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The founder of the World Economic Forum and CEOs of Bank of America and EY say ESG standards are the future of capitalism

The founder of the World Economic Forum and CEOs of Bank of America and EY say ESG standards are the future of capitalism







Klaus Schwab wearing a suit and tie: Klaus Schwab, founder and president of the World Economic Forum, WEF, championed the Big Four's new ESG framework. Salvatore Di Nolfi/Keystone via AP


© Salvatore Di Nolfi/Keystone via AP
Klaus Schwab, founder and president of the World Economic Forum, WEF, championed the Big Four’s new ESG framework. Salvatore Di Nolfi/Keystone via AP

  • On a Wednesday video conference call, Klaus Schwab, founder of the World Economic Forum, joined Bank of America CEO Brian Moynihan, and EY CEO Carmine Di Sibio to talk about the future of environmental, social, and governance standards (ESGs). 
  • Schwab said ESG standards are not a fad, and Monynihan and Di Sibio expressed hopes that more companies would adopt the newly created ESG framework. 
  • The ESG standards may become mandatory in the future, Moynihan and Di Sibio said. 
  • Visit Business Insider’s homepage for more stories.

On a video conference call Wednesday, Klaus Schwab, founder of the World Economic Forum said environmental, social, and governance standards (ESGs) will be the next step in driving stakeholder capitalism: the notion that a company is responsible to all its stakeholders, including its employees, customers, and the environment. 

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“ESGs and stakeholder capitalism are not a fad. It’s not a manifestation of business leaders to showcase their corporate social responsibility. ESGs are an integral part of business management,” Schwab said in the call hosted by Diligent Corporation. 

ESG standards are a set of criteria used to measure a company’s performance on things such as how the company is impacting the environment (like its amount of toxic emissions), how it manages relationships with its employees (does it encourage employees to volunteer), and how the company runs internally (boardroom diversity). 

The call follows a September 22 announcement by executives from the so called “Big Four” accounting firms — Deloitte, PwC, EY, and KPMG — on a new reporting framework for ESGs. A reporting framework helps companies assess their compliance to a set of metrics and report it

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ESG Market Record Is Causing Some Bubble Anxiety: Green Insight

ESG Market Record Is Causing Some Bubble Anxiety: Green Insight

MsMinister of latvia in Copenhagen Denmark

Photographer: Francis Dean/Corbis News

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The investing world of environmental, social and governance just broke through another barrier, and the growth is starting to raise questions (and even concern) about how much bigger it can get.

Explore dynamic updates of the earth’s key data points

Total green bond issuance topped $1 trillion in the past week, joining ESG-focused funds that have a similar amount in assets under management. In the past month alone, more than $50 billion of green bonds were sold, including debuts in Germany by a trio of automakers including Volkswagen, and JPMorgan, the biggest U.S. bank by assets, according to data compiled by BloombergNEF.

Is it a bubble? Jared Dillian, an investment strategist at Mauldin Economics, wrote this week in Bloomberg Opinion that he thinks it just might be. “ESG is nothing but a passing investment fad, not unlike smart beta, the BRICs, structured products or any of the myriad market bubbles over the last 25 years, small and large,” he said. 

Still, analysts at Bank of America expect another $450 billion of green, social and sustainable debt to be issued in 2021, roughly equaling this year’s issuance. Sales of green bonds, where proceeds are ring-fenced for environmental projects, will account for “the bulk” of the transactions, Bank of America said.

The Bank for International Settlements, which is often dubbed the central bank for central banks, said last month that it has seen no proof that green bonds result in lower corporate carbon emissions. The median change in carbon intensity—the ratio of carbon emissions to revenue—of green bond issuers has been minimal over time, the BIS said.

Concern about the lack of standards in the green bond market surfaced

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