Accounting for product impact in the pharmaceuticals industry

We apply the product impact measurement framework of the Impact-Weighted Accounts Initiative (IWAI) in two competitor companies within the pharmaceuticals industry. We design a monetization methodology that allows us to calculate monetary impact estimates of accessible product provision and efficacy, among other factors. Our results indicate substantial differences in the impact that competitors have through their products. These differences demonstrate how impact reflects corporate strategy and informs decision-making on industry-specific areas.(AU)

Corporate environmental impact: measurement, data and information

As an organization's environmental impact has become a central societal consideration, thereby affecting industry and organizational competitiveness, interest in measuring and analyzing environmental impact has increased. We develop a methodology to derive comparable and scalable monetized environmental impact estimates by applying characterization pathways and monetization factors to organization level environmental outputs, including carbon emissions, water use, and other emission types. The median environmental impact as a percentage of an organization's sales (operating income), referred to as environmental intensity, is 2% (22%) suggesting a significant level of 'hidden liabilities' and potential for value erosion if environmental impacts are priced. About 60% of the variation in environmental intensity is driven by industry membership, while the rest can be attributed to firm specific factors or to country and more granular industry classifications. Environmental intensity exhibits moderate correlation with various environmental ratings across firms and industries and no correlation across firms within industries. Firms with higher environmental intensity exhibit lower corporate market valuation, consistent with investors viewing environmental impacts as financially material and pricing them in some but not all industries. We document the dynamic materiality of environmental intensity, where the relation between environmental intensity and corporation valuation has become stronger in recent years.(AU)

Measuring employment impact: applications and cases

Applying the Impact-Weighted Accounts Initiative's employment impact methodology, on eight leading companies, we document wide variability in employment impacts as a percentage of salaries paid, ranging between 59 and 80 percent. We identify opportunities for improvement and discuss transition plans for companies to create more positive employment impact. We conclude with a call for disclosure of Equal Employment Opportunity Commission EEO-1 reports, paid leave, childcare and healthcare benefits, which would greatly facilitate the comparable and reliable measurement of employment impact in the future.(AU)

A framework for product impact-weighted accounts

While there has been significant progress in the measurement of an organization's environmental and social impacts from its operations, metrics to evaluate the impact of products once they come to market lag far behind. In this paper, we provide a framework for systematic measurement of product impact in monetary terms and delve into the rationale for the framework's seven elements. We then apply the whole framework to two competitor companies to show the feasibility of measuring product impact and the actionability of the framework. We indicate the value of impactweighted financial statement analysis with examples of insights enabled by industry-wide product impact measurement. We see our results as a first step, rather than a definitive answer, towards more systematic measurement of product impact in monetary terms that can then be reflected in financial statements with the purpose of creating impact-weighted financial accounts.(AU)

Accounting for product impact in the airlines industry

We apply the product impact measurement framework of the Impact-Weighted Accounts Initiative (IWAI) in two competitor companies within the airlines industry. We design a monetization methodology that allows us to calculate monetary impact estimates of fare affordability, timeliness and gate control, among other factors. Our results indicate substantial differences in the impact that competitors have through their products. These differences demonstrate how impact reflects corporate strategy and informs decision-making on industry-specific areas, including airline route structure choices.(AU)

Accounting for product impact in the consumer finance industry

We apply the product impact measurement framework of the Impact-Weighted Accounts Initiative (IWAI) in two competitor companies within the consumer-packaged goods industry. We design a methodology that allows us to calculate monetary impact estimates on customer health, access and affordability of products and recyclability, among other factors. Our results indicate substantial differences in the impact that competitors have through their products. These differences demonstrate how impact measures reflect business strategy choices and informs decision-making on industry-specific areas, including food reformulation and product placement.(AU)

Accounting for product impact in the oil and gas industry

We apply the product impact measurement framework of the Impact-Weighted Accounts Initiative (IWAI) in two competitor companies within the oil and gas industry. We design a monetization methodology that allows us to calculate monetary product impact estimates of natural gas provision to emerging markets, energy provided, and emissions created. Our results indicate differences in the impact that competitors have through their products. These differences demonstrate how impact reflects corporate strategy and informs decision-making on industryspecific areas.(AU)

Measuring the cost of corporate water usage

We develop a methodology that calculates the impact that organizations have on the environment through their water consumption relating to water stress risk. Using the methodology, we derive estimates for four companies that show how assumptions on the geographic location of the water withdrawal and use of different prices for water across geographies lead to variation in these estimates. We conclude with a framework guiding a user to understand the conditions under which a methodology might lead to over- or underestimation of water costs.(AU)

The performance frontier: innovating for a sustainable strategy.

A mishmash of sustainability tactics does not add up to a sustainable strategy. Too often, companies launch sustainability programs with the hope that they'll be financially rewarded for doing good, even when those programs aren't relevant to their strategy and operations. They fail to understand the trade-offs between financial performance and performance on environmental, social, and governance (ESG) issues. Improving one typically comes at a cost to the other. But it doesn't have to be this way. It's possible to simultaneously boost both financial and ESG performance-if you focus strategically on issues that are the most "material" to shareholder value, and you develop major innovations in products, processes, and business models that prioritize those concerns. Maps being developed by the Sustainability Accounting Standards Board, which rank the materiality of 43 issues for 88 industries, can provide valuable guidance. And broad initiatives undertaken by three companies-Natura, Dow Chemical, and CLP Group-demonstrate the kind of innovations that will push performance into new territory. Communicating the benefits to stakeholders is also critical, which is why integrated reports, which combine financial and ESG reporting, are now gaining in popularity.