The World Economic Forum today released a set of universal environmental, social and governance (ESG) metrics and disclosures to measure stakeholder capitalism that companies can report on regardless of their industry or region. Organized around the pillars of principles of governance, planet, people and prosperity, the identified metrics and disclosures align existing standards, enabling companies to collectively report non-financial disclosures.
Announced at the fourth annual Sustainable Development Impact Summit, this open and multi-stakeholder initiative delivers on a commitment from the World Economic Forum Annual Meeting 2020 in January. Since then, 120 members of the Forum’s International Business Council have shown strong support for ESG metrics, with some companies expected to begin incorporating them into their reporting immediately.
The report, “Measuring Stakeholder Capitalism: Toward Common Metrics and Consistent Reporting of Sustainable Value Creation”, comes at a pivotal moment. The social unrest, economic inequalities and racial injustice exacerbated by the COVID-19 pandemic has accelerated demand from business, governments, standards bodies and NGOs for a comprehensive, globally accepted corporate reporting system.
“This is a unique moment in history to walk the talk and to make stakeholder capitalism measurable,” says Klaus Schwab, Founder and Executive Chairman, World Economic Forum. “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.”
The stakeholder capitalism metrics and disclosures, developed in collaboration with Deloitte, EY, KPMG and PwC, reflect an open consultation process with corporates, investors, standard-setters, NGOs and international organizations, and are designed to provide a common set of existing disclosures that lead towards a coherent and comprehensive global corporate reporting system.
In parallel to this work, the World Economic Forum has also collaborated with the Impact Management Project to bring together the efforts of the five leading independent global framework and standard-setters (CDP, CDSB, GRI, IIRC and SASB) to work towards a comprehensive corporate reporting system and a statement of intent which works as a complement to the common metrics released today.
Companies see the importance of social, climate and other non-financial factors as critical for their long-term viability and success. Some 86% of executives surveyed by the Forum agreed that reporting on a set of universal ESG disclosures is important and would be useful for financial markets and the economy.
“Companies have to deliver great returns for shareholders and address important societal priorities,” said Brian Moynihan, Chairman and CEO of Bank of America, and Chairman of the International Business Council. “These metrics will provide clarity to investors and other stakeholders and ensure capital is aligning to drive progress on the SDGs. That’s stakeholder capitalism in action.”
“As the UK works in partnership with Italy towards hosting the COP26 climate change conference in Glasgow in November 2021, I welcome the work of the World Economic Forum’s International Business Council in creating a set of common metrics for reporting sustainable value creation,” said Mark Carney, Finance Advisor to the UK Prime Minister for COP26 and United Nations (UN) Special Envoy for Climate Action and Finance. “Through this work you are demonstrating to shareholders, stakeholders and society at large that the private sector is committed to measuring and improving its impacts on the environment as part of the transition to a low carbon future. I encourage governments, regulators, the official accounting community and voluntary standard setters to work with the IBC towards creating a globally accepted system of sustainability reporting based on this project’s groundbreaking work.”
“The disruptions of 2020 have underscored the critical importance of organizations managing and reporting their impact on the economy, the environment and society, and their increasing connection to long-term enterprise value creation,” said Punit Renjen, CEO, Deloitte Global. “Deloitte is pleased to have led the development of the Principles of Governance pillar and collaborated on this project with so many respected organizations. We hope our work supports organizations as they move towards consistent reporting of ESG metrics and disclosures in mainstream annual reports, as ultimately, this is how the business community will make greater progress against the Sustainable Development Goals.”
“The time is now for companies to broaden their engagement with stakeholders,” said Carmine Di Sibio, EY Global Chairman and CEO. “The combined impacts of climate change, COVID-19 and economic inequality contribute to the urgency for businesses to embrace long-term, sustainable value creation and prioritize the needs of people and planet and the creation of broad-based economic prosperity.”
“As businesses become more acutely aware of their role in addressing societal and environmental issues, moving toward a common set of ESG-focused metrics will help ensure that we all collectively make a difference where it counts,” said Bill Thomas, Global Chairman and Chief Executive Officer, KPMG International. “Reporting on ESG factors like carbon emissions and human rights and other key metrics will not only help inform investors while helping companies control their full corporate value, it has the power to realign capitalism for the benefit of broader society.”
“Robust non-financial reporting is a crucial element of the systemic economic reform the world needs to address issues like climate change and social inclusion, and we were pleased to be able to collaborate on this initiative and lead on the Planet pillar of this work,” said Bob Moritz, Global Chairman, PwC. “Stakeholders – including investors, but also policy makers, consumers and employees – need more rounded, comparable and robust information to make decisions. Get that information flowing, align market incentives against performance on these metrics, and a better tomorrow becomes possible.”
Companies are encouraged to report on the full set of metrics in their mainstream reporting. “Measuring Stakeholder Capitalism: Toward Common Metrics and Consistent Reporting of Sustainable Value Creation” recommends a “disclose or explain” approach when certain metrics are not feasible, not relevant, or difficult to implement immediately. The report also 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 centred on four pillars:
- Reflects a company’s equity and its treatment of employees. Metrics include diversity reporting, wage gaps, and health and safety.
- Reflects a company’s dependencies and impacts on the natural environment. Metrics in this pillar include greenhouse gas emissions, land protection and water use.
- Reflects 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
- Reflects a company’s purpose, strategy and accountability. This pillar includes criteria measuring risk and ethical behaviour.
New project to help 30 developing countries tackle marine litter scourge
A UN-backed initiative aims to turn the tide on marine litter, in line with the global development goal on conserving and sustainably using the oceans, seas and marine resources.
