Identify
Understand all impacts potentially associated with the organisation
Description
Identification is the process through which enterprises, investors and financial institutions start to determine which impact topics
Specific issues that are important to the object(s) of impact.Subject of impact
All organisations are likely to have a range of positive and negative impacts
The effect(s) of organisations' actions on people and the natural environment.Impact
Relevant impact topics are determined based on an analysis of the organisation’s groups of affected people (also known as “stakeholders”) and/or components of the natural environment (referred to hereafter as the organisation’s
A term used by the Platform to group enterprises, investors and financial institutions of all types. Source: Impact Management PlatformOrganisation
This process is akin to the materiality assessments conducted in the context of sustainability reporting. Such assessments are conducted with a view to determining which disclosures to include, on the basis of stakeholders’ information needs and interests. However, the identification process is first and foremost part of a management process rather than a communication (or disclosure) process. As a result, it involves a broader, more holistic analysis (covering the organisation’s impact profile and context), as opposed to relying primarily on an (organisation-centric) stakeholder mapping and engagement.
For sustainability focused enterprises, investors and financial institutions’ specific impact topics are established as part of the organisation’s purpose and goals, i.e. before the identification process has taken place. The identification process remains relevant, as it will help ensure that any other sustainability issues associated with its activities are not overlooked (and therefore help to avoid any unintended negative impacts).
Example: An enterprise that produces wind power needs to consider the types of impact it may have on local communities, employees or workers in the value chain, alongside its likely positive impacts in the area of climate change.
Analysis of an organisation’s impact profile
Identification starts with obtaining a high-level understanding of which sustainability topics
A term used broadly to denote aspects of stakeholder well-being (e.g. health, wealth, safety), or business activities or practices that are evidenced drivers of well-being (e.g. employment, diversity and inclusion). This term is synonymous with ‘sustainability matters’, ‘impact areas’, ‘impact categories’ or ‘general issue categories’ which are similar terms used by different standard setters. Source: OECD Well-being Framework; Global Reporting Initiative (GRI) Sustainability Topics; Sustainability Accounting Standards Board (SASB) General Issue Categories; IRIS+ Categories; United Nations Environment Programme Finance Initiative (UNEP FI) Impact Areas A term used by the Platform to group enterprises, investors and financial institutions of all types. Source: Impact Management PlatformSustainability topic
Organisation
An organisation’s economic activities are a major determinant of its impact associations and therefore, its impact profile. Certain economic activities may be particularly associated with specific populations and sustainability topics; conversely, certain population groups and sustainability topics are unlikely be associated with other specific activities.
Example: An enterprise in the water treatment sector is likely to positively impact its customers’ access to sanitation and health, while an enterprise in the oil and gas sector is likely to negatively impact climate stability.
When reviewing their impact associations, enterprises need to consider:
- All of the sectors they are involved in (in the case of large enterprises / multinational companies, there may be more than one); and
- The different components of its value chain. Enterprise impacts may be mostly operational (i.e. linked to its production process), upstream (i.e. linked to its sourcing) or downstream (i.e. linked to its products and services) or a combination. For enterprises with complex supply chains, this involves conducting a mapping of the supply chain; so as to ensure information is collected on impacts potentially associated with suppliers in different parts of the supply chain.
The bulk of investors and financial institutions’ impacts are generated downstream, via their clients and/or investee companies, as opposed to their operations. As such, their impact profile requires an analysis of their portfolio composition.
Analysis of an organisation’s operating context
Aside from their inherent impact profile, organisations also need to understand the context in which they are operating, which means understanding the sustainability needs and priorities of the people (namely the organisation’s potentially affected stakeholders) and the natural environment in the locations they are active in.
Contextual analysis involves:
- a review of the policy and regulatory treatment of sustainability issues, which informs organisations about policy priorities and legal obligations in relation to sustainability issues; and
- a factual and holistic review of the well-being of people and the condition of the natural environment, since not all needs and gaps will necessarily be reflected in policy and regulation.
The latter requires reviewing evidence, data and research, as well as engagement with potentially affected stakeholders to understand their needs and expectations.
