Impact measurement and standards

Despite rapid economic growth and increasing interest in impact investment worldwide, less attention has been paid to the question of whether this growth is sustainable for people and the planet. In an ideal scenario, growth would happen within planetary and social boundaries. However, current financial value is often prioritised and achieved at cost to society and the environment. For example, small farmers in Indonesia have long practised slash-and-burn agriculture, and in recent decades large companies have industrialised the practice. The peatland blazes in Indonesia release smoke and large amounts of greenhouse gases, which impact both Indonesia itself, and neighbouring countries such as Malaysia, the Philippines, Thailand, and Singapore. A similar pattern can be observed regarding public health issues such as the COVID-19 pandemic. These climate and social impacts of growth suggest that the current approach to financial growth is not sustainable in the long run, and organisations often fail to consider the externalities while they are seeking financial returns. To better align financial value with environmental and social values, it is necessary to develop and harmonise Environmental, Social, and Governance (ESG) measurements and standards. Organisations should measure and internalise the negative externalities to the environment and society resulting from their primary economic activities. Doing this requires organisations to report on these impacts transparently and to start managing both positive and negative effects, with the ultimate aim of creating value for all stakeholders and ensuring that economic growth takes planetary and social benefits into consideration. While trillions of dollars are invested into sustainability and ESG globally, we have limited knowledge about whether these investments are genuinely making positive and material changes to the environment and society. Meanwhile, many frameworks are being developed for organisations to report their ESG impact, but there is an absence of ...