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Institutional Investors Engage with Global Compact Participants

( New York, 15 January 2007 ) – Underscoring the increasing importance of corporate responsibility to mainstream institutional investors, a group of signatories to the UN Principles for Responsible Investment (PRI) – representing approximately US$2.13 trillion in assets – has written to the chief executive officers of 103 companies in more than 30 countries to recognize frontrunners in the integration of environmental, social and governance (ESG) issues, while pressing laggards to improve their performance.

All 103 companies are Global Compact participants. Companies that join the initiative make a leadership commitment to implement ten principles in the areas of human rights, labour standards, the environment, and anti-corruption in business strategy and operations – and to issue an annual Communication on Progress (COP) detailing their efforts.

In the letter to CEOs, the investors focus on adherence to this disclosure dimension of the UN Global Compact, because it was felt that it is through the COP process that participants can be held to account by stakeholders, including the investment community. The goal of the letter is to leverage investor influence to encourage non-communicating companies to deliver on their commitment and to give recognition to notably good communications.

The letter further expresses the investors’ belief that the Global Compact has improved the debate surrounding ESG issues, which they regard as potentially material to companies’ business performance and long-term financial success.

 “We see a corporate commitment to adhering to the Global Compact as a positive public statement, which helps companies maintain a company’s license to operate. We believe that good corporate practices warrant our support”, said Steve Waygood of Morley Fund Management, one of the collaborating investment institutions.

“We want to help to protect the credibility of the Global Compact, which suffers when companies free-ride on the good work of others. Without adequate reporting on progress, a company signing the Global Compact’s ten principles represents little more than a statement of good intentions”, he added.

A full database of COPs is accessible on the Global Compact website at www.unglobalcompact.org .

Media Contacts:

Gavin Power
Senior Advisor, Head of Public Affairs
UN Global Compact

Notes to Editors

How did the investors identify companies?

The investors used the UN Global Compact’s public database to identify companies among the over 4,000 Global Compact signatories where they felt that engagement was warranted. They selected 30 “non-communicating” and 48 “inactive” companies for poor performance – as well as 25 companies that have produced particularly good COPs. The companies receiving the letters are located in more than 30 different countries. The collaborating investor group includes 19 asset owners and managers from 10 countries, including:

  • BC Investment Management Corporation (bcIMC)
  • Canada Pension Plan Investment Board
  • Comité Syndical National de Retraite Bâtirente
  • Carlson Investment Management
  • CCLA
  • Credit Agricole Asset Management
  • DnB NOR Asset Management
  • Domini Social Investments
  • Kommunal Landspensjonkasse – KLP
  • Mergence Africa Investments
  • Meritas Mutual Funds
  • Morley Fund Management
  • Newton Investment Management
  • New Zealand Superannuation Fund
  • The Environment Agency Pension Fund
  • The Ethical Council (Swedish pension funds AP1, AP2, AP3, AP4)
  • Universities Superannuation Scheme
  • 27Four Investment Managers

What are the Principles for Responsible Investment?

The PRI Initiative was established in 2006 as a framework to help investors achieve better long term investment returns and sustainable markets through better analysis of environmental, social and governance issues in the investment process and the exercise of responsible ownership practices. The PRI is convened by the United Nations Environment Program Finance Initiative and the United Nations Global Compact. More than 275 institutional investors have signed up to the PRI representing more than US$11 trillion in assets under management. For more information, visit www.unpri.org.

What is the UN Global Compact?

Launched in 2000, the UN Global Compact brings business together with UN agencies, labour, civil society and governments to advance ten universal principles in the areas of human rights, labour, environment and anti-corruption. Through the power of collective action, the Global Compact seeks to mainstream these ten principles in business activities around the world and to catalyze actions in support of broader UN goals. With over 3,600 participating companies and hundreds of other stakeholders from more than120 countries, it is the world's largest voluntary corporate citizenship initiative. For more information, please visit www.unglobalcompact.org

How is corporate adherence to the Global Compact evaluated?

Once a company has made a commitment to the Global Compact, it is expected to make the ten principles part of its strategy, culture and daily operations. Participating companies are further required to publish in their annual financial reports, or similar public documents, a description of the ways in which they are supporting the Global Compact. This description is known as a Communication on Progress (COP).
The rationale behind the COP is to raise transparency and contribute to public accountability, by creating a repository of corporate practices that serve as a basis for continuous performance improvement.
Failure to submit a Communication on Progress puts the company at risk of being identified as “non-communicating” or “inactive” on the Global Compact website. For further information, see the COP database at www.unglobalcompact.org/COP/cop_search.html .