CBS Challenges Effectiveness of UN Sustainability Initiative

The effectiveness of the UN Global Compact, dubbed the world’s largest corporate sustainability initiative, has been called into question by a professor at Copenhagen Business School (CBS).

The Global Compact initiative asks firms to commit to 10 broad principles spanning areas that include anti-corruption and the environment as well as human and labor rights. Ban Ki-moon, the UN’s secretary-general, had set a target of acquiring 20,000 participants in the scheme by 2020. However Andreas Rasche, who teaches an MBA class on leading responsible corporations at CBS, says that “this vision seems to be out of reach.” Having worked on a number of projects within the initiative, Rasche seems to be well qualified to voice his concern.

The professor points to a third month in 2015 in which fewer firms have joined the initiative than have been expelled for not fulfilling their obligation to report back on their progress against the 10 principles. There are now a total of around 8,000 businesses signed up to the scheme, after figures from October showed that while 116 new companies joined, 132 were expelled. While the scheme is “too good of an idea to give up on…it won’t be this version of the Global Compact that changes the practice of corporate sustainability,” Rasche writes in Copenhagen Business School’s Business of Society blog.

Turnover of participants ‘is not sustainable’ says Copenhagen Business School professor

One thing that needs to change, in Rasche’s mind, is the ease with which firms can sign up to the initiative. New signatories are asked for nothing more than a statement of intent with the end result being that a high turnover of participants appears to be preventing the Global Compact from gathering any significant momentum. “A voluntary initiative that has to expel around 1,000 participants each year, while at the same time accepting 1,000 new companies, may miss the point,” says Rasche, concluding that its current turnover “is not sustainable and this seems to be an important lesson for an initiative focused on sustainability.”

In 2014, the Copenhagen Business School professor discussed the pitfalls of condemning courses on business ethics to optional components of an MBA program, arguing that all students should be familiar with the topics that this subject area encompasses.

Business schools’ commitments to Global Compact’s values

Since 2007, the Global Compact has had an extension into the world of business education through a separate initiative, the Principles for Responsible Management Education (PRME). Here there are six guiding themes designed to inform business schools’ approach to training the next generation of management leaders, one of which is to uphold the values of the Global Compact.

Along with Copenhagen Business School, Cornell University’s Johnson School of Business, INSEAD and CEIBS were among the earliest signatories to this initiative, which now stretches to more than 500 institutions in 80 countries. As part of each school’s agreement to report back on progress made, INSEAD notes a three-part “master plan to fully integrate corporate responsibility and sustainability into the INSEAD MBA program”, while CEIBS points out that “ethics and governance are mandatory components of our degree program curricula” on both its MBA and EMBA in its latest report.

Isenberg School of Management and Cologne Business School are among the institutions who have signed up to the PRME as recently as last month. But, even here, there appear to be progress-reporting issues – a sizeable number of signatories are flagged up (at the time of writing) as being non-communicating participants, including IMD and Warwick Business School, for their failure to keep up with their commitment to publicly share their progress on the PRME in the form of a report every two years. As with businesses signed up to the Global Compact, expulsion is also a possibility if institutions don’t rectify their non-communicating status within a year and happened to Ohio State University’s Fisher College of Business and HEC Montréal in 2013. Could the PRME also benefit from a re-evaluation of its joining criteria? Such a move could conceivably improve the initiative’s standing among those schools that are yet to sign up and get more of them to commit to being publicly accountable in their efforts to provide MBA students with a responsible management education.