Bank of America CEO says capitalism needs to be cleaned up with new global ESG rules


Bank of America chief executive Brian Moynihan said Wednesday that the current effort to create a set of official global standards on ESG issues is critical to “aligning capitalism with what society wants it to do “.

Asked by CNBC’s Karen Tso at the World Economic Forum in Davos if stakeholder capitalism needs a fresh start by creating common standards for corporate disclosures, Moynihan said he was committed to the idea after seeing hundreds of companies have joined the UN Sustainable Development Goals in 2017, followed by ongoing debates about what terms like sustainability actually mean and accusations of greenwashing.

“Without that definition, without that convergence, everyone has defined it in their own way. Someone would think that this topic is important or this way of talking about it is important,” he said.

Environmental, social and corporate governance (ESG) initiatives are increasingly being discussed in company results and by senior business people, although they have also proven to be controversial. Critics include both those who claim they are a PR exercise and, more recently, those who argue that ESG mutual funds will yield weaker returns.

In 2020, Moynihan – who is also Chair of the WEF’s International Business Council – and WEF Founder and Chair Klaus Schwab worked with the Big Four accountants to create a set of common stakeholder metrics for businesses to follow.

He said it was now important to “go to the official site” and support the new International Sustainability Standards Board set up by the non-profit organization IFRS.

At Wednesday’s panel, IFRS Chair Erkki Liikanen said that since the board was set up, they had consolidated their work with that of other groups with niche expertise and were working on a final standard release to be released in mid-2023.

This is to include a set of general disclosure requirements for companies on non-financial sustainability and a set specifically on climate. Liikanen said it would then need to be adopted and endorsed globally.

Moynihan also said it is crucial that sustainability and ethical standards become official and global.

He said informally setting standards meant companies could hide poor sustainability practices “further down the stream” in their supply chains, or divest certain assets or claim they were too small to carry out controls.

But with standardized, cross-border rules that are part of companies’ annual reports and audited, he continued: “Then, honestly, an investment manager, a consumer, society, others can sit and say, here’s a line that’s acceptable.” and you’re either above or below.”

“If you’re below that, we shouldn’t be doing business with you, and if you’re above that, tell us how you’re progressing on these important things.”

“Which, at the end of the day, will align capitalism with what society wants it to do and get us moving faster.”

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