Oliver Cann, Public Engagement, World Economic Forum, +41 79 799 3405, firstname.lastname@example.org
·140 of the world’s largest companies support effort to develop a core set of common metrics and disclosures on non-financial factors to their investors and other stakeholders.
·Chief executive officers increasingly see topics of Environmental, Social, and Governance (ESG) and Sustainable Development Goals (SDG) as important to long-term business value creation.
·At the request of its International Business Council (IBC), the World Economic Forum is preparing a proposal for common ESG metrics and disclosures in collaboration with the world’s four largest accounting firms.
·The proposal will be finalized in coming months after further consultation with businesses and other key ESG actors.
·Read more on the World Economic Forum’s stakeholder capitalism project here. Share on social media using #wef20
Davos, Switzerland, 22 January 2020 – On Tuesday, the chief executive officers of many of the world’s largest companies expressed support for aligning on a core set of metrics and disclosures in their annual reports on the non-financial aspects of business performance such as greenhouse gas emissions and strategies, diversity, employee health and well-being and other factors that are generally framed as ESG topics.
Though business leaders increasingly see the topics of ESG and the SDGs as important to long-term business value creation, lack of comparable ESG reporting in mainstream reports hinders the meaningful benchmarking of sustainable business performance by investors and society. Additionally, this prevents effective communication about a company’s long-term and sustainable value creation.
The IBC of the World Economic Forum discussed a proposal prepared by the Forum in collaboration with the Big Four accounting firms – Deloitte, EY, KPMG and PwC – titled Toward Common Metrics and Consistent Reporting of Sustainable Value Creation. The proposal recommends a set of core metrics and recommended disclosures. The intent is for the metrics to be reflected in the mainstream annual reports of companies on a consistent basis across industry sectors and countries.
“For stakeholder capitalism to become a reality, we must be able to measure companies’ performance on environmental, social and governance metrics,” said Klaus Schwab, Founder and Executive Chairman of the World Economic Forum. “The International Business Council’s decision to endorse this principle, and their willingness to be measured in their annual reports on more than profits, is a crucial step to change our economic system for the better.”
The proposed metrics and recommended disclosures have been organized into four pillars that are aligned with the SDGs and principal ESG domains. They are:
- Principles of Governance
Aligned with SDGs 12, 16 and 17, “principles of governance” focuses on a company’s commitment to ethics and societal benefit
Aligned with SDGs 6, 7, 12, 13, 14 and 15, “planet” looks at the themes of climate sustainability and environmental responsibility
Aligned with SDGs 1,3, 4, 5 and 10, “people” examines the roles human and social capital play in business
Aligned with SDGs 1, 8, 9 and 10, “prosperity” focuses on business contributions to equitable, innovative growth
The metrics are drawn, wherever possible, from existing standards and disclosures such as GRI, SASB, TCFD, CDSB and others. Instead of reinventing the wheel by creating a new standard, they aim to amplify and elevate the rigorous work that has already been done by these initiatives, bringing their most material aspects into mainstream reports on a consistent basis.
“By aligning companies with asset owner and asset managers through common, limited and meaningful metrics, we will ensure sufficient capital is available to meet the Sustainable Development Goals,” said Brian Moynihan, Chairman and Chief Executive Officer, Bank of America. “Companies can deliver great returns for their shareholders, invest in their employees, share their success with the communities in which they operate and drive progress on societal priorities.”
Adoption of such recommended universal metrics and disclosures by IBC companies is intended to be a catalyst for greater alignment and synergy among existing ESG standards and ultimately a system-wide solution, such as a generally accepted international accounting or other reporting standard drawn from best practice.
At the request of the IBC, the World Economic Forum will continue to consult with interested companies and other stakeholders to further develop and test these metrics and universal disclosures as well as to engage and collaborate with policy-makers, businesses and civil society groups who wish to see this work progress.
Notes to editors:
Watch live webcasts https://wef.ch/wef20
Guide to how to follow and embed sessions on your website at http://wef.ch/howtofollow
View the best photos from the event at http://wef.ch/pix
Read the Forum Agenda at http://wef.ch/agenda
Become a fan of the Forum on Facebook at http://wef.ch/facebook
Watch Forum videos at http://wef.ch/video
Follow the Forum on Twitter via @wef and @davos, and join the conversation using #wef20 and #FairerWorld
Follow the Forum on Instagram at http://wef.ch/instagram
Follow the Forum on LinkedIn at http://wef.ch/linkedin
Learn about the Forum’s impact on http://wef.ch/impact
Subscribe to Forum news releases at http://wef.ch/news