must be provided --”report or explain”.

3. A measurement of outcomes that reflect the degree to which targets/perfor-mance indicators were met, or other qualitative or quantitative measurements of results.

A COP that contains these three elements will meet the GC Active level of the Differentiation Programme. If the COP does not contain one or more of these elements, the company will be placed on the Learner Platform and will be given a one-time, 12-month “learner” grace period to submit a COP that meets all three requirements. Companies that go beyond the minimum COP requirements may be able to self-declare as “GC Advanced” if they have adopted and reported on a range of advanced sustainability strategy, governance and management practices that meet the criteria.

FOrMAT. TheoverallformatofaCOPisflexibleandCOPscanbewritteninanylanguage.The COP should be fully integrated in the participant’s main medium of stakeholder communication (e.g., an annual report and/or a sustainability report). If the participant does not publish formal reports, a COP can be created as a stand-alone document.

The Global Compact has developed a Basic COP Template to guide smaller and less experi-enced companies in their Communication on Progress. It is an easy-to-use web-based template that can be completed during the submission process (details at www.unglobalcomapct.org). Note: Although the Basic COP Template is available to all companies as a way to communicate directly with stakeholders and to fulfill the disclosure requirements, the Global Compact strongly encourages businesses to use their own medium of communication (e.g., website, annual report, sustainability report) to disseminate the content of their COP.

Communication on Progress rules and Deadlines


SUBMISSIOn AnD SeLF-ASSeSSMenT. In addition to their own medium of communication with stakeholders all business participants are required to post their COP on the Global Compact website. They must complete a brief self-assessment capturing the contentoftheCOP.Thisself-assessmentdeterminestheirfulfillmentoftheminimumcontentrequirements and their level in the Differentiation Programme.

DeADLIne AnD SAnCTIOnS. BusinessparticipantsarerequiredtosubmitafirstCOPwithin a year of joining the Global Compact. All subsequent COPs are due within one year following the previous COP submission. To receive a deadline extension, participants can submit a grace letter. Participants that fail to submit a COP or a grace letter within their deadline or whose COP fails to meet all content requirements beyond the Learner grace period will be designated as non-communicating and an icon indicating this status will appear next to their name on the Global Compact website. Companies that fail to submit a COP that meets all requirements within one year of becoming non-communicating will be expelled from the Global Compact. The names of expelled participants are made public on the Global Compact website.

VerIFICATIOn ThrOUGh STAkehOLDer VeTTInG. The Global Compact recognizes increasedengagementeffortsreflectedinaparticipant’sCOPandself-assessment.TheGlobalCompact does not assess the performance of companies. Instead, COPs and self-assessments are publicized to encourage stakeholder vetting and to develop a scalable system of accountability. Stakeholders can use this information to make more informed choices, ultimately ensuring that companies live up to their commitment to the Global Compact.


From iniTiAL CommiTmenT To CommuniCATinG proGress


The table below demonstrates how each differentiation level builds upon the participant’s initial commitment to the Global Compact. At the GC Active level, participants have fulfilled the mini-mum requirements of their commitment. At the GC Advanced level, participants have gone beyond the minimum requirements and pursued a higher level of implementation and disclosure following the Global Compact’s advanced criteria and best practices.

CommiTmenTA company joining the Global Compact is expected to:

1. Commit at the chief executive level and incorporate the UN Global Compact and its prin-ciples in the decision-making processes of the highest-level governance body (e.g. Board).

2. Make the UN Global Compact and its principles an integral part of business strategy, day-to-day operations, and organizational culture.

3. Take actions in support of UN goals and issues.

4. Advance the UN Global Com-pact and the case for responsible business practices through advocacy and active outreach to peers, partners, clients, consum-ers, and the public.

5. Communicate annually with its stakeholders on progress made to implement the principles, ideally integrated into the annual report or similar public docu-ment (known as the Communica-tion on Progress – COP – policy).

GC ACTive LeveLCops aspiring to GC Active level must:

GC AdvAnCed LeveLCops aspiring to GC Advanced level must:

Include a statement by the chief executive expressing continued support for the Global Compact and renewing the participant’s ongoing commitment to the initiative and its principles.

Same as GC Active level, plus:Describe corporate strategy and gover-nance, including: ◆ High-level sustainability strategy in line

with Global Compact principles◆ Effective decision-making processes

and systems of governance for corporate sustainability

Include a description of practi-cal actions (policies, procedures, activities) in all four issue areas (human rights, labour, environment, anti-corruption).

Include measurement of out-comes.

Describe in-depth implementation of the principles in all four issue areas: ◆ Commitments, strategies or policies ◆ Management systems◆ Monitoring and evaluation mechanisms◆ Key outcomes

optional – While not a requirement at the GC Active level, participants are strongly encouraged to actively incorporate broader UN goals and issues in their strategies and opera-tions and ultimately pursue the GC Advanced level.

Describe actions taken in support of broader un goals and issues, including:◆ Core business contribution◆ Strategic social investment and philan-

thropy◆ Advocacy and public policy engagement◆ Partnerships and collective actions

optional – While not a requirement at the GC Active level, participants are strongly encouraged to advance the case for responsible business practices beyond their core opera-tions and ultimately pursue the GC Advanced level.

Describe:◆ engagement with all key stakeholders◆ implementation of the Global Compact

principles in the value chain

Submit a COP annually to the Global compact website. Companies are encouraged to make the COP widely available to all stakeholders though a sustainability or integrated report.

Same as GC Active level, plus: incorporate high standards of disclosure and verification, including: ◆ Information on the company’s profile and

context of operation◆ Independent verification of the COP by a

credible third-party


1. Commitment at the Chief executive Level

GC Active Level ➜ Statement of Continued SupportGlobal Compact participation begins with the top leadership and extends to the company as a whole. The chief executive’s personal involvement sends an important signal to employees and stakeholders that the company’s corporate responsibility engagement is a strategic and operational priority. It also sets the standard for an effective incorporation of sustainability principles and practices into the company’s strategy and daily operations. A top-down commit-mentcanhaveatremendousinfluenceonthequalityofGlobalCompactimplementation.

To ensure that companies remain committed to the Global Compact at the leadership level, each COP must include a statement by the chief executive expressing continued support for the Global Compact and renewing the participant’s ongoing commitment to the initia-tive and its principles.


1. Commit at the chief executive level and incorporate the UN Global Compact and its prin-ciples in the decision-making processes of the highest-level governance body (e.g. Board).



Include a statement by the chief executive expressing continued support for the Global Compact and renewing the participant’s ongoing commitment to the initiative and its principles.

Same as GC Active level, plus:Describe corporate strategy and gover-nance, including: ◆ High-level sustainability strategy in

line with Global Compact principles◆ Effective decision-making processes

and systems of governance for corporate sustainability

exAmpLe –sTATemenT oF ConTinued supporTTowards Corporate Social Responsibility, Communication on Progress Report, July 2011EGYTRANS, Egypt, COP for 2010

excerpt from section: “Chairman’s Commitment”

“…We firmly believe that our policies ad-here to the 10 principles of the UN Global Compact and we look forward to continuing our work with the Egyptian Local Network. In the attached report, we summarize the progress we have made in 2010/2011 against these principles and strive to report continuous progress in future.”

