New ESG/SDGs Metrics From International Business Council (IBC) of the World Economic Forum (WEF)

The following is a link to a pdf of Measuring Stakeholder Capitalism: Towards Common Metrics and Consistent Reporting of Sustainable Value Creation (a 96 page paper):

The paper, which was published in September 2020, is a project of the International Business Council (IBC) of the World Economic Form (WEF) in collaboration with Deloitte, EY, KPMG and PwC. I believe that this is the first time that the Big 4 have gotten together in an effort to develop ESG and sustainability standards.

The paper defines the finished project as follows: “This work defines a core set of “stakeholder Capitalism Metrics” (SCM) and disclosures that can be used by IBC members to align their mainstream reporting on performance against environmental, social and governance (ESG) indicators and track their contributions towards the SDGs [UN Sustainable Development Goals] on a consistent basis.”

The paper and its ESG metrics are based on four pillars:

Pillar 1: Principles of Governance;

Pillar 2: Planet;

Pillar 3: People; and

Pillar 4: Prosperity.

This paper is a good initial effort to define measurable standards and metrics. In light of the authors and contributors this paper and its further related amendments, tweaks, and discussions will become a direct standard for IBC members, and some parts of it will become indirect or voluntary standards for some other organizations.

Many provisions in the paper are heavily focused on GRI (Global Reporting Initiative) standards. Thus, for example, the paper does not focus on SASB (Sustainability Accounting Standards Board) standards. You might also be aware that the SASB and the IIRC (International Integrated Reporting Council) announced on November 25, their intent to merge into a unified organization “in major step towards simplifying the corporate reporting system.” A lot of significant developments and changes are occurring in the ESG and sustainability areas.

As the IBC/Big-4 paper is heavily focused on GRI standards, and UN Sustainable Development Goals, it is or will be relevant or more relevant for US corporations that operate internationally. The extent, if any, to which select provisions in the paper are made applicable to US corporations and/or other organizations what operate solely or primarily domestically in the US is yet to be seen.

Best to you. David Tate, Esq.

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Remember, every case and situation is different. It is important to obtain and evaluate all of the evidence that is available, and to apply that evidence to the applicable standards and laws. You do need to consult with an attorney and other professionals about your particular situation. This post is not a solicitation for legal or other services inside of or outside of California, and, of course, this post only is a summary of information that changes from time to time, and does not apply to any particular situation or to your specific situation. So . . . you cannot rely on this post for your situation or as legal or other professional advice or representation.

Thank you for reading this post. I ask that you also pass it along to other people who would be interested as it is through collaboration that great things and success occur more quickly. And please also subscribe to this blog and my other blog (see below), and connect with me on LinkedIn and Twitter.

Best to you, David Tate, Esq. (and inactive California CPA) – practicing in California only

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World Economic Forum and Big Four Draft Toward Common Metrics and Consistent Reporting of Sustainable Value Creation

I am providing two links: the first link is to the Cooley PubCo post about the January 2020 World Economic Forum in collaboration with Deloitte, EY, KPMG, and PwC draft paper titled Toward Common Metrics and Consistent Reporting of Sustainable Value Creation, and the second link is to the draft paper.

The Cooley PubCo post is a good discussion about the progress of sustainability with links to other prior posts and materials.

The draft paper is 45 pages of materials based on four primary or core metrics: Pillar 1 – Principles of Governance; Pillar 2 – Planet; Pillar 3 – People; and Pillar 4 – Prosperity. Beginning at page 26 the paper provides an Appendix: Supplemental Information on Metrics and Disclosures which further breaks down the four Pillar’s and is quite eye opening.

I seldom spend too much time posting about drafts and proposals, and I am keeping to that habit now, but I will say that it will be interesting to see if and how this progresses, and to also keep apprised of other developments in sustainability and ESG metrics and reporting.

Here is a link to the Cooley PubCo post: https://cooleypubco.com/2020/01/29/world-economic-forum-big-four-sustainability-framework/

Here is a link to the draft paper titled Toward Common Metrics and Consistent Reporting of Sustainable Value Creation: http://www3.weforum.org/docs/WEF_IBC_ESG_Metrics_Discussion_Paper.pdf

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Remember, every case and situation is different. It is important to obtain and evaluate all of the evidence that is available, and to apply that evidence to the applicable standards and laws. You do need to consult with an attorney and other professionals about your particular situation. This post is not a solicitation for legal or other services inside of or outside of California, and, of course, this post only is a summary of information that changes from time to time, and does not apply to any particular situation or to your specific situation. So . . . you cannot rely on this post for your situation or as legal or other professional advice or representation.

Thank you for reading this post. I ask that you also pass it along to other people who would be interested as it is through collaboration that great things and success occur more quickly. And please also subscribe to this blog and my other blog (see below), and connect with me on LinkedIn and Twitter.

Best to you, David Tate, Esq. (and inactive California CPA) – practicing in California only.

I am also the Chair of the Business Law Section of the Bar Association of San Francisco.

Blogs: Trust, estate/probate, power of attorney, conservatorship, elder and dependent adult abuse, nursing home and care, disability, discrimination, personal injury, responsibilities and rights, and other related litigation, and contentious administrations http://californiaestatetrust.com; Business, D&O, board, director, audit committee, shareholder, founder, owner, and investor litigation, governance, responsibilities and rights, compliance, investigations, and risk management  http://auditcommitteeupdate.com

 

 

 

PCAOB Proposes Significant Changes to the Audit Report – From PWC

The PCAOB has again proposed changes to the standard audit report in which the PCAOB proposes that the report disclose additional information, for example about communications to the audit committee and about judgment or estimate related issues. Here is the link to a discussion by PWC, CLICK HERE. Comments about the proposal are due by August 2016.

This is a modified version of a prior PCAOB proposal. I’m not particularly convinced that the proposal requires a detailed discussion by me at this time as, similar to legislation, the proposal will change over time and whether or not it will ever be enacted is uncertain. However, given that this is a second serious attempt to enact a change in the audit report for audits performed and that are subject to PCAOB oversight, I must believe that this attempt will have an increased chance of being enacted.

I continue to believe that the current audit report suffers from significant limitations that reduce or limit its usefulness and relevancy for investors. I question the number of audits that would be performed if not for the statutory requirement? And we are seeing other efforts to increase discussions and disclosures that are thought to be useful to investors, such as the activities of the Sustainability Accounting Standards Board and other activities by the PCAOB.

In general, these activities also should benefit the external and internal audit professions as they will make their activities even more relevant, and also likely increase their workload.

One other thought: where are audit committees on this? I believe that in general they should support these efforts: on the one hand these activities might increase audit committee complexity and workload, but on the other hand, as the audit committee is significantly dependent on information that is provided by other people (because the audit committee is not involved in the day-to-day activities of the business, and its role is diligent and informed “oversight”), this information and these disclosures tend to provide the audit committee with additional information that might help in the audit committee member’s oversight effectiveness.

Best, Dave Tate, Esq. (San Francisco/California), and here is a link to my audit committee guide, CLICK HERE

PCAOB proposes changes to audit report