When we talk about businesses it is easy to forget that we are really talking about people. Companies are collections of humans, whose decisions and actions impact other humans: employees and their families, surrounding communities, workers in their value chains, and consumers. It all starts and ends with people, for people, by people – it seems only right then for companies to put people at the heart of what they do. But what does this look like in practice, and how do we incentivize companies to do so?
Measuring and incentivizing companies to leave no one behind
The World Benchmarking Alliance (WBA) develops free and publicly available benchmarks that measure and incentivize company contributions towards the Sustainable Development Goals (SDGs). At the heart of our model is the social transformation; the change required to move to a world where companies truly value all people, where rights are respected and systemic inequalities are addressed.
WBA’s social transformation framework, launched in January, explains how we will assess 2,000 companies to ensure they leave no one behind, focusing on three key areas: human rights, decent work, and ethical conduct. The framework’s social indicators will be embedded in all our benchmarks and will aim to distinguish between those companies that are moving towards the social transformation, and those who are not.
In February, we hosted a launch webinar to present the framework and discuss the opportunities and challenges of assessing companies on social issues, with speakers from the Business and Human Rights Resource Centre, Daimler, Unilever, Aviva Investors, and WBA; keynoted by the German Commissioner for Sustainability Standards from the Ministry for Economic Cooperation and Development. Three themes dominated the discussion:
Benchmarks as valuable tools to drive change
Benchmarks serve as roadmaps for companies, providing clarity about goals and societal expectations. They drive internal and external debate, as well as a race to the top among companies. By highlighting good practices, they also demonstrate these goals are not only socially desirable but are also commercially viable.
For other stakeholders, such as investors and civil society organizations, the increased transparency generated by these assessments allows them to hold companies accountable through reliable, comparable data.
For governments, benchmark rankings provide data for evidence-based policymaking. Germany’s recent draft due diligence legislation is a clear example of this: a government led monitoring exercise showed only 20% of companies were implementing the UN Guiding Principles for Business and Human Rights (UNGPs), supporting the argument for binding regulation.
The social transformation framework will transparently provide equivalent insights into 2,000 major companies across 80 countries, framing the discussion on responsible business conduct, the need for additional legislation and tracking progress once implemented.
Complexity and the need for harmonization
The assessment of social issues was recognised for its complexity, especially when contrasted with financial or environmental issues. Assessing social, more qualitative issues, is complex. The sheer number of existing initiatives and methodologies makes for a complex landscape. Operationalizing these metrics into companies’ operations is a complex endeavour. Such complexity can lead to frustration, and in occasions efforts to ‘do better’ suffer when resources are dominated by efforts to ‘report better’.
The discussion agreed on the need for increased alignment on corporate disclosure requirements and social metrics, with the developments in Europe on mandatory due diligence and non-financial reporting providing an example of potential supranational alignment efforts.
Recognizing this, WBA’s social transformation framework builds on existing tools and framework, instead of reinventing the wheel, and was described by panelists as powerful for having boiled down the complexity, harmonising multiple initiatives, while learning keeping the focus on company behaviours and ultimately people, rather than disclosure frameworks.
From social metrics to social transformation
‘Does this new social framework mean social indicators now match climate for quality?’ asked one of the attendees. ‘We know what good looks like, so we don’t need to spend another decade talking about the right data; we should get on with action to get there’ was the response of one of our panelists.
This is a crucial consideration. To create change, we need to shift from discussions of ‘better metrics’ to actually creating systemic action. Benchmarks, based on transparent methodologies and data, can address the complexity issue by providing just enough of the right information to stakeholders. While our social framework does not claim to have all the answers, it does have enough answers for people to make better decisions.
People are not metrics. But some metrics may help us ensure companies put people at the heart of their business models. By respecting human rights, providing and promoting decent work, and acting ethically, companies will be able to support a transformation for the SDGs which leaves no one behind.
We will assess the first 1,000 companies in 2021. But to drive systemic change, we need support from leading businesses, progressive governments, workers, civil society organisations, academics, and the finance sector, with a commitment to support the transformations for the SDGs through informed decision making. As we build momentum, we encourage all stakeholders to read our framework and indicators and to reach out to explore opportun