—Hussam Leheta, Chairman and CEO

Analysis

In this message, the CEO explicitly sup-ports the principles of the Global Compact. Although not a COP requirement, this CEO’s message also expresses continued engage-ment with the local network.


Toward GC Advanced ➜ Strategy, GovernanceAttheGCAdvancedlevel,thestatementbythechiefexecutivemustreflectahigherlevelofcommitment that goes beyond basic support of the Global Compact principles. The Global Compact encourages participants to express support for other platforms such as the CEO Water Mandate or the Women’s Empowerment Principles, among others.

TheGCAdvancedlevelinvolvesspecificcriteriaonstrategyandgovernancerelevanttothecompany’s highest management level. While these criteria can be addressed at any point in the COP, the statement of support is an ideal medium for higher governance bodies to present their increased levels of engagement.

a. Strategy.At the GC Advanced level, the Global Compact encourages companies to describe key aspects of their high-level sustainability strategy in line with the Global Compact principles (Criterion 1).

A description of the sustainability strategy offers stakeholders insight into how the company manages the challenges and opportunities that sustainability represents for their organization. It further helps to assess whether the strategic direction of the company is in line with their values and their view of the future as it relates to sustainability. Reporting on the company’s sustainability strategy is also a way for stakeholders to assess the quality of management and their long-term vision for the company.

At the GC Advanced level, the Global Compact considers best practice to report on the follow-ing strategy-related topics:• Impactofbroadersustainabilitytrendsonthelong-termprospectsandfinancialperfor-

mance of the organization;• Major sustainability risks and opportunities in the near to medium term (3-5 years);• Social and environmental impact of the organization’s activities;• Overall strategy to manage sustainability impacts, risks and opportunities in the near to

medium term (3-5 years); • Key performance indicators; • Major successes and failures during the reporting period.

movinG upwArds: The invoLvemenT oF boArds oF direCTors in The un GLobAL CompACTAdvances the understanding of Boardroom engagement in environmental, social and governance issues and guides companies to better integrate oversight of these issues into the Board agenda.

A new AGendA For The boArd oF direCTors: Adop-Tion And oversiGhT oF Cor-porATe susTAinAbiLiTyRecommendations for Boards of Directors on their role in steering and improving the sustainability performance of the corporations they oversee.

1

Moving Upwards:

The involveMenT of Boards of direcTors in The Un gloBal coMpacT

A NEW AGENDA FOR THE BOARD OF DIRECTORSADOPTION AND OVERSIGHT OF CORPORATE SUSTAINABILITY

Lead-board-final.indd 1 1/17/12 2:56 PM


exAmpLe – Cop AddressinG GC AdvAnCed CriTerion 1 on sTrATeGy Sustainable Development Report 2010Bayer AG, Germany, COP for 2011

excerpt from section: “Foreword by bayer management board Chairman dr. marijin dekkers”“… I am keen to work tirelessly with my fellow Board members to continue Bayer’s long tradition of sustainable business practices. …Our mission and our values help us achieve our goals. This also applies to our commitment to sustainability, for which we have set ambitious new targets to be achieved by 2015. These targets ensure the enhanced integration of sustainability into our business activities.

Our innovations help solve the major challenges of our time, primarily in the fields of health care, nutrition for the growing world population and conservation of ever scarcer resources. We aim to reconcile economic growth with environmental and social responsibility. With this in mind, we embrace the principles of the United Nations Global Compact initiative ….Acting sustain-ably and responsibly also means always ensuring maximum safety. Our new Safety Council and our global process and plant safety initiative to ensure safe processes and the comprehensive safety of our employees, the people in the vicinity of our sites and the environment are extremely important to us. These efforts play a key role in achieving the social acceptance the company relies on…

As a global enterprise, Bayer aims to

have as diverse and international a work-force as possible. Some 21 different nation-alities are already represented in the top management echelon. We are keen to keep encouraging this diversity at other manage-ment levels, too. The Group Management Board has also decided to aim to increase the proportion of female managerial staff to approaching 30 percent by 2015…

As you can see, innovation and sustain-ability are the main driving forces behind our activities – wholly in keeping with our mission “Bayer: Science For A Better Life.” This is also our promise to society.”

—Dr. Marijn Dekkers, Chairman of the Board of Management

AnalysisThis statement meets the GC Advanced lev-el criteria in a number of ways. It not only shows endorsement of the Global Compact principles at the highest management level, but it takes its commitment further by considering broader sustainability issues such as nutrition, health, natural resources, safety and diversity, among others. The statement also supports broader UN goals and outlines the company’s strategies and policies, including existing resources and procedures for implementing their sustain-ability goals.


b. Governance.Corporategovernanceisbroadlydefinedasasystemofrules,processes,orlawsbywhichcompanies are operated, regulated, and controlled. It involves a set of relationships between a company’s management, its board, its shareholders and other stakeholders.

The Global Compact encourages companies to describe effective decision-making processes and systems of governance for corporate sustainability (Criterion2). At the GC Advanced level, the Global Compact recognizes the following best practices related to governance: • Involvement and accountability of top management (C-suite) in developing the corporate sus-

tainability strategy in line with Global Compact principles and overseeing its implementation; • Highest corporate governance body (Board of Directors or equivalent) exercises oversight of

long-term corporate sustainability strategy and implementation in line with Global Compact principles;

• Goals and incentive schemes for management to promote sustainability strategy in line with Global Compact principles.

exAmpLe – Cop AddressinG GC AdvAnCed CriTeriA 2 on GovernAnCeFortum’s 2010 Sustainability ReportFortum, Finland, COP for 2011

excerpt from section: “sustainability organisation”“The Corporate Relations and Sustainability (CR&S) function is responsiblefor coordinating and developing sustain-ability at the Group level. Its Executive Vice President reports to the CEO and is a member of the Fortum Management Team. The Executive Vice President of Corporate Relations and Sustainability also serves as Chairman of the Sustainability and Public Affairs steering group. The steering group comprises representatives from all divisions and Group functions. Among other things,

the steering group tasks include manag-ing consistent, systematic and efficient implementation of Fortum’s sustainability approach throughout the organisation.”

AnalysisIn this example, the company discloses its efforts to implement a system of governance that effectively coordinates and develops sustainability efforts. The company has specific bodies to oversee sustainability efforts and activities not only at the group level but also throughout the whole organization.


2. Make the Un Global Compact and its Principles an Integral Part of Business Strategy, Day-to-Day Operations, and Organizational Culture


2. Make the UN Global Compact and its principles an integral part of business strategy, day-to-day operations, and organizational culture.



a. Include a description of practi-cal actions (policies, procedures, activities) in all four issue areas (human rights, labour, environment, anti-corruption).

b. Include measurement of out-comes.

Describe in-depth implementation of the principles in all four issue areas: ◆ Commitments, strategies or policies ◆ Management systems◆ Monitoring and evaluation mechanisms◆ Key outcomes

GC Active Level ➜ Description of Actions and OutcomesIntegrating the Global Compact principles into business strategy, operations and culture is at the core of a company’s commitment to the initiative. Transparent and comprehensive report-ing on actions and outcomes can help the company identify its strengths and weaknesses in terms of sustainability performance. Robust reporting on practical actions and outcomes can also strengthen stakeholder trust in the company.

