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Measuring Stakeholder Capitalism

How should one measure the sustainability impact of two food and beverage companies operating in different geographical regions and subjected to various regulations?

As investors, consumers, employees, and many other stakeholders are paying closer attention to the connection between sustainability issues and the companies they choose to do business with, many corporations are overwhelmed by the different metrics and frameworks available. For sustainability reporting purposes, publicly traded companies devote a lot of time in plotting existing data against frameworks such as TCFD, CDP, CDSB, GRI, and SASB, to name a few.

To provide clearer common metrics, the World Economic Forum (WEF), big four accounting firms, and the International Business Council (IBC) collaborated to design a reporting framework to help organizations align their corporate values and strategies with the UN’s Sustainable Development Goals (SDGs). The new metric is based on four principles: Governance, Planet, People, and Prosperity. These principles are meant to translate existing metrics from the five leading voluntary reporting frameworks into a universal model for organizations across different industries and business models. The high-level metrics are designed as follow:

21 core metrics: Primarily quantitative metrics of information already reported by many firms under other frameworks.

34 expanded metrics: Additional quantitative and qualitative metrics which are less well-established across existing frameworks. These metrics advance new ways of measuring and communicating sustainable value creation.

The International Business council members are encouraged to start reporting on these updated metrics and disclosures immediately. More details on the reporting timeline will be presented in Winter 2021.

This convergence exercise aims to bring greater comparability and consistency to ESG reporting and ultimately achieve Stakeholder Capitalism: allowing companies to drive positive outcomes for the business, the economy, society, and the planet while creating sustainable values connected to the 17 SDGs.

The announcement of this common reporting framework also comes at a time when multiple regulatory bodies such as the SEC, IFRS, and IOSCO are proposing more robust sustainability measurement disclosure in addition to existing financial reports.

Investors realize economic, environmental, and social factors are increasingly material to long-term enterprise value creation. AMNIe helps your organization navigate the landscape and adopt the appropriate ESG methods to identify risks and opportunities in your sustainability integration journey.

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Disclaimer! The views expressed in this post are the opinions of the authors and are not representative of the people, organizations or institutions that the authors may or may not be associated with in a professional or personal capacity.

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