World Economic Forum Sets ESG Metrics Framework
The process of environmental, social and governance (ESG) principles becoming part of companies’ financial DNA got one of its biggest pushes in September. The World Economic Forum (WEF), in conjunction with the Big Four financial firms and Bank of America, released a set of sustainability metrics to serve as a framework for organizations to detail ESG impacts in their financial reports.
In the white paper Measuring Stakeholder Capitalism Towards Common Metrics and Consistent Reporting of Sustainable Value Creation, the WEF presented 21 metrics divided into four categories — governance, people, planet and prosperity. Among the analytics: monetary losses form unethical behavior, greenhouse-gas emissions, pay-equality and living-wage percentages, and percentage of revenue from products and services designed for social benefit.
“These are the (metrics) that we truly believe as a business community are the right measures to start with,” Bob Moritz, global chairman of London-based professional-services giant PricewaterhouseCoopers (PwC) said at the WEF’s virtual Sustainable Development Impact Summit in September. “We’re not looking for perfection, we’re looking for progress.”
Moritz said he hopes the WEF metrics can help bring global consistency to companies’ ESG reporting, with disclosure requirements varying among countries. In the U.S., the Securities and Exchange Commission adopted a framework for ESG disclosures, but those standards don’t include specific metrics.
Metric tons (MT) of avoided emissions throughout Walmart’s value chain in 2019, according to the retail behemoth’s most recent environmental, social and governance report. The company has avoided 230 million MT since 2017, and those efforts will accelerate as more suppliers sign on to Walmart’s Project Gigaton, a program designed to prevent 1 billion MT of greenhouse gases from its supply chain by the end of the decade. More than 2,300 suppliers are participating in the project.
“There is no one-size-fits-all approach to addressing social and environmental issues in supply chains,” Walmart’s ESG report states. “We tailor our engagement by evaluating our sourcing footprint, determining the most relevant issues for each commodity and identifying where Walmart is best positioned to accelerate positive action forward.”
Flavorful Goal of Sustainable Vanilla Reached
In 2016, the vanilla industry — facing concerns about diminishing quality, questionable labor practices, financial hardships among bean farmers and insufficient supply chain traceability — launched a sustainability initiative. The mission’s objective has been realized in one segment of the industry, as the Kellogg Company and Symrise, a German flavors and fragrances company, announced they have met a goal of 100 percent responsibly sourced vanilla from Madagascar.
The companies formed a partnership in 2019 to sustainably source from Madagascar — which grows more than 80 percent of the world’s vanilla beans — with a three-year project target date. “Responsibly sourcing our ingredients means making a difference from the very start. That’s why we’re working closely with the farmers who grow them,” Kellogg chief sustainability officer Amy Senter said in a press release. “Farmers like those in Madagascar aren’t just growing vanilla for people around the world, they’re cultivating healthy soils, diverse ecosystems and strong communities.”
Based on their “closest to the source” philosophy, the companies provide training on sustainable farming, ethical labor practice and budget/cash flow management for more than 1,000 vanilla farmers in Madagascar. Symrise states on its website that it purchases vanilla from about 7,000 farmers in 84 villages in the country.