Subsidiary Participation and Communication on Progress

Companies joining the United Nations Global Compact commit to implementing the ten principles into their strategies and throughout their operations. Their efforts are expected to be continuous and comprehensive wherever they operate. Multinational business participants are expected to work toward a globally coherent approach to corporate sustainability.

A company's commitment to join the Global Compact applies not only to its headquarters, but also to all subsidiaries and local branches. It is important that this commitment is spread throughout the company's operations around the world. For multinational participants of the Global Compact, the engagement of subsidiaries can generate significant business value and is one of the most important contributions that can be made to scale up corporate sustainability efforts.

There are several ways in which subsidiaries of companies can participate in the Global Compact:

1. Parent company’s Global Compact commitment applies to all subsidiaries

• For companies that prefer that their subsidiaries do not become signatories individually, the parent company’s annual Communication on Progress (COP) should explicitly cover activities of all subsidiaries.
• Subsidiaries are strongly encouraged to participate actively both at the global and the local level, including through the Global Compact Local Networks, global working groups or special initiatives.

2. Subsidiaries can choose to become Global Compact signatories alongside the parent company

• In addition to the parent company’s commitment to reinforce their commitment to the United Nations Global Compact at the local level, subsidiaries can but are not required to become Global Compact participants themselves by sending their own letter to the United Nations Secretary-General (a Signing Subsidiary).
• Signing Subsidiaries will be listed individually as participants on the Global Compact website.
• The parent company and each Signing Subsidiary are expected to communicate annually on their progress to implement the Global Compact principles. This can be accomplished by:

i. Separate COPs submitted by the parent company and each Signing Subsidiary; or

ii. A COP for the parent company which, during the submission process, the parent company indicates also applies to the signing subsidiary(ies). In such cases, the parent company should email Leimer Tejeda at tejeda @ un.org with the list of signing signatories to which the COP also applies.

3. Subsidiaries of non-participating companies can become Global Compact signatories

• Subsidiaries of non-participating parent companies are strongly encouraged to participate individually.
• These companies will be listed as participants on the Global Compact website and are expected to communicate annually on their progress to implement the Global Compact principles in line with the COP policy.

Note: Within this policy, the term "subsidiary" is defined as a company controlled by another company in the sense that the parent can dominate the decision-making process of the subsidiary in relation to its financial and operating policies in pursuance of the objectives of the parent company. 

(Last update 10 January 2013)