Getting on the same page
On the one hand, the focus is on the enterprise value; measuring how much the enterprise value is at risk due to environmental and social challenges.
In short, the focus has shifted from what impact the environment and society have on a firm, to what impact the firm has on society and the environment. Under the latter approach, organisations are not only seen as drivers of economic value but also drivers of social and environmental impact. The approach of every enterprise will be tailored to their specific mission as well as financial and extra-financial conditions, but it is clear that a pure focus on financial materiality is not going to move the needle.
Doing the right things
Doing the things right
Picking a standard or methodology and drafting up a pretty impact report is not sufficient anymore. As with the UPDP-OECD Impact Standards, embedding standards in an organisation’s decision-making and operational practices is the way forward.
A key factor in the years to come is external assurance. What today sounds very familiar in financial accounting will have to become a common practice for impact results, internal practices and reporting. The requirement to have an independent assessment of how an organisation is performing on sustainability and social impact, is a must to take a leap forward.
Structuring Hybrid Impact Investments
- United Nations (2021). The Sustainable Development Goals Report 2021. https://unstats.un.org/sdgs/report/2021/The-Sustainable-Development-Goals-Report-2021.pdf
- OECD, UNDP (2021). OECD-UNDP Impact Standards for Financing Sustainable Development, OECD Publishing, Paris, https://read.oecd-ilibrary.org/development/oecd-undp-impact-standards-for-financing-sustainable-development_744f982e-en#page5