Updated: Jun 8
A set of universal environmental, social, and governance (ESG) measures and disclosures released by the World Economic Forum is designed to help companies report nonfinancial disclosures.
The “stakeholder capitalism metrics,” including ESG indicators and disclosures for financial markets, investors, and society, are designed to make benchmarking sustainable business performance easier.
A World Economic Forum publication encourages companies to report on the full set of metrics in their mainstream reporting. The publication recommends that each company apply its own view of dynamic materiality, reporting on what is deemed material to its business and stakeholders.
The metrics are centered on four pillars:
People: Reflecting a company’s equity and its treatment of employees. Metrics include diversity reporting, wage gaps, and health and safety.
Planet: Reflecting a company’s dependencies and impact on the natural environment. Metrics in this pillar include greenhouse gas emissions, land protection, and water use.
Prosperity: Reflecting how a company affects the financial well-being of its community. Metrics include employment and wealth generation, taxes paid, and research and development expenses.
Principles of governance: Reflecting a company’s purpose, strategy, and accountability. This pillar includes criteria measuring risk and ethical behavior.
In parallel to this work, the World Economic Forum collaborated with five leading, independent global framework and standard setters to work toward a comprehensive reporting system and a statement of intent that complements the common metrics. Earlier this , the International Integrated Reporting Council, CDP, the Climate Disclosure Standards Board, the Global Reporting Initiative, and the Sustainability Accounting Standards Board announced a shared vision of what is needed to make progress toward comprehensive corporate reporting and the intent to work together to achieve it. The International Federation of Accountants also called for the creation of a new sustainability accounting standards board that would exist alongside the International Accounting Standards Board under the IFRS Foundation.
“This is a unique moment in history to walk the talk and to make stakeholder capitalism measurable,” Klaus Schwab, founder and executive chairman of the World Economic Forum, said in a news release. “Having companies accepting, not only to measure but also to report on, their environmental and social responsibility will represent a sea change in economic history.”
Article Reposted from — Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is the JofA’s editorial director.