Stakeholder Capitalism: over 50 companies adopt ESG reporting metrics

(Credit: Unsplash)

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

A coalition of over 50 companies have drawn from existing frameworks and co-created a comprehensive set of metrics that highlight the need for consistent ESG reporting.

The impact.

Global challenges amplified by the COVID-19 pandemic have made Environmental, Social and Governance (ESG) issues even more pressing for policymakers, boards and executives.

To promote alignment among existing ESG frameworks, the World Economic Forum, with Partners including Deloitte, EY, KPMG, and PwC, has drawn upon existing frameworks and identified a set of universal disclosures – the Stakeholder Capitalism Metrics.

During the Sustainable Development Impact Summit 2021, the Forum announced that over 50 companies have begun including the Stakeholder Capitalism Metrics in their mainstream reporting materials, including annual reports and sustainability reports.

The Stakeholder Capitalism Metrics promote alignment among existing ESG frameworks and create a set of data points that can be compared between companies, regardless of their industry or region. The metrics include non-financial disclosures centred around four pillars: people, planet, prosperity and principles of governance and include measurements around greenhouse gas emissions, pay equality and board diversity, among others.

Since January 2021, approximately 120 companies have shown their support for this initiative. Companies which have adopted this approach include: Accenture, Bank of America, Eni, Fidelity International, HSBC Holdings, IBM, Mastercard, Nestlé, PayPal, Royal DSM, Salesforce, Schneider Electric, Siemens, Total, UBS, Unilever, Yara International and Zurich Insurance Group. The latest group of companies who have signed on to the Stakeholder Capitalism Metrics can be found here.

An analysis of reports from 45 companies shows how enterprises are building skills for the future, with over $1.5 trillion invested in training. They also indicate that companies are innovating, with over $20 trillion spent on research and development and $23 trillion in multi-year innovation investments. Lastly, they are contributing to their communities with nearly $140 trillion paid in taxes.

In parallel, the Forum has been collaborating with the Impact Management Project (IMP) to bring together the major standard setters and frameworks and is collaborating with the International Financial Reporting Standards Foundation (IFRSF) as a contributing member of their Technical Readiness Working Group to establish the International Sustainability Standards Board.

What’s the challenge?

Measuring the impact companies have on society and our planet is essential if practices are to be managed and improvements are to be made.

However, public and private stakeholders have struggled for many years to make clear progress amongst a number of competing standards, frameworks and initiatives.

Without generally accepted international accounting or reporting standards when it comes to ESG, many companies are working in silos and cannot effectively share best practices or key learnings.

For the private sector to drive progress towards achieving the UN Sustainable Development Goals, a common system of measurement is essential.

This is the first time that we have publicly seen this breadth of data from global companies across sectors on ESG factors. The Stakeholder Capitalism Metrics are already demonstrating that consistent and comparable ESG reporting can help articulate to stakeholders the impacts of ESG commitments.— Olivier Schwab, Managing Director, World Economic Forum.

Our approach.

At the World Economic Forum Annual Meeting 2020 in Davos, 120 of the world’s largest companies supported efforts to develop a core set of common metrics and disclosures on non-financial factors for their investors and other stakeholders.

In September 2020, following a six-month consultation process with over 200 companies, investors and interested parties, the project published a refined set of 21 core and 34 expanded metrics and disclosures in its report Measuring Stakeholder Capitalism: Towards Common Metrics and Consistent Reporting of Sustainable Value Creation.

Since the launch of the Stakeholder Capitalism Metrics, the Forum has been building a coalition of CEOs who are willing to show their commitment to stakeholder capitalism and to reflect these metrics and disclosures in their mainstream reporting.

These metrics will go a long way to helping banks report on their progress towards their net zero and wider ESG ambitions. Banks can’t form a comprehensive analysis of their own ESG-related risk and opportunity if reporting is inconsistent. This is a big step forward in creating a minimum standard of disclosure for all companies to follow.
— Noel Quinn, Group Chief Executive, HSBC

Our aim is to bring stakeholders together to simplify and harmonize the various approaches to non-financial reporting.

The work is carried out through three interconnected communities:

  • Business Leaders: Advancing the adoption of the Stakeholder Capital Metrics and offering a collective, private-sector voice to the convergence dialogue
  • ESG Practitioners: Leading the ESG strategy for their organization and implementing the recommendations into the reporting materials of their companies
  • ESG Ecosystem: Harmonizing the global dialogue among standards foundations, private standard setters, regulators and international organizations

How can you get involved?

If your organisation shares the conviction that companies need useful tools for measuring and communicating sustainable value creation, you are invited to join this coalition of global businesses.

In committing to reporting on the Stakeholder Capitalism Metrics you can play a transformative role within our community and lend your voice to this convergence effort.

Learn about Stakeholder Capitalism Metrics: Read our latest report.

Work with us on ESG Metrics: Contact us.

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