Companies sign up for new ESG stakeholder metrics

Dozens of business leaders this week committed their organizations to using a new set of ESG-related metrics and disclosures developed in collaboration with the Big Four accounting firms.

The 61 signatories, revealed at the World Economic Forum’s Davos conference, will start using ‘stakeholder capitalism metrics’ as an initiative intended to speed up convergence among the main private ESG standard-setters and to bring greater comparability and consistency to ESG disclosures. The metrics are based on other voluntary standards and consist of a set of 21 core – and 34 expanded – disclosures focusing on four areas: people, planet, prosperity and principles of governance.

The metrics are designed to be comparable across regions and industries. The aim is to help companies and investors benchmark progress on sustainability matters and in so doing improve decision-making, transparency and accountability.

The forum and its International Business Council (IBC) developed the metrics with Deloitte, EY, KPMG and PwC and released them last September following a consultation process with more than 200 companies, investors and other interested parties.

According to the forum, companies that have agreed to implement reporting on the stakeholder capitalism metrics include Bank of America, Boston Consulting Group, BP, Credit Suisse, Dell Technologies, HP, IBM, Mastercard, Mitsubishi Corporation, Nestlé, PayPal, Royal Dutch Shell, Salesforce, Siemens and Unilever.

The leaders and their organizations signing on to the initiative have committed to:

• Reflecting the core metrics in their reporting, such as in annual reports, sustainability reports and proxy statements, using those most relevant to their business or briefly explaining why a different approach is more appropriate
• Publicly supporting these efforts, encouraging business partners to do so
• Promoting the convergence of existing ESG standards, frameworks and principles with the aim of creating a globally accepted approach to non-financial reporting on common ESG metrics.

Brian Moynihan, chair and CEO of Bank of America and chair of the IBC, says in a statement: ‘That is stakeholder capitalism in action. Common metrics will help all stakeholders measure the progress we are making and ensure the resources capitalism can marshal – from companies, from investors and others – are directed to where they can make the most difference.’

The forum also quotes Marc Benioff, chair and CEO of Salesforce, as saying: ‘Today is another step forward in the growing impact of stakeholder capitalism. It’s not just about words, but also about companies setting clear metrics, measuring our progress and holding ourselves accountable. Only then can we provide long-term growth for our shareholders, build trust with all stakeholders and truly improve the state of the world.’

This week’s announcement comes amid progress by reporting and standard-setting organizations toward a more unified approach to sustainability disclosure.

Last September, five bodies – CDP, the Climate Disclosure Standards Board, the Global Reporting Initiative, the International Integrated Reporting Council (IIRC) and SASB – pledged to work together for a comprehensive solution. In December they released a prototype climate-related financial disclosure standard – using inputs from their different frameworks and standards – to demonstrate how sustainability can affect enterprise value.

SASB and the IIRC in November announced plans to merge into one organization by mid-2021 with the aim of offering investors and companies a comprehensive corporate reporting framework to drive global sustainability performance.