Stakeholder Capitalism Metrics

From Open Risk Manual

Definition

Stakeholder Capitalism Metrics is a proposed set of universal, material ESG metrics and recommended disclosures that could be reflected in the of companies on a consistent basis across industry sectors and countries[1]

The metrics aim to be capable of verification and assurance, to enhance transparency and alignment among corporations, investors and all stakeholders. They are drawn wherever possible from existing standards and disclosures, with the aim of amplifying the rigorous work already done by standard‐setters rather than reinventing the wheel. The metrics have been selected for their universality across industries and business models, but the intention is not to replace relevant sector and company specific indicators. Companies are encouraged to report against as many of the core and expanded metrics as they find material and appropriate, on the basis of a "disclose or explain" approach.

Companies are encouraged to begin reporting on the recommended core metrics, where relevant and possible in mainstream corporate disclosures (annual reports to investors and proxy statements). Addressing ESG metrics within a company’s annual report (variously known as the MD&A, the strategic report, the integrated report) will ensure that consideration of material ESG factors is on the board’s agenda and is part of the overall corporate governance process.

Structure

The proposal consists of 21 core and 34 expanded metrics and disclosures which are recommended for adoption

Core metrics

A set of 21 more established or critically important metrics and disclosures. These are primarily quantitative metrics for which information is already being reported by many firms (albeit often in different formats) or can be obtained with reasonable effort.They focus primarily on activities within an organization’s own boundaries.

Expanded metrics

A set of 34 metrics and disclosures that tend to be less well‐established in existing practice and standards and have a wider value chain scope or convey impact in a more sophisticated or tangible way, such as in monetary terms. They represent a more advanced way of measuring and communicating sustainable value creation.

Four Pillars

The recommended metrics are organized under four pillars that are aligned with the SDGs and principal ESG domains:

  • Principles of Governance: The definition of Governance is evolving as organizations are increasingly expected to define and embed their purpose at the centre of their business. But the principles of agency, accountability and stewardship continue to be vital for truly "good governance".
  • Planet: An ambition to protect the planet from degradation, including through sustainable consumption and production, sustainably managing its natural resources and taking urgent action on Climate Change, so that it can support the needs of the present and future generations.
  • People: An ambition to end poverty and hunger, in all their forms and dimensions, and to ensure that all human beings can fulfil their potential in dignity and equality and in a healthy environment.
  • Prosperity: An ambition to ensure that all human beings can enjoy prosperous and fulfilling lives and that economic, social and technological progress occurs in harmony with nature.

Issues and Challenges

  • Adoption
  • Harmonization with other initiatives
  • Effectiveness

References

Contributors to this article

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