The World Economic Forum (WEF) is getting ahead of the curve. Anticipating a future that may involve certain required corporate disclosures related to environmental, social, and governmental (ESG) aspects of business performance and risk, the WEF’s International Business Council — chaired by Bank of America CEO Brian Moynihan — has released a new report containing voluntary metrics.
The report, “Measuring Stakeholder Capitalism: Towards Common Metrics and Consistent Reporting of Sustainable Value Creation” contains voluntary ESG metrics and disclosures that are aligned with the UN’s Sustainable Development Goals. It also includes the ambitious overall goal of working towards an eventual systemic ESG reporting solution “such as a generally accepted international accounting standard …” Notably, the report was prepared in collaboration with Deloitte, EY, KPMG, and PwC.
Certain anti-corruption metrics and disclosures are part of the recommended core reporting framework – within the Principles of Governance Pillar’s “Ethical Behavior” Theme – under “Anti-corruption” and “Protected ethics advice and reporting mechanisms” categories. (The other pillars cover “Planet,” “People” and “Prosperity.”)
The anti-corruption section involves both quantitative and narrative reporting. Numerical data is sought for anti-corruption policies and procedures training (percentages of key groups trained, broken down by region), and “incidents of corruption” totals (number and nature of incidents during current and previous years). There is also a broadly worded disclosure request for a “Discussion of initiatives and stakeholder engagement to improve the broader operating environment and culture, in order to combat corruption.”
The advice and reporting section asks for a description of the internal and external mechanisms used for “Seeking advice about ethical and lawful behavior and organizational integrity; and Reporting concerns about unethical or unlawful behavior and lack of organizational integrity.”
For companies considering WEF’s voluntary ESG reporting framework for organizational alignment, employee retention/recruiting, reputational, or other voluntary reasons, the proposed anti-corruption disclosures and metrics are not overly burdensome or extreme – particularly for larger companies with an existing anti-corruption program. Similarly, those organizations that have become certified to ISO 37001 – Anti-bribery management systems may be able to leverage existing documented processes and established metrics to provide the WEF anti-corruption reporting information.
As with other disclosures involving process descriptions or quantitative elements, precision will be required, and arriving at an acceptable definition of an “incident of corruption” will require particular care. By contrast, the initiatives to combat corruption discussion provides opportunities for an organization to communicate messages and highlight activities related to the important “culture” and “operationalization of compliance” compliance topics – both of which DOJ continues to emphasize in the 2020 revisions of its FCPA guidance and corporate compliance program evaluation publications, and that are also highlighted in ISO 37001.
Many of the globe’s largest companies that comprise the International Business Council membership have committed to report against the report’s ESG metrics “at the earliest opportunity.” In so doing, they will be the early participants in WEF’s execution of a time-tested lobbying/legislative strategy: get ahead of an anticipated and potentially disruptive major issue by organizing and helping to guide the issue’s eventual form and trajectory through framework creation and voluntary actions.
ESG interest from investors, Millennials, environmentalists, and other stakeholders is strong and fast-growing. WEF has taken notice. Working closely with the Big 4, its International Business Council group has produced a detailed and timely voluntary ESG reporting framework and report, with anti-corruption components, that will likely be an influential source and reference for any future required governmental or other reporting.
Worth MacMurray, pictured above right, is a Principal at Governance & Compliance Initiatives, LLC, and advises on ISO 37001 and anti-corruption matters. He was formerly general counsel of several DC-area public IT companies, a federal-agency approved chief compliance officer for companies under regulatory scrutiny, a leader within PwC’s DC anti-corruption group, and a member of the U.S. Technical Advisory Group that worked with other countries over a 3-year period to create ISO 37001. He can be contacted here.
Elaine Dezenski, above left, is founder and managing partner at LumiRisk, LLC, an international risk advisory firm focused on security, compliance, risk management, and supply chain integrity. She was previously the Senior Director and Head of the World Economic Forum’s Partnering Against Corruption Initiative. She is a member of EXIM Chairman’s Council on China Competition and serves as an adjunct faculty member at RAND Corporation. She can be contacted here.