Gap Between ‘Saying’ and ‘Doing’ on Sustainability: Report

Annual figures from the world’s largest voluntary corporate sustainability initiative highlight a gulf between companies’ sustainability policies and the actions undertaken to achieve them.

Benchmarking and reporting program The United Nations Global Compact recently released its flagship Global Corporate Sustainability Report for 2013, which suggested that while companies were making commitments in the areas of human rights, labour, anti-corruption and the environment, many were not actually implementing solutions.  

“Sustainability is clearly on the radar. Leadership sees it as a key factor for business success and has begun to define what it looks like through policies and performance targets. The goal now is to move from seeing and saying… to doing,” the report said.

“Turning a blind eye to sustainability issues is a ticking time bomb, and hiding missteps–no matter how deep down the supply chain–is no longer an option.

“This gap between policies and performance exists in almost every area.”

Notable disparities between intent and action included:

• 65 percent of signatories were committing to sustainability at the CEO level, but only 35 percent were training managers to integrate sustainability into strategy and operations.

• Seven out of 10 companies had an anti-corruption policy in place, but only three in 10 had anonymous hotlines to report instances of corruption.

• While 72 percent of companies had incorporated human rights into their corporate codes, complaint mechanisms were put in place at only half that rate (37 percent).

• 57 percent of respondents included sustainability expectations in supplier documents. However, only 18 percent of companies took the next step to assist suppliers with setting and reviewing their sustainability goals.

The results come ahead of the premier UN event with business, The UN Global Compact Leaders Summit, which begins tomorrow in New York, bringing together 1,000 chief executives and leaders from civil society, Government and the UN to work on aligning UN and corporate priorities.

The report is based on responses to the 2013 Global Compact Annual Implementation Survey, which had 1,712 respondents from 113 countries.

The survey has been conducted since 2007 to help the Global Compact understand how corporate participants are taking steps to advance their sustainability commitments.

The report also showed that small and medium sized enterprises (SMEs) struggled more than their larger counterparts to move from commitment to action.

The majority (56%) of companies participating in the Global Compact are are small- and medium-sized enterprises (SMEs) with less than 250 employees.

“Of all the factors that impact sustainability performance, company size has the most significant influence,” the report said.

“The gap is significant on nearly all fronts.”

Large companies were twice as likely to have a human rights complaint system or monitor and evaluate their environmental performance, while SMEs cited a lack of financial resources and lack of knowledge as the most significant barriers to better sustainability performance, compared to a small minority of large companies.

Human rights and labour was spotlighted as a weakness for all respondents.

“Both large and small companies are not making forward progress on all fronts. For example, all companies are especially challenged when it comes to conducting impact assessments in the areas of human rights and labour. Only the largest of companies–with over 50,000 employees–are engaging sufficiently in stakeholder dialogue on any of these issues,” the report said.  

The report showed a focus on employees among those companies that had acted on sustainability issues, but not in terms of financial incentives.  

Employee training and awareness was the in the top three most frequently reported means of action in all areas, including human rights (44 percent), labour (56 percent), anti-corruption (42 percent) and the environment 62 (percent).

Staff training and workshops were used by 49 percent and employee orientation was considered by 51 percent, but only 8 percent of respondents linked executive remuneration packages to sustainability performance. Slightly more respondents (11 percent) linked sustainability performance to employee compensation.

21 percent used sustainability criteria in employee performance assessments.

When asked to rank the top global sustainability challenges, respondents cited education (63 percent), poverty eradication (52 percent), climate change (52 percent) and growth and employment (49 percent).

Launched in 2000, the UN Global Compact has over 12,000 signatories from business and key stakeholder groups based in 145 countries.

8,000 of those signatories are companies. The chief executive of each pledges to embed human rights, labour, environment and anti-corruption principles into their operations and disclose progress annually.

The report noted that the 8,000 Global Compact participants represented “just a sliver”of the world’s estimated 70,000 multinationals and millions of smaller enterprises. 

Introducing the report, Secretary-General of the United Nations Ban Ki Moon said further involvement with business was key.

“We cannot achieve a more equitable, prosperous and sustainable future without business engagement and solutions.

“The United Nations is committed to deepening its collaboration with the private sector and advancing the corporate responsibility movement,” he said.