At Davos 2020, the World Economic Forum’s (WEF’s) International Business Council (IBC), in a largely glowing blaze of publicity, issued a consultation draft proposal outlining a set of common environmental, social and governance (ESG) metrics for inclusion in mainstream company annual reporting.
The need to streamline current frameworks
The WEF’s proposal directly confronts widespread criticisms of the high number of ESG-related reporting frameworks with which companies have had to contend. It calls not just for greater cooperation and alignment among existing ESG reporting frameworks, but also endorses the creation of a generally accepted international standard, consistent with what the WEF refers to as the ‘principles of stakeholder capitalism’. These principles outline that a company is ‘more than an economic unit generating wealth’ and something that ‘fulfils human and societal aspirations as part of the broader social system’. This means performance should be measured not only on delivered returns to shareholders, but also on how it achieves its environmental, social and good governance objectives.
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