The GloLitter Partnerships Project will support 30 developing countries in preventing and reducing marine litter from the maritime transport and fisheries sectors, which includes plastic litter such as lost or discarded fishing gear.
Protecting oceans and livelihoods
“Plastic litter has a devastating impact on marine life and human health”, said Manuel Barange, FAO’s Director of Fisheries and Aquaculture. “This initiative is an important step in tackling the issue and will help protect the ocean ecosystem as well as the livelihoods of those who depend on it.”
Protecting the marine environment is the objective of Sustainable Development Goal 14, part of the 2030 Agenda to create a more just and equitable future for all people and the planet.
The GloLitter project will help countries apply best practices for the prevention and reduction of marine plastic litter, in an effort to safeguard the world’s coastal and marine resources.
Actions will include encouraging fishing gear to be marked so that it can be traced if lost or discarded at sea. Another focus will be on the availability and adequacy of port reception facilities and their connection to national waste management systems.
“Marine litter is a scourge on the oceans and on the planet”, said Jose Matheickal, Head of the IMO’s Department for Partnerships and Projects. “I am delighted that we have more than 30 countries committed to this initiative and working with IMO and FAO to address this issue.”
Five regions represented
The nations taking part in the GloLitter project are in Asia, Africa, the Caribbean, Latin America and the Pacific.
They will also receive technical assistance and training, as well as guidance documents and other tools to help enforce existing regulations.
The project will promote compliance with relevant international instruments, including the Voluntary Guidelines for the Marking of Fishing Gear, and the International Convention for the Prevention of Pollution from Ships (MARPOL), which contains regulations against discharging plastics into the sea.
Climate Finance: Climate Actions at Center of Development and Recovery
The Asian Development Bank (ADB) called access to climate finance a key priority for Asia and the Pacific as governments design and implement a green and resilient recovery from the coronavirus disease (COVID-19) pandemic.
Speaking at the United Kingdom Climate and Development Ministerial—one of the premier events leading up to the United Nations Climate Change Conference (COP 26) in November—ADB President Masatsugu Asakawa said expanding access to finance is critical if developing economies in Asia and the Pacific are to meet their Paris Agreement goals to reduce greenhouse gas emissions and help adapt to the adverse impacts of climate change.
“We can no longer take a business-as-usual approach to climate change. We need to put ambitious climate actions at the center of development,” Mr. Asakawa said. “ADB is committed to supporting its developing member countries through finance, knowledge, and collaboration with other development partners, as they scale up climate actions and push for an ambitious outcome at COP 26 and beyond.”
ADB is using a three-pronged strategy to expand access to finance for its developing members as they step up their response to the impacts of climate change.
First, ADB has an ambitious corporate target to ensure 75% of the total number of its committed operations support climate change mitigation and adaptation by the end of the decade, with climate finance from ADB’s own resources to reach $80 billion cumulatively between 2019 and 2030. ADB has also adopted explicit climate targets under its Asian Development Fund (ADF), which provides grant financing to its poorest members. ADF 13, which covers the period of 2021–2024, will support climate mitigation and adaption in 35% of its operations by volume and 65% of its total number of projects by 2024.
Second, ADB is enhancing support for adaptation and resilience that goes beyond climate proofing physical infrastructure to promote strong integration of ecological, social, institutional, and financial aspects of resilience into ADB’s investments.
Third, ADB is increasing its focus on supporting the poorest and most vulnerable communities in its developing member countries by working with the United Kingdom, the Nordic Development Fund, and the Green Climate Fund on a community resilience program to scale up the quantity and quality of climate adaptation finance in support of local climate adaptation actions.
Migrants left stranded and without assistance by COVID-19 lockdowns
Travel restrictions during the COVID pandemic have been particularly hard on refugees and migrants who move out of necessity, stranding millions from home, the UN migration agency, IOM, said on Thursday.
According to the International Organization for Migration (IOM), the first year of the pandemic saw more than 111,000 travel restrictions and border closures around the world at their peak in December.
These measures “have thwarted many people’s ability to pursue migration as a tool to escape conflict, economic collapse, environmental disaster and other crises”, IOM maintained.
In mid-July, nearly three million people were stranded, sometimes without access to consular assistance, nor the means to meet their basic needs.
In Panama, the UN agency said that thousands were cut off in the jungle while attempting to travel north to the United States; in Lebanon, migrant workers were affected significantly by the August 2020 explosion in Beirut and the subsequent surge of COVID-19 cases.
Business as usual
Border closures also prevented displaced people from seeking refuge, IOM maintained, but not business travellers, who “have continued to move fairly freely”, including through agreed ‘green lanes’, such as the one between Singapore and Malaysia.
By contrast, those who moved out of necessity – such as migrant workers and refugees – have had to absorb expensive quarantine and self-isolation costs, IOM said, noting that in the first half of 2020, asylum applications fell by one-third, compared to the same period a year earlier.
As the COVID crisis continues, this distinction between those who can move and those who cannot, will likely become even more pronounced, IOM said, “between those with the resources and opportunities to move freely, and those whose movement is severely restricted by COVID-19-related or pre-existing travel and visa restrictions and limited resources”.
This inequality is even more likely if travel is allowed for anyone who has been vaccinated or tested negative for COVID-19, or for those with access to digital health records – an impossibility for many migrants.
Frontier lockdowns also reduced options for those living in overcrowded camps with high coronavirus infection rates in Bangladesh and Greece, IOM’s report indicated.
In South America, meanwhile, many displaced Venezuelans in Colombia, Peru, Chile, Ecuador and Brazil, lost their livelihoods and some have sought to return home – including by enlisting the services of smugglers.
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