Global business leaders and investors unite to develop framework that measures long-term value creation for all stakeholders
London, 28 June 2017
As businesses around the globe respond to calls to demonstrate their contribution to inclusive long-term value creation for all of society, the Coalition for Inclusive Capitalism and EY have announced that they are bringing together CEOs from over 20 global companies, representing more than US$20 trillion of assets under management, to work on a proof of concept to encourage and measure long-term value creation. The project, called “The Embankment Project for Inclusive Capitalism” will develop and test a new framework to better reflect the full value companies create through human, physical, financial and intellectual capital deployment.
The initiative was announced at the Aspen Ideas Festival by Lady Lynn Forester de Rothschild, Founder of the Coalition for Inclusive Capitalism, and Mark Weinberger, EY Global Chairman and CEO.
The 18-month project will involve six corporations from across the consumer products, health services and the industrials sectors, in addition to 15 investment and asset management organizations. The group will scrutinize, test and refine a framework that is being developed by EY. The Coalition for Inclusive Capitalism will work collaboratively with EY and the project participants, with input from an Advisory Board which will be established comprising leading academics, regulators, international standard setters and other strategic advisors.
Lady Lynn Forester de Rothschild, Founder of the Coalition for Inclusive Capitalism, says: “We have reached a critical point in history when popular opinion of capitalism is very low and political pressure against the status quo is building to a crescendo. This will worsen unless trust between business and the public improves. In order to achieve the desired increase in social cohesion, investors and businesses need a better way to create and articulate the long-term, inclusive value they create for their customers, employees, communities, the environment and shareholders.
“The Embankment Project for Inclusive Capitalism brings together some of the world’s leading asset owners, asset managers and multinationals to address this pressing need. By identifying and measuring the broader view of a company – its purpose, products, people and planet – companies and investors are more likely to prosper over the longer term and curb short-term behavior. This is not just another siloed ESG or CSR initiative. The project goes to activities that are at the very heart of value creation, but are not now fully captured on a company’s P&L or balance sheet. The Embankment Project for Inclusive Capitalism attempts to properly value a firm’s intangible strategic assets that benefit society, as well as shareholders. The Project would not be possible without the EY framework and the commitment of all of the participants. Together, we are dedicated to making this a serious and useful step toward the creation of more inclusive prosperity.”
The EY framework is designed to help companies deliver trusted information to customers, shareholders, employees and the financial community to improve the allocation of capital for long-term value creation. The asset owners and asset management firms that seek to invest in companies focused on long-term growth by taking into account intangible assets of inclusive business behavior will actively participate in the proof of concept through the Embankment Project and determine if the end product provides a valuable view of companies from which to make their investment decisions.
Mark Weinberger, EY Global Chairman and CEO, says: “Trust in business, financial institutions and society as a whole is at an all-time low and if we hope to make any progress we have to address the issues behind these problems. We believe we can help by working with The Coalition for Inclusive Capitalism to bring together diverse stakeholders to create a framework which is a consistent model for how companies can measure and report the long-term value they create. Such a framework can supplement currently available financial information. This won’t be easy, and while we may not reach a successful solution applicable to all businesses, in trying we will further this important dialogue, which will be valuable progress.”
Paul Polman, CEO of Unilever and member of the project, welcomed the move, and says: "Long-term investment and sustainable growth models go hand in hand. Businesses must operate with purpose embedded in their strategy, serving their shareholders and wider society. The ability to articulate this in a standardised, meaningful way has long been needed so markets can properly measure this broader approach to value creation.”
Indra Nooyi, Chairman and CEO of PepsiCo and member of the project, commented: "Business must do more than simply turn a profit. We must also be guided by a deep sense of purpose. This means measuring our success not only quarter to quarter, but also year to year and decade to decade. It means creating value for shareholders as well as society. Companies that embrace this mindset will be the ones to thrive long-term.”
Confirmed participants include:
- Lady Lynn Forester de Rothschild, CEO of the Coalition for Inclusive Capitalism
- Mark Weinberger, EY Global Chairman and CEO
- Hywel Ball, EY UK & Ireland Head of Assurance
- Mark Bertolini, Chairman and CEO, Aetna
- Edward Breen, CEO, DuPont
- Alex Gorsky, Chairman and CEO, Johnson & Johnson
- Mark Schneider, CEO, Nestlé
- Indra Nooyi, Chairman and CEO, PepsiCo
- Paul Polman, CEO, Unilever
- Oliver Bäte, CEO, Allianz
- Hiro Mizuno, Executive Managing Director and Chief Investment Officer, Government Pension Investment Fund (GPIF)
- Deanna Mulligan, President and CEO, The Guardian Life Insurance Company of America
- Theresa Whitmarsh, Executive Director, Washington State Investment Board
- Martin Gilbert, Co-Founder and CEO, Aberdeen Asset Management
- Abigail Johnson, Chairman and CEO, Fidelity Investments
- Jamie Dimon, Chairman and CEO, JPMorgan Chase & Co
- Hendrik du Toit, CEO, Investec Asset Management
- George Walker, Chairman and CEO, Neuberger Berman
- Peter Harrison, Group CEO, Schroders
- Ronald O’Hanley, President and CEO, State Street Global Advisors
- Roger Ferguson, President and CEO, TIAA
- Bill McNabb, Chairman and CEO, Vanguard
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Notes to Editors
About the Coalition for Inclusive Capitalism
The Coalition for Inclusive Capitalism is a global not-for-profit organization that was founded in 2014 by Lynn Forester de Rothschild, the Chairman of E.L. Rothschild LLC. The organization was established to engage leaders across business, government and civil society in their efforts to make capitalism more equitable, sustainable, and inclusive. The Coalition develops practical thought leadership and convenes the Conference on Inclusive Capitalism to bring together renowned leaders from the world’s largest and most influential asset owners, asset managers and corporations to positively influence the future of capitalism. The organization works with other like-minded groups through our Allied Efforts program and extensive public outreach. Please visit www.inc-cap.com for more information.
EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.
EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.
This news release has been issued by EYGM Limited, a member of the global EY organization that also does not provide any services to clients.
About the Embankment Project
The 18-month, evidence-led project, will seek to demonstrate that through collaboration across the investment chain, a new reporting mechanism is a valuable tool for corporations to drive long-term shareholder value through the credible measurement and comparisons of activities affecting all material stakeholders.
The expected outputs of the project will include:
- Open source methodology for development of Long-term value reporting;
- Long-term value stakeholder reports covering the main measurable outcomes for each stakeholder group, including inclusive business practices determined to be material for the two or three distinct sector groups in the Embankment Project, with a view to expanding to all sectors post the Embankment Project if the asset owner (AO) and asset manager (AM) participants in the Embankment Project deem the reporting to be valuable to their investment decision-making;
- Recommendations and guidance for AO and AM on how to stimulate long-term investment measurements along the investment chain including non-financial metrics and a proposed uniform reporting framework for corporations;
- Roadmap of recommendations for the international standard setters, regulators and other stakeholders to consider and to adopt for the capital markets.
There will be a mid-term project report out in January 2018 and a final project report planned in late 2018.