Example: A textiles company with part of its production process in Morocco can consider the country’s environmental, developmental and social policies and priorities (e.g. as outlined in a national development plan or an SDG Voluntary National Review (VNR), where it might find a focus on employment, suggesting that jobs may be an area of significant need. In addition, it can consult international statistical databases (e.g. UN SDG or other statistics) to understand the level of need across these topics, enabling it to discover additional information, for instance the specific employment gaps in the country’s youth population. Engagement with local communities might enable a further layer of understanding as regards the specific barriers and challenges for youth employment.
Identifying relevant impact topics
The combined results of the impact profile and contextual analyses enable enterprises, investors and financial institutions to draw preliminary conclusions towards identifying the significant impact topics that need to be acted on, namely by establishing which impact topics are relevant based on the organisation’s characteristics and operating environment.
Relevant impact topics are the topics that an organisation is most closely associated with (hereafter referred to as the topics with which an organisation has strong impact associations) based on the organisation’s characteristics and sector (or those contained in a portfolio), and for which the needs/priorities are high in the organisation’s operating context.
The strength of an organisation’s impact associations are a function of:
- Likelihood: how likely impacts are to materialise based on the type and economic activity of the organisation.
Example: While enterprises in all sectors may negatively impact the health and safety of their works and employees, the likelihood of potential adverse health and safety impacts is higher in some sectors (e.g. mining, agriculture, textiles) than in others (such as education or retail sales).
- Reach: the likely extent of the impacts, for instance the number of individuals likely to be affected, the probable scope of environmental damage.
Example: A multinational consumer goods enterprise with global and complex supply chains can affect the well-being to the numerous people that make up its workforce. Similarly, a global industrial company can potentially affect multiple components of the environment (air, water, land and their accompanying ecosystems) in many different locations.
- Severity: the likely severity or gravity of the impacts, and related to this, the irremediable character – the extent to which associated impacts can or cannot be remediated.
Example: For companies in the food and beverage industry, consumer health is a strong impact association because of the possibility of provoking severe health-related incidents among consumers, potentially leading to irremediable consequences (e.g. as a result of poor sanitation in the production facility). In agriculture and food production, forest clearing may be associated with irremediable damage to natural ecosystems that are impossible or very hard to regenerate.
- Prevalence: the occurrence of the association itself across an organisation’s range of different activities (or portfolio). An association can be considered prevalent if it applies the majority or a large part of the organisation’s activities.
Example: For an enterprise with multiple different industrial activities, energy and resource needs are likely to be high across the variety of its production processes and distribution processes. Therefore, for this enterprise, associations with the topic of resource efficiency is likely to be prevalent across the variety of its activities. The enterprise may also run a vocational training programme as part of its corporate citizenship efforts, and which is not core to its business. As a result, the organisation’s association to the topic of education cannot be considered to be prevalent.
In the case of financial institutions, prevalence is mostly linked to portfolio composition. For example, the strength of a bank’s association with the impact topic of climate change is a function of the presence of high-emitting sectors in its portfolio.
Once strong impact associations have been established as per the above criteria, relevant impact topics can be determined by examining the intersection with impact topics for which there is a strong level of need, as revealed by the context analysis (described above).
Another important consideration when prioritising impact topics is the interlinkages (sometimes also referred to as interdependencies) between different topics. Where possible, enterprises, investors and financial institutions should prioritise those topics that enables one or more other impact topics to be addressed as well.
Example: A bank operating in Northern Africa is likely to have identified both climate change adaptation and income inequality as areas of need, and therefore the areas on which to focus their impact management efforts. A central part of adapting to climate change is building the resilience of an economies key sectors; the bank could support this by supporting the strategic growth and diversification of companies in key sectors. By focusing on climate change adaptation in this way, it will also be driving economic inclusion and development, both of which are critical drivers of income equality.
It is important to note that the initial prioritisation of certain sustainability topics does not imply that all others, especially any other negatively associated impact topics, are removed from the scope of an enterprise’s impact management.
Example: Impact topics and affected populations that are typically associated with a social media company may be the communication benefits and disinformation risks to users; as a result it would be expected that these topics be addressed by its impact management strategy. Other topics such as climate change and employee well-being might arise as less strongly associated to the company, but ensuring the company’s potential negative impacts in these areas are avoided, mitigated or compensated would likewise be expected.
