Global business leaders support ESG convergence

Over fifty international business leaders and their organisations, including Mahindra and Reliance Industries, have committed to the core ‘Stakeholder Capitalism Metrics’, a set of environmental, social and governance (ESG) metrics and disclosures released by the World Economic Forum and its International Business Council in September 2020.

Stakeholder Capitalism Metrics — which measure the long-term enterprise value creation for all stakeholders — offer a set of universal, comparable disclosures focused on people, planet, prosperity and governance that companies can report on, regardless of industry or region.

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The move signals that private sector leaders view ESG factors as critical to the success and long-term viability of all businesses and a unified voice is gathering pace on a global solution for non-financial reporting.

This clearly represents the intent from leading global companies to integrate sustainability into their core strategy, operations and corporate disclosures.

Shared, sustainable value

Some of the international businesses that have committed to a common set of ESG metrics in their reporting to investors or other stakeholders include biggies such as Unilever, Salesforce, Dell, Royal DSM, MasterCard and Sony.

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Stakeholder Capitalism Metrics strengthen the ability of companies and investors to benchmark progress on sustainability matters, thereby improving decision making and enhancing transparency and accountability regarding the shared and sustainable value that companies create.

These metrics pull a wide array of existing ESG standards into 21 core and 34 expanded metrics.

The World Economic Forum, in collaboration with Bank of America, Deloitte, EY, KPMG and PwC, curated the set of 21 core and 34 expanded metrics over the past two years with the support of over 140 stakeholders.

Four pillars

Commenting on the development, Klaus Schwab, Founder and Executive Chairman, World Economic Forum, said: “Stakeholder capitalism becomes now really mainstream. The public commitments from companies to report not only on financial metrics but also their ESG impacts are an important step towards a global economy that works for progress, people and the Planet”.

The metrics include non-financial disclosures centred around the four pillars: people, planet, prosperity and principles of governance. Intentionally built on existing standards, the pillars include metrics such as greenhouse gas emissions, pay equality and board diversity, among others.

Alan Jope, CEO of Unilever, said, “Runaway climate change, environmental degradation and social inequality are some of the biggest problems that the world faces. Companies’ annual reports and accounts might not be the first mechanism for change that would spring to mind, but standardised and mandatory non-financial reporting is critical to create a new form of capitalism that tackles these problems. The Forum’s IBC work is an important step forward and we are providing our wholehearted support”.

Geraldine Matchett, Co-CEO and Chief Financial Officer and Member of the Managing Board, Royal DSM, said: “Although there is growing demand from investors who recognise that ESG disclosure is vital for good investment decisions, there is no agreed international framework yet. I hope the Stakeholder Capitalism Metrics are a first step towards the convergence of existing metrics and standards. This will be one of the fastest ways to accelerate the systemic change the world needs, putting investors on the right track, helping to change consumer behaviour for the better, and helping companies to do the right thing”.

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