The United Nations Global Compact is an initiative that advocates responsible business practices. The compact also covers wider matters closely related to the human rights issue. How does the United Nations Global Compact roll in the world of investment?
Understanding the United Nations Global Compact
Companies who participate in the initiative are expected to practice businesses that do not only bring economic benefit but also social and the environment benefit. Hence, upon advancing with the businesses, companies related to the compact need to integrate the 10 principles as quoted from Investopedia below:
- Encourage and respect the protection of internationally proclaimed human rights
- Practice a business that is free from any form of human rights abuse
- Advocates the freedom of association and the effective recognition of the right to collective bargaining
- Reject any form of forced and compulsory labour
- Diminish child labour
- Abolish any form of discrimination in the work environment
- Adopt environmentally cautious practices before actually proceeding with actions involving challenges
- Abide by the environmental responsibilities in business
- Support the development and transpiring of environmentally friendly technologies
- Prohibit any kind of corruption, including extortion and bribery
This means companies involved in the compact are both socially and environmentally responsible in advancing their businesses. In a sense, the 10 principles by the United Nations Global Compact are similar to the ESG criteria.
Benefits of being a part of the compact for businesses and investors
Through the compact, companies can find other companies that share the same. Discovering companies that share the same value may become the chance for a new product development collaboration. The compact can also give businesses access to untapped markets.
Furthermore, companies related to the compact are most probably the main targets of investors whose main interest are green investing, sustainable investing, or socially responsible investing (SRI). Participating in the compact will give the companies access to meet and the chance to such investors.
The public has now started to take into account certain companies’ value in practising their businesses. Hence, the demand for socially and environmentally responsible businesses are starting to get higher. The compact can be a great chance for investors to find out and invest in companies can become the next promising business.
Follow and join us on Youtube, Instagram, Facebook, and Twitter to be part of the trader community in Asia
