Transformational Governance

Expanding the “G” in ESG through Transformational Governance

Transformational Governance

Tied to Principles:

1 Businesses should support and respect the protection of internationally proclaimed human rights. More about Principle 1
2 Businesses should make sure that they are not complicit in human rights abuses. More about Principle 2
3 Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining. More about Principle 3
4 Businesses should uphold the elimination of all forms of forced and compulsory labour. More about Principle 4
5 Businesses should uphold the effective abolition of child labour. More about Principle 5
6 Businesses should uphold the elimination of discrimination in respect of employment and occupation. More about Principle 6
7 Businesses should support a precautionary approach to environmental challenges. More about Principle 7
8 Businesses should undertake initiatives to promote greater environmental responsibility. More about Principle 8
9 Businesses should encourage the development and diffusion of environmentally friendly technologies. More about Principle 9
10 Businesses should work against corruption in all its forms, including extortion and bribery. More about Principle 10

In the face of converging crises — including COVID-19, climate change, economic uncertainty, social inequality and rising disinformation — UN Secretary-General António Guterres has called for a reimagined social contract to address the world’s most pressing challenges. Business has an important role to play by promoting ethical leadership and building trust between public and private institutions and in these institutions by civil society. Through Transformational Governance, this vision can be translated into business action.

In recent years, there has been a dramatic increase in public support for laws requiring companies to work for a better society (GlobeScan Radar 2021) and increasing expectations for CEOs to speak up and act on a broad range of issues (Edelman Trust Barometer 2022). Transformational Governance provides a framework to address these rising stakeholder and shareholder expectations by adopting a broader approach to the G – governance dimension – in ESG – environmental, social governance.

Transformational Governance is a principles-based philosophy - not a new legal concept - that calls on business to be more accountable, ethical, inclusive and transparent to drive responsible business conduct, improve ESG performance and strengthen public institutions, laws and systems. This means fostering a culture of integrity, fairness and inclusion beyond legal formality — asking not just what is legal but what is right.

The targets of Sustainable Development Goal 16 - Peace, Justice and Strong Institutions - underpin Transformational Governance. Of the 17 Sustainable Development Goals, this goal is the least understood by business but arguably the most consequential to business. Peace, justice and strong institutions are essential elements of governance that bind businesses to the communities in which they operate and serve.

Our Work

The SDG 16 Business Framework | Inspiring Transformational Governance helps businesses understand and implement the targets of SDG 16. It also promotes trust between private and public institutions and trust in those institutions by civil society.

This Framework was informed by 14 country consultations and interviews with more than 60 business leaders, leading to commitments by 1,300 CEOs from 100+ countries in a Statement from Business Leaders for Renewed Global Cooperation.

Building on the Framework, Think Labs, Policy & Advocacy Campaigns, Accelerator Programs, Peer Learning Groups, Academy Learning Series, and Events will be rolled out to innovate and scale Transformational Governance. Working with partners across business, the UN system, civil society and academia, businesses will be guided to adopt a holistic approach to Transformational Governance through SDG 16.

Our Impact

Working with partners across business, the UN system, civil society and academia, businesses will be guided to adopt a holistic approach to Transformational Governance through SDG 16. By 2024, we aim to develop this emerging concept by encouraging as many UN Global Compact participant companies to:

Take action on SDG 16, both internally and externally
Engage in thought leadership on Transformational Governance connected to corporate, sustainable and global governance
Demonstrate bold leadership on strengthening global cooperation and inclusive multilateralism