ESG reporting is driving transformation globally, according to new case studies from the World Economic Forum (WEF), with notable changes in sustainability and company culture.
The case studies identified specific strategy and operations changes within companies reporting on the WEF’s Stakeholder Capitalism Metrics including new approaches to water management and the implementation of biodiversity strategies and targets.
“We're happy that support continues to grow for this set of metrics even in the face of geopolitical challenges, the lingering global pandemic and economic disruptions of the past two years,” said WEF’s head of private sector engagement, ESG, Emily Bayley.
“As this growth continues and jurisdictions transition from voluntary to mandatory sustainability reporting standards, we hope these learnings can provide valuable insights for companies that are just getting started on sustainability reporting and those that have been doing it for years.”
However, the WEF said that companies were still struggling with the “competing and disparate” ESG frameworks that currently exist around the world.
Additionally, the organisation highlighted concerns that making reporting mandatory could lead to less transparency as companies will not want to disclose more than they have to.
“As mandated ESG reporting becomes more widespread, both regulators and internal advocates should ensure corporations understand the full value of transparency on sustainability and other ESG issues,” the WEF said.
“Addressing this issue is particularly important as regulators in different regions begin to roll out their mandatory reporting requirements.”
While awaiting the new standards, ASIC has encouraged directors and senior management of listed companies and their advisors to continue reporting voluntarily under the Task Force on Climate-Related Financial Disclosures (TCFD) framework.
“Focus on a common set of comprehensive and material metrics will be important for both the efficacy and feasibility of ESG reporting in the coming months,” the WEF suggested.
“As much as possible, the European Union, the US Securities and Exchange Commission (SEC) and the International Financial Reporting Standards (IFRS) Foundation should align their metrics to ensure companies are able to implement effective ESG reporting globally.”
A total of 186 global companies with a combined market capitalisation of more than US$6.5 trillion have adopted the WEF’s Stakeholder Capitalism Metrics since they were introduced in 2020.
The WEF said that the metrics were expected to form part of the ISSB’s exposure draft on cross-thematic disclosures and metrics next year.
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.