CEOs of several large global companies on Wednesday expressed support for aligning on a core set of metrics and disclosures in their annual reports about environmental, social and governance (ESG) matters.
Announcing the initiative, the World Economic Forum (WEF) said 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 and Sustainable Development Goals (SDGs) as important to long-term business value creation.
At the request of its International Business Council (IBC), the WEF is preparing a proposal for common ESG metrics and disclosures in collaboration with the world's four largest accounting firms.
The proposal will be finalised in the coming months after further consultation with businesses and other key ESG actors.
The WEF said CEOs 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 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 discussed a proposal prepared by the WEF 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 WEF.
"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."
At the request of the IBC, the WEF 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, it said.
Disclaimer: No Business Standard Journalist was involved in creation of this content
