The Impact assessment: Discussing the need for standardized extra-financial reporting through the impact assessment lens
10 years ago, people were sold a story that focusing on ESG would yield higher profits. They believed that it would change the impact companies had on society. Today, the global community should look at going beyond ESG with a sense of urgency.
This is a message that was sounded loud and clear at the “Impact Assessment” panel our Clear Skies team attended, one panel out of many at the Sustainable Finance Summit ,organized by Finance Montreal and UNEPFI on Oct 4-8, 2021 .
If you were not able to attend this panel, here is a brief summary.
Hosted by Impak’s Paul Allard and Axel Bonaldo, this workshop welcomed international independent experts Diana Fox Carney and Jeremy Nicholls to discuss the need for standardized extra-financial reporting through the impact assessment lens. An important challenge encountered by Ms. Fox Carney, who is public policy expert in Climate and the transition to net-zero GHG, was to define the metrics that will create impact and what indicators to look for. With a lot of indicators, companies will select the ones that are doing well for them. However, companies are better managed when they are focused on a wide range of indicators. Because the environment can’t speak for itself, it is possible to measure GHG emissions, but what about measuring the impact of people?
In the last 4-5 months, Mr. Bonaldo has worked on an impact taskforce to establish a global consensus about impact. The task force agrees that it’ s not about standardizing one framework, but the importance of having a macro framework. Although the many methodologies for measuring impact that exist are great (17 SDGS, OECD UNDP, GIIN, IRIS+, Compass, SROI, Impact weighted accounts and IMP) it’s important to balance what can be agreed on at the global level and what needs to be prioritized.
Ms. Fox Carney mentions the importance of the SDGs because they bring us to what are the key issues are. An interesting point she mentioned was, “If I had magical powers, I would ensure that there would be a perfect alignment between financial return and return to society.”
As the methodologies that I mentioned earlier in this text are being refined and standardized at the macro level, it might soon be easier than we think to show how those financial and social returns are aligned!
