29 firms fail to file promised sustainability reports

For the fifth year, a coalition of signatories to the Principles for Responsible Investment (PRI) are pressuring companies to fulfill their stated commitments to corporate sustainability reporting.

The investors, from 12 countries and with more than $3 trillion in assets under management, have identified 29 companies that are members of the UN Global Compact (UNGC) but "have failed to produce the mandatory annual report that communicates their progress on corporate sustainability." The investors have written to the 29 companies, challenging them to produce the annual corporate responsibility report known as a Communication on Progress (COP) that is required of the more than 7,000 corporate members of UNGC.

A press release declines to identify the 29 laggards contacted by the coalition. In 2010, Gavin Power of UNGC told SocialFunds.com, "The investors feel strongly that they get better results through private negotiations. Given their success rates, we’re comfortable with that policy."

The coalition has met with a measure of success over the years of its engagement. From 2008 through 2011, an average of 40.1% of laggard companies submitted sustainability reports after being contacted by the investors. Last year's engagement identified 33 laggards, 13 of which subsequently submitted COPs. Ten laggards were expelled from UNGC.

Since 2005, UNGC has expelled more than 3,000 companies for failing to produce a COP, which reports on corporations' efforts to implement UNGC's ten sustainability principles. Last year, in order "to motivate companies at all levels to strive for greater integration of the principles," the Global Compact introduced a Differentiation Framework, which aims to mainstream sustainability reporting and improve transparency and disclosure.

Notwithstanding the admirable goals of UNGC, the markedly high expulsion rate has raised eyebrows among some corporate responsibility observers. Mallen Baker, the founder of Business Respect, wrote in a blog post titled Global Compact keeps fishing the bodies out the river, "CSR membership organizations -- some of them with real commitments and obligations -- do not see such high drop-out rates."

"Some NGOs have criticized the organization for not having enough teeth to enforce standards on its members," Baker wrote. "What is simply not good enough is the Global Compact trumpeting its high expulsion rate as a badge of honor."

The investors wrote to 89 additional companies, acknowledging their advanced levels of reporting. Of the 89 leaders, only two -- Symantec and Dow Chemical -- are headquartered in the U.S., and Dow is currently embroiled in a widely reported controversy over its sponsorship of the 2012 Olympic Games in London. Dow is the owner of Union Carbide, whose factory in Bhopal, India, leaked poisonous gas in 1984, killing 15,000 people. Dow bought Union Carbide in 2001, and disavows any legal responsibility for liabilities relating to the Bhopal disaster.

U.S.-based members of the investor coalition include Boston Common Asset Management and Trillium Asset Management.

This article originally appeared in SocialFunds. Photo courtesy of Franck Boston via Shutterstock.