Critics of the movement toward “stakeholder capitalism” like to argue that until corporate accounting and governance rules change, shareholder primacy will reign supreme. (If you didn’t understand that last sentence, read my story here.) I agree with their point. It took over a century for us to develop the elaborate accounting scaffolding that surrounds today’s public companies, and it will take more than one statement from the Business Roundtable to change it.
But an important step forward occurred yesterday. The World Economic Forum, working with the big four accounting firms, released a report with the ponderous title Measuring Stakeholder Capitalism: Towards Common Metrics and Consistent Reporting of Sustainable Value Creation. You can download it here. It’s a large document and will take some time to digest. But if you care about this issue, it is an absolute must read.
I’ve attended the World Economic Forum in Davos, Switzerland, for more than 20 years now—mainly for the unmatchable opportunity to network with so many powerful, famous and even thoughtful people—all packed into one tiny mountain village. To be honest, I’ve never considered it much more than an elaborate gabfest.
This new paper, however—which is the result of an extensive, year-long effort—is something different. We know that what gets measured gets managed. Without an agreed upon set of metrics, shareholder capitalism would remain a mere promise. Now we have them: 21 core metrics that set a common framework for measuring how companies are meeting the needs of people and planet. I’m sure CEO Daily readers will find things to disagree with in here—and I welcome hearing your feedback. But in my view, this is one big step forward.
By the way, in addition to WEF head Klaus Schwab, a big dose of credit goes to Bank of America CEO Brian Moynihan, who headed the committee that produced this work and lent his considerable credibility to the effort. I talked with Moynihan about it a few weeks ago on our podcast Leadership Next. You can listen to that episode here.
Let me know what you think. More news below.