At last month’s Climate Week in New York, in collaboration with our sister organisation, the International Foundation for Valuing Impacts (IFVI), GSG Impact hosted over 200 investors, business leaders and academics to explore exciting and important new developments in impact accounting and the monetary valuation of impacts.

As our Chair, Nick Hurd said in his address to attendees:

The highlight of the event was IFVI’s release of thousands of environmental impact valuation factors, covering 430 different environmental impacts across 268 geographic locations. These are available now to enable companies, and their investors, to value their environmental impacts across air pollution, land use, waste and water pollution.  

For the first time, investors will be able to rely on robust data to measure and compare in monetary terms the impacts created by companies. These ground-breaking resources will revolutionise how we account for sustainability in financial terms.

IFVI, GSG Impact, and the National Partners are now ready to lead the advance of mandatory impact accounting for over 50% of the world's investors and companies. This includes (i) disseminating data and insights to each country, (ii) leading training, capacity-building and advocacy work locally and globally, and (iii) implementing pilot programmes with companies, investors, and regulators across multiple countries. This is a watershed moment for impact accounting and the GSG Impact Partnership across over 50 countries has a key role to play.

GSG President, Sir Ronald Cohen, set the tone of the event, together with Harvard Business School professor George Serafeim with their talk “The era of impact accounting has arrived”.

Key points:

• IFVI’s release marks the arrival of impact accounting based on the standardised measurement and valuation of impacts.

• If we think impacts are important or material to social and planetary long-term health, we should actually value them.

• Companies within resource intensive industries producing more negative environmental impacts trade at a discount relative to the industry leaders in terms of environmental multiples.

• Constructing data sets from which you can understand leaders and laggards within industries and can compare them to understand how their business models are evolving, gives you insights about the risk and the growth.

GSG Impact’s Sebastian Welisiejko, and our Vice Chair Ibukun Awosika covered how impact accounting can be adopted across the globe. They were joined on stage by Allison Herren Lee, Senior Research Fellow, NYU Law, Ken Shibusawa, CEO, Shibusawa & Company and Vincent Siegerink, Economist, Centre on Well-Being, Inclusion, Sustainability and Equal Opportunity.

Key points:

• In the Global South, it is hard for investors to account for their investments. Being able to do so will encourage others to invest.

• Impact accounts cut through the noise and controversy over ESG by making it clear that the term “non-financial metrics” is a misnomer; when you put a dollar value on corporate impacts, it is transformative.

• In Japan, Eisai has been a leader in applying impact accounting (Case Study on Human Capital Impacts and Case Study on Medications for Neglected Diseases). Today, everyone at large companies now knows about it.

• Impact accounting is complementary to all of the other frameworks in the impact management system. It is an enhancing methodology and impact accounting has a crucial place in that system.

Other sessions at the event included:

Robert Zochowski, President and CEO, IFVI, giving an overview of impact accounting methodology developments, David Blood, Founding Partner, Generation Investment Management and others on “The importance of impact accounting in decision-making, risk management, and compliance”. Gordon Brown, former UK Prime Minister, spoke of the theme of impact accounting heralding a new era.

The GSG Impact/IFVI event wasn’t our only engagement during Climate Week. With our leadership team present in force, we took the opportunity to meet with leaders from the World Bank, UNDP, Foundations and other global institutions on how to drive effective solutions in emerging economies. 

Discussions focused on:

• The need for strong social infrastructure to enable more effective on-the-ground climate investments.

• GSG Impact’s efforts ensure that voices from emerging economies & SMEs are integrated into global sustainability frameworks and reporting standards.

• How to support MDBs and DFIs to strengthen their catalytic capital capabilities to attract additional private sector capital.

• Focusing on the value of green industrial policies in creating employment and advancing technologies to mitigate climate change.