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CEOs are calling for more regulation—of ESG standards

August 12, 2021, 10:18 AM UTC

Good morning.

It’s not often business leaders call for more regulation. But at yesterday’s meeting of the Fortune CFO Collaborative, there was clear support for SEC action to require companies to disclose both sustainability and diversity metrics. Why? To provide consistency, clarity and certainty.   

Bank of America CEO Brian Moynihan, who is spending a good bit of his time on this topic these days, told the CFOs that the demand for standardized ESG metrics is coming from investors. “They want more accountability from the corporate world on what they are doing to drive progress on stakeholder capitalism, and if they weren’t going to get it, they were going to start voting with their feet.” But while every CFO knows how to measure shareholder returns, there’s been no clear agreement on how to measure stakeholder returns. As an example, Moynihan said, “in 2020, but for the pandemic, there would have been 600 (different) conventions in North America for environmental metrics.”

Moynihan chaired an effort last year with the World Economic Forum and the Big 4 accounting firms to map out a set of simplified and standardized stakeholder metrics. And now, he says, he is working with various government agencies to get those metrics adopted. “What will really change this dramatically is when someone from the official sector says: ‘This is what you will do.’”

Former SEC Commissioner Robert Jackson, now at NYU School of Law, told the CFOs to expect the SEC to jump into the act by the end of the year. “You should expect in the next six months out of this SEC a proposal to require disclosure on climate impact….and secondly, a human capital rule, which will require disclosure about workforce diversity and workforce pay.”

So stay tuned. Another big step toward stakeholder capitalism is about to take place.

More news below.

Alan Murray


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Open the borders

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Crackdown blueprint 

A document laying out a five-year "blueprint" has given some shape to a mounting crackdown in China that has hit sectors from tech to after-school tutoring. The blueprint points towards increasing regulation of areas from anti-monopoly legislation to "ethnic religion," and intensifying law enforcement, including in the food and medicine sectors. Fortune


Karaoke crackdown

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Clogged ports 

The global shipping system is all clogged up. Currently, 353 container ships are stuck at ports around the world, double the year-earlier level, according to a logistics company. In Los Angeles and Long Beach alone, there are 22 ships waiting, with delays of up to 12 days expected. The delays, which are fouling up vast supply chains, are caused by COVID-era restrictions—but they're also exacerbated by the years-long trend towards ever-larger ships. FT

Messi Crypto

Here's a wild one: the blockbuster transfer of superstar Lionel Messi from Barcelona to Paris Saint-Germain F.C. is producing an unexpected rally: in crypto. Premier league teams have increasingly embraced crypto "fan tokens" to engage long-distance fans, but the coins weren't intended as a financial investment. Now, writes Christiaan Hetzner, the token from Messi's new club is popping off. Fortune

Keep up the pretense

Do "fake work" to show you're ready for the real thing? That could be the future, warns Kai-Fu Lee, the CEO of Sinovation Ventures and former president of Google China. Lee warns that, to build the talent and experience necessary to do higher-level, non-automated work, companies may need to find new ways to hire entry-level employees. The prediction is from Lee's new book about the rise of A.I., which he semi-joked to Fortune's Nicholas Gordon was "almost a book version of Black Mirror in a more constructive format." Fortune

This edition of CEO Daily was edited by Katherine Dunn. 

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