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Tuesday
May122015

Embracing the metrics of mutuality

Back in 2011, former U.S. Vice President Al Gore and the chairman of Generation Investment Management David Blood penned a "manifesto for sustainable capitalism" in the Wall Street Journal. We find it interesting because they were really writing about how businesses could, and should, embrace broader performance metrics -- including the social, environmental, and governance areas.

In it, they argue for using the ultimate business management tool -- performance metrics -- to leverage a more effective response to global challenges than governments could muster.

Businesses cannot be asked to do the job of governments, but companies and investors will ultimately mobilize most of the capital needed to overcome the unprecedented challenges we now face.

Their five recommended actions include: 

  1. Identify and incorporate risk from stranded assets.
  2. Mandate integrated reporting.
  3. End the default practice of issuing quarterly earnings guidance.
  4. Align compensation structures with long-term sustainable performance.
  5. Incentivize long-term investing with loyalty-driven securities.

As we continue to investigate and refine the metrics associated with the Economics of Mutuality, we are eager to hear your ideas of what to look for and where to measure.

-- Bruno Roche

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