Last week’s gathering at Davos included an unprecedented focus on sustainability, as the 50th Annual Meeting of the World Economic Forum was dedicated to “stakeholder capitalism.”

I have been going to the WEF meetings at Davos since 2005. Fifteen years later, it is remarkable to see how sustainable business (or responsible capitalism or whatever term you want to use) has—to use an appropriate metaphor for the Swiss Alps in January—come in from the cold.

A lot has changed: in 2005, climate discussions were few and Al Gore’s sessions, coming months before “An Inconvenient Truth” was released, were lightly attended. Human rights were little discussed, and LGBT issues were nowhere to be found.  I am not sure Greta Thunberg’s parents would have imagined that their then two-year-old daughter would be one of the most influential voices at this global gathering at age 17.

This year, it was heartening to see the many new initiatives and announcements that emerged in the run up to and throughout the week at Davos. One that deserves specific attention is the effort to create a single Environmental, Social, and Governance (ESG) reporting and disclosure framework, something that’s become a bit of a “holy grail” in the sustainability world.

This effort could be an important turning point, but only if certain core principles, in the words of the report, potentially lead to “a generally accepted international accounting standard” for sustainable value creation.

The vehicle for the latest effort is a report released last week by the WEF’s International Business Council (IBC), a gathering of more than 100 large company CEOs. The report, Toward Common Metrics and Consistent Reporting of Sustainable Value Creation, reflects two intersecting developments: growing recognition of the importance of sustainability performance, both for business and the wider world, and growing frustration with the welter of reporting and disclosure frameworks, as well as the seemingly endless number of ratings and rankings.

The IBC’s interest and initiative is very welcome—a sign that it’s time to get serious about committing to assessing businesses on their impacts, and not only the shareholder capitalism model that has lost considerable credibility, especially in the last year.

This effort could be an important turning point, but only if certain core principles, in the words of the report, potentially lead to “a generally accepted international accounting standard” for sustainable value creation. The principles that should be at the core of this effort, and others that may emerge alongside it, are the following:

Material and Ambitious

There is great value in establishing a common baseline for what is material to investors as it relates to corporate sustainability performance. This approach sets a baseline, which is important. It is also essential that this model not reflect a lowest common denominator approach. The IBC seems to understand this in taking on—whether or not sufficiently—the issue of corporate tax disclosures, which is a very positive step.  As this effort evolves, it is essential that it have sufficient ambition across all topics.

Inclusive and Credible

There has been much grumbling about this effort—and also much interest and initiative—on the part of existing sustainability reporting standard setters. It is essential that the seminal work of these organizations be fully considered and integrated into the IBC effort. The drive to embed sustainable value creation in corporate reporting and listing requirements will not succeed if the views of broader society are not fully considered. If uptake by markets undermines uptake of disclosure by the wider world, little will have been accomplished. I was encouraged to see that the initial report makes extensive use of the work done to date by the GRI, SASB, TCFD, IIRC, etc. as well as well-recognized frameworks such as the UN Guiding Principles on Business and Human Rights.  Similarly, it remains an open question whether the Big 4 accounting firms are the right partners for this effort. They have massively important expertise and credibility with business—whether they have all the expertise they need and the credibility with wider society is subject to debate.

Consistent and Flexible

The IBC does well to propose both core and expanded metrics. This is absolutely critical for a variety of reasons. First, it is essential to have a “common core” that all companies are expected to report against. Indeed, the uptake of the Task Force for Climate-Related Financial Disclosure’s (TCFD) recommendations is testament to the fact that climate change is material for every company, though not always in the same ways or to the same extent.  It is also the case that the essence of sustainable business is the need to address the intersection of business and society, which for obvious reasons is always evolving. To take just two examples from the past five years, recognition of the need to restrict ocean plastics and support the rights of LBGTI people have skyrocketed up the business agenda. There will, therefore, be a need to ensure that emerging issues are explored and addressed on an ongoing basis. Time scales are crucial here: what is material and relevant today will be different in five years, let alone by 2050. This model needs to find a way to balance the needs of today and tomorrow… which is after all the essence of sustainability.

The “S” in ESG to Should Not Be Silent

Social issues are more challenging than many others. They reflect diverse societal norms and laws. They are often measured qualitatively rather than quantitatively. The “cross-cuts” on various issues, for example gender impacts of climate change, are essential but hard to measure.  However, these considerations often dominate public impressions of a company’s performance and the brand value that comprises such a large portion of a company’s assets.

Governance Matters

This effort risks being only words on a page if corporate governance does not evolve in a way that will ensure that Boards have the breadth of perspective to fully understand the import of the topics in whatever framework emerges. In the halls in Davos, it is widely accepted, though not often stated publicly, that Boards lack the expertise (and far too often, the inclination) to understand many ESG issues, not least, those on the social side. A parallel effort to ensure that Boards can bring their “A game” to making this framework real will be essential.


It is almost certain that we will see a profound transformation of corporate reporting and measurement in this decisive decade of the 2020s; the world badly needs it, and so do CEOs, Boards, and investors. Whether the IBC’s nascent effort provides the foundation for such reforms will depend on whether the principles established here are pursued fully and openly. Initial signs are good and there is much work yet to be done.