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Old January 13th, 2022 #1
Robbie Key
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Default What is Stakeholder Capitalism?

27 Jan, 2021

Stakeholder capitalism gains traction as companies commit to new ESG metrics

Author Esther Whieldon

Dozens of the world's largest companies representing trillions of dollars in market capitalization pledged to use a uniform set of "Stakeholder Capitalism Metrics" in their mainstream disclosures amid broader global efforts to streamline and standardize reporting on environmental, social and governance topics.

The World Economic Forum and its International Business Council made the announcement Jan. 26, as leaders from governments and the private sector worldwide convened for a virtual version of the annual Davos conference.

The 21 core stakeholder capitalism metrics are based on existing voluntary standards and offer "universal, comparable disclosures" that companies can report on "regardless of industry or region," according to a news release.

The metrics include nonfinancial disclosures centered around four pillars: people, planet, prosperity and principles of governance. They seek to address to United Nations Sustainable Development Goals, known as the SDGs, which launched in 2015 with an aim to create a safer, more prosperous planet by eradicating poverty, eliminating hunger and providing clean water and sanitation worldwide by 2030.

The new stakeholder capitalism metrics include climate change, greenhouse gas emissions, pay equality, remuneration policies, board diversity and employment statistics by age, gender and region.



Growing momentum behind stakeholder capitalism

The announcement during Davos follows the September 2020 news that the world's big four accounting firms — Deloitte Touche Tohmatsu Ltd., KPMG International Co-op, Ernst & Young LLP and PricewaterhouseCoopers LLP — and the World Economic Forum's International Business Council had developed the 21 core and 34 expanded ESG metrics.

Stakeholder capitalism is the idea that corporations have responsibilities that extend beyond just their investors to include their societies, communities and employees. The approach gained huge momentum after BlackRock Inc.'s Larry Fink, head of the world's largest asset manager, in his 2018 letter to shareholders urged corporate CEOs to look beyond financial performance to show how their businesses made a positive contribution to society. In his 2021 annual letter, also released Jan. 26, Fink told CEOs that their shareholders will benefit "if you can create enduring, sustainable value for all of your stakeholders."

During a panel discussion about stakeholder capitalism at Davos that same day, Fink pointed to "an extraordinary shift" in investor preferences that he largely attributed to stakeholder capitalism.

"Across every industry you see a widening gap between the best-performing companies in the industry and the worst-performing companies," Fink said, adding: "We're seeing now valuation shifts and that is because of companies' role in their stakeholders' [lives] and how they are building a better community around their stakeholders."

Converging ESG standards

The sustainability world has grappled for years with how to feed the growing appetite for ESG disclosure among investors, rating agencies and other stakeholders. Critics of the sustainability movement contend the lack of definition around ESG leaves room for green-washing. There is widespread agreement among ESG skeptics and proponents alike that data quality remains patchy, standardization is lacking when it comes to disclosure and there is a dizzying jumble of different reporting frameworks that make apples-to-apples comparisons across companies nearly impossible.

Brian Moynihan, Bank of America Corp. CEO and chairman of the International Business Council, said the new stakeholder capitalism metrics will help achieve convergence between the many standards, frameworks and ratings systems for ESG-related metrics. They will also bring much-needed private investment to the SDGs.

"We're doing this because we need $6 trillion a year for the SDGs to be implemented, and the only way you'll do that is [if] private companies are driving it," Moynihan said during the same panel discussion. Bank of America was among the companies that agreed to begin using the 21 core metrics in mainstream reports.

