UNGC Violation Screening
Overview
SESAMm's UNGC Violation Screening framework assesses whether ESG controversies constitute potential breaches of the United Nations Global Compact (UNGC) Principles. The framework evaluates events ( individual ESG controversies linked to a company) and classifies each according to the severity of the potential breach and the degree of company responsibility.
The UNGC comprises 10 principles across four pillars: Human Rights, Labor Rights, Environment, and Anti-Corruption. SESAMm maps its ESG sub-categories to these principles as follows:
| Principle | Pillar | Title | SESAMm ESG Subcategory |
|---|---|---|---|
| 1 | Human Rights | Support and respect the protection of internationally proclaimed human rights | Fundamental Human Rights, Rights of Indigenous Communities, Right to Property |
| 2 | Human Rights | Make sure that they are not complicit in human rights abuses | Violation of Human Rights in Conflict or High Risk Zones |
| 3 | Labour Rights | Uphold the freedom of association and the effective recognition of the right to collective bargaining | Freedom of Association and Collective Bargaining |
| 4 | Labour Rights | Elimination of all forms of forced and compulsory labour | Forced Labor |
| 5 | Labour Rights | Effective abolition of child labour | Child Labor |
| 6 | Labour Rights | Elimination of discrimination in respect of employment and occupation | Workplace Diversity & Inclusion |
| 7 | Environment | Support a precautionary approach to environmental challenges | Atmospheric Pollution, Biodiversity and Ecosystems, Energy & Natural Resources Management, Waste Management, Water Consumption, Water Pollution, Climate Change |
| 8 | Environment | Undertake initiatives to promote greater environmental responsibility | Energy & Natural Resources Management, Biodiversity and Ecosystems, Waste Management, Water Pollution, Industrial Accidents & Physical Risk |
| 9 | Environment | Encourage the development and diffusion of environmentally friendly technologies | Energy & Natural Resources Management |
| 10 | Anti-Corruption | Work against corruption in all its forms, including extortion and bribery | Corruption and Bribery |
How It Works
SESAMm uses a two-step process to evaluate events against the 10 UNGC principles, balancing analytical depth with computational efficiency.
Step 1: Pre-filtering
A transformer-based embedding model quickly analyzes the event title and summary. Using predefined probability thresholds, it identifies and filters out clear non-breaches, classifying them as Low Risk. This step handles the majority of events, conserving resources for more complex analysis.
Step 2: LLM Classification
Events flagged as potential risks in Step 1 are processed by an advanced Large Language Model (LLM). The model applies strict in-scope/out-of-scope criteria to assign a final risk classification and identify the specific UNGC principles breached.
UNGC classification is calculated at the event level only.
Risk Classification
Each event is assigned one of three risk levels:
Violator (High Risk)
Clear and explicit breaches of the UNGC Principles, backed by strong evidence such as official sanctions, regulatory fines, public admissions of guilt, or formal condemnations. The company has been found directly responsible for committing or enabling serious violations.
Watchlist (Moderate Risk)
Potential serious violations where evidence is partial or inconclusive. These events suggest possible misconduct — or a risk of misconduct — but fall short of confirming a clear breach. This may include cases where initial findings suggest wrongdoing but insufficient information exists to confirm direct company culpability.
Low Risk
Events that raise concerns but lack clear evidence of a UNGC violation. The company may not be acting contrary to international norms, but the event warrants monitoring. A Low Risk classification does not equate to an absence of risk, it reflects that current evidence does not confirm a breach.
Each classification is accompanied by the list of UNGC principles breached, offering full transparency into the rationale behind the label.
Key Assessment Factors
Two primary factors inform the risk classification:
Severity: The overall gravity of the incident, including its potential impact on stakeholders, the scale of harm, the number of people affected, and whether the impact is reversible. Higher severity increases the likelihood of a Moderate or High Risk classification.
Company Responsibility: The degree of the company's involvement or culpability, including evidence of direct participation, prior knowledge, or failure to prevent the violation. The more direct and undeniable the company's role, the more likely the event is to receive a High Risk classification.