stakeholder capitalism, esg and information assets: making

Stakeholder Capitalism, ESG and Information Assets: Making Strategy Happen

Copyright © 2022 TheoremOne, LLC. All rights reserved.

How to Align ESG Metrics and Stakeholder

Capitalism to Achieve Real Value

During this decade, we are likely to experience the fastest economic change in history caused by a confluence of global macro forces that accelerate transformation.

The COVID-19 pandemic has upended the global financial

system. Climate change is causing wildfires, storms, heat,

floods, and other extreme weather events across the world.

These events have devastated communities and businesses

at the cost of many lives and trillions of dollars.

The world is changing, and these changes create challenges that

stand in the way of business goals and aspirations. The capitalism

model that we’ve known for many years has reached a tipping

point and is pivoting toward stakeholder capitalism. Shareholder

value remains important but so now is stakeholder value.

2STAKEHOLDER CAPITALISM, ESG AND INFORMATION ASSETS: MAKING STRATEGY HAPPEN

Let’s be clear: Stakeholders are companies, employees,

civilians, society, lenders, insurers, regulators, the

planet, etc. Everything has become a stakeholder.

Organizations now need to be more stakeholder-

focused than ever before. They cannot expect to run

their businesses managing for shareholder value alone;

they should also manage for stakeholder value.

There are greater demands and expectations on

companies coming from all stakeholders. Whether it’s

from lenders, insurers, investors, or employees, we

expect organizations to be good corporate citizens.

As the world pivots toward

stakeholder capitalism, there’s

mounting pressure to stay

relevant. Organizations will

have to adopt new approaches

to developing products and

services, new strategies in

conducting and presenting their

reputations, and new paths to

overcoming these challenges.

Businesses are the most significant platform for change. CEOs are

transforming their organizations into more transparent and social

enterprises, where its impact on the environment and society

becomes equally as important to success as its financial condition.

As the world pivots toward

stakeholder capitalism,

there’s mounting pressure

to stay relevant.


Leaders must deal with accelerating business change. This

includes developing innovative products and services, building

new assets and facilities, and ensuring all stakeholders know of

its environmental, social, and governance (ESG) condition.

Climate change presents a financial risk to the global

economy. Financial institutions and investors require

clear, comprehensive, high-quality information from

organizations on climate change impacts. This includes the

risks and opportunities presented by rising temperatures,

climate-related policy, and emerging technologies.


At the 2015 Paris Agreement, countries participating in the United

Nations Framework Convention on Climate Change (UNFCCC)

agreed to a common target: to hold the rise in global average

temperature well below 2°C. More recently, scientists believe

1.5°C has become the new “safe” upper limit for global warming.

Every organization should be concerned with ESG matters. To

align with the 1.5°C and net-zero ambition targets, they need to set

climate strategy and actions aligned to their business strategies.

This requires companies to:

• Halve their emissions and supply chain emissions before 2030.

• Develop products and services that reduce emissions

and remove carbon from the atmosphere.

• Demonstrate climate leadership to encourage

and influence society to take action.

ESG has captured the business world’s attention and is growing

exponentially. ESG is a set of non-financial measures that

contributes directly to an organization’s risk management profile,

sustainability development, and corporate social responsibility.

ESG contributes to shareholder value in many ways,

such as risk reduction, profitability improvements, brand

equity, human capital, and strategy execution.

ESG Metrics Matter, in Real-Time


Achieving the above goals requires companies to become more

efficient, intelligent, and frequent at measuring their corporate

ESG footprint. These actions help easily monitor and assess

KPI trajectories, run scenario analyses and predictive analytics,

benchmark progress, and make the necessary changes required to

get on—or stay on—track.

They are necessary to inform

organizational actions and

approaches and satisfy the

ambitions of all stakeholders.

Would you board a plane

knowing there are no

instrumentation displays in

the flight deck (in other words,

knowing that the pilot would be

flying blind)? CEOs and senior

business leaders need to know the

total health of their company’s ESG position as they

run their companies at multi-billion dollar rates. They

should also inform stakeholders in real-time—not just

when the sustainability report is published annually.

ESG performance and shareholder value creation are deeply

connected. The “business” of business now is to help improve

shareholder and stakeholder value by improving ESG performance.

The “business” of

business now is to help

improve shareholder

and stakeholder

value by improving

ESG performance.


The environmental perspective includes anything that

contributes to carbon emissions and climate change,

such as energy management, water and wastewater

management, air quality, materials sourcing and

management, and supply chain management.

The social perspective addresses the relationships and

reputation a company has with its stakeholders, such as

employee engagement, diversity and inclusion, health and

safety, human rights and community relations, labor practices.

