Highlights

Embankment Project for Inclusive Capitalism releases report to drive sustainable and inclusive growth

LONDON -The Embankment Project for Inclusive Capitalism (EPIC) today releases its report identifying value drivers important for sustainable and inclusive growth, as well as potential metrics to assess them. The report is the result of a multi-stakeholder effort and includes contributions from more than 30 global business leaders.

Created by the Coalition for Inclusive Capitalism and EY, this project has brought together a collection of participants with both market strength and diversity across the entire investment chain, representing US$30 trillion of assets under management and almost 2 million employees around the world.

The health of corporations and financial markets – and public trust in both – is critical to economic growth. Our collective future strongly depends on vibrant and sustainable capital markets. Market participants have a role to ensure long-term value creation that benefits all.

Today, a company’s value is increasingly reflected not just in its short-term financial performance, but also by intangible assets such as intellectual property, talent, brand and innovation, as well as impacts on society and the environment that are not fully captured by traditional financial statements. To understand this value, participants in EPIC believe it is essential to focus on and measure:

Talent: the way companies manage their human capital when it comes to compensation and benefits; recruitment; training and development; diversity and inclusion; well-being and creating a purpose-driven culture of engagement.

Innovation: fulfilling unmet needs and maintaining focus on the end user during the innovation process and fostering trust in the organization.

Society and environment: the impact on external stakeholders and communities by contributing to business-relevant social and environmental goals.

Governance: the effectiveness of the board in providing appropriate oversight, governance mechanisms to ensure board quality and independence, and the ability of leadership, in conjunction with the board, to develop and assess long-term strategy.

The report released today, which is available at EPIC-value.com, outlines several of these intangible assets and possible metrics for helping companies communicate their ability to generate long-term value to both investors and society as a whole. The group believes that these findings serve as a contribution to ongoing discussions around long-term value creation and, at the same time, serve as an impetus for discussions that have yet to begin.

Lady Lynn Forester de Rothschild, CEO and Founder of the Coalition for Inclusive Capitalism, says: “The activities that society expects from business are changing and this will affect value creation for long-term investors. EPIC addresses this reality and represents a breakthrough in how businesses can measure and report the true value they create for all stakeholders. We look forward to a rigorous discussion on the results of this work and ways it can be applied around the world."

Recognizing more work needs to be done to capture the full range of corporate activities and assets that create long-term value, the group will continue to test the results embodied in this report and expect that the results will not be considered in the same way by different companies, asset managers and owners. That acknowledged, it will continue this journey alongside other like-minded initiatives and invite others to join its efforts.

Mark Weinberger, EY Global Chairman and CEO, says: “There has been a lot of focus recently on short-term pressure in our capital markets and a lively discussion around quarterly reporting, but what we report is as important as how often we report it. It is time to update how we value companies and measure their impact on all stakeholders, not just shareholders. EPIC brought together companies and investors to help define how firms create long-term value and offer potential ways to measure and report on that.”