Rethinking How We Measure Companies on Social and Environmental Impact

ABSTRACT

The COVID-19 pandemic, the war in Ukraine, and the ongoing climate crisis have put a spotlight on the central role businesses can play in tackling global challenges. We need companies to step up and help solve social and environmental problems at scale--for the sake of the economy as well as people and the planet. Yet one of the incentives companies have for being more socially and environmentally active is limited by existing approaches for assessing a company's social and environmental performance. The predominant frameworks are too narrow and fail to fully address key stakeholder concerns on their own. Environmental, social, and governance assessments focus on internal operational matters, such as labor relations and supply chain sustainability, but don't fully consider the impact that a company's products or services can have on outside stakeholders. Impact investing, in contrast, focuses on external issues, such as whether products and services address the needs of the poor, but it overlooks internal considerations, such as how companies treat their employees.