(Geneva, 5 July 2007) – Three groundbreaking studies by organizations such as the UN Global Compact and Goldman Sachs presented today at the Global Compact Leaders Summit show that an increasing number of business leaders see corporate responsibility as a way to compete successfully and to build trust with stakeholders – and that sustainability front-runners in a range of industries can generate higher stock prices.

“The evidence is building that embedding universal principles and related environmental, social and governance policies into management practices and operations delivers long-term business value and is rewarded by markets”, said Georg Kell, Executive Director of the UN Global Compact. “Fundamentally, for companies and investors, this is about managing risks and opportunities presented by globalization”.

A report released by Goldman Sachs, one of the world’s leading investment banks, showed that among six sectors covered – energy, mining, steel, food, beverages, and media – companies that are considered leaders in implementing environmental, social and governance (ESG) policies to create sustained competitive advantage have outperformed the general stock market by 25 per cent since August 2005. In addition, 72 per cent of these companies have outperformed their peers over the same period.

Goldman Sachs analyzed the companies with respect to three areas: ESG performance; how well they are positioned vis-à-vis long-term industry trends; and the strength of their underlying financial returns.

At the Summit, the UN Global Compact also released its first Annual Review, a comprehensive survey that monitors the extent to which companies have implemented the ten Global Compact principles in the areas of human rights, labour, environment and anti-corruption. Among the key findings:

  • A majority of survey respondents have policies in place related to human rights, labour conditions, the environment and anti-corruption.
  • 75 per cent of respondents have engaged in cross-sector partnerships with one or more of the following sectors: non-governmental organizations, business, academia, the UN, and other multi-lateral organizations.
  • 63 per cent of respondents said they participate in the Global Compact to increase trust in the company.

At the same time, there are important “performance gaps” in implementation, as highlighted by a complementary survey of chief executives participating in the Global Compact. The survey, prepared by McKinsey&Company, revealed the following:

  • More than 90 per cent of CEOs are doing more than they did 5 years ago to incorporate environmental, social and governance issues into strategy and operations.
  • 72 per cent of CEOs said that corporate responsibility should be embedded fully into strategy and operations, but only 50 per cent think their firms actually do so.
  • 59 per cent of CEOs said corporate responsibility should be embedded into global supply chains, but only 27 per cent think they are doing so.

“Taken together, these three reports show that for an increasing number of business leaders, corporate responsibility is no longer an option, it is a necessity in order to compete successfully”, said Mr Kell. “At the same time, in order to fully maximize these benefits and increase their competitive advantage in the global marketplace, companies must adopt a broader and deeper approach with respect to implementation of corporate responsibility principles”.

Click here to downoad the Goldman Sachs “GS Sustain” report
Click here to download McKinsey&Company’s “Shaping the New Rules of Competition”
Click here to download the UN Global Compacts “First Annual Review”

About Goldman Sachs

Goldman Sachs is a leading global investment banking, securities and investment management firm that provides a wide range of services worldwide to a substantial and diversified client base that includes corporations, financial institutions, governments and high-net-worth individuals. Founded in 1869, it is one of the oldest and largest investment banking firms. The firm is headquartered in New York and maintains offices in London, Frankfurt, Tokyo, Hong Kong, Johannesburg and other major financial centers around the world.

About McKinsey & Company

McKinsey & Company is a management consulting firm that helps many of the world’s leading corporations and organizations address their strategic challenges. With consultants deployed in more than 40 countries across the globe, McKinsey advises on strategic, operational, organizational and technological issues. For eight decades, the firm’s primary objective has been to serve as an organization’s most trusted external advisor on critical issues facing senior management.

See the Press Release on the Global Compact Website for more details.