More than 60 companies employing seven million people globally have signed up to a new set of environmental, social and governance standards created by the World Economic Forum.
“We have elaborated a concept or an approach where a business can report … on stakeholder responsibility and they can be measured,” Klaus Schwab, founder and executive chairman of the forum, told a panel debate on the subject at the Davos Agenda online event on Tuesday.
“Until now, stakeholder capitalism was some kind of a vague concept. But … we will walk the talk.”
Some 61 companies have signed up for the standards, which contain 21 core metrics. Signatories include Sony, Unilever, Nestle, PayPal, Dow Chemicals, India's Reliance Industries and the UAE's Majid Al Futtaim Group.
The standards were developed by the forum in collaboration with a group of firms including Bank of America, Deloitte, EY, KPMG and PwC in a report titled Measuring Stakeholder Capitalism first published in September.
These may not be the final version, Mr Schwab said, pointing out that it took “years” before a generally accepted set of standards for financial metrics was agreed upon. However, they provide “a beginning” for measuring ESG performance, he added.
Corporations have “a tremendous responsibility” as the world recovers from Covid-19, particularly because the gap between haves and have-nots is widening, the UAE’s minister of cabinet affairs, Mohammad Al Gergawi, told the panel.
During the pandemic, 600 billionaires made $930 billion during “a tough economic time”, Mr Al Gergawi said.
“Meanwhile … half of the population actually cannot be vaccinated because of the economy in certain countries.”
"I think we need to have a new normal," Mr Al Gergawi said, where corporations take more responsibility.
"This is a win-win for everybody", including the companies themselves, he said.
The pandemic created “a tsunami” for governments to deal with globally, he said, pointing out that one year ago there were 2,000 cases and 50 deaths, compared to 100 million cases and 2 million deaths now.
So far, just 63 million people in 56 countries have been vaccinated. But the UAE is second only to Israel in terms of the proportion of the population that has received the necessary shots, at about 25 per cent, Mr Al Gergawi said.
The challenge for governments globally is to co-operate to make sure everyone is vaccinated.
“This is the only time maybe in the recent history of mankind where everybody has to come together,” he said.
“I think the relations between companies, between governments, are much closer – and should be much closer – than before. Or we might face tremendous negative consequences.”
ESG concerns “have been steadily increasing since the 1990s” and a number of frameworks and global standards have already been introduced, which has “created a bit of confusion”, Ilham Kadri, chief executive of Belgian chemicals giant Solvay, said.
“There is a wealth of non-financial metrics that are already being published,” she said, but these have rarely been used by investors in a coherent way.
“So in our view, the adoption of common standards … brings a great benefit to key stakeholders. It promotes a deeper understanding and benchmarking thanks to the harmonisation of key metrics across industries. It also brings a lot of transparency.”
There are likely to be “a multiplicity” of standards introduced for measuring ESG, Anand Mahindra, chairman of Indian conglomerate Mahindra Group, said.
His company became a signatory for the WEF framework because the metrics “are very broad”.
“They’re very useful because they’re already data that we’re reporting,” he said.
Using such metrics are important, Mr Mahindra said.
“They indicate our progress toward leaving our planet a better place than we found it.”