Dear Fellow Supporters of Integrated Reporting,
This e-mail is to inform you about some recent articles in The Huffington Post, Institutional Investor, and Ethisphere; an interview I did with Jane Stevensen, Managing Director of the Climate Disclosure Standards Board; and an interview of Georg Kell, Founding Executive Director of the UN Global Compact and now Vice Chairman of Arabesque Partners.
In “Why Systematic Risks Present Global Opportunities” Georg reviews the recently published "The Global Opportunity Report" jointly produced by DNV GL, the UN Global Compact, and the Monday Morning Global Institute. This report identifies five systemic risks (youth unemployment, resistance to life-saving medicine, accelerating transport emissions, global food crisis, and loss of ocean biodiversity) and the 15 opportunities for business that these create. He notes that “Most of the opportunities identified in the Global Opportunity Report are based on smart applications of technology, with young people showing a significantly more positive attitude than older generations.” And while the focus of this report is on the role of the business community, Georg concludes that “Investors, entrepreneurs and civil society activists are not the only ones that will find inspiration in this report. Politicians could also benefit greatly if they were to read and understand it.”
In “Why Investors Should Care About the Next Generation of Accounting Standards” I discuss the importance of the work of the Sustainability Accounting Standards Board (SASB) in the context of how financial accounting and reporting standards emerged in the United States. Thanks to this we have the deep and liquid capital markets we have today that have generated enormous wealth. But without standards for a company to report its performance on the material environmental, social, and governance issues it must manage to create value over the long term, we will not have the capital markets we need to support a sustainable society. This is why SASB is so important. I conclude with a call to action: “Companies and investors only stand to gain adopting SASB’s standards, and society and future generations will as well. It’s time to get on with it.”
In “End of the Beginning” Georg and I cite another study by DNV GL which found that “the corporate sustainability movement has so far produced only incremental change towards the goals of sustainable and inclusive markets.” This study identifies four interconnected pathways to addressing this problem: (1) the silent majority of companies still operating with a focus on short-term profits need to get on board, (2) a new narrative needs to be developed about the role of business in society, (3) public policy failures to support sustainability need to be addressed, and (4) there needs to be greater alignment between companies and investors. We believe the last one holds out the most promise and argue that the idea of an “ESG Quant fund” has an important role to play here. We conclude by saying “For nearly two decades, thousands of individuals from all walks of life have been developing and improving the impact of the sustainability movement. A fusion with the world of finance now signals the end of the beginning, and marks an important new phase in the growth of Generation S.”
Interview with Jane Stevensen
My latest Forbes.com post “Does the Financial World Finally Get Climate Change?” is based on an interview with Jane Stevensen, Managing Director of the Climate Disclosure Standards Board. (CDSB). In it Jane explains the role of the CDSB (advancing and aligning the global mainstream corporate reporting model to equate natural capital with financial capital); the CDSB Framework and its three principles of comparability, consistency, and clarity; the progress it has made since its founding in 2007 (its framework is being used by over 300 companies and has the support of institutional investors with more than $7 trillion in assets under management); the importance of standards on carbon reporting to support carbon pricing; and how it is supporting the work of the Financial Stability Board’s “Task Force on Climate-related Financial Disclosures” which is being chaired by Michael Bloomberg.
Interview with Georg Kell
“Global Compact: Corporate Engagement at the UN“ is an interview that the Great Transition Initiative (“The Great Transition Initiative is an online forum of ideas and an international network for the critical exploration of concepts, strategies, and visions for a transition to a future of enriched lives, human solidarity, and a resilient biosphere.”) did with Georg. In it he candidly reflects back on what was accomplished in his 15 years as Founding Executive Director of the UN Global Compact. He describes the circumstances of its founding, the early challenges it faced and how it overcome them. Georg discusses Its strengths and limitations, and some of the things he would have done differently. He concludes with some advice for his successor, Lise Kingo: “Lise Kingo was an early champion of the Compact and has deep insights into the corporate world. The Compact is very lucky to have her. I have no doubt that under her leadership, the Compact will evolve further and the business case will become even stronger. I am encouraging her to not get drawn into the bureaucratic underworld. It takes courage and a long-term vision to navigate the choppy waters of UN politics”.
Robert G. Eccles | Professor of Management Practice | Harvard Business School
Movement: Meaning, Momentum, Motives, and Materiality