Simon Pitsillides: What is the Global Compact?

Sara Krüger Falk: The UN Global Compact is an organisation within the UN system; businesses and governments working together with shared objectives on some of the challenges we are experiencing in the world. We are working together on ten principles that are within human rights, labour rights, the environment, climate and anti-corruption. It’s a Global Compact of “shared values and principles” so that we are working towards a common course, using the same language.

Country-specific networks such as the Denmark Global Compact are a translation of the principles in a local context: “Making global goals local business”. Business in Bangladesh or in Sudan is different from Denmark. Danish companies have a lot of sourcing from other parts of the world. We draw immensely on global resources and we also have large consumption and production levels here. So, of course, Danish businesses have other challenges than businesses in other parts of the world.

SP: So it’s really about defining those challenges on a local level.

Sara Krüger Falk: One of the broader objectives of our work in the network is to motivate and push companies to take action and make a change. We need change. And we need companies to do it. Actually, do it. And then the other focus area for us is to create community, to get more businesses active in the sustainability agenda, because we believe that’s the future of business. That’s the winners of the future, so we want to give them tools to get started, with the ten principles of the Global Compact as the basic structure framework.

SP: Only one in ten companies which know their impacts, which could potentially follow on to measure-manage-change.

Sara Krüger Falk: Exactly. I believe it will be a very important competitiveness factor for future businesses, but we also still see {very competitive} companies that are not doing it. So, we need a strong push for legislation to make sure that we don’t have irresponsible companies. And that we don’t make it profitable to be irresponsible. Because who is going to clean up after them?

SP: Exactly. So, what are the most significant issues for the near future?

Sara Krüger Falk: I think the picture is changing very rapidly. Five years ago I would not have said global virus outbreaks or a hunger crisis like the one we might be looking at after the invasion of Ukraine by Russia. I also think that our knowledge about biodiversity loss and impact on food systems has increased during the last year. And we have blind spots, things that we don’t know yet. We need to understand that we can experience drastic changes that might change our view on what is the greatest risk. Companies should be aware that there is no fixed “right thing to do”, because it might change in very short periods of time.

SP: Being flexible and having a good identification methodology in place?

Sara Krüger Falk: Being flexible, and agile.

SP: And responsive – identify change swiftly and respond to change swiftly.

Sara Krüger Falk: I think those are the companies that will win in the future, that are very aware of and able to identify the challenges.

For example with the war in Ukraine, we are going to have a crisis on food systems. But it’s going to be a crisis not only caused by that war. It’s also caused by climate change, it’s caused by a lot of different things. So, I think the solution to that is to work together and find new ways of food production, to limit food waste and work together, sectors and countries, to address these issues.

The same with the energy crisis that we are facing. We need to shift from fossil fuels, we knew that. The COVID crisis has really taught us to work in different ways and that we are very, very flexible and that it’s easy for us to change how we do things normally.

{People now working virtually, conferences shifting into hybrid} also affects, for example, the aviation sector.

SP: Things are changing rapidly and companies need to adapt to those changes. I would hate to be in the shoes of the airlines right now.

Sara Krüger Falk: Developments are faster than they have ever been. So, if you have very good, solid, business case, it might not be as good and solid in five years. You need to constantly rethink and rethink the business case for the future needs.

{The other issue is} the constant dynamics companies are faced with. I just talked to a company in food production and they were making a shift from palm oil to sunflower oil to reduce impacts on rainforests in the Amazon. But now with the war in Ukraine they couldn’t access all this sunflower oil from Russia. So, what’s the right thing to do? I think companies will face these dilemmas constantly.

We need to shift away from fossil fuels, we need to build windmill parks, but what are the negative impacts on biodiversity and what’s the right thing to do?

We have to expect companies to perform proper due diligence in these decisions. It’s not always going to be crystal clear what’s the right thing to do. It’s going to be difficult.

We need long-term perspective making company strategy. And the Sustainable Development Goals are this fantastic direction as a leading star or a lighthouse.

SP: The wild card are the people buying those products and services. It’s people on a personal and professional level, they are looking for products – it has been proven over and over again -, products and services which are sustainable.

