Name: Bank of America's CEO is trying to get companies to adopt a standardized set of ESG metrics
Uploaded: 2021-08-12
Duration: 7 min 52 s
Description: Brian Moynihan is also the chair of the World Economic Forum's International Business Council.

Brian Moynihan is also the chair of the World Economic Forum's International Business Council.

Bank of America's CEO is trying to get companies to adopt a standardized set of ESG metrics

Environment

Brian Moynihan is the chair of the World Economic Forum's International Business Council.

Bank of America's CEO wants firms to standardize ESG metrics

you know, my sense is prior to the last year. So it was kind of choose your own metric. You you measured in the way that you choose to measure it and made it very confusing for anybody on the outside trying try trying to follow it. So describe a little bit what the task was for the iBC of the world Economic Forum that you shared your coming out as a journalist. You can't come out and saying you choose your own metrics. Look, it's the company's actually did more than that. But they were trying to respond to a bunch of requests to choose their own metrics. And so uh, there are a lot of people who want to measures a report on our measurements without ever having our input. Um you get report on by, you know, these various uh metric providers and and ngos and others that did this on your environmental conference a on your human capital things and you would never have input and suddenly you get a rating and you look at it and say, I don't recognize the company they're talking about. So what the IBc said is with the, what we call the alphabet soup of Metrics agencies out there and growing every minute in 2020. But for the pandemic, there would have been 600 conventions in north America on environmental metrics. Whoa. And so it's 100 the team that the people on the, on the screen here, the people of these companies that have to ultimately produce the information that goes into the public domain and therefore you have been asked by some subset of those to do it. So we have the iBc said look, we've got to get control this and drive an issue or driven notion who better to do that to turn to the Big Four accounting first to better define metrics that meet the sustainable development goals for somebody's used to us reporting on financial metrics. So we got the big forward to work together. They took all the metrics are out there. They consolidate those metrics along the scG platforms, people, planet prosperity principles of governance, four or five metrics in each then. And and these are metrics. People can report on. If you look at our new report, you can see our report right there. Some are Broader, someone narrow if there's another 30 supplemental metrics. The principles were classic disclosure principles, disclosure abstain if you couldn't calculate it, you didn't have to disclose it, but you have to tell people why why you wouldn't do it. And so we got the big four to put those on the table. We got the IBC companies to look at them. We then worked a lot to try to figure out if they were the right ones. We had a lot input and now we have 100 companies of the large companies, a little bit of agreed to disclosed to use them as a disclosure practices. And then beyond that we then started with the D. R. I and Sassy and T. C. F. D. And all the other metrics centers and said, you know, you ought to consolidate, make it easier rather than have a bunch of things which are kind of the same but slightly different than had slightly different emphasis. And then we also started working with the public sector, the frs Who is working on a set of sustainability metrics. Your peons are pushing hard on this right now. We started working with them to basically say here's the private sector's view and here's what we can do. And by the way, you don't have to guess at it, here's your 40 companies are actually already published on, here's another 60, they're going to do it here. It is. You know, so if you're going to write something up, why don't you write this up? Because we know we can then say it almost any company of any size. You got to be able to do this. If these five companies are industry can do it, why can't you so you can actually have a more issue driven view. And that was the work we did and the metrics are out there and people reporting on, it's a lot of metrics though. Do you expect every big company to report on every metric? Well, just, you know, look, the idea is that they can't, they should say why they can't and that can't can come two ways. One is, It's a metric they'd rather not report on for some reason that makes a complex in the company to they don't have the calculation done. So scope three emissions for something like that. That's hard. That might be harder. Scope one emissions, frankly, it shouldn't be that hard for a company of other kinds of companies or Representatives CFO forum here to do if they're not, they're missing a bit what's going to happen to him anyway. So they should be, they should be preparing that. So. So even within a metric, as simple describe as your emissions, you have different parts of it. You disclose differently. Um, diversity metrics. There's debate about disclosing your EO one level diversity metrics. We disclose those, some people don't want to, you can get the people say, I just don't, I don't want to, whatever reason, but the reality is it's becoming the standard to do business to have to disclose this. So we decide for foreign companies a little different description of basically a diversity of the management team. Uh, you know, we had the one on taxes got a little interesting because, you know, your cash tax rate in your taxes is something that gets very complex and where we're in and yet we've got a metric in it for that. So we have not that many. When you really think about how many there could be, uh, and how many we had to sort through to get to that. And if you think about this is a journey that begins in the world, you describe, you know, 600 different conventions for sustainability metrics and ends in a coherent place where we have the kind of rigor around DSG metrics that we have around financial metrics, how much of the way on that journey have we traveled? Are we halfway? Are we a third of the way? How much more do we have to do? Well, I think it means if you go back and study fasting, how form and stuff it isn't ever ever evergreen process. It doesn't stop and start it formed out of a need to get a standard set of accountant counting metrics for Krul's and things like that in a cash flow statement was consistent. So, you know, I think in that regard, you wanna start of the journey, but on the other hand, have you thought through with a group of the big four accounting uh firms and their and their members and thought through what would be a reasonable set to put in to be able to measure companies? So now, so I think we're pretty far along on that now. The question is what really changes dramatically is when you have somebody say from the official sector, this is what you'll do, because once they say that there isn't a choice for any public company already, if it happens right, that you do you think we're headed there? I think you're headed there in europe for sure. I mean, I think it's there, there close to it. So if you think about the frs has already talking, you know, you have sustainability metrics platform just as well as you have international accounting metrics and, and so I think, and I think then, you know, the Security Exchange Commission under Terror Gensler's movement is looking at not all the metrics are there, but a couple of obviously around environmental, around human capital. I think the two metrics that will make it to the forefront fastest in the official sector. But you know, the point really was to the issuers, which is, let me flip it around, is how many times that you're with a bunch of investors and somebody asked you about this and you rattle off all the things they said, well, we didn't know you did that, we didn't understand that. This gives you a chance to objectify that discussion, which is if I put the metrics on table and I just closed against them across time, investor. Like our our group looks at um, either on the institutional side advising institutional clients, scandal surrounding plots research platform or in our group that works with Mayor on the private bank, they can sit there and say these companies are above the bar. The idea here is that if you said everybody company has to be a top, there's only one, all the money goes to one company. But the idea if you have 10 companies industry And the bar was X. It appears that it's good enough and 18 or above it, the money will shift away from the other two. And so it'll it'll self police itself, even if it doesn't become part of the official metrics. Because the investors are now trying to substantiate how they are investing consistent with the principles, because the people given the money wants them to do that. That's when you all what everybody forgets about all this. It gets caught up in who's making decisions. But it's their clients telling them you have to do this and it's our clients telling us you have to do this especially around the environment and becoming more prevalent around human capital.