For the 2021 Milken Institute Global Conference, we asked #PowerofIdeas contributors to consider how the disruptions and innovations of the recent past can be reframed for a thriving future. See more coverage on the Milken Institute LinkedIn page. This article originally appeared in the Power of Ideas.

As COP26 (the 26th UN Climate Change Conference scheduled for October 31—November 12 in Glasgow) approaches, we can expect a welcome surge in private-sector commitments toward much-needed social, economic, and environmental change. Private-sector involvement at G7, the UN General Assembly and Global Goals Week, G20, and COP26 is an important sign that businesses are focused on working with the public sector to help people build prosperous, meaningful lives.

The events themselves, however, remind us how far we still need to go. From racial justice, job creation, and anticorruption to climate action, data transparency, and ethical leadership, this moment presents challenges that demand accelerated action. The UN Sustainable Development Goals (SDGs) carry the hopes of more than 193 countries, yet six years after their introduction, definitive progress remains elusive on inequality, climate, and ending extreme poverty.

This is why it’s encouraging to see environmental, social, and governance (ESG) issues increasingly on the agenda at conferences—and in boardrooms—around the world. ESG is one way of catalyzing business to embrace societal change, sustainable development, and the SDGs. The discussions taking place are strategy dialogs, not just talks around regulatory compliance or ESG ratings, and they reflect the understanding that creating and measuring stakeholder value allows companies to position themselves for long-term success—and help put people, the economy, and society on the path to a sustainable future.

Looking at E, S, and G

It is understandable, in light of the urgency surrounding climate change, that companies, regulators, and civil society are increasingly focused on the E in ESG. With a climate crisis all around—from floods in Western Europe to wildfires in California—businesses have an imperative to combat climate change, report the value they create by doing so, and spur others in the effort. They are also increasingly expected to report on climate risk as set out by the Task Force on Climate-Related Financial Disclosures.  

But we cannot approach ESG with piecemeal, siloed efforts toward E, S, and G. The S and the G are critical if we are to lead truly meaningful lives. A focus on S—people—recognizes the importance of human capital, racial equity, and upskilling. And G—structure—reflects how effectively an organization is positioned to fulfill its purpose and create value for all stakeholders; it is the true test of whether organizations can “walk the talk.” 

Ultimately, all these metrics work in unison—and together, they complete the picture of the value an organization can accrue over the long term—and the contribution this can make to building more meaningful, prosperous lives.

Metrics That Matter

To achieve this goal, however, we need robust metrics. This is how we get a clearer picture of where we are and where we need to go; it also tells us how to get there. Equipped with verifiable metrics, businesses can measure and report their progress on ESG topics and the value created when businesses and stakeholders are in sync. Their decisions are better informed about where to allocate energy and resources to turn ambitions into impact. They can show how their efforts are addressing climate change, workforce training, racial equity, economic inequality, and prosperity in the communities where they operate. They can show progress over time and hold themselves accountable. As they do, it’s important to recognize that E, S, and G aren’t separate concepts but interlocking priorities that demand a holistic approach. Given the magnitude of many intersecting challenges, businesses can—and must—act on all three at once.

Ultimately, the goal is to move toward a true global standard for ESG disclosures. There are many approaches, voluntary standards, frameworks, and metrics. The convergence of efforts, under the direction of the International Financial Reporting Standards Foundation, and with the introduction of an International Sustainability Standards Board, are important developments. This provides a pathway to increased comparability and consistency of nonfinancial disclosures with the same level of discipline we currently have for financial disclosures. This is why we must encourage individual country and regional regulatory authorities to work together and support the global standard-setting process. 

Amid the challenges of the moment, this stakeholder mindset gives businesses a roadmap to long-term success, which will contribute to greater prosperity for all. That’s a path we all should take. Because it’s not just good business—it’s the right thing to do.

The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organization or its member firms.

Carmine Di Sibio EY Global Chairman and CEO