DeSCrIPTIOn OF PrACTICAL ACTIOnS In ALL ISSUe AreAS. The COP policy requires a description of practical actions, i.e., disclosure of any relevant policies, procedures, and activities that the company has taken to implement the Global Compact principles in each of the four issue areas (human rights, labour, environment, and anti-corruption). In cases where a COP does not address one or more of the four issue areas, it must provide an explanation (“report or explain”).

The description of practical actions allows companies to present the substance of their efforts and achievements toward sustainability. It is also an opportunity for companies to substantiate the management systems they use to integrate the ten principles in their strate-giesandoperations.Suchmanagementsystemscaninformforward-lookinganalysis,reflectingsystematic processes to manage risks and opportunities. The descriptions can be used to bench-mark performance with other companies in similar circumstances and are a crucial component of the COP.

un GLobAL CompACT mAnAGemenT modeLGuides companies through the robust management process of formally committing to, assessing, defining, implementing, measuring, and communi-cating a corporate sustainability strategy based on the Global Compact and its principles. (UNGC/Deloitte)

CommiTLeadership commitment to mainstream the Global Compact principles into strategies and operations and to take action in support of broader UN goals, in a transparent way Assess

Assess risks,opportunities, and impacts across

Global Compact issue areas

impLemenTImplement strategies and

policies through the company and across the company’s

value chain

meAsureMeasure and monitor

impacts and progress toward goals

CommuniCATeCommunicate progress and

strategies and engage with stakeholders

for continuous improvement


MeASUreMenT OF OUTCOMeS. In order to improve, companies must continuously assess their progress. The COP policy requires companies to provide a measurement of outcomes, which assesses what targets/performance indicators were met. While the COP policy does not require a measurement of outcomes for each issue area or in regard to each principle, compa-nies are encouraged provide this information. Ideally, each practical action described (required for each issue area) should be complemented by a measurement of the outcomes generated.

Practical actions include actual or planned policies, strategies, commitments, management systems, monitoring procedures and key outcomes designed or implemented in each of the four issue areas: human rights, labour, environment and anti-corruption.

prACTiCAL ACTions And ouTComes issue AreAs

Commitments, strategies or policies Human Rights

Management systems Labour

Monitoring and evaluation mechanisms Environment

Outcomes Anti-Corruption

mAkinG The ConneCTion: The Gri GuideLines And The un GLobAL

CompACT CommuniCATion on proGress. Provides a framework and indicators to measure outcomes. Performance metrics help companies measure their sustainability outcomes and can be used to set new goals. These metrics can be qualitative and quantitative, and can be used to demonstrate change over time.

subsidiAry pArTiCipATion And CommuniCATion on proGress

A company’s commitment to join the Global Compact applies not only to its headquar-ters, but also to all subsidiaries and local branches. There are several ways in which affiliates can participate:1. Parent company’s Global Compact com-

mitment applies to all subsidiaries;2. Subsidiaries choose to become Global

Compact signatories alongside the parent company;

3. Subsidiaries of non-participating com-

panies can become Global Compact signatories.

Participating companies – and any signing subsidiaries – are expected to communicate annually on their progress to implement the Global Compact principles. For a detailed policy, please see: http://www.unglobalcompact.org/ HowToParticipate/Business_Participation/Subsidiary_Engagement.html


Theformatofthereportisflexible.Acompanymaychoosetoallocateseparatesectionsforeach issue area, while another company may elaborate on its progress on human rights and labour in the same section. In the example below, the company reports on policies related to the environmental issue area.

exAmpLe – Cop inCLudes desCripTion oF ACTionsInfosys Sustainability PolicyInfoSys Technologies, India, COP for 2010

excerpt from section: “sustainability policy”“We formulated the Infosys Sustainability Policy this year with the objective of being a responsible, leading global organization working towards the greater common good by setting global benchmarks for a sustain-able tomorrow. …◆ We will work on reducing our per capita

consumption of electricity, water and carbon emissions, with a long-term goal to become water sustainable and carbon neutral

◆ We will invest in green buildings and datacenters to effectively utilize natural resources

◆ … we will contribute to society through

the Infosys Foundation, Infosys Science Foundation and other such initiatives….

◆ We will conduct camps and awareness programs to help the members of the Infosys family to become proactive about their health, wellbeing and reduce their ecological footprint.”

AnalysisThe company reports on the recent formulation of a sustainability policy that applies to employees, vendor partners and contractors across various geographies. The company’s goal is to become a leader in sustainability for the environment through specific policies and actions.

A measurement of outcomes details a company’s progress. For progress to be visible, it is rec-ommended that companies provide the following in their COP: • Metrics that demonstrate in concrete terms the implementation of polices and strategies and

the results achieved (as opposed to simply stating that an action has been taken);• Data for a reporting period presented alongside data from previous years; • A qualitative analysis to explain trends and place information in context.


exAmpLe – Cop inCLudes meAsuremenT oF ouTComes2011 UNGC Communication on Progress AVIVA, COP for 2011

excerpt i) Greenhouse gas emissions – 4 percent re-duction since 2009. Our long-term target is to reduce our carbon emissions by 30 per-cent by 2020 from the 2006 baseline. We are on track, with a 10% reduction achieved from 2006 to 2010.ii) Waste – 2% increase in overall operation-al waste since 2009. Our long-term target is zero to landfill for UK operations by 2015, and worldwide by 2020.iii) Water consumption – 15.2m3 per em-ployee, compared to the UK best practice benchmark of 7.7m3. Our long-term target is the best practice benchmark.

iv) Energy intensity – total cost of buildings-related energy in 2010 was £17.7 million (2009: £17.7 million).v) Paper – consumption of paper has increased by 29% since 2009, 44% of the paper has a percentage of recycled content.

AnalysisThe company outlines the outcomes measurements for different factors within the environment. It establishes the actual performance indicators for the year of the report, and it triangulates the information with previous years and with future goals.

Toward GC Advanced ➜ robust policies, strategies and management systems in all issue areasThe Global Compact Advanced level focuses on integrating the ten principles’ strategies and operations, including monitoring and evaluation systems, into companies’ Management systems. Companies are expected to provide a description of policies, strategies and manage-ment systems for each issue area (human rights, labour, environment, and anti-corruption), asreflectedintheGCAdvancedcriteria5-20detailedinthetablebelow.Thenumbersinthetableindicatethespecificcriterionassociatedwitheachissuearea.

human rights Labour environment Anti-

Corruption

APPLICABLE ADVANCED CRITERION*

Robust commitments, strategies or policies 5 9 13 17

Effective management systems 6 10 14 18

Effective monitoring and evaluation mechanisms 7 11 15 19

Key outcomes 8 12 16 20

*For more detail on criteria and best practices, see annex


exAmpLe – Cop inCLudes AdvAnCed reporTinG on prACTiCAL ACTionsSymantec 2011 Corporate Sustainability ReportSymantec, United States of America, COP for 2011

excerpt from section: “human rights”“Acting on our principles” We respect and protect human rights, including those internationally recognized rights and labor standards proclaimed in the Universal Declaration of Human Rights and the International Labor Organization’s core conventions.

