The opportunity has come to establish independent, rigorous global standards for nonfinancial information for companies’ environmental, social, and governance (ESG) performance as well as their external impact. We cannot lose this opportunity lest it never come again. As I wrote in this column in May 2016 “we won’t have the capital markets we need today to create a sustainable society for future generations” without nonfinancial information that is of the same rigor and relevance as financial information—and subject to the same degree of auditability.

From my vantage point, the best case scenario for a path forward is for three powerful bodies to act in concert. Each one has made real progress towards establishing a standard.

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The Impact Management Project (IMP), led by Chief Executive Clara Barby, should join forces with the World Economic Forum International Business Council (IBC), led by Bank of America Chairman and CEO Brian Moynihan and, in consultation with the European Union, provide the mechanism for delivery of a complete system of standards. This process will leverage the work the IMP has done to reconcile the sets of existing standards, the strong commitment from the corporate community through the IBC, and optimize the  positive aspects of the enforcement powers of government of the European Union. I will expand on this below.

The IMP facilitates a “structured network” of 13 members working to leverage and harmonize their expertise in nonfinancial reporting and impact measurement for the benefit of companies, investors, and public entities in order to ensure long-term value creation for shareholders while supporting the Sustainable Development Goals. Especially important for corporate disclosure standard setting in the public markets are Global Reporting Initiative (GRI), led by Chief Executive Tim Mohin, and the Sustainability Accounting Standards Board (SASB), led by CEO Janine Guillot. 

The IBC has gained the support of a substantial global group of 140 CEOs (whose identity I hope will be made public soon) who have recommended 22 metrics for every company to report on in their report “Toward Common Metrics and Consistent Reporting of Sustainable Value Creation,” many of which were drawn from SASB’s and GRI’s work.  

The European Commission has taken the regulatory bit in its teeth and is currently reviewing the Non-Financial Reporting Directive in order to strengthen it by establishing standards that will be mandated for external reporting. The document is now out for comment.  

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