“Creating long-term value requires both a focus on financial and sustainability performance. This means we need tools for measuring sustainability performance just as we have for financial performance.”
Klaus Schwab, Founder and Executive Chairman of the World Economic Forum
In 1993, Germany's Daimler Benz AG listed its shares on the New York Stock Exchange for the first time. In the same year, it posted an aftertax loss of 1.84 billion Deutschmarks under US accounting principles, while reporting a 615 million Deutschmarks net profit under German accounting rules. No, this was not a case of fraudulent reporting or auditing malpractice! Different accounting principles led to different bottom-line results of the same entity in the same year. These variations due to different accounting standards were fixed by the introduction of International Financial Reporting Standards (IFRS) in 2001, which enabled a harmonisation of financial accounting and reporting.
Twenty years later, the world is once again facing a dramatic change in corporate reporting. This time, it is about the harmonisation of corporate sustainability reporting on ecological, social, and governance (ESG) dimensions. Politicians and customers are increasingly putting sustainability at the heart of regulation and purchase decisions. For the investors, there is compelling evidence that corporate investment and improvements in ESG practices generate an ESG premium, and/or make companies more resilient in the face of crisis. In response to this responsibility for listed corporations, and a one for many value-chain partners.