Sara Krüger Falk: You are right in one sense that demand for sustainable products is increasing. But I still think that we have a challenge. Consumers want sustainable products but they are confused on what to buy and sometimes they say they want a sustainable product but still tend to choose the cheapest. So, there are a dilemma for businesses – you know the right thing to do but you also need to address the market. Maybe the demand for those products is not quite there yet. But we expect it to come.

SP: In the last couple of years there has been an increase in sustainability action which was driven primarily by regulation. What we do need mostly is having the regulators of the world putting down in very specific ways what companies should be doing. Do you agree with that? 

Sara Krüger Falk: I agree that it would be much easier to be a company if there was a common ground on what you had to deliver. Of course, we need a level playing field, so there shouldn’t be national legislation that is very different in Denmark than the UK or Latin America. That’s where the Global Compact comes in very handy, because it’s a common language, it’s a common framework and you can benchmark.

But, we can also see that some very large companies are also driving change in their supply chain, cutting agreements if their suppliers do not correspond to their requirements. It’s “hard law” – that’s legislation, but it’s also a Code of Conduct from one of your main suppliers. You have to do it if you want to keep that engagement open.

I can also see the financial sector is a very big driver for this. Large investors are being active, {diverting investments from companies} if they don’t have the proper ESG ratings.

It’s also very different if you are in the food sector, if you are in the fashion sector, if you are in construction. The demands and the standards that you use are different. It makes it complex for businesses sometimes to navigate it. I see companies using a lot of resources on living up to those separate requirements.

There would be a lot of good energy in working more together on common standards and a common way of addressing climate, human rights. I think that’s where the collaboration both with the UN Global Compact comes in, but we have a close collaboration also with GRI and other frameworks, so that we can align. I think that’s what companies need right now. Clarity and alignment.

SP: Absolutely. The UN Global Compact and GRI joined forces sometime ago to build a universal framework for corporate sustainability performance and disclosure. How are you seeing this work in practice among your members in Denmark?

Sara Krüger Falk: We don’t have that many Danish companies that are using the GRI Standards. I agree on having global standards. But we have mainly been working with the Global Compact and saying you can use whatever framework you want. I think the GRI Standards are really good {with human rights}, they have very good questions. So, it is a very good supplement to the Global Compact. We have the new COP requirements that are also totally aligned with GRI with sixty questions.

SP: Thank you. GRI and the European Financial Reporting Advisory Group Project Task Force announced that they will be collaborating to co-construct the EU sustainability reporting structures, commonly known as the CSRD. How will this impact companies in Denmark? Have you identified how many companies this will impact in Denmark? 

Sara Krüger Falk: Around 1,400. I am expecting that there will be some requirements and some demands that we haven’t experienced before, but I also think that Danish companies are used to reporting and used to having requirements. So, it will not be so hard for them to live up to those requirements. Of course, I don’t think that the SMEs that will be the suppliers in the supply chains of the companies that are affected by the new legislation are ready. That’s a very big job for us, to make them ready to be suppliers that can deliver information that their customers – the larger companies – will be needing (and the financial institutions as well).

SP: What developments are you hoping to see in the next one to three years to help advance the UN Global Compact goals?

Sara Krüger Falk: If you look at the UN Guiding Principles on Business and Human Rights you will understand that you also have the responsibility to open your eyes. Understand that if you are not actively trying to make a change or understand your supply chain, you might be supporting adverse human rights impacts in some ways. {We need to raise} awareness about the responsibility of all companies to also better understand their supply chain.

I can say that I have been working in the area of sustainability for many years. What I can see is that the awareness and the urge and the purpose in people I meet in all business sectors is very strong. So, I think there is a movement going on, there is a massive movement going on, and I feel it’s stronger and stronger from many different areas of society, which is great, because we need action desperately. We need to make changes all over consumers, governments, businesses, municipalities. Everyone has to work together and I think that if we manage to join forces, we can really make a change.

It’s always good to use a framework to also document what you do. So, it’s not only empty words but, really, action that you can track and document.

SP: It’s action which, once you have identified, is measure, manage and change. And then continue with that circle. 

Sara Krüger Falk: And then increase. Work more. Do more.

SP: Absolutely.

