There was one recurring topic at the virtual World Economic Forum (WEF) which resonated strongly: increasing commitment by global leaders to move beyond maximizing shareholder value, and expanding companies’ focus on sustainable value creation for society. Investors are calling for new metrics beyond financial performance, and demanding transparency that would allow them to make more enlightened investment decisions. The investment world is clearly shifting. Norway’s sovereign wealth fund – the world’s largest – at the end of 2020 sold its entire portfolio of companies focused on fossil fuels.
Over 60 major companies from all over the world with a combined market cap of $7 trillion and millions of employees, including Accenture, have already signed on to the WEF “Stakeholder Capitalism Metrics”.
ESG (environmental, social and governance reporting) has entered the mainstream!
Adoption of comparable, broader value metrics is an encouraging and positive step forward. But the decisions we take to turn the noble stakeholder goals into reality is what will count more, in the end.
Where to start?
- By recognizing that the future will not be an extension of the past. In our study “Society Disrupted. Now What?” we highlight how a series of emerging lifestyles will profoundly change the demand game in the market. Responsible denizens will demand greater transparency about the origin of the goods they are buying; think smart consumers who want to track and trace where their seafood or tea come from, not only whether it will arrive on time. The appeal of your brand will be increasingly intertwined with how responsible your supply chain practices are, and the built-in sustainability features of your products and services. Small, innovative companies are already responding to this demand. Teapasar, a Singaporean-based food tech start up, utilizes its “ProfilePrint” technology to verify the tea’s “fingerprint”, which provides information like its origins, terroir and harvest age. The company aims to prevent unfair pricing and misrepresentation, and to authenticate tea leaves sold by retailers at a fraction of the cost.
- By adopting modern performance measurement frameworks that help focus the attention of management on “metrics that matter” to all your stakeholders. Companies need to set targets and measure progress for the new forms of value creation: better customer and supplier experience, more environmentally sustainable practices, new skills and jobs for the future, and broader contribution to the communities in which they operate. We believe that new measures focused on non-financial performance are essential to driving stakeholder value. For instance, when companies develop a business case for cloud technology adoption, they will have to consider the net environmental benefits in the long-run, together with a tangible outcome in upskilling the employees for the new roles that the massive availability of data and artificial intelligence are making available.
Accenture analysis suggests that by pursuing a green approach, migrations to the public cloud can reduce global carbon (CO2) emissions by 59 million tons of CO2 per year. This magnitude of reduction can go a long way in meeting climate change commitment and strengthening the role of businesses in a circular economy.
Creating and operating a responsible business is no longer optional – it is the necessary path to future success.
These are the conversations we’re having with clients today. These are the actions that will take us to a future where business can ensure that inclusive social progress and environmental responsibility are prioritized alongside economic growth. 2021 makes it an exciting and meaningful time to lead in business.
I’d like to thank my colleagues, Vedrana Savic and Claire Aubertin-Noel, for co-authoring this blog with me.