Overview
Introduced: 2000
Effective from: Ongoing
Last modified: May 2024
Region(s): Global
About
The United Nations Global Compact (UNGC) is the world’s largest voluntary corporate sustainability initiative, with over 20,000 participants across 160+ countries. UNGC encourages businesses worldwide to adopt sustainable and socially responsible policies. Companies that join the UNGC commit to aligning their operations and strategies with ten universally accepted principles in the areas of human rights, labor, environment, and anti-corruption, and to advance progress on the United Nations Sustainable Development Goals (SDGs).
The Compact fosters long-term value creation, ethical governance, and stakeholder trust by encouraging public transparency and measurable impact.
Criteria for compliance
Entities covered
Participation in the UNGC is voluntary, but strongly encouraged for:
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Public and private companies committed to integrating ESG into operations
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Multinational enterprises with global supply chains
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SMEs looking to align with recognized global frameworks
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Organizations aiming to enhance ESG credibility without legal mandates
Framework structure
The 10 principles:
Grouped under four key areas:
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Human rights: Support and respect international human rights; avoid complicity in abuses
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Labor: Uphold freedom of association, eliminate forced and child labor, and end workplace discrimination
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Environment: Embrace precautionary approaches, promote environmental responsibility, and advance clean technologies
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Anti-corruption: Work against corruption in all forms, including extortion and bribery
The 17 SDGs:
UNGC encourages companies to align business strategies with the SDGs, covering global priorities like climate action, clean water, gender equality, and sustainable cities.
Compliance timelines
Companies are expected to submit an annual Communication on Progress (CoP) report, detailing their efforts to implement the 10 Principles and contribute to the SDGs.
Failure to Report:
1 missed CoP = “Non-Communicating” status
2 consecutive missed CoPs = participant is delisted
Disclosure requirements
Communication on Progress (CoP)
Companies must report annually on their progress in implementing the UNGC principles. The CoP should include a CEO statement, a description of practical actions taken, and performance indicators. The CoP is published on the UNGC website, ensuring transparency and accountability.
Third-party auditing
The UNGC does not require third-party auditing, but companies are encouraged to seek external assurance for their CoP reports to enhance credibility.
Penalties for non-compliance
Companies that fail to submit a CoP for two consecutive years may be listed as “Non-Communicating” and eventually delisted from the UNGC. While this does not carry legal penalties, it can impact the company’s reputation and stakeholder relationships.
