The chief executive officers of 140 of the world’s largest companies attending the World Economic Forum in Davos this week have expressed support for the development of a core set of metrics and disclosures in their annual reports on the non-financial aspects of business performance to their investors and other stakeholders..

Chief executive officers increasingly see topics of Environmental, Social, and Governance (ESG) and Sustainable Development Goals (SDG) , including greenhouse gas emissions and strategies, diversity, employee health and well-being as important to long-term business value creation.

Meeting in Davos, the International Business Council of the World Economic Forum discussed a proposal prepared by the Forum in collaboration with the Big Four accounting firms – Deloitte, EY, KPMG and PwC – titled Toward Common Metrics and Consistent Reporting of Sustainable Value Creation.

The proposal recommends a set of core metrics and recommended disclosures. The intent is for the metrics to be reflected in the mainstream annual reports of companies on a consistent basis across industry sectors and countries.

Though business leaders increasingly see the topics of ESG and the SDGs as important to long-term business value creation, lack of comparable ESG reporting in mainstream reports is currently hindering the meaningful benchmarking of sustainable business performance by investors and society.

Klaus Schwab, Founder and Executive Chairman of the World Economic Forum commented:

“For stakeholder capitalism to become a reality, we must be able to measure companies’ performance on environmental, social and governance metrics.”

“The International Business Council’s decision to endorse this principle, and their willingness to be measured in their annual reports on more than profits, is a crucial step to change our economic system for the better.”

The proposed metrics and recommended disclosures have been organized into four pillars that are aligned with the SDGs and principal ESG domains. They are:

Principles of Governance

Aligned with SDGs 12, 16 and 17, “principles of governance” focuses on a company’s commitment to ethics and societal benefit

Planet

Aligned with SDGs 6, 7, 12, 13, 14 and 15, “planet” looks at the themes of climate sustainability and environmental responsibility

People

Aligned with SDGs 1,3, 4, 5 and 10, “people” examines the roles human and social capital play in business

Prosperity

Aligned with SDGs 1, 8, 9 and 10, “prosperity” focuses on business contributions to equitable, innovative growth

The metrics are drawn, wherever possible, from existing standards and disclosures such as GRI, SASB, TCFD, CDSB and others. Instead of creating a new standard, they aim to amplify and elevate the rigorous work that has already been done by these initiatives, bringing their most material aspects into mainstream reports on a consistent basis.

“By aligning companies with asset owner and asset managers through common, limited and meaningful metrics, we will ensure sufficient capital is available to meet the Sustainable Development Goals,” said Brian Moynihan, Chairman and Chief Executive Officer, Bank of America. “Companies can deliver great returns for their shareholders, invest in their employees, share their success with the communities in which they operate and drive progress on societal priorities.”

Adoption of such recommended universal metrics and disclosures by IBC companies is intended to be a catalyst for greater alignment and synergy among existing ESG standards and ultimately a system-wide solution, such as a generally accepted international accounting or other reporting standard drawn from best practice.

At the request of the IBC, the World Economic Forum will continue to consult with interested companies and other stakeholders to further develop and test these metrics and universal disclosures.

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