The identification process acts as a first layer of prioritisation. However, prioritisation continues during the measurement, assessment and valuation process, when the organisation considers its actual impacts (not potential impacts, as in the present identification process) and its related practice. The Measure, assess and value action provides more information about this process
Resources
Resources that set expectations on identification in sustainability frameworks (for impact management practice)
For all enterprises:
OECD Guidelines for Multinational Enterprises
The Guidelines for Multinational Enterprises are a set of voluntary principles and standards that promote responsible business conduct among multinational enterprises (MNEs). They cover various areas, including human rights, labour relations, environmental protection, anti-corruption and consumer protection, aiming to help MNEs align their business practices with societal expectations, and contribute to sustainable development.
This is a cross-cutting resource, meaning that it supports the internal impact management process as a whole, rather than one or a few of the Actions of Impact Management.
OECD Due Diligence Guidance for Responsible Business Conduct
The Guidance provides practical support to enterprises seeking to implement of the OECD Guidelines for Multinational Enterprises, through plain language explanations of its due diligence recommendations and associated provisions.
This is a cross-cutting resource, meaning that it supports the internal impact management process as a whole, rather than one or a few of the Actions of Impact Management.
Natural Capital Protocol
The Natural Capital Protocol is a framework designed to help businesses identify, measure, and value their impacts and dependencies on natural capital. It provides a standardised approach for organisations to integrate natural capital considerations into their decision-making processes, enabling them to better understand and manage their relationship with nature.
This is a cross-cutting resource, meaning that it supports the internal impact management process as a whole, rather than one or a few of the Actions of Impact Management.
Social and Human Capital Protocol
The Social and Human Capital Protocol is a framework designed to assist organisations in identifying, measuring, and managing their impacts and dependencies on social and human capital. It provides a standardised approach for businesses to integrate social and human capital considerations into their decision-making processes, enabling them to better understand and manage their relationships with employees, communities and stakeholders.
This is a cross-cutting resource, meaning that it supports the internal impact management process as a whole, rather than one or a few of the Actions of Impact Management.
SDG Impact Standards for Enterprises
The SDG Impact Standards for Enterprises provide a practical guide and self-assessment tool for integrating the Sustainable Development Goals (SDGs) into organisational decision-making.
This is a cross-cutting resource, meaning that it supports the internal impact management process as a whole, rather than one or a few of the Actions of Impact Management.
Principles of Social Value
The Principles of Social Value guide organisations in considering social value in decision-making, aiming to optimise value for all stakeholders materially affected by their activities. The practice standards help organisations to implement each principle to a point where they are accountable for their activities.
This is a cross-cutting resource, meaning that it supports the internal impact management process as a whole, rather than one or a few of the Actions of Impact Management.
B Corp certification
The B Corp Certification is an assessment process that evaluates a company’s social and environmental performance, as well as governance and transparency. Organisations that achieve B Corp Certification demonstrate a commitment to meeting a high standard of responsible business practices and accountability.
Use this resource for the following Actions of Impact Management
- Verification, assurance and certification: Achieve B Corp certification by meeting the standards set by B Lab, demonstrating a commitment to social and environmental performance, accountability and transparency.
- Benchmarking and rating: Compare impact scores and metrics with those of other organiations within the same industry or sector.
Standard on Applying Social Value Principle 1: Engage Stakeholders
Standard and guidance on how to apply the first of SVI’s Social Value Principles.
Use this resource to:
- Identify: Use the guidance on identifying stakeholders and engaging with them to understand actual and potential significant impacts.
- Set targets and plan: Use the guidance on identifying stakeholders, engaging with them, and collecting information to help shape strategy and objectives.
For investors and financial institutions:
Responsible Business Conduct for Institutional Investors
The Responsible Business Conduct for Institutional Investors helps institutional investors implement the due diligence provisions of the OECD Guidelines for Multinational Enterprises.
This is a cross-cutting resource, meaning that it supports the internal impact management process as a whole, rather than one or a few of the Actions of Impact Management.
