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CSR's Editorial - Common Metrics for ESG
Common Metrics for ESG
In 2020, the World Economic Forum’s International Business Committee published 22 ESG metrics with a vision to standardise corporate reporting under a ‘stakeholder capitalism’ approach. The three ESG pillars provide a common framework for social engagement, and performance metrics by which countries and businesses can measure their impact on society through a more consolidated approach to standards and reporting frameworks.
The Forum has worked with auditing firms which include Deloitte, EY, KPMG and PwC to establish universal metrics and standards of disclosure. Over 150 companies globally have demonstrated support and several others have expressed interest in being part of the change. Since the Sustainable Development Impact Meetings in September 2022, over 130 companies have already included the Stakeholder Capitalism Metrics in their mainstream reporting materials, including annual reports and sustainability reports.
ESG offers a focused framework through which governments, businesses and civil society can collaborate on serious global challenges, with a shared understanding of their moral obligation and interdependence in creating economic growth while protecting and safeguarding people and planet.
ESG can mean different things to different companies. So here are a few broad guidelines we asked our corporate partners to consider as they shaped their stories for this edition.
The Environment Component:
Addresses how the business interacts with the natural environment, the impacts of its operations, and the actions the company takes to mitigate negative effects. This would include impacts, such as greenhouse gas (GHG) emissions, raw material use, land use, water consumption, pollution and waste creation, and the company’s supply chain activities.
The World Environment Fund (WEF) suggests alignment with these SDG goals:
Clean water and sanitation
Affordable and clean energy production
Responsible resource consumption and production
Climate Action
Life on land
Life below water
The Social Component:
Addresses how business activities affect people — from its own workforce to customers, local communities and those who work in its extended supply chain. This includes people impacts such as fair pay and safe working conditions, workforce health and wellbeing, diversity, equality, and inclusion, safeguarding against child labour and slavery, and anti-corruption measures. It also recognizes a business’s obligation to support society proactively through initiatives such as education programmes and upskilling employees.
These align with five SDG goals.
The Governance Component:
Addresses policies, structures, and procedures by which an organisation or country is run. It explores the decision-making process and the distribution of rights and responsibilities between elements of the organisation, including the board and senior executives or, in national terms, the government, parliament and senior ministers. This includes clear organisational purpose and values embedded in the business, monitoring board composition and skills, regulatory compliance, executive compensation, oversight and accountability, risk management, and reporting. These align with three SDG goals:
Responsible resource consumption and production
Peace, justice, and strong institutions
Partnerships to achieve the goals
Establishing common metrics and standards allows for comparative data points and a simpler approach to measuring performance and ESG reporting. According to the WEF, the metrics include non-financial disclosures centred around four pillars: people, planet, prosperity, and principles of governance and include measurements around greenhouse gas emissions, pay equality and board diversity, among others.
Among those companies that have signed on to the Stakeholder Capitalism Metrics in their Reporting Materials and are operating or present in Trinidad & Tobago are: bp, Deloitte, EY, Heineken, Kia, KMPG, McKinsey & Company, Nestlé, PwC, Royal Dutch Shell, Unilever and Yara International. In this issue you will see stories from the Ansa McAL Group, Atlantic LNG, the National Gas Company, Shell T&T Limited and Republic Financial Holdings which is now a signatory to the Principles of Responsible Banking. We have also shared some snapshots on sustainability from Seprod (Musson Group), Methanex, Scotiabank, CIBC FirstCaribbean, Demerara Distillers, Royal Bank of Canada, Demerara Bank and Nestlé.
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