78% of the world’s 250 largest companies report in accordance with the GRI Standards

SustainCase was primarily created to demonstrate, through case studies, the importance of dealing with a company’s most important impacts in a structured way, with use of the GRI Standards. To show how today’s best-run companies are achieving economic, social and environmental success – and how you can too.

Research by well-recognised institutions is clearly proving that responsible companies can look to the future with optimism.

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The Global Reporting Initiative (GRI) and the UN Global Compact

Under the terms of a Memorandum of Understanding signed in 2010, the UN Global Compact adopted the GRI Standards as the recommended reporting framework for companies to communicate on progress made.

This was the beginning of a historic alliance. The world’s two largest corporate responsibility initiatives joined forces to build a universal framework for corporate sustainability performance and disclosure, aiming to transform business practices on a global scale. The alliance, articulated during the UN Global Compact Leaders Summit 2010, was a crucial step in ensuring convergence in the area of corporate sustainability and allowed both initiatives to focus on their respective and complementary strengths – the Global Compact’s mainstreaming of universal principles and UN goals in business, and GRI’s comprehensive reporting framework.

The alliance provides companies with a clear roadmap to corporate sustainability, using GRI’s reporting principles and best practice indicators to report effectively on key corporate sustainability actions advocated by the Global Compact. Together, the two initiatives can guide companies of varying degrees of sophistication towards more sustainable performance and increased transparency.

Globally, only the GRI Standards provide a complete set of standards that uniquely addresses all 17 Sustainable Development Goals (SDGs). Sustainability reporters worldwide do not need to use any other sustainability framework for their report.

Sustainability: the new paradigm for conducting business

We are at a key moment in the evolution of sustainability and it is fast becoming the new paradigm for conducting business:

• Sustainability reporting at centre of EU’s 1 trillion euro Green Deal
• New Eurobarometer Survey: Environmental protection and climate important for over 90% of European citizens
• Climate change: New EU rules could mean the end of ‘throwaway culture’
• 2 out of 4 major consumer trends relate to sustainability (Mintel)
• Mintel research: Key 2018 consumer trends relate to sustainability
• Corporate sustainability and profitability are interrelated (Oxford University)
• High Sustainability companies significantly outperform their counterparts over the long-term, in both stock market and accounting performance (Harvard Business School)
• Deloitte: Business leaders can win the loyalty of Millennials by driving societal and economic change.
• 84% of Millennial investors interested in sustainable investing (Morgan Stanley)
• There is an accelerating growth of people choosing sustainable brands (Nielsen 30,000 consumers in 60 countries)
• Millennials love CSR (Chartered Institute of Marketing, UK)

It is essential for Businesses to be part of the Sustainable “Green” economy – trust is key

Businesses must adequately prepare for the onslaught of sustainability regulations and identify and address the needs of stakeholders that can hold them back or stop them from reaching their objectives. Stakeholders can be, for example:

• Consumers/ clients
• Investors
• Top talent
• Prospective business partners across value chains
• Communities worldwide
• Local authorities
• NGOs.

Businesses typically compete for Capital, Materials, Business and Top Talent. Imagine how much easier it would be to convince key stakeholders that they can trust you, that you are responsible and in for the long term, if you had a first-class CSR/ESG/SDG/Sustainability report.

To support and accelerate corporate reporting on the SDGs, GRI and the UN Global Compact collaborated to develop the following documents:

• The report Analysis of the Goals and Targets, to help companies understand how they are impacting the SDGs and their targets, by providing a list of indicators to make reporting on the SDGs straightforward and simple to execute. Download Analysis of the Goals and Targets

• Integrating the SDGs into Corporate Reporting: A Practical Guide outlines three steps for companies to embed the SDGs in existing business and reporting processes in alignment with GRI Standards and recognised principles. Download Integrating the SDGs into Corporate Reporting

• In Focus: Addressing Investor Needs in Business Reporting on the SDGs provides additional information about investor-relevant aspects of corporate SDG reporting. Download Addressing Investor Needs in Business Reporting on the SDGs

• The SDG Compass* provides guidance for companies on how they can align their strategies as well as measure and manage their contribution to the realisation of the SDGs.  Download the SDG Compass Guide

*Developed by the UN Global Compact, GRI and the World Business Council for Sustainable Development (WBCSD)

SustainCase was primarily created to demonstrate, through case studies, the importance of dealing with a company’s most important impacts in a structured way, with use of the GRI Standards. To show how today’s best-run companies are achieving economic, social and environmental success – and how you can too.