Due Diligence for Responsible Corporate Lending and Securities Underwriting
The Due Diligence for Responsible Corporate Lending and Securities Underwriting provides a common global framework for financial institutions to identify, respond to and publicly communicate on environmental and social risks associated with their clients. Its aim is to advance human rights and positive outcomes for people through investor stewardship.
Use this resource for the following Actions of Impact Management:
- Implement: Cease, prevent or mitigate negative impacts, and provide for or cooperate in remediation where appropriate.
Principles for Responsible Banking
The Principles for Responsible Banking (PRB) guide banks in aligning their business strategies with society’s goals, as well as promoting sustainability. These principles aim to encourage banks to play a crucial role in achieving global sustainable development objectives, including addressing climate change, promoting financial inclusion and fostering sustainable economic growth.
This is a cross-cutting resource, meaning that it supports the internal impact management process as a whole, rather than one or a few of the Actions of Impact Management.
Impact Standards for Financing Sustainable Development (IS-FSD)
The Impact Standards for Financing Sustainable Development (IS-FSD) is a framework for donors, development finance institutions (DFIs) and their private partners to make financial decisions that maximise their positive contribution to the SDGs. The Standards are harmonised with the UNDP SDG Impact Standards.
This is a cross-cutting resource, meaning that it supports the internal impact management process as a whole, rather than one or a few of the Actions of Impact Management.
SDG Impact Standards for Private Equity Funds
The SDG Impact Standards for Private Equity Funds provide a decision-making framework for integrating the Sustainable Development Goals (SDGs) into one or more funds.
This is a cross-cutting resource, meaning that it supports the internal impact management process as a whole, rather than one or a few of the Actions of Impact Management.
Identification requirements in sustainability frameworks (for disclosure)
GRI Standards
The GRI Standards are a modular system of interconnected standards for reporting on sustainability performance, covering a wide range of sustainability topics, including climate change, human rights, labour practices and product responsibility. They enable organisations to measure, manage and communicate their sustainability performance effectively.
Use this resource for the following Actions of Impact Management:
- Communicate: Report to all stakeholders on material topics that reflect the organisation’s most significant impacts. GRI’s standardised metrics help the organisation and its stakeholders compare performance with others.
SASB Standards
The SASB Standards are reporting standards that provide industry-specific disclosure topics and associated metrics for measuring performance across 26 General Issue Categories (or sustainability topics). Management or mismanagement of performance on these sustainability topics may create, preserve or erode value for a typical organisation in a given industry over time.
Use this resource for the following Actions of Impact Management:
- Communicate: Report to providers of financial capital on sustainability topics that are likely to affect how value is created, sustained or eroded for the organisation over the short-, medium- and long-term.
Guidance and resources for impact identification (for impact management practice)
For all enterprises:
Environmental, Health, and Safety Guidelines
The environmental, health, and safety (EHS) guidelines are technical reference documents with general and industry-specific examples of good international industry practice (GIIP).
Use this resource to:
- Identify: Understand the performance levels and measures that are generally considered to be achievable in new facilities by existing technology at reasonable costs.
Impact Mappings
The excel-based Impact Mappings are standalone versions of the research embedded in UNEP FI’s Impact Analysis Tools, split into two parts. The first part, Sector Mappings, shows the strength of connection between economic activities (using ISIC classification) and positive and negative impacts (using UNEP FI’s Impact Radar). The second part, Needs Mappings, tracks a selection of indicators at global, country and local levels as a way to estimate the sustainable development needs in different geographies.
Use this resource for the following Actions of Impact Management:
- Identify: Use the Sector-Impact map to understand the impact areas and topics associated with different economic activities, understand positive and negative associations, and identify key sectors for different impact areas and topics.
IRIS+ Thematic Taxonomy
The IRIS+ Thematic Taxonomy provides guidance to impact investors on the IRIS+ Impact Categories and Impact Themes.
Use this resource for the following Actions of Impact Management:
- Strategy: Set an intention for impact using the IRIS+ Thematic Taxonomy of Impact Categories and Impact Themes.
SDG Investor Maps
Country-level data and insights about SDG-enabling investment opportunities. This work focuses on the gap between interest in investing in SDGs and the business models that could provide investable opportunities.
