Defining Industry Purposes With Metrics That Matter
The Mutual Value Initiative is a unique industry-level purpose framework that empowers business leaders to deliver both impact and profit. It goes beyond existing ESG frameworks to transform performance measurement.
For each industry, it identifies the barriers and opportunities relating to mutual value creation – plus robust metrics to describe those barriers and opportunities.
It provides common ground to unite actors in provoking systems change by focusing on double materiality — what matters most to society and the environment as well as financial performance.
There are more than 600 ESG rating and ranking frameworks globally that companies and investors may have to deal with
75% of investors use or consider using these ESG frameworks, but 53% are concerned about poor sources of data and analytics
92% of the 500 largest US publicly listed companies report using these frameworks, but the metrics are not standardised
Sources: SustainAbility, BlackRock, G&A
Meeting the Needs of the World
Organizations are coming under increasing pressure from multiple directions to embed sustainable, responsible, and purposeful business practices at the heart of their operations.
Many different ESG frameworks have emerged to meet this need, but they are overly complex, purely reporting-orientated in their application, and too narrow in their focus on financial materiality.
We need a new framework that does more than protect value from material non-financial threats — a framework that harnesses the true nature and strength of business: creating mutual value.
What companies will need to be able to do is to present their purposes, and the consequence of their purposes, in a form that investors can interpret in ESG terms. They will have to transition from the mechanisms of defining the purpose, the metrics associated with what those purposes, outcomes and impacts are, and relate them to ESG measures – and in particular, the standardised metric lenses that will emerge over the next few years.
Colin Mayer CBE
Oxford University Emeritus Professor at Saïd Business School
and Visiting Professor at Blavatnik School of Government
How It Works
The Mutual Value Initiative provides a set of purpose objectives with corresponding performance and reporting metrics as well as best practices for 44 different industry clusters.
Listening to a Shared Voice
The global challenges that truly matter to all stakeholders on an industry basis are identified through an innovative approach we called ‘shared voice’, which is powered by cutting-edge research techniques.
For example, we use artificial intelligence-driven data classifiers and natural language processing to analyse corporate reports, news media, social media, academic publications, and NGO activity reports from across the globe.
Understanding the Challenges
Tackling complex challenges requires many stakeholders and collective action. It also demands a deep understanding of the challenges themselves in order to identify the most effective levers for change.
We build interactive, visualised maps based on in-depth research and expert systems analysis to create shared meaning among stakeholders. They become the central resource for identifying the points of entry to drive impact.
Identifying Metrics that Matter
We go beyond the ever-growing ocean of ESG metrics and reporting frameworks that measure simple outputs such as the presence of a human rights policy or the number of women on a board.
The metrics that matter are the metrics that are linked to a robust theory of change. For each challenge, we build a theory of change that enables us to target a specific subset of metrics that are most likely to deliver impact and therefore mutual value creation.
Example: Consumer Staples Industry
We carried out big data analysis across a range of key stakeholder voices to discover the most significant challenges facing the Consumer Staples industry. Achieving zero harmful end-of-life waste ranked highest, with particular concern around plastic waste.
Click data visualization to enlarge
A Cross-Sector Initiative Led by EoM Foundation
The public interest Economics of Mutuality Foundation, in tandem with its subsidiary consultancy EoM Solutions, is developing the Mutual Value Initiative with a coalition of business, academic, standard-setting, and delivery partners including the following:
An Invitation to Partner With US
At this stage, we are looking for companies interested in contributing to the Mutual Value Initiative’s development. Partnership will entail driving the agenda of the initiative internally and externally, sharing key experiences and data, actively collaborating with other partner companies grouped by industry cluster, and offering funding support.
Building on a Key Academic Paper
The Mutual Value Initiative has been inspired by a group of expert academics and practitioners. It builds on a collaborative paper that proposes an integrated frame of reference for the measurement of purpose in relation to accounting, reporting, and valuation.
