Purpose beyond profit: 100 businesses to report on efforts to benefit society
The World Economic Forum (WEF) has confirmed that more than 100 businesses have voiced support for its Stakeholder Capitalism Metrics initiative, which is encouraging businesses to report, in a unified manner, on their efforts to realise societal purpose beyond profit-making.
Businesses to have committed to adopting the metrics since the start of 2021 include Enel, Ericsson, Hyundai Motor Group, Swiss Re and Standard Chartered. They join the likes of Unilever, Siemens, Nestle, Dow, PayPal, Mastercard and Salesforce.
The Metrics were first published in September 2020, following a year-long collaboration between the WEF, Deloitte, EY, KPMG and PwC. There are 21 core metrics and a further 34 expanded metrics and disclosures, spanning four themes: governance, planet, people and prosperity.
Governance-related disclosures include reporting on materiality assessments; board composition in terms of gender; support for under-represented social groups; the other positions held by directors; risk; the code of ethics and anti-corruption measures. Businesses are also required to disclose monetary losses from unethical behaviour.
Under the ‘planet’ pillar, businesses are encouraged to disclose their entire emissions footprint in absolute terms; climate risk across the value chain; water footprint and water risk exposure; land use, land conversion and biodiversity impact; waste and resource-related risks.
Topics covered by the people and prosperity pillars, meanwhile, include diversity and inclusion; wage level; equal pay; health and safety; employee wellbeing; taxes paid and R&D spending.
So far, 50 businesses have added the Metrics to their reporting for 2020-2021, either through annual reports, sustainability reports or integrated reports, which combine elements of the two. An initial analysis from WEF of these reports shows that the companies have collectively invested $1.5trn in training over a 12-month period and are spending some $23trn in multi-year innovation schemes.
“We are delighted to see so many companies joining this effort and, even more so, excited to see many already implementing the metrics into their reporting,” the WEF’s managing director Olivier Schwab said.
“This is the first time we have publicly seen this breadth of data from global companies across sectors on ESG factors. The Stakeholder Capitalism Metrics are already demonstrating that consistent and comparable ESG reporting can help articulate to stakeholders the collective contribution of ESG commitments.”
Future of the Corporation
In the context of 2020 and 2021, purpose-led business has become more of a hot topic than ever, with consumers and investors looking to support firms that have helped communities through Covid-19
Last year, The University of Cambridge Institute for Sustainability Leadership (CISL) published a ten-point plan, based on discussions with leading executives and sustainability professionals, designed to act as a manifesto for purposeful business.
Similarly, the chief executives of some of the world’s most recognisable companies, including L’Oreal, co-signed a letter outlining how the purpose-led economy will grow post-Covid-19. And, as 2020 came to a close, the Vatican launched a ‘Council for Inclusive Capitalism’, consisting of executives from major businesses including Kering and Visa. This ‘coalition of the willing’ was set up to accelerate the private sector’s contribution to the Sustainable Development Goals (SDGs).
Building on this trend, the British Academy has this week published the concluding report of its ‘Future of the Corporation’ programme, tracking attitudes towards purpose-led business among executives and exploring potential methods for combatting purpose-washing.
The report reveals the result of a poll of 511 senior decision-makers in the private sector, revealing that two-thirds are taking action to make their organisation more purpose-led. Additionally, 43% agree that businesses should exist to find and scale profitable solutions to the most pressing global environmental and social challenges – and that they should not be able to profit from harming people or planet.
The poll also asked respondents about a range of potential changes to laws and regulations, with 62% of respondents saying their organisation would support at least one major change. The changes proposed were:
- Corporate purpose being placed at the heart of company law and the fiduciary responsibility of directors who determine and implement company purposes
- The publication of government guidance on how companies can incorporate purpose in their legal form, for example in their articles of association
- Regulators being given new powers to hold directors and controlling owners to account for their corporate purposes
- A new duty being placed into the mandate of all regulators to enforce the principle that companies do not profit from failing to meet the minimum standards that the regulator sets
The British Academy ultimately concludes that changes are needed across the economic system to realise the new model of capitalism it is proposing, with action from leading businesses, regulators, auditors, financial institutions and policymakers.
The Academy’s academic lead for the Future of the Corporation programme Professor Colin Mayer said: “21st-century business should be about solving problems of people and the planet through innovation, imagination, and creativity. Profits should flow from doing that. But too often companies also profit from producing problems. This report offers a clear route to making purposeful business effective by making directors responsible for the delivery of purpose, a strategy that ensures clear accountability.”
Register for edie’s next webinar: How B Corps are shaping the future of sustainable business
edie will be running a free webinar at 2pm BST on Thursday 7 October outlining how companies, including edie’s publisher Faversham House, are actively making business a force for good through the B Corp movement.
This one-hour edie webinar, hosted in association with sustainability consultancy and edie’s B Corp partner, Seismic, will bring together a selection of certified B Corps to discuss how the process worked, what role the in-house sustainability and CSR teams have played, and benefits experienced so far.
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