We engage continually with our stake-holders to refine our human rights policies and practices, and we invest resources in helping to ensure that we are not complicit in any human rights violations. Each year, all Symantec employees receive training on our corporate Code of Conduct, which covers our commitment to upholding the human rights of Symantec employees and those who work for or on behalf of the company.

key initiatives and outcomesIn FY11,…[Symantec established] a formal Global Supply Chain Manufacturing and Fulfillment Code of Conduct that is broadly based on the Electronic Industry Citizen-ship Coalition (EICC) Code of Conduct and ISO 26000 principles. [The Code] delin-eates Symantec’s expectations regarding labor conditions and the protection of labor rights, and prohibits child labor and forced or compulsory labor. It has been rolled out to all our tier one suppliers, who will

be subject to Code-based audits beginning later in calendar 2011. These audits will supplement internal reviews we already conduct to identify financial risks, quality problems, and other concerns related to our suppliers.

Symantec also participated in the U.S Council for International Business confer-ence “Engaging Business: Implementing Respect for Human Rights”…

In FY 2012, we will update the Syman-tec Code of Conduct and roll out a supplier Code of Conduct and privacy policy, to a broader set of Symantec suppliers….

Also, all employees will be required to complete at least one hour of training regarding respect in the workplace, with managers receiving at least one additional hour of education focused on management and leadership issues….”

AnalysisThe company reiterates its commitment to human rights issues, refers to appli-cable international instruments and links this commitment to specific efforts, such as implementing policies, investment of resources and training. The company describes the establishment of formal codes of conduct that address sustainabil-ity issues, implementation processes and monitoring through audits.

Best practices associated with these criteria include robust reporting on: a company’s com-mitment to comply with the applicable laws and internationally recognized instruments; policies; due diligence processes; internal training; grievance mechanisms; accountability structure; effective response mechanisms; and formal monitoring and measurement mecha-nisms, among others.


Global Compact resources offer specific guidance on policies, strategies, commitments, manage-ment systems, monitoring procedures, and key outcomes on the four issue areas. The criteria used to establish the GC Advanced level derived from the following sources:

Guiding principles for the implementation of the un “protect, respect and remedy” Framework Au-thoritative global standard for preventing and addressing the risk of human rights violations linked to business activity. The Guiding Principles clarify cor-porate responsibility to respect human rights.

The Labour principles of the united nations Global Compact: A Guide for Busi-ness Brief description and practical guide for how compa-nies can respect, promote, and realize each labour principle.

RepoRting guidance on

the 10th pRinciple against coRRuption

anti corrupton-no correct.indd 1 4/19/10 11:34:25 AM

EnvironmEntal StEwardShip StratEgyoverview and resource for Corporate leaders

environmenTAL sTewArd-ship sTrATeGy Integrative approach to manag-ing a variety of key environmen-tal issues and designed to help companies develop a comprehen-sive environmental strategy that follows an 8-step model.

reporting Guidance on the 10th principle Against Cor-ruption Practical guide to help companies determine what anti-corruption issues they should report and how to do so in a comprehensive and effective manner.

The Labour Principlesof the United Nations Global Compact

A Guide for Business


Incorporating Cross Cutting Principles and Guidance on Women, ChildrenandConflictAreasThe GC Advanced level is also an opportunity for companies to demonstrate how the adoption ofprinciplesandguidancerelatetoaspecificgroupofstakeholders(e.g.,women,children)oraspecificoperatingcontext(e.g.,conflict-affectedorhigh-riskareas).Acompany’sChiefExecu-tive can include the endorsement of these principles in their COP’s statement of support, and elaborate on them in the Practical Actions and Outcomes section.

The following resources provide guidance and recommended actions:

Women’s empowerment Principles – equality Means Business A set of principles for business offering guidance on how to empower women in the workplace, marketplace and community. They emphasize the business case for corporate action to promote gender equality and women’s empower-ment and seek to point the way to best practice by elaborating the gender dimension of good corporate citizenship, the UN Global Compact, and the role of business in sustainable development.

Children’s rights and Business PrinciplesThefirstcomprehensivesetofprinciplestoguidecompaniesonthefullrangeof actions they can take in the workplace, marketplace and community to respect and support children’s rights. Released in March 2012, the Principles are built on existing standards, initiatives and best practices related to business andchildren,andseektofillgapstopresentacoherentvisionforbusinessto maximize the positive impacts and minimize negative impact on children, who are often overlooked as stakeholders of business.

GuidanceonResponsibleBusinessinConflict-Affected&High-RiskAreas:AResourceforCompanies&Investors A reference point for constructive dialogue between companies and inves-torsonwhatconstitutesresponsiblebusinesspracticesindifficultoperatingenvironments. This voluntary guidance stimulates learning and dialogue and promotes collective action and innovative partnerships through Global Com-pact Local Networks and other initiatives.

Establish high-level corporate leadership for gender equality.

Treat all women and men fairly at work – respect and support human rights and nondiscrimination.

Ensure the health, safety and well-being of all women and men workers.

Promote education, training and professional development for women.

Implement enterprise development, supply chain and marketing practices that empower women.

Promote equality through community initiatives and advocacy.

Measure and publicly report on progress to achieve gender equality.

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3. Take actions in support of UN goals and issues.



optional – While not a requirement at the GC Active level, participants are strongly encouraged to actively incorporate broader UN goals and issues in their strategies and opera-tions and ultimately pursue the GC Advanced level.

Describe actions taken in support of broader un goals and issues, including:◆ Core business contribution◆ Strategic social investment and philan-

thropy◆ Advocacy and public policy engagement◆ Partnerships and collective actions

3. Take Actions in Support of Un Goals and Issues

GC Active Level ➜ Contribute to Broad Development Objectives through Partnerships (Optional)Companies who join the Global Compact make a commitment to support broader UN goals and issues, which include human rights, labour, environment, and anti-corruption, as well as priorities such as peace and security; the Millennium Development Goals; children’s rights; gender equality; health; education; humanitarian assistance; migration and adaptation; food security; sustainable ecosystems and biodiversity; climate change; water security and sanita-tion; and employment and decent working conditions, among others through core business, philanthropy, advocacy or partnership activities. All companies, whether they are at the GC Ac-tive or GC Advanced level, are strongly encouraged to address this part of their Global Compact commitment in their annual COP.

exAmpLe – Cop inCLudes ACTions in supporT oF un GoALs And issues8th Corporate Sustainability Report 2010-2011The Indian Hotel Company Ltd., India, COP for 2011

excerpt from section “Creating sustainable livelihoods”“With the service industry growing at a fast pace, the need for trained and groomed manpower and able local vendors is impera-tive for smooth functioning of business. While there is such high demand on one side, there is a huge number of unemployed/ underem-ployed youth and small scale enterprises across the globe. IHCL believes that it can act as a bridge to effectively connect the scenarios, while benefitting both ends. Our Corporate Responsibility theme of ‘building sustainable livelihoods’ is as central to our growth as making profits. We work symbi-otically with the larger community and our

goal is to empower our target groups to be independent, earning members of society. We work alongside state systems and civil soci-ety organisations towards evolving realistic and sustainable solutions for national chal-lenges like malnutrition, unemployment and gaps in vocational training and education…”

AnalysisThis company expresses its commitment to empower target groups to be independent and self-supporting members of society by working with the community. The company leverages partnerships with state systems and civil society organizations to tackle issues such as malnutrition and education gaps.