Other companies that pledged to use the core metrics include financial institutions Allianz SE, Banco Santander SA, Banco Bilbao Vizcaya Argentaria SA, Credit Suisse Group AG, Mastercard Inc. and UBS Group AG, as well as tech giants Dell Technologies Inc., HP Inc. and International Business Machines Corp. and consumer names like Nestlé SA. A number of fossil fuel companies also pledged to use the metrics, including BP PLC, Eni SpA, Royal Dutch Shell PLC, Equinor ASA and Total SE.

https://www.spglobal.com/marketintel...trics-62298688
 
Old January 13th, 2022 #2
Robbie Key
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Global Business Leaders Support ESG Convergence by Committing to Stakeholder Capitalism Metrics

Published
26 Jan 2021


Madeleine Hillyer, Public Engagement, World Economic Forum, [email protected]

· Today, over 60 business leaders, including members of the World Economic Forum and its International Business Council (IBC), have committed to the core Stakeholder Capitalism Metrics released by the IBC

· Stakeholder Capitalism Metrics offer a set of universal, comparable disclosures focused on people, planet, prosperity and governance that companies can report on, regardless of industry or region

· The move signals that private sector leaders view environmental, social and governance factors as critical to the success and long-term viability of all businesses and a unified voice is gathering pace on a global solution for non-financial reporting

· Read more on the Stakeholder Capitalism Metrics and how the initiative encourages greater convergence among sustainability standard-setters and a global solution for non-financial reporting here

Geneva, Switzerland 26 January 2021 – A growing coalition of over 60 top business leaders across industries announced today their commitment to the Stakeholder Capitalism Metrics, a set of environmental, social and governance (ESG) metrics and disclosures released by the World Economic Forum and its International Business Council (IBC) in September 2020, that measure the long-term enterprise value creation for all stakeholders.

The Stakeholder Capitalism Metrics, drawn from existing voluntary standards, offer a core set of 21 universal, comparable disclosures focused on people, planet, prosperity and principles of governance that are considered most critical for business, society and the planet, and that companies can report on regardless of industry or region. They strengthen the ability of companies and investors to benchmark progress on sustainability matters, thereby improving decision-making and enhancing transparency and accountability regarding the shared and sustainable value companies create.

These leaders and their organizations, including Dow, Unilever, Nestlé, PayPal, Reliance Industries and Sony have today committed to:

- Reflect the core metrics in their reporting to investors and other stakeholders (e.g. annual report, sustainability report, proxy statements, or other materials) by reporting on the metrics most relevant to their business or briefly explaining why a different approach is more appropriate

- Publicly support this work and encourage their business partners to do so

- Promote the further convergence of existing ESG standards, frameworks and principles to support progress towards a globally accepted solution for non-financial reporting on common ESG metrics

In making these commitments, business leaders are signalling that ESG factors are increasingly critical to the success and long-term viability of all businesses. This clearly represents the intent from leading global companies to integrate sustainability into their core strategy, operations and corporate disclosures.

“Stakeholder capitalism becomes now really mainstream,” said Klaus Schwab, Founder and Executive Chairman, World Economic Forum. “The public commitments from companies to report not only on financial matters but also their ESG impacts are an important step towards a global economy that works for progress, people and the planet.”

“We have to deliver great returns for our shareholders and help drive progress on society’s most important priorities,” said Brian Moynihan, Chairman and CEO of Bank of America, and Chairman of the International Business Council. “That is stakeholder capitalism in action. Common metrics will help all stakeholders measure the progress we are making and ensure that the resources capitalism can marshal – from companies, from investors, and others – are directed to where they can make the most difference.”

The World Economic Forum, in collaboration with Bank of America, Deloitte, EY, KPMG and PwC, curated the set of 21 core and 34 expanded metrics over the past two years with the support of over 140 stakeholders.

The metrics include non-financial disclosures centred around the four pillars: people, planet, prosperity and principles of governance. Intentionally built on existing standards, the pillars include metrics such as greenhouse gas emissions, pay equality and board diversity, among others.

By adopting and reporting on these metrics and disclosures, the business community will continue to catalyse greater cooperation and alignment among existing standards and encourage progress on the development of a systemic, globally accepted set of common standards for reporting on sustainability performance.

