For the private sector, the World Economic Forum’s (WEF) International Business Council (IBC) unveiled a new approach in Stakeholder Capitalism Metrics (SCM). Released in September 2020, the SCM represent the world’s first standardized ESG measurements. With them, “we can spend less time worrying about what to measure and what measurement system, and more time measuring progress,” says Brian Moynihan, Bank of America Chair of the Board and Chief Executive Officer, and current Chair of the Stakeholder Capitalism Metrics Initiative. “This will help reward companies making progress, hold companies accountable that need to make better progress, and act on the major issues facing the world,” he adds.
Since their release, more than 200 companies have committed to implementing the metrics, and more than 130 have incorporated them into their annual or sustainability reports. Perhaps more important, collaboration and innovation by standards-setting organizations such as the International Financial Reporting Standards (IFRS) Foundation are helping accelerate the awareness and importance of sustainability-linked metrics. During COP26 in Glasgow, the IFRS announced the establishment of the International Sustainability Standards Board (ISSB), tasked with delivering a comprehensive global baseline of sustainability disclosure standards to meet the needs of global financial markets. These standards will set how companies disclose information about sustainability-related factors that may help, or hinder, performance. The need for such guidance was underscored in late 2021 when sixty global businesses representing over EUR 8.5 trillion in assets and employing over 5 million people released an open letter. That letter calls for close alignment between mandatory sustainability reporting requirements in the EU, and the global process to launch the sustainability disclosure standards of the ISSB.
A sea change in capitalism
Stakeholder capitalism holds that companies must support a wider array of constituents than just shareholders. The magnitude of current global challenges including the ongoing health crisis, persistent issues of racial and income equality, and an increasingly vulnerable environment have given stakeholder capitalism new meaning and urgency. “Capitalism can help solve these problems,” Moynihan says. “Companies have to deliver great returns for shareholders and address important societal priorities — aligning their activities and operations to drive progress on the SDGs. That’s stakeholder capitalism in action.”
To do so, the United Nations identified 17 Sustainable Development Goals (SDGs), calling for urgent action by 2030 on issues such as climate change, global hunger and clean water and sanitation. By disproportionately affecting vulnerable communities, the health crisis has amplified the challenges and driven many companies to accelerate their efforts to find solutions.