Toward GC Advanced ➜ Take Action in Support of Broader Un goalsThe Global Compact asks companies at the GC Advanced level to describe actions taken in support of broader Un goals and issues (Criterion 4), in line with the areas outlined in the Blueprint for Corporate Sustainability Leadership:

• Adoptionormodificationofbusinessstrategiesandoperatingprocedurestomaximizecontribution to Un goals and issues: Companies are increasingly mobilizing their technolo-gies, processes, products and skills to build more inclusive business models to contribute to the eradication of poverty, as well as the realization of the Millennium Development Goals.

• Development of products, services and business models that contribute to Un goals and issues: Companies that engage the poorest segments of the population as suppliers, distributors or other types of business partners can help generate income and stimulate entrepreneurship. Also, developing safe and affordable products for the poor and market-ing them in innovative ways can help meet basic needs, increase productivity and raise the standard of living.

• Social investments and philanthropic contributions that tie in with the organization’s core competencies, operating context and sustainability strategy: Companies increasingly are identifying and supporting synergies between core business imperatives and the needs of societies that have a positive effect on both. Establishing a strategic link between social investments and core business makes it more likely for such activities to be sustainable and able to reach scale.

• Public advocacy on the importance of one or more Un goals and issues: At the local, na-tional and global levels, companies can make contributions to sustainability by engaging in advocacy and public policy formulation. They can also play an important role by calling for the strengthening of public institutions and their administrative capacity. Advocacy can also be done through press releases, speeches, and other communication vehicles.

• Partnership projects and collective actions in support of Un goals and issues. Through collaboration, actors can strengthen their efforts to achieve individual objectives leveraging, combining and capitalizing on complementary resources, strengths and capabilities to tackle issues such as poverty reduction, health, education, and community development. Collective action can be an effective way of creating a level playing and increasing the impact beyond the capacity of any one company.

According to the Blueprint for Corporate Sustainability Leadership, “broader UN Goals and Issues” refers to an array of global issues, based on the most acute or chronic global challenges, including Peace & Security; the Millennium Develop-ment Goals; Human Rights; Children’s Rights; Gender Equality; Health; Education; Humanitarian Assistance; Migration; Food Security; Sustainable Ecosystems and Biodiversity; Climate Change; Mitigation and Adaptation; Water Security and Sanitation; Employment and Decent Working; Conditions; and Anti-Corruption.

A GLobAL CompACT For deveLopmenT Articulates how companies can support development objectives through their core business; strategic social investments; advo-cacy; partnerships and collective action. Available Global Compact platforms for business to support development goals are identified and examples of how companies are contributing to this agenda are showcased.

A GlobAl CompACt for DevelopmentBusiness Contributions

to Development

ADVOCACY & PUBLICPOLICY ENGAGEMENT

Advocate Conscientiously& Lobby Responsibly

SOCIAL INVESTMENT& PHILANTHROPY

Give Generously& Strategically

Develop InclusiveBusiness Models

Invest Long Term & Be Profitable

CORE BUSINESS

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GLobAL CompACT CoLLeCTive ACTion iniTiATives:Caring for Climate: Voluntary and complementary action platform that provides a framework for business leaders to advance practical solutions and help shape climate change policy as well as pub-lic attitudes. Caring for Climate offers an interface for business and governments at the global level, with the aim of transcending national interests and responding to the global nature of the issue with pragmatic business solutions.

Ceo water mandate: Public-private initiative designed to assist companies in the development, implementation and disclosure of water sustainability policies and practices. The CEO Water Mandate recognizes that the business sector, through the production of goods and services, impacts water resources – both directly and through supply chains.

Anti-corruption Collective Action projects: Four-year collective action projects in five countries: Brazil, Egypt, India, Nigeria, and South Africa. Work is underway in each country with Global Compact Local Networks and key partners to establish and operationalize the ambitious projects. By facilitat-ing ongoing dialogue between the private and public sector, this project will offer an opportunity for a wide range of stakeholders to explore how collective action can create incentives for ethical business performance, and to discuss areas for further improvement.

women’s empowerment principles: A set of principles for business offering guidance on how to empower women in the workplace, marketplace and community. They emphasize the business case for corporate action to promote gender equality and women’s empowerment and seek to point the way to best practice by elaborating the gender dimension of corporate responsibility, the Global Compact, and the role of business in sustainable development.

exAmpLe – Cop inCLudes desCripTion oF ACTions TAken in supporT oF broAder un GoALs And issues (GC AdvAnCed LeveL)Communication on Progress Martha Tilaar Group, Indonesia, COP for 2011

excerpt from section: “un Goals and issues”

“balisari spa therapist training pro-gram. Through the scholarship program granted to the teenage girls from poor families in rural areas of Indonesia, Martha Tilaar Group has created a business model that is beneficial for both parties. Those teenage girls are given opportunities and facilities to train as professional spa therapists. Next, the grantees are employed as spa therapists… The benefits enable the women to raise their level of dignity, as indicated by the improvement of their living standards and economic conditions of their families and by their personal pride as employees of a big company whose professionalism is well acknowledged. At the same time, the benefits of this program

have guarantee Martha Tilaar Group with a supply of professional employees, so this company can improve its brand image as the provider of international quality prod-ucts and services. In the end, all of these efforts contribute profits for the company.”

Analysis

The company describes its support of broader UN goals. This COP not only mentions its in-corporation of the Global Compact’s advanced criteria, but it describes efforts that directly relate to the MDGs in the areas of poverty, education, and gender equality. The COP analyses the internal and external benefits of this programme through indicators that measure its impact over time, and addresses the challenges that must be overcome to guarantee the success of the programme.


4. Advance the Un Global Compact and the Case for responsible Business Practices Through Advocacy and Active Outreach


4. Advance the UN Global Com-pact and the case for responsible business practices through advocacy and active outreach to peers, partners, clients, consum-ers, and the public..



optional – While not a requirement at the GC Active level, participants are strongly encouraged to advance the case for responsible business practices beyond their core opera-tions and ultimately pursue the GC Advanced level.

Describe:◆ engagement with all key stakeholders◆ implementation of the Global Compact

principles in the value chain

GC Active Level ➜Advocate Corporate responsibilityParticipants in the Global Compact are strongly encouraged to make an effort to advance their commitment beyond core operations to reach subsidiaries, peers, partners, clients, consumers, communities and the public-at-large.

Toward GC Advanced ➜ Stakeholder engagement and Value ChainThe Global Compact asks companies at the GC Advanced level to describe engagement with all important stakeholders (Criterion 3) and their implementation of the Global Compact principles in the value chain (Criterion 21). (For more detail on criteria and best practices, see annex).

Stakeholder engagementIt is considered good practice to identify and proactively engage with stakeholders (e.g., consumers, employees, organized labour, civil society, investors, media, and government) to benefitthecompanyandsocietyasawhole.Suchengagementcangeneratetrust,reduceriskstoreputation,addressdelicateissues,preventdisputes,andultimatelyfulfillthecompany’scommitment towards sustainability. Stakeholders are the main audience of the COP, and active stakeholder engagement can lead to more successful implementation of responsible practices and communication.

