The leaders of the Big Four accounting firms have come together in an unusual joint initiative to unveil a reporting framework for environmental, social and governance standards. The move spearheaded by the International Business Council (IBC), under the auspices of the World Economic Forum aims to encourage the 130+ large global companies in the IBC to adopt the standards for their 2021 accounts. If the initiative is successful, it would mark the first truly co-ordinated approach to ESG reporting and could prompt investors to move more money into the sector, which is currently thought to total about $32tn under the broadest definitions of ESG. The framework has 21 core metrics and 34 extended metrics, covering issues ranging from emissions to social factors such as pay and gender ratios and governance targets. While environmental factors are being measured by some companies, social metrics are considered harder to measure with precision. Some leading accountants warn it could be hard for companies to report on social metrics since that could raise potential liability risks. The drive to create a common accounting framework has been sparked by rising frustration among investment groups over the plethora of competing systems for measuring sustainability.

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Financial Times