Multi-stakeholder demands for transparency on sustainability impacts can’t be ignored
‘Stakeholder capitalism’ — What does adopting it really mean, and why should companies be answerable when effecting society and the environment, and not only the investors’ interests?
These pivotal questions have been addressed in Towards stakeholder capitalism: how we can get there, the second instalment of ‘The GRI Perspective’. This new regular series examines the surface of topical themes in the world of sustainability reporting.
The paper carefully studies January’s annual letter to CEOs from Larry Fink, CEO of BlackRock calling for companies to “create value for as well as be valued by its full range of stakeholders”.
Insights from The GRI Perspective include:
- There is growing awareness in changing business culture – from value creation that benefits shareholders alone towards one that deeply studies a broader set of stakeholders, encompassing social engagement and environmental impact.
- Explaining how a company’s actions look not only to be profitable, however, additionally, to safeguard stakeholder interests, is an essential tool to highlight their contribution to people and planet.
- A stakeholder-centric corporate strategy may have numerous upsides – from developing reputation and brand to greater ability to hire new staff, from mitigating environmental risks to more access to capital markets.
- It is illogical for shareholder capitalism to occur without reporting on the impacts of sustainability issues on value creation. Stakeholder capitalism, meanwhile, without sustainability reporting reflecting the needs of society and the environment makes no sense either.
- Achieving socio-economic and environmental cohesion demands a wider perspective than climate metrics or investor interests alone: this is where GRI’s world-leading, multi-stakeholder sustainability reporting standards enter, alongside financial disclosure.
As Larry Fink stated last month, “stakeholder capitalism is not woke, its capitalism”. At GRI we are in firm agreement – yet failing to endorse sustainability reporting that meets the needs of a multitude of stakeholders falls short of the societal expectations of true stakeholder capitalism. We understand that businesses need to be profitable, and that doing so in a way that does not conflict with their obligations to people and the climate can be challenging. At the same time, understanding and managing sustainability risks is a prerequisite when responding to the transparency needs of stakeholders, which include investors. That’s why corporate reporting needs to fully reflect impacts on the economy, environmental and society, as enabled by the GRI Standards. We believe the best way that this can be achieved is by moving to a comprehensive, two-pillar reporting system – with financial and sustainability disclosure on an equal footing.
Peter Paul van de Wijs, GRI Chief External Affairs Officer
The previous issue of The GRI Perspective, A business case for environment & society, published in January and looked at changes in the sustainability reporting landscape, including developments by the EU and the IFRS.