At the GC Advanced level, the Global Compact recommends a number of best practices re-lated to stakeholder engagement:• regular stakeholder consultations in the areas of human rights, labour, environment

and anti-corruption: Engagements can take the form of consultations, direct dialogue, and forums, among others. For example, companies can hold consultations with stakeholders to address dilemmas and challenges, and invite them to take an active part in reviewing performance. Companies can also establish channels to engage with employees and other stakeholders to hear their ideas, address their concerns and protect “whistle-blowers”.

• Processforstakeholderidentificationandengagement.Successful engagement with stakeholders starts with identifying who they are. Some stakeholders will represent a higher priority than others in terms of topics to be addressed and to be described in the COP. To identify the relevant stakeholders, a company needs a clear understanding of how it affects certain groups and individuals, and conversely how those groups and individuals can affect the company. Prioritizing which stakeholders a company should engage is the key to maxi-


mizing sustainability efforts. A variety of approaches may be needed for engaging different stakeholders, including letters, telephone interviews, emails and meetings, among others.

• Process of incorporating stakeholder input into corporate strategy and business deci-sion-making. Companies are encouraged not only to reach out to stakeholders with com-munications and information but also to listen to what stakeholders have to say. The Global Compactrecommendsthatstakeholderinputbeincludedinthedefinitionofacompany’ssustainability strategies, goals and policies.

• The Global Compact also recommends transparency about which stakeholder groups the company has engaged and the outcomes of stakeholder involvement.

Value ChainsSincecompaniesstronglyinfluencetheirvaluechains,andcorporatesupplychainshavegrowninscaleandcomplexityoverthepastfewdecades,withthepotentialtodeliverbenefitsat the corporate and societal level, concerns about poor social and environmental conditions within the value chains are widespread. A company’s overall commitment to corporate respon-sibility can be seriously discredited if low standards of business conduct are found to persist in their supply chains, and failure to address suppliers’ environmental, social and governance performancecancausesignificantoperationalrisksanddamagetheirreputation.

The Global Compact requires participants who aspire to the GC Advanced level to endorse, and include in their COP, the implementation of the Global Compact principles in the value chain (Criterion 21).

At the GC Advanced level, the Global Compact recognizes the following best practices related to value chain:• Analysis of sustainability risk, opportunity and impact in the value chain, both upstream

and downstream;• Policy on value chain, including a policy for suppliers and subcontractors; • Communication of policies and expectations to suppliers and other business partners; • Monitoring and assurance mechanisms (e.g., audits/screenings) for compliance in the value

chain; • Awareness-raising, training and other types of capacity building with suppliers and other

business partners.

exAmpLe – Cop inCLudes impLemenTATion oF prinCipLes in The vALue ChAin (GC AdvAnCed LeveL)Corporate Responsibility Report 2010/2011 Deutsche Telekom AG, Germany, COP for 2011

excerpt from section: “supply chain management”“Telekom organizes workshops in Germany with important suppliers in order to more firmly integrate sustainable elements into the supply chain. The company conducted four sustainability workshops during the reporting period:i. with Research In Motion Deutschland GmbH in September 2010ii. with Microsoft in May 2010iii. with HTC in November 2010iv. with Vattenfall in November 2010

At these four workshops, company representatives discussed topics, includ-ing the integration of sustainable elements into research and development activities as well as into the supplier selection process. Closer collaboration in calculating the CO2 footprint of product lifecycles was also on the agenda. These dialogue sessions are helpful when it comes to comparing corporate standards regarding sustain-ability issues and serve as a platform for future collaboration on the basis of common standards.”

Supply Chain SuStainabilitya practical Guide for Continuous improvement

SupplyChainReport_12.indd 1 6/4/10 9:04:08 AM

suppLy ChAin susTAinAbiLiTy – A prACTiCAL Guide For ConTinuous

improvemenT

Illustrates how Global Compact signatories can implement the ten principles throughout their supply chains and integrate sustainabil-ity into procurement strategies. Includes examples of good cor-porate practices.



5. Communicate annually with its stakeholders on progress made to implement the principles, ideally integrated into the annual report or similar public docu-ment (known as the Communica-tion on Progress – COP – policy).



Submit a COP annually to the Global compact website. Companies are encouraged to make the COP widely available to all stakeholders though a sustainability or integrated report.

Same as GC Active level, plus: incorporate high standards of disclosure and verification, including: ◆ Information on the company’s profile and

context of operation◆ Independent verification of the COP by a

credible third-party

5. Communicate Annually with Stakeholders

GC Active Level ➜ Sharing the COP with StakeholdersThe COP is a platform for transparency that helps hold participants accountable to their com-mitment to advance the Global Compact principles, not a report to the United Nations or the Global Compact, and the value of a COP depends, to a large extent, on its dissemination and availability to stakeholders. Transparency and disclosure can enable stakeholders to understand a company’s efforts and progress, and help them to make educated choices. Companies are required annually to post a COP on the Global Compact website and complete a self-assessment with basic information on the content, format and time period covered by the COP in order to ensure a minimum level of transparency.

In addition, the Global Compact encourages companies to use existing modes of commu-nication to disseminate their COP to the most relevant stakeholders. A COP should integrated intoanannualfinancialorsustainabilityreport.Astand-aloneCOPshouldonlybecreatedifacompany has no other vehicle to report to its stakeholders on corporate responsibility issues. In this case, companies are encouraged to disseminate their COP using other established methods of communication such as websites, direct mailing, and employee alerts, among others. Since theGlobalCompactOfficewelcomesCOPsinalllanguages,companiesshoulddrafttheirCOPsin the language used by their stakeholders.

Toward GC Advanced ➜Transparency,DisclosureandVerificationHighstandardsofdisclosure,transparencyandverificationwillimproveacompany’sabilitytocommunicate with stakeholders.

The Global Compact requires companies at the GC Advanced level to include information on the company’sprofileandcontextofoperation (Criterion 22) in their COPs. Context informa-tion will allow stakeholders to assess the company’s performance and the appropriateness of its actions in implementing the Global Compact principles. The Global Compact recommends that theCOPincludethefollowinginformationonprofileandcontextofoperations:• Legal structure, including any group structure and ownership; • Countries where the organization operates, with either major operations or operations that arespecificallyrelevanttosustainability;

• Markets served (including geographic breakdown, sectors served, and types of customers/ben-eficiaries);

• Primary brands, products and/or services; and• Direct and indirect economic value generated for various stakeholders (e.g., employees, own-

ers, government, and lenders).


The GC Advanced level also requires that COPs incorporate high standards of transparency and disclosure (Criterion 22).

The leading standard in sustainability reporting is provided by the Global reporting Initia-tive (GrI) Sustainability Reporting Guidelines, which are a set of Reporting Principles and StandardDisclosureonstrategy,profile,managementapproach,andperformanceindicators.The Global Compact recommends the GRI G3 Guidelines at the Application Level A+ because it encourages the use of the GRI reporting framework to the fullest extent possible. Companies canbenefitfromusingboththeGlobalCompactprinciplestoguidesustainabilitystrategyand actions, and the GRI Guidelines to communicate progress to stakeholders. While the GRI Guidelines do not represent the only way to prepare a COP, they do offer guidance on how to prepare a globally-recognized report.

