With growing concerns about how companies are addressing long-term value creation and working to build a better ESG framework to serve all stakeholders. The Methodology is designed to provide guidance to companies on such a framework.
The Methodology can also be used by educators and trainers to develop materials and curricula, and by policymakers to improve legislation and regulation related to corporate governance.
“Corporate Governance underpins better environmental and social risk management in companies. Integrating environmental and social factors within company corporate governance frameworks will ensure better accountability for sustainable private sector activities,” said Ethiopis Tafara, VP & General Counsel, Legal, Compliance and ESG Sustainability.
The core tool of the Methodology is IFC’s Corporate Governance Progression Matrix, which companies can use to improve their respective governance framework including board oversight of environmental and social issues. It emphasises the importance of continuing progress—rather than static minimum standards—in the corporate governance and sustainability practices of a company.
The Matrix focuses on six parameters of assessment: commitment to corporate governance; the structure and functioning of the board of directors; the control environment; disclosure and transparency; treatment of minority shareholders; and governance of stakeholder engagement, which includes civil society and communities affected by a company’s operations. The increased scrutiny expected by the revised Matrix for board level engagement of environmental and social issues seeks to ensure accountability for sustainable private sector activities.
As a major investor in emerging markets, IFC is applying this Methodology to its own due diligence and investments. Beyond its own investments, IFC seeks to raise standards across the emerging markets private sector and its ESG advisory services teams work with regulators and stock exchanges, to help them apply higher disclosure standards to corporate listings, reporting requirements, and other disclosure obligations to grow sustainable financial markets.
In December 2018, we analysed CDP’s list of top 100 CO2 emitters. We found that the top polluters in the world, working in the fossil fuel sector either as miners, producers, etc were responsible for 71% of the total industrial greenhouse gas emissions since 1988. The report found that these 100 companies were the source of 635 billion tonnes of (Green House Gas) GHGs emitted since 1988 and that over half (52%) of all global industrial GHGs emitted since the start of the industrial revolution in 1751.
A crisis that costs the world economy roughly $4.7 trillion in medical and social costs every year. So, what if these top polluters had to pay for pollution?
The U.S. Environmental Protection Agency even admits that certain environmental standards aren’t fully implemented in U.S. law. So if companies are paying for their pollution, those payments are probably subsidised. In fact, in 2015, the world’s biggest fossil fuel companies received a combined $5.3 trillion in subsidies, China alone provided subsidies of $2.3 tn. Meanwhile, people helped pay for more than 90% of the cost of recycling.
So, what would be the impact of having the polluters bear the cost of polluting? Find out here.
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