The governance perspective is the internal system of practices,

controls, and procedures that a company uses to govern

itself, such as business model resilience, risk management,

legal and regulatory management, materials sourcing

management, and meeting external stakeholders’ needs.

What is ESG?


We know there’s mounting pressure on organizations to

disclose their ESG reports. Many address the challenges

of ESG disclosure by gathering data across a variety of

corporate sources and data points. They empower business

units to collect ESG data across each facility and send it to

a corporate center for curation, analysis, and reporting.

In most organizations, information scatters across

hundreds of applications, data stores, spreadsheets

on isolated laptops—even on paper. Usually, this data

arrives at the investor relations department in different

formats, at different times, and in different contexts.

The ESG Challenge


In reality, this data should already be online, easily

accessible, and exposed for regular consumption. Instead,

it requires tying up internal resources to do the work.

If you cannot expose and consume ESG-related information

at the click of a mouse, then you should question how

aligned to your business strategy is to your IT strategies.

There is no excuse not to easily surface this corporate

non-financial data and turn it into insight and value.

Limited ESG visibility across corporate systems prohibits

predictability and increases cost and risks.

Given the limited time and

resources to gather and curate

all of this information,

organizations limit

themselves to an incomplete

understanding of their ESG

metrics trends and a narrow

view of corporate activities.

Without having real-

time visibility into the

ESG metrics conditions across all corporate facilities and

controls in place, organizations are unable to identify their

true ESG healthor deal with skewing trends. This in turn

weakens reputation and stakeholder relationships.

The ESG data that inform corporate metrics are constantly

changing. This means actual ESG conditions are often misaligned

with what business leaders think they are or need to be.

Limited ESG visibility

across corporate systems

prohibits predictability and

increases cost and risks.


CEOs and CFOs know the financial condition of their

companies at any moment in time. Still, few know their

actual environmental condition and how sustainability

issues and carbon emissions are trending.

What if you could gain a complete financial and non-financial

perspective of your business? What if you could access

both your financial and non-financial status at the touch of

a button? Wouldn’t it be beneficial to immediately know the

ESG health of every office, factory, and warehouse across your

organization and be able to create action plans for them?

If there is an ESG-related metric conflict, you can take

immediate and appropriate action to deal with the issue. No

stakeholder should have to wait for the annual sustainability

report to see how you’re performing. It is possible to see

in near real-time right across every business location

and facility where any out-of-spec conditions exist.

Finally, you will have full situational awareness of

how well the organization performs against all ESG-

related metrics and whether they are compromised.

You can track ESG performance against value.

Using this knowledge, you can take corrective measures,

adjust inputs and controls, and keep your ESG metrics

trending in the direction you and your stakeholders want.

Financial and Non-Financial Business Close


Through better knowledge and insight, you gain better

control over your business operations and ESG metrics.

At the same time, you can satisfy all stakeholders,

enhance your reputation, improve the health of the planet,

and increase shareholder and stakeholder value.


To meet the ongoing business demands while satisfying

stakeholder expectations and competing with rivals, organizations

need to consider operating two distinct business models:

Your traditional core business: the single hierarchical operating

model underpinned by an enterprise resource planning (ERP)

“system of record” to help the organization function.

An operating model with no hierarchical structure, which

functions in tandem with the core hierarchical model. This

model has more of a start-up mentality that’s agile, energized,

and designed to capitalize on today’s challenges.

New Business Models


Some large organizations have implemented dual business

operating models. Keeping shareholder value and stakeholder

value in mind, isn’t it time to consider a “true’’ non-financial

enterprise system capability that sits alongside corporate

ERP? Combining a traditional hierarchical model with an

agile business model, along with the importance of financial

and non-financial reporting, is the smart choice.

Invest in a system that leverages all of your information

assets and dark data, creates new products and services,

monetizes its value, and provides instantaneous ESG reports

to satisfy lenders and shareholders. This is not rocket

science; its about attitude, aspiration, and ambition.

Why not consider flying your organization with total control

by having the two most important information systems

available to you, working in harmony, and at the same time?


How We Help

TheoremOne is an innovation and engineering firm that builds

custom software for companies making bold bets to stay ahead.

Through research, lean design, and agile delivery, we make

great user experiences accessible to the enterprise. Founded

in 2007, TheoremOne’s global cross-functional development

teams drive technology, process, and cultural transformation.

To learn more about how we enable ambitious leaders to build

better software visit theoremone.co or follow @theoremone.


1-888-969-2983

[email protected]

theoremone.co

stakeholder capitalism, esg and information assets: making

Documents