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Total Impact Valuation: Overview of Current Practices (Expanded Report)
June 08, 2018 | Report
Total impact valuation—the practice of quantifying and monetizing a company’s economic, social, and environmental impacts—has almost as many methodologies as it has companies engaging in the practice. BASF, Samsung, AkzoNobel, and the 11 other companies in our sample thathave published the methodologies and results of their quantitative environmental and social impact analyses are trailblazers in a complex, emerging field that could play an important role in the future of company reporting. But in the absence of a standard methodology, the differences in valuation approaches make it unfeasible to compare company practices oreven to draw useful conclusions about an individual company’s results. Without a common language, total impact valuation risks remaining at best an immensely challenging, scattered practice, and at worst a self-serving, misleading instrument.
This report includes:
- Appendix A: Companies in our sample;
- Appendix B: Economic, social, and environmental indicators used in total impact valuation methodologies;
- Appendix C: Examples of valuation approaches by indicator.
BRIEF
Total impact valuation—the practice of quantifying and monetizing a company’s economic, social, and environmental impacts—can help organizations better understand the full extent of their impacts on society, which can in turn guide management decisions by identifying where to focus efforts on improving social value creation. While today this process is complicated and its results can be misleading, once refined, it has the potential to play an important role in the future of company reporting.
In this, the first phase of a research initiative on the topic, we examine examples of existing total impact valuation approaches to identify their main differences and similarities. Subsequent phases will examine the practical application of total impact valuation and how companies are using their approaches to create value.
Total impact valuation is at an embryonic stage While many companies are engaged in prominent multisector initiatives to understand and drive this practice forward, we found only 14 trailblazing companies—multinationals BASF, Samsung, and AkzoNobel among them—that have published results of quantitative impact analyses that include both environmental and social impacts. Some of these companies have more than five years of experience refining their approaches, while others are just beginning to pilot their methodologies. Such is the growth of this practice that even
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