Research by well-recognised institutions is clearly proving that responsible companies can look to the future with optimism.

1-day Remote Learning Course

FBRH GRI Certified “Integrating the SDGs into your reporting process” | Venue: London LSE

The main aim of the GRI Certified course “Integrating the SDGs into your reporting process” is to teach participants the recommended methodology for choosing the SDGs their business will address, with case studies of the best practices in integrating the SDGs into your reporting process.

A methodology developed by GRI and the UN Global Compact, to:

• enable and encourage a strong private sector role in both measuring and achieving the SDGs

• make it easier for organisations worldwide to use their reporting through the GRI Standards to support and address the SDGs.

Course information (Remote learning option available):

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FBRH has trained some of the world’s largest companies: Aramco, AIB, Aston Martin, Blackrock, Deloitte, Engie, ERM CVS, European Bank for Reconstruction and Development, Heineken International, KPMG, London School of Economics (LSE), Lundin Petroleum, Manchester Metropolitan University, Netherlands Enterprise Agency, Nord Stream 2 AG, Norwegian Property ASA, Phillips Lighting, PwC,Salterbaxter (an MSL Company), Telenor ASA, United Nations Office for Disaster Risk Reduction (UNISDR), Volkswagen Group UK Limited, Walgreens Boots Alliance, World Business Council For Sustainable Development (WBCSD)… complete list…

References:

This article is based on published information by the UN Global Compact and the Global Reporting Initiative (GRI). For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the publication’s meaning. If you would like to quote these written sources from the original please revert to the following links:

https://www.unglobalcompact.org/news/50-06-24-2010

https://www.globalreporting.org/information/SDGs/Pages/Reporting-on-the-SDGs.aspx

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The Global Reporting Initiative (GRI) and the United Nations Global Compact, supported by the Principles for Responsible Investment (PRI), have joined forces and have launched the ‘Business Reporting on the SDGs’ initiative, to promote business reporting on the United Nations 17 Sustainable Development Goals (SDGs).

The best practice challenge

While active involvement by businesses is key to achieving the SDGs, best practice regarding corporate reporting on the SDGs remains to be identified. GRI and the UN Global Compact introduced an innovative action platform to deal with this challenge: Business Reporting on the SDGs is intended to supplement the GRI Standards and the UN Global Compact Communication on Progress, making the most of the UN Global Compact’s Ten Principles and the GRI Standards.

How does it work?

Business Reporting on the SDGs will support businesses in integrating SDG reporting into their existing procedures, to bring about targeted corporate action on the SDGs. The new action platform will provide a mechanism to corporations for reporting on the SDGs within the UN Global Compact Communication on Progress and GRI Standards, offering advice on how to align the two reporting frameworks and, also, on how to extract SDG implementation data from a large number of business reports. It consists of:

• the Corporate Action Group (CAG), a business engagement and peer learning forum, enabling company representatives to engage in finding and promoting ways to contribute to the SDGs

• the Multi-stakeholder Advisory Committee (MAC), made up of the members of the CAG and representatives from various stakeholder groups (such as investors, academics, governments, civil society organizations), guiding the UN Global Compact’s and GRI’s research and analysis

Join the next GRI Certified and ISEP approved two-day course and learn how to take solid, focused action (materiality) to address the Sustainable Development Goals (SDGs) and minimise your company’s environmental, economic & social impacts by employing the world’s most widely used standards.

Key facts

• Under the terms of a Memorandum of Understanding signed in 2010, the UN Global Compact adopts the GRI Standards as the recommended reporting framework for companies to communicate on progress made.
• 80% of the world’s 250 largest companies issue Corporate Social Responsibility (CSR) reports using GRI’s Sustainability Reporting Standards

References:

This article was compiled using a publication by GRI. For the sake of readability, we did not use brackets or ellipses but made sure that the extra or missing words did not change the publication’s meaning. If you would like to quote these written sources from the original please revert to the link below:

https://www.globalreporting.org/information/SDGs/Pages/Reporting-on-the-SDGs.aspx

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