The financial services industry needs to shake off its old-school approach. Everyone is talking about impact and double materiality but it’s ironic that, when we actually try to measure impact, we somehow end up focusing on what’s important to a company (single materiality) and don’t also consider what’s important to people and planet (double materiality). Of course, investors should try to understand the detailed operations of a company but, to measure impact effectively, we need a much more open and outward-looking mindset.
The challenge is that impacts are not easily measured. In our pesticide example, they could be spread across the globe, with direct impacts on biodiversity and health, but also potential knock-on effects on jobs, food supply, water quality etc... You can see why some impact scoring models try to skirt around or downplay this step.
However, while it’s difficult to measure impact, it isn’t impossible. Technology and global connectivity are on our side. We can now gather and assess huge amounts of information, using not just computer power and AI but also the collective intelligence of people all around the globe. We also have guiding principles in the form of the UN Sustainable Development Goals (SDGs), which include both environmental objectives like Life on Land and Life Below Water and social objectives like Zero Poverty and Quality Education. What is relevant for impact is not the contribution of a product to a company’s revenues, but its contribution (positive or negative) to one or more of these goals. We can address this challenge and we shouldn’t shy away from it or revert to outdated methodologies that fail to serve the purpose. With our collective approach to impact measurement, a global community of nearly 50.000 trained contributors decides whether something is material, and what its impact is on the world and the SDGs, not a single data provider with a revenue-based methodology. With this approach, double materiality becomes a reality, not just another way to greenwash an investment or company.
Find out more about Impaakt and our collective approach to impact assessment.