Companies at the GC Advanced level are also encouraged to integrate sustainability informa-tionfromtheCOPinanannualfinancialreport.Thisfollowsarecenttrendtowardsintegratedreporting,whichisdefinedbythe International Integrated reporting Committee (IIrC) as an approach to corporate reporting that demonstrates the link between an organization’s strat-egy,governanceandfinancialperformanceandthesocial,environmentalandeconomiccon-text within which it operates. The IIRC claims that by reinforcing these conditions Integrated Reporting can help businesses make more sustainable decisions and enable investors and other stakeholders to understand how an organization is actually performing. Corporate governance should be emphasized, and the GC Advanced level recommends that the company’s board, where permissible, approves the COP and other formal reporting on corporate sustainability.

In addition, the GC Advanced level requires that COPsbeindependentlyverifiedbyacred-ible third-party (Criteria24).Verificationtypicallyreferstotheaccuracyoftheinformationinthe COP (i.e., the process by which the data was collected and aggregated). The Global Compact recommendsthattheinformationintheCOPbeindependentlyverifiedusinganassurancestandard(e.g.,AA1000,ISAE3000).TheGlobalCompactalsorecommendsverificationoftheCOP’scontentsagainstcontentstandards(e.g.,GRICheck).Verificationisoftenperformedbythesameindependentauditorsthatverifyfinancialaccounts(e.g.,accountingfirms),butitcanalso be done by a multi-stakeholder panel or by peers (e.g., Global Compact Local Network).

exAmpLe oF independenT veriFiCATion (GC AdvAnCed LeveL)OeKB Sustainability Report 2010 OeKB, Austria, COP for 2011

excerpt from section: “Certificate and validation”“Certification Sustainability auditors, ETA Umweltmanagement GmbH, were commis-sioned to:◆ Evaluate the 2010 Sustainability Report

on the basis of the underlying sustainabil-ity aspects, data, management systems, and procedures;

◆ Critically review the scope, balance and interpretation of representation;

◆ Critically review the scope, balance, and interpretation of the presentation; and

◆ Verify compliance with the requirements of Regulation (EC) No. 1221/2009 (EMAS Regulation), EN ISO 14001:2004; the Global Reporting Initiative (GRI G3) and the UN Global Compact.”


AnnexGC AdvAnCed LeveL -24 AdvAnCed CriTeriA And besT prACTiCes


Business participants that fulfill the requirements of the GC Active level are encouraged to pursue the GC Advanced level by describing in their annual COP how they meet or plan to meet the 24 GC Advanced Criteria and the corresponding best practices explained below. Over time, participants at the GC Advanced level are encouraged to implement all best practices that are relevant to their context of operation. In cases where a company believes a criterion is not relevant, this should be explained in the COP.

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Criterion 1: The COP describes key aspects of the company’s high-level sustainability strategy in line with Global Compact principles

◆ Impact of broader sustainability trends on the long-term prospects and financial performance of the organization.

◆ Major sustainability risks and opportunities in the near to medium term.◆ Social and environmental impact of the organization’s activities. ◆ Overall strategy to manage sustainability impacts, risks and opportunities

in the near to medium term.◆ Key performance indicators to measure progress.◆ Major successes and failures during the reporting period.

Criterion 2:The COP describes ef-fective decision-making processes and systems of governance for corporate sustainability

◆ Involvement and accountability of management in developing a corporate sustainability strategy in line with Global Compact principles and oversee-ing its implementation.

◆ Corporate governance structure and its role in oversight of long term corporate sustainability strategy and implementation in line with Global Compact principles.

◆ Goals and incentive schemes for management to promote sustainability strategy in line with Global Compact principles.

Criterion 3:The COP describes en-gagement with all impor-tant stakeholders

◆ Regular stakeholder consultations in the area of human rights, labour, environment and anticorruption.

◆ List of stakeholder groups engaged by the organization.◆ Process for stakeholder identification and engagement.◆ Outcome of stakeholder involvement.◆ Process of incorporating stakeholder input into corporate strategy and

business decision making.

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Criterion 4:The COP describes actions taken in support of broader UN goals and issues

◆ Adoption or modification of business strategy and operating procedures to maximize contribution to UN goals and issues.

◆ Development of products, services and business models that contribute to UN goals and issues.

◆ Social investments and philanthropic contributions that tie in with the organization’s core competencies, operating contexts and sustainability strategies.

◆ Public advocacy on the importance of one or more UN goals and issues. ◆ Partnership projects and collective actions in support of UN goals and

issues.



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Criterion 5:The COP describes robust commitments, strategies or policies in the area of human rights

◆ Commitment to comply with all applicable laws and respect internationally recognized human rights, wherever the company operates.

◆ Statement of policy expressing commitment to respect and support human rights approved at the most senior level of the company.

◆ Statement of policy stipulating human rights expectations of personnel, business partners and other parties directly linked to operations, products or services.

◆ Statement of policy publicly available and communicated internally and externally to all personnel, business partners and other relevant parties.

Criterion 6:The COP describes effec-tive management systems to integrate the human rights principles

◆ On-going due diligence process that includes an assessment of actual and potential human rights impacts.

◆ Internal awareness-raising and training on human rights for management and employees.

◆ Operational-level grievance mechanisms for those potentially impacted by the company’s activities.

◆ Allocation of responsibilities and accountability for addressing human rights impacts.

◆ Internal decision-making, budget and oversight for effective responses to human rights impacts.

◆ Processes to provide for or cooperate in the remediation of adverse human rights impacts that the company has caused or contributed to.

Criterion 7:The COP describes effec-tive monitoring and evalua-tion mechanisms of human rights integration

◆ System to monitor the effectiveness of human rights policies and imple-mentation, including in the supply chain.

◆ Monitoring drawing from internal and external feedback, including affected stakeholders.

◆ Leadership review of monitoring and improvement results.◆ Process to deal with incidents.

Criterion 8:The COP describes key outcomes of human rights integration

◆ Outcomes of due diligence process.◆ External and formal reporting of operations or operating contexts that pose

risks of severe human rights impacts. ◆ Disclosure of main incidents involving the company. ◆ Outcomes of processes of remediation of adverse human rights impacts.

Lab

our

p

rin

cip

les

imp

lem

enta

tion Criterion 9:

The COP describes robust commitments, strategies or policies in the area of labour

◆ Reference to relevant international conventions and other international instruments.

◆ Reflection on the relevance of the labour principles for the company. ◆ Written company policy on labour.◆ Inclusion of minimum labour standards in contracts with suppliers and

other relevant business partners.◆ Specific commitments and goals for specified years.



Lab

our

pri

nci

ple

s im

ple

men

tati

on

Criterion 10: The COP describes effec-tive management systems to integrate the labour principles

◆ Risk and impact assessments in the area of labour.◆ Allocation of responsibilities and accountability within the organization.◆ Internal awareness-raising and training on the labour principles for

management and employees.◆ Grievance mechanisms, communication channels and other procedures

for reporting concerns or seeking advice.

