In 2019, a group of over 140 CEOs from the world's largest companies identified a significant problem in the growing field of sustainability that continues today: the existence of multiple environmental, social and governance (ESG) reporting frameworks and the lack of consistency and comparability of metrics among them.1 This group, the International Business Council (IBC) of the World Economic Forum (WEF), has since addressed this problem by working to define a set of "common metrics for sustainable value creation" that draw common themes out of existing reporting frameworks from organizations like the Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB) and the Task Force on Climate‑Related Financial Disclosures (TCFD). These efforts have produced an important white paper, "Measuring Stakeholder Capitalism: Towards Common Metrics and Consistent Reporting of Sustainable Value Creation" (the White Paper), published on September 22, 2020.

The White Paper "defines a core set of 'Stakeholder Capitalism Metrics' (SCM) and disclosures that can be used by IBC members to align their mainstream reporting on performance against ESG indicators and track consistently their contributions toward the UN's Sustainable Development Goals (SDGs). The metrics are deliberately based on existing standards, with the near-term objectives of accelerating convergence among the leading private standard-setters and bringing greater comparability and consistency to the reporting of ESG disclosures."

This practical approach to addressing a pervasive issue facing any company considering reporting or using ESG data is likely to be highly influential among the ICB's members and beyond. Accordingly, this Legal Update summarizes key aspects of the White Paper and discusses the potential impact of these new sustainability metrics on the developing ESG field more broadly. For more information about a similar initiative targeted at the asset management industry, please see our recent legal update on the CFA Institute's August 2020 consultation paper on ESG Disclosure Standards for Investment Products.

The Stakeholder Capitalism Metrics

The White Paper sets out 55 SCMs by referring to two overarching categories:

  • 21 Core Metrics, which are well-established or critically important and are intended to represent the "primary quantitative metrics for which information is already being reported by many firms"; and
  • 34 Expanded Metrics, which are less well-established, or have a wider value chain scope, and are intended to "represent a more advanced way of measuring and communicating sustainable value creation."

In applying the SCMs, companies are encouraged to report on at least the 21 Core Metrics and, over time, move toward more robust reporting incorporating the other 34 Expanded Metrics. If any of the SCMs are not material to a company’s long-term value creation, the WEF suggests adopting a "disclose or explain" approach by identifying specific information omitted from a report and explaining why it has been omitted. In any event, when determining whether information is "material", the White Paper asks companies to consider the concept of "dynamic materiality" in which topics can move from impacting only "external" factors, like the economy and the environment, to having a significant impact on a company's enterprise value and/or finances either gradually or very quickly. In this context, managers should be cognizant of the broader trends affecting ESG factors and the impact on their businesses.

The paper further categorizes the SCMs by subject matter into four main pillars:

  • Principles of Governance;
  • Planet;
  • People; and
  • Prosperity.

Each pillar is discussed in detail below. Readers can review the White Paper for additional details and more information about other aspects of the SCMs it describes.

Principles of Governance

The SCMs in the Governance pillar help determine whether a company's governance processes appropriately align its financial and societal performance with respect to achieving SDGs 12 (Responsible Consumption and Production), 16 (Peace, Justice and Strong Institutions) and 17 (Partnerships for the Goals). Importantly, the WEF recognizes that companies using the SCMs are subject to governance frameworks in the jurisdictions in which they are established or operate, and they may further apply other governance frameworks focused on ESG matters. The White Paper confirms that the SCMs are not intended to replace such frameworks, but rather to supplement them.

This pillar's Core Metrics include disclosures related to the composition of governance bodies (e.g., considering gender diversity and ESG competencies), anti-corruption and risk and opportunity oversight. Expanded Metrics include disclosures related to the remuneration of senior executives and managers, public policy and lobbying efforts. The Governance SCMs, in particular, draw heavily from existing GRI sources.


The SCMs in the Planet pillar help assess a company's business dependencies and impacts on the environment with respect to achieving SDGs 6 (Clean Water and Sanitation), 7 (Affordable and Clean Energy), 12 (Responsible Consumption and Production), 13 (Climate Action), 14 (Life Below Water) and 15 (Life on Land). The White Paper addresses historical difficulties with disclosures in this area, including the relevance of impacts and dependencies along the full value chain, by noting recent developments in the measurement and management of environmental impacts and encouraging companies to leverage these developments in reporting on the SCMs.

This pillar's Core Metrics include disclosures related to greenhouse gas emissions, TCFD implementation, land use and freshwater availability. Expanded Metrics include a small number of "promising and emerging metrics" aimed at issues less well-represented in formal reporting standards, including nature loss, plastic waste and resource circularity. This includes disclosures related to land use and ecosystem conversion, as well as the prevalence of single‑use plastics and air and water pollutants throughout the value chain. The Planet SCMs draw heavily from GRI, TCFD, Natural Capital Protocol and International Organization for Standardization sources.


The SCMs in the People pillar help assess a company's societal impact and contributions to the growth and value of people with respect to achieving SDGs 1 (No Poverty), 3 (Good Health and Well-Being), 4 (Quality Education), 5 (Gender Equality), 8 (Decent Work and Economic Growth) and 10 (Reduced Inequalities). The White Paper divides the value of people into human capital (e.g., individual knowledge, skills, competencies and attributes) and social capital (e.g., networks, shared norms, values and understanding).

This pillar's Core Metrics include disclosures related to diversity and inclusion among all employees, pay equality across gender and ethnic groups, risks of child and forced labour, health and safety issues and job training. Expanded Metrics relate to incidents of discrimination and harassment, collective bargaining issues, human rights reviews and employee well-being. The People SCMs draw heavily from GRI and SASB sources.


The SCMs in the Prosperity pillar help determine whether a company is contributing to the dignity of people and the fight to end poverty and inequality with respect to achieving SDGs 1 (No Poverty), 8 (Decent Work and Economic Growth), 9 (Industry, Innovation and Infrastructure) and 10 (Reduced Inequalities). Outcomes in this category are measured in terms of economic growth, investments in sustainable infrastructure and sustainable production and consumption.

This pillar's Core Metrics include disclosures related to economic contribution (including economic value generated and distributed), financial investments, R&D expenses and taxes paid. Expanded Metrics relate to infrastructure investments and services supported, total "social" investment value and percentage of revenue from products designed to deliver social benefits or address sustainability challenges. The Prosperity SCMs draw heavily from GRI sources.


The White Paper's systematic and practical approach to aggregating information from various ESG reporting metrics is a welcome addition to the growing field of sustainability for both data reporters and data users. We expect the SCMs to have a significant influence going forward, as each of the IBC's 140+ members are now invited to incorporate SCMs into their own reporting frameworks. The impact of this uptake is twofold: the use of better ESG reporting metrics by the world's largest companies will create benefits of its own, while smaller enterprises around the globe may look to emulate these market leaders by adopting the SCMs themselves.

1 White Paper, pg. 6.