Use this resource to:
- Identify: Identify investment themes in emerging markets which have significant potential to advance the SDGs that are aligned to government policies and sustainable national development needs.
Maximise Your Impact: A Guide for Social Entrepreneurs
“Maximise Your Impact: A Guide for Social Entrepreneurs” proposes a practical approach for social entrepreneurs to understand and maximise the positive social value they create, supporting both the creation and development of impact-oriented organisations.
Use this resource for the following Actions of Impact Management:
- Strategy: Develop a strategy and business model that address the root causes of the problem that the organisation is trying to solve.
- Governance: Set the right governance structure and practices to serve the organisation’s mission.
- Identify: Identify the problems and solutions that the organisation will seek to address, including through qualitative research and stakeholder engagement.
- Measure, assess and value: Check whether the organisation has all the information it needs to assess its impacts. The guidance contains 10 questions that guide impact assessment, functioning as a checklist to ensure all necessary contextual information is collected.
- Set targets and plan: Create an impact goal (the core problem that the organisation is trying to achieve), set targets and forecast changes that the organisation is planning to make towards the impact goal and associated targets.
- Implement: Integrate information on social value into management decision-making.
- Monitor, learn and adapt: Understand how to use the collected information to decide whether to change, stop or scale-up activities, and learn how to develop a set of recommendations about adapting targets.
SDG Action Manager
The SDG Action Manager is a digital tool designed to help organisations measure their impact across various sustainability areas, set goals aligned with the SDGs, and track progress over time. The questionnaire, which draws from B Lab’s B Impact Assessment and the UN Global Compact’s 10 Principles, enables organisations to collect performance information on the SDGs that are most relevant to manage, based on its size, sector and geography. It was developed through research and public consultation and so provides an evidence-based starting point for identifying sustainability topics to measure.
Use this resource for the following Actions of Impact Management:
- Governance: Prioritise governance mechanisms that address the organisation’s key sustainability risks and enhance its resilience against potential challenges.
- Identify: Understand the most relevant SDGs to manage based on the organisation’s size, sector, and geography.
- Measure, assess and value: Obtain a set of metrics.
- Set targets and plan: Set specific, measurable, achievable, relevant, and time-bound (SMART) targets related to sustainable development. Organisations can align their targets with the specific indicators and targets outlined in the SDGs.
B Impact Assessment
The B Impact Assessment is an evaluation tool used by businesses to measure and manage their social and environmental impact. It assesses performance across various impact areas, including governance, workers, community, environment and customers.
This is a cross-cutting resource, meaning that it supports the internal impact management process as a whole, rather than one or a few of the Actions of Impact Management.
Corporate Impact Analysis Tool
The Corporate Impact Analysis Tool helps banks and investors understand the actual and potential impacts of their clients and investee companies, as part of their impact management strategy and processes.
Use this resource for the following Actions of Impact Management:
- Implement: Banks and investors can use the Tool’s findings to carry out portfolio management and client engagement. Additionally, the Tool can be used by enterprises themselves to integrate impact management into their own strategic planning and business development practices.
For investors and financial institutions:
Investing with SDG Outcomes: A Five-part Framework
The “Investing with SDG Outcomes: A Five-part Framework” provides a high-level framework for investors to shape real-world outcomes in line with the Sustainable Development Goals (SDGs).
This is a cross-cutting resource, meaning that it supports the internal impact management process as a whole, rather than one or a few of the Actions of Impact Management.
Responsible Business Conduct for Institutional Investors
The Responsible Business Conduct for Institutional Investors helps institutional investors implement the due diligence provisions of the OECD Guidelines for Multinational Enterprises.
This is a cross-cutting resource, meaning that it supports the internal impact management process as a whole, rather than one or a few of the Actions of Impact Management.
Investment Portfolio Impact Analysis Tool
The Investment Portfolio Impact Analysis Tool helps financial institutions holistically understand and manage the actual and potential impacts of their investment portfolios. It aligns with UNEP FI’s unique holistic approach to impact and helps to implement PRB Principle 2 on Impact Analysis.
Use this resource for the following Actions of Impact Management:
- Identify: Identify impact areas and topics related to economic, environmental and social factors associated with an investment portfolio, based on an objective review (cartography) of the portfolio’s sectoral and geographic breakdown.
