Much attention has been paid to measuring companies’ impact on the environment. But when it comes to impacts on people, there has been far less scrutiny, standardization, and innovation in the data used to evaluate which businesses are ‘getting it right’ than we see in the environmental field. The current state-of-the-art involves just scanning for words in corporate-issued documents. This is inadequate. Instead, we should use more solid metrics such as proportions of the workforce that are employed rather than on temporary or limited-hour contracts, ratios of CEO to median worker pay, as well as data on gender and race pay gaps. We should make this shift quickly — and not assume that “something is better than nothing.” If we move quickly to force companies to report meaningful data, shareholders, employees, NGOs, and other stakeholders can then assess year-on-year progress. Investors will be better positioned to identify and reward companies that are taking meaningful action. In short order, we will learn which indicators and metrics are most robust when applied within or across industries and can build those into future iterations of our reporting (and accounting) models.
Authors: Caroline Rees, Robert G. Eccles
Source: Harvard Business Review
Subjects: Human Resources, Social Responsibility