Criterion 11: The COP describes effec-tive monitoring and evalua-tion mechanisms of labour principles integration

◆ System to track and measure performance based on standardized performance metrics.

◆ Audits or other steps to monitor and improve the labour performance of companies in the supply chain.

◆ Leadership review of monitoring and improvement results.◆ Process to deal with incidents.

Criterion 12:The COP describes key outcomes of integration of the labour principles

◆ Outcome of due diligence and follow-up efforts to uphold the freedom of association right to collective bargaining.

◆ Outcome of due diligence and follow-up efforts to eliminate forced labour. ◆ Outcome of due diligence and follow-up efforts to abolish child labor. ◆ Outcome of due diligence and follow-up efforts to eliminate discrimination. ◆ Disclosure of main incidents involving the company.

en

viro

nm

enta

l ste

war

dsh

ip im

ple

men

tati

on

Criterion 13:The COP describes robust commitments, strategies or policies in the area of environmental steward-ship

◆ Reference to relevant international conventions and other international instruments.

• Reflectionontherelevanceofenvironmentalstewardshipforthecompany.◆ Written company policy on environmental stewardship.◆ Inclusion of minimum environmental standards in contracts with suppliers

and other relevant business partners.◆ Specific commitments and goals for specified years.

Criterion 14: The COP describes effec-tive management systems to integrate the environ-mental principles

◆ Environmental risk and impact assessments.◆ Assessments of lifecycle impact of products, ensuring environmentally

sound end-of-life management policies.◆ Allocation of responsibilities and accountability within the organization.◆ Internal awareness-raising and training on environmental stewardship for

management and employees.◆ Grievance mechanisms, communication channels and other procedures for

reporting concerns or seeking advice regarding environmental impacts.

Criterion 15:The COP describes ef-fective monitoring and evaluation mechanisms for environmental steward-ship

◆ System to track and measure performance based on standardized perfor-mance metrics.

◆ Leadership review of monitoring and improvement results.◆ Process to deal with incidents.◆ Audits or other steps to monitor and improve the environmental perfor-

mance of companies in the supply chain.



en

viro

nm

enta

l s

tew

ard

ship

im

ple

men

tati

on

Criterion 16:The COP describes key outcomes of integration of the environmental principles

◆ Indicators on uses of materials and energy. ◆ Indicators on emissions, effluents, and waste.◆ Indicators on the company’s initiatives to promote greater environmental

responsibility.◆ Indicators on the development and diffusion of environmentally friendly

technologies.◆ Disclosure of main incidents involving the company.

An

ti-C

orru

pti

on im

ple

men

tati

on

Criterion 17:The COP describes robust commitments, strategies or policies in the area of anti-corruption

◆ Publicly stated formal policy of zero-tolerance of corruption.◆ Commitment to be in compliance with all relevant anti-corruption laws,

including the implementation of procedures to know the law and monitor changes.

◆ Statement of support for international and regional legal frameworks, such as the UN Convention against Corruption.

◆ Carrying out risk assessment of potential areas of corruption.◆ Detailed policies for high-risk areas of corruption.◆ Policy on anti-corruption regarding business partners.

Criterion 18:The COP describes effec-tive management systems to integrate the anti-cor-ruption principle

◆ Support by the organization’s leadership for anti-corruption.◆ Human Resources procedures supporting the anti-corruption commitment

or policy, including communication to and training for all employees.◆ Internal checks and balances to ensure consistency with the anti-corrup-

tion commitment.◆ Actions taken to encourage business partners to implement anti-corrup-

tion commitments.◆ Management responsibility and accountability for implementation of the

anti-corruption commitment or policy.◆ Communications (whistleblowing) channels and follow-up mechanisms for

reporting concerns or seeking advice.◆ Internal accounting and auditing procedures related to anticorruption.

Criterion 19:The COP describes ef-fective monitoring and evaluation mechanisms for the integration of anti-corruption

◆ Leadership review of monitoring and improvement results.◆ Process to deal with incidents.◆ Public legal cases regarding corruption.◆ Use of independent external assurance of anti-corruption programmes.

Criterion 20:The COP describes key outcomes of integration of the anti-corruption principle

◆ Outcomes of assessments of potential areas of corruption, where appropriate.

◆ Outcomes of mechanisms for reporting concerns or seeking advice.◆ Indicators Human Resources procedures supporting the anti-corruption

commitment or policy.◆ Disclosure of main incidents involving the company.



val

ue

Ch

ain

im

ple

men

tati

on

Criterion 21:The COP describes imple-mentation of the Global Compact principles in the value chain

◆ Analysis of sustainability risk, opportunity and impact in the value chain, both upstream and downstream.

◆ Policy on value chain, including a policy for suppliers and subcontractors.◆ Communication of policies and expectations to suppliers and other busi-

ness partners.◆ Monitoring and assurance mechanisms for compliance in the value chain.◆ Awareness-raising, training and other types of capacity building with sup-

pliers and other business partners.

Tra

nsp

aren

cy a

nd

ver

ifica

tion

Criterion 22:The COP provides infor-mation on the company’s profile and context of operation

◆ Legal structure, including any group structure and ownership.◆ Countries where the organisation operates, with either major operations or

operations that are specifically relevant to sustainability.◆ Markets served.◆ Primary brands, products, and/or services.◆ Direct and indirect economic value generated for various stakeholders.

Criterion 23:The COP incorporates high standards of transparency and disclosure

◆ COP uses the Global Reporting Initiative (GRI) Sustainability Reporting Guidelines.

◆ COP qualifies for Level B or higher of the GRI application levels ◆ COP includes comparison of key performance indicators for the previous

2-3 years.◆ Board, where permissible, approves COP and other formal reporting on

corporate sustainability.◆ Relevant sustainability information from COP is included in annual financial

report and filings.

Criterion 24:The COP is independently verified by a credible third-party

◆ Accuracy of information in COP is verified against assurance standard.◆ Accuracy of information in COP is verified by independent auditors.◆ Content of COP is independently verified against content standards.◆ COP is reviewed by a multi-stakeholder panel or by peers.

hUMAn rIGhTS

Businesses should support and respect the protection ofinternationally proclaimed human rights; andmake sure that they are not complicit in human rights abuses.

LABOUr

Businesses should uphold the freedom of association and theeffective recognition of the right to collective bargaining;the elimination of all forms of forced and compulsory labour;the effective abolition of child labour; andthe elimination of discrimination in respect of employmentand occupation.

enVIrOnMenT

Businesses should support a precautionary approach toenvironmental challenges;undertake initiatives to promote greater environmentalresponsibility; andencourage the development and diffusion ofenvironmentally friendly technologies.

AnTI-COrrUPTIOn

Businesses should work against corruption in all its forms,including extortion and bribery.

Principle 1

Principle 2

Principle 3

Principle 4Principle 5Principle 6

Principle 7

Principle 8

Principle 9

Principle 10

The Ten Principles of the United Nations Global Compact

Published by the UN Global Compact OfficeContact: [email protected] 2012

comprehensive guide€¦ · 8 comprehensive guide the differentiation programme the global compact...

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