- Measure, assess and value: Assess current practices and performance in relation to the bank’s most significant impact areas by integrating the outputs of the ‘Identification’ tools with additional data.
- Set targets and plan: Use the outcome of the practice and performance assessment to set targets and define the bank’s action plan.
- Implement: Develop action plans that outline specific strategies, initiatives and measures that the bank will undertake to address the identified impact areas.
- Monitor, learn and adapt: PRB signatories can use the Tool to periodically update and review information on their impact performance, as part of the requirements set out in Principle 2.
Core Characteristics of Impact Investing
The Core Characteristics of Impact Investing define the growing approach of impact investing, and offer the financial markets greater clarity on what constitutes credible impact investing.
This resource is for the following Actions of Impact Management:
- Strategy: Intentionally contribute to positive social and environmental impact by using evidence and impact data in investment design, enabling the investor to manage impact performance and contribute to the growth of impact investing overall.
Operating Principles for Impact Management
The GIIN Operating Principles for Impact Management provide a framework for investors and fund managers to manage and measure their impact. The principles outline best practices for impact management across the investment lifecycle, from strategy development to implementation, monitoring and reporting.
This is a cross-cutting resource, meaning that it supports the internal impact management process as a whole, rather than one or a few of the Actions of Impact Management.
Impact Protocol for Banks
The Impact Protocol provides a step-by-step guide of how to analyse and manage a bank’s portfolio impacts, as per UNEP FI’s holistic impact approach and in alignment with the requirements of the Principles for Responsible Banking. The Protocol provides an overview of the impact management process as a whole and is complemented by other UNEP FI resources including the Impact Management Tool and the Thematic Target-Setting Guidance, which can be used to operationalise the Protocol.
This is a cross-cutting resource, meaning that it supports the internal impact management process as a whole, rather than one or a few of the Actions of Impact Management.
Portfolio Impact Analysis Tool for Banks
This tool is designed to help banks and investors holistically understand and manage the actual and potential impacts of their portfolios.
Use this resource for the following Actions of Impact Management:
- Identify: Understand the impact areas and topics associated with a bank’s portfolio, based on portfolio composition and context; and identify the bank’s most significant impact areas.
- Measure, assess and value: Assess current practice and performance vis-à-vis most significant impact areas, by combining the tool’s ‘Identification’ outputs with additional data; use the assessment as a basis for target-setting and defining the bank’s action plan.
- Set targets and plan: Define relevant and meaningful targets and action plans.
- Implement: Inform and carry out impact management process.
- Monitor, learn and adapt: Monitor practice and performance; and use the assessment to make improvements and adjust targets.
Global guidance on the integration of environmental, social and governance risks into insurance underwriting
This guide is the first of its kind globally for managing ESG risks in risk assessment and insurance underwriting. It has an initial focus on non-life insurance business, also known as property and casualty insurance business.
Use this resource for the following Actions of Impact Management:
- Identify: Understand the materiality of ESG risks to various lines of business and economic sectors, including characteristics that might affect the ability to assess and mitigate such risks.
- Implement: Address the growing concerns by stakeholders across society (e.g. NGOs, investors, governments).
Guidance for impact identification (for disclosure)
GRI Sector Standards
GRI is developing standards for 40 sectors to compliment their current topic standards.
Use this resource to:
- Identify: Identify sustainability topics to measure using the list of topics listed for each Sector Standard.
- Measure, assess and value: Identify metrics to measure for each significant topic. The standards themselves provide guidance on selecting metrics to report.
- Communicate: Report to all stakeholders on ‘material topics’ that reflect the organisation’s most significant impacts. The Sector Standards are a helpful starting point for identifying likely significant impacts.
SASB Materiality Map
The SASB Materiality Map is a tool to help companies identify and prioritise sustainability issues that are financially material to their industry. It provides a framework for assessing the relevance and impact of environmental, social, and governance (ESG) factors on business performance and value creation.
Use this resource for the following Actions of Impact Management:
- Communicate: Use disclosure guidance and standards to disclose on material issues, recognising how various sustainability factors have a material impact on the viability of a company as well as its financial performance.
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