The principles of stakeholder capitalism, championed by the World Economic Forum for half a century and recently restated in the Davos Manifesto 2020, have never been so important. This 100 pages report is a very substantive piece of work that defines Stakeholder Capitalism Metrics that can be used by companies to measure and demonstrate their contributions towards creating more prosperous, fulfilled societies. You will need a couple of hours with full concentration capacity to fully absorb the great work. However we have done a quick summary for you in case you just want an overview.
Key takeouts
- In 2020, the WEF and the IBC (comprising 140 CEOs) — in collaboration with the Big 4 wrote the report to demonstrate and communicate sustainable business performance and long-term value creation to all stakeholders.
- This work defines a core set of “Stakeholder Capitalism Metrics” (SCM) and disclosures that can be used by IBC members to align their mainstream reporting on performance against environmental, social and governance (ESG) indicators and track their contributions towards the SDGs on a consistent basis
- The metrics are deliberately based on existing standards, with the near-term objectives of accelerating convergence among the leading private standard-setters and bringing greater comparability and consistency to the reporting of ESG disclosures.
- They outlined a recommended set of 21 core metrics and 34 expanded metrics for companies to further the road towards a global harmonized reporting system.
- The recommended industry agnostic metrics are organized under four pillars that are aligned with the SDGs and principal ESG domains: Principles of Governance, Planet, People and Prosperity.
- Since published, the five leading voluntary framework and standard-setters (CDP, Climate Disclosure Standards Board (CDSB), Global Reporting Initiative (GRI), International Integrated Reporting Council (IIRC) , Sustainability Accounting Standards Board (SASB) )have for the first time committed to work towards a joint vision.
Key insight
- We don’t believe that there is a silver bullet. However, this work and all other great stakeholder metrics frameworks will hopefully act as a catalyst towards the convergence of standards and an expanded set of reporting requirements in a system-wide solution, which could culminate in a new international accounting standard.
- At inspired companies we believe that the key to the measurement approach is that the metrics developed have to be organically linked to the main purpose of the organization. Additionally it should help the company answer the question “Is the world on side or not?”
