Step 3: Learn how to Rate Impact

The Impaakt Team

8 min Read Time | November 25th 2022

Key Takeaways

1

To hold companies to account, we let our community rate the environmental and social impacts of companies.

2

There are two dimensions to impact rating: the value and the scale.

3

When rating, keep in mind our golden rules.

Intro: Rating an Impact Analysis

The impact analyses published on our platform are written by our diverse community of members. Reading and rating these analyses are an integral part of our model.

You can find out more about why assessing impact is important in Step 1: why ratings?


Rating an impact analysis is easy. We use 2 measures: value and scale.

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Value

First, you must consider how positive or negative the impact of the company is on the planet and society based on what is described in the impact analysis.

The range goes from strongly negative to strongly positive.


When rating the value of the impact described, think about the absolute impact of the company.

For example:

  • Is it bad or very bad to use forced labour in a supply chain, pollute water bodies, or sell cigarettes?

  • Is it good or very good to support SMEs, create jobs, or produce electric cars?


🚨 A few things to note:

  • Assessing the value of the impact is subjective (ie, there is no right or wrong answer; the value is based on your judgement).

  • The value is rated based on a topic rather than a company. For example, the greenhouse gas (GHG) emissions of an oil and gas company versus a pharmaceutical company have the same value). It is the scale that will be company-specific.

  • The value does not take into account how “small” or “big” the impact is for a company. In consequence, two companies should get the same value for, say, GHG emissions, while the scale should take care of the fact that in one case, the impact is negligible while it is big in the other one.

  • Finally, remember when you are rating an analysis, you should only take into account the topic addressed, and not the other impacts of the company which are treated in different analyses. For example, when assessing the impact of a pharmaceutical company on human health, you should not rate taking into consideration the waste the company contributes to with its medicine; this will be addressed in a different analysis.


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Scale

The second measure of impact is the scale.

There are three scale dimensions:

1. Breadth: the scope of the impact (from few/small to many/large)

  • You should measure the breadth by using the metrics available in the text of the analysis. For example, tonnes of CO2, the number of women in the workforce, etc.



2. Depth: the profoundness of the impact (how much people and/or the environment are affected/changed)


3. Persistence: the longevity of the impact (days/decades and how reversible, easily stopped, or extended the impact is)


Something to have in mind when rating is the effect your ratings will have. Giving a scale rating of 1-1-1 versus a scale rating of 5-5-5 will not result in an overall scale of 3 and 15 but in 8 and 1,000 (the numbers are multiplied by themselves and then by 8). This leads to a power-like curve, not a linear one.

Finally, note that the scale enables us to figure out which impact topics are the most significant for a company or an industry and get the topic weight to obtain the overall impact score.

Best practices when rating

Check out the article Golden Rules and find out the best practices to ensure your ratings are accurate.

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