Business commit to act fairly and sustainably— the hard work starts now
A welcome development this week was the declaration from 181 chief executives of US companies to operate in a way that values and recognizes all their stakeholders.
The signatories to the Statement on the Purpose of a Corporation, organized by Business Roundtable, includes commitments to:
Respect communities and the environment by embracing sustainable business practices;
Deal with suppliers and partners fairly and ethically;
Invest in their employees, fostering diversity and inclusion;
Demonstrate transparency and effective stakeholder engagement.
And these are not a fringe group of eco-minded companies. Leading global businesses and household names from across many sectors have signed up. To single out just a few, they include the chiefs of Apple, Amazon, BP, Bank of America, Coca-Cola, Ford, Johnson & Johnson, PwC, Walmart and Visa.
While this appears to be a tipping point, it has been building for a long time. Before joining GRI, I had worked for three American companies (one on this list) that all provide their sustainability results each year — two of them for more than 20 years.
In today’s world companies understand that the profit motive cannot subsume their commitment to people and the planet — and this week’s declaration codifies this reality.
Yet some have said it is a commitment without teeth because there are no detailed goals. This is true, but scratch the surface and you will discover that most of the 181 signatories publish annual ‘sustainability reports’ that detail their progress and set out the goals that are pertinent to their business. And the majority of these reports are based on the GRI Standards.
The declaration is a public statement about how many of these companies have acted for years, and in some cases, decades. So, the real question is, what will change?
One answer is the hope that their example catches on and other companies will assess their impacts and report on their improvements. But this is not enough. The problems faced by the world — from accelerating climate change to mass extinctions — cannot wait for more businesses to voluntarily join these leaders.
Last month I testified before the United States House Finance Committee on the need to require publicly traded US companies to disclose their ‘environmental, social and governance’ (ESG) information. Corporate ESG data is not only critical for addressing sustainability challenges, it is increasingly relied on by investors and capital markets around the world.
This declaration makes it clear that leading companies recognize their obligation to communities and groups in addition to their core shareholders. With this as the foundation, it’s time to turn the rhetoric into reality. Beyond the leaders on this list, we need all companies to disclose their impacts and the measures they are taking to improve the world around them. And to do that, we need a global common language — as provided by the GRI Standards.
The GRI Standards are already the most widely adopted by companies around the world and are referenced or required in 139 ESG disclosure policies in 61 countries. More than 60 of those policies are capital market disclosure requirements in 45 countries.
It’s time to take the next step. It’s time to do the hard work. The 181 businesses on this list and the thousands of other responsible corporate leaders must come together to help level the playing field. To support mandatory ESG disclosure based on global, independent, multi-stakeholder standards. This will help other companies learn what they these firms have already learned: that being a good corporate citizen is good business.
I applaud these CEOs for taking this important step. The hard work to make good on those promises, however, has only just begun.