About 60 large international companies, including Bank of America, Mastercard, and KPMG, announced they will adopt a new reporting framework on environmental, social, and governance principles in partnerships with the World Economic Forum.
The ESG standards, or ‘Stakeholder Capitalism Metrics’, will measure a company’s performance on factors like how the company is impacting the environment, how it manages relationships with its employees, and how the company runs internally, Business Insider reports.
“At the moment you have a situation where a company reports mainly about their intentions. Now we have to walk the talk,” Klaus Schwab, World Economic founder and executive chairman, told Business Insider.
If the new standards become more widely adopted, some see this becoming standard procedure for major companies to report their ESG metrics, similar to how a company regularly reports on its financial metrics. The companies will report on the most relevant metrics that relate to their business or explain why they are following a different approach. The firms will also promote existing ESG standards.
The business community believes that ESG metrics are a way to advance stakeholder capitalism, a leading economic theory today that claims companies are responsible to all stakeholders, including employees, customers, and the environment.
“We have to deliver great returns for our shareholders and help drive progress on society’s most important priorities,” Brian Moynihan, CEO of Bank of America, and chairman of the International Business Council, said. “That is stakeholder capitalism in action.”
The World Economic Forum and the International Business Council have partnered with ‘the Big Four’ accounting firms – Deloitte, PwC, EY, and KPMG – in creating a reporting framework of 21 ESG standards.
“These metrics are meant to cover the landscape” of the U.N. Sustainable Development Goals, established by the United Nations in 2015 to provide a common set of ESG outcomes that member countries can work together to achieve by 2030, Moynihan told Barron’s.
For more news, information, and strategy, visit the ESG Channel.