New case studies from the World Economic Forum show how comprehensive environmental, social and corporate governance (ESG) reporting is starting to drive corporate change around the world, especially in sustainability efforts and company culture.
Based on case studies from companies that report on Stakeholder Capitalism Metrics, the white paper finds examples of specific strategy and operational changes as a result. This includes initiatives such as new real estate water management practices and the implementation of biodiversity strategies and targets.
The case studies also show that despite some progress, companies still struggle with competing and divergent ESG frameworks around the world. As regulators begin to roll out mandatory ESG reporting in the regions, alignment is key to ensuring that the clarity and effectiveness of ESG reporting continues to improve globally.
We are pleased that support continues to grow for this set of metrics even in the face of geopolitical challenges, the ongoing global pandemic and economic disruptions over the past two years,” said. Emily Bayley, Head of Private Sector Engagement, ESG, World Economic Forum. “As this growth continues and jurisdictions move from voluntary to mandatory sustainability reporting standards, we hope these learnings will provide valuable insights for companies just starting to report on sustainability. and those who have been doing it for many years.”
ESG-Driven Corporate Impacts
The Stakeholder Capitalism Metrics Initiative case studies engage a global set of companies to gather how, and if, their ESG reporting informs corporate change internally and externally.
Examples of these changes include:
ecopetrol
Stakeholders told Ecopetrol that their report was very high – the Forum’s core criteria helped the company to focus on reporting on the topics that were most material and would bring value.
HEINEKEN
Metrics go beyond ESG to capture commercial metrics of employment, economic contribution, investment and taxes. It provides “an annual dashboard of the same data on both sustainability and progress that will give us a snapshot of how healthy our company is”.
JLL
The core metrics of water consumption and withdrawal in water stressed areas lead the company to encourage its teams and clients to agree on water management plans and targets. It may even influence where the company rents office space in the future.
Philips
Accurate reporting of the environmental and social impacts of its operations. For example, the resource circularity metric directs customers to the most effective products on the market and drives the company’s innovation agenda to design more sustainable solutions.
SABIC
Forum metrics reporting increases the amount of transparency within the company, leading to conversations and progress on difficult issues.
Schneider Electric
The metric of land use and ecological sensitivity contributes to Schneider’s new approach to biodiversity, as it adapts its reporting and asks all sites to develop specific biodiversity action plans.
ESG Regulatory Landscape
While progress has been made in creating and implementing meaningful and effective ESG disclosures around the world, concerns remain about the disparate nature of the competing and complex ESG reporting mechanisms currently in place.
There are also concerns that while reporting may be mandated there may be less transparency because people may not want to disclose more than they need to. As mandated ESG reporting becomes more widespread, regulators and internal stakeholders must ensure that corporations understand the full value of transparency on sustainability and other ESG issues.
Addressing this issue is especially important as regulators in various regions begin to roll out their mandatory reporting requirements. Focusing on a common set of comprehensive and material metrics will be important for the efficiency and effectiveness of ESG reporting in the coming months. To the extent possible, the European Union, the US Securities and Exchange Commission (SEC) and the International Financial Reporting Standards (IFRS) Foundation should align their metrics to ensure that companies are able to implement effective ESG reporting in whole world.
Stakeholder Capitalism Metrics Initiative
The World Economic Forum and the coalition of companies that have adopted the Stakeholder Capitalism Metrics, joined the preparatory working group and continued the dialogue with the International Sustainability Standards Board (ISSB) technical teams under the IFRS Foundation as they go through the standard-setting process. . . The metrics are expected to be part of the ISSB’s “exposure draft” next year on cross-thematic disclosures and metrics.
Announced at the World Economic Forum Sustainable Development Impact Meetings 2022, these case studies build on the previous report to show progress in the commitment made by companies at the Annual Meeting in 2020. Since then, 186 global companies, which has a combined market capitalization of over $6.5 trillion, adopting Stakeholder Capitalism Metrics. Of these, 126 companies disclosed against metrics in their mainstream reports for one or two years.