The full list of companies that have agreed to implement reporting on the Stakeholder Capitalism Metrics includes:

Accenture
Adecco Group
African Rainbow Minerals
Allianz
Banco Santander
Bank of America
BBVA
Boston Consulting Group
bp
Clifford Chance
Credit Suisse
Dell Technologies
Deloitte
Deutsche Post DHL
Dow
Eni
Ecolab
Ecopetrol
Equinor
EY
Fidelity International
HEINEKEN
HP
HSBC Holdings
IBM
JLL
Kearney Inc.
KPMG
Mahindra Group
Majid Al Futtaim
ManpowerGroup
Mastercard
McKinsey & Company
Medtronic
Mercuria Energy Group
Mitsubishi Corporation
Mitsubishi UFJ Financial Group Inc.
Nestlé
Novo Nordisk A/S
Palo Alto Networks
PayPal
Publicis Groupe
PwC
Reliance Industries
Repsol
Royal DSM
Royal Dutch Shell
Royal Philips
Salesforce
Schneider Electric
Siemens
Solvay
Sony
Sumitomo Corporation
Sumitomo Mitsui Financial Group (SMFG)
Suntory Holdings
Takeda Pharmaceutical
Total
UBS
Unilever
Yara International
Zurich Insurance Group

The latest group of companies who’ve signed on to the Stakeholder Capitalism metrics can be found here.

Expert thoughts:

“Runaway climate change, environmental degradation and social inequality are some of the biggest problems that the world faces,” said Alan Jope, CEO of Unilever. “Companies’ annual reports and accounts might not be the first mechanism for change that would spring to mind, but standardized and mandatory non-financial reporting is critical to creating a new form of capitalism that tackles these problems. The Forum’s IBC work is an important step forward and we are providing our wholehearted support.”

“Although there is growing demand from investors who recognize that ESG disclosure is vital for good investment decisions, there is no agreed international framework yet,” said Geraldine Matchett, Co-CEO and Chief Financial Officer and Member of the Managing Board, Royal DSM. “I hope the Stakeholder Capitalism Metrics are a first step towards the convergence of existing metrices and standards. This will be one of the fastest ways to accelerate the systemic change the world needs, putting investors on the right track, helping to change consumer behaviour for the better, and helping companies to do the right thing.”

“The Stakeholder Capitalism Metrics represent a great stride forward towards equipping investors, corporates, society and regulators with a common set of relevant ESG metrics,” says Ilham Kadri, CEO and Chairman of the Executive Committee, SOLVAY SA. “SOLVAY is committed to delivering superior profitable growth that is sustainable and responsible. It welcomes enthusiastically these metrics as an opportunity to engage in dialogue on an aligned, transparent and factual basis in order to address the important challenges that our societies face.”

“Today is another step forward in the growing impact of stakeholder capitalism. It’s not just about words, but about companies setting clear metrics, measuring our progress, and holding ourselves accountable,” says Marc Benioff, Chair and CEO, Salesforce. “Only then can we provide long-term growth for our shareholders, build trust with all stakeholders, and truly improve the state of the world."

About the Measuring Stakeholder Capitalism initiative

In August 2019, at the request of its IBC, the World Economic Forum collaborated with Deloitte, EY, KPMG and PwC in a project to identify a set of universal metrics and disclosures – Stakeholder Capitalism Metrics – deliberately drawn from existing standards, focused on the four themes of principles of governance, planet, people and prosperity. In September 2020, following a six-month consultation process with over 200 companies, investors and interested parties, the project published a refined set of 21 core and 34 expanded metrics and disclosures in its report Measuring Stakeholder Capitalism: Towards Common Metrics and Consistent Reporting of Sustainable Value Creation.

The Stakeholder Capitalism Metrics initiative seeks to improve the ways that companies measure and demonstrate their performance against ESG indicators and to enable positive contributions towards achieving the Sustainable Development Goals (SDGs). The project’s twin objectives are to accelerate convergence among the leading private ESG standard-setters and to bring greater comparability and consistency to the reporting of ESG disclosures.

https://www.weforum.org/press/2021/0...cs-73b5e9f13d/
 
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