CEOs sign climate pledge at UN Global Compact

London, 12 July: Business chiefs from 153 global companies have called on governments to establish market mechanisms to tackle climate change, while committing to take practical steps to improve their own energy efficiency and cut the carbon intensity of their products.

The statement, 'Caring for climate: the business leadership platform', was signed at a 6 July Geneva summit of the UN Global Compact, where business, governments, civil society, trade unions and NGOs meet to advance 10 goals in the areas of human rights, labour, environment and corruption. Firms including Unilever, Coca-Cola, Airbus, South Korea's national rail operator Korail, Anglo American and major Spanish cement producer Cementos Portland Valderrivas, put their names to the agreement. Of the signatories, 30 come from the Fortune Global 100 ranking of the world's largest companies.

Georg Kell, executive director of the UN Global Compact, called the statement "a unique and significant business initiative, as it is both a call to governments and a commitment to action by business itself".

The statement, commits the companies to "practical actions to increase the efficiency of energy usage and to reduce the carbon burden or products, services and processes, to set voluntary targets for doing so and to report publicly on the achievement of those targets annually".

But it also calls on world governments to introduce regulations to curb climate change, with an emphasis on market solutions such as emissions trading. The chief executives pressed for the "urgent creation, in close consultation with the business community and civil society, of comprehensive, long-term and effective legislation and fiscal frameworks designed to make markets work for the climate, in particular policies and mechanisms intended to create a stable price for carbon".

Achim Steiner, executive director of the UN Environment Programme, said: "Climate change is shaping global markets and global consumer attitudes. There will be winners and losers. Companies who seize opportunities, who adopt environmental, social and governance policies and who evolve, innovate and respond to these challenges are likely to be the pioneers and industry leaders of the 21st century."

Also at the summit, the UN Global Compact published its first annual review, surveying the progress made by companies in applying its 10 principles. The review showed that the majority of companies have put in place policies on human rights, labour conditions, the environment and corruption.

But, in a separate report, consultants McKinsey & Company showed implementation is patchy in places. A full 90% of chief executives said they were doing more to incorporate environmental, social and governance issues into strategy and operations than they were five years ago. In addition, 75% said corporate responsibility should be fully embedded into strategy and operations – but only 50% said their firms are doing so.

Only 27% of CEOs said they were embedding corporate responsibility into global supply chains, although 59% agreed this should be done.

Kell said: "Companies must adopt a broader and deeper approach with respect to implementation of corporate responsibility principles."

Also at the Global Compact summit, the NGO AccountAbility released its Responsible Competitiveness Index, rating governments on their performance in encouraging corporate responsibility. Sweden took the top spot, scoring 81 overall, followed by Denmark, Finland, Iceland and the UK. Germany came in 11th place, with a score of 72.7. The US ranked 18th in the index, with 69.6 points. China took 87th place, just above Zimbabwe, with 47.2. Chad came in last place, with a score of only 35.1.

Simon Zadek, chief executive of AccountAbility, said: "Governments need to reshape global markets, otherwise markets will continue to damage people and the environment. The good news is that countries can compete responsibly and be successful, so long as governments and policy-makers can put in place the right frameworks. There needn't be a conflict between compassion and competitiveness. Sweden is a shining example of this."