Strategy

Embed impact management into strategy according to organisational purpose and goals

Last updated: July 4, 2023

Description

Embedding impact management into an organisations’s strategy means that understanding and addressing its positive and/or negative impacts on people or on the natural environment are an integral part of how it plans to achieve its goals and/or fulfil its purpose.

Two main models arise depending on the way sustainability and well-being related considerations are integrated in the organisation’s purpose (its motivation for existing or “raison d’être”) and vision (its goals and approach to conducting its business).

Enterprises, investors and financial institutions for which delivering positive impact is an integral part of their purpose and goals (referred to across the actions as sustainability-focused organisations). This model is most traditionally associated with social enterprises and impact investors, although some larger and more mainstream organisations have also started to embrace it. Impact management here is central to the organisation’s strategy. The organisation’s strategy will revolve around the specific positive impacts it wishes to contribute and a theory of change to deliver these.

Enterprises, investors and financial institutions for which delivering positive impact is not embedded in their purpose, but whose vision is to operate sustainably (referred to across the actions as sustainability-aligned organisations). In other words, these organisations seek to operate in alignment with minimum sustainability thresholds for people and the natural environment, based on the available science and as enshrined in international agreements. For these organisations, impact management remains an important component of the organisation’s strategy, and serves to ensure that, across its operations and activities, significant negative impacts are addressed and positive impacts are maximised.

These two models are not mutually exclusive nor inclusive. An organisation for which delivering positive impact is an integral part of their purpose and goals, may not necessarily set out to operate sustainably on the whole (i.e. in relation to the impact topics that are not part of its core focus). On the other hand, an organisation seeking to operate sustainably may gradually find it possible and strategic to embed specific impact objectives directly within its purpose.

There are, of course, organisations for which delivering positive impact is not embedded in their purpose nor is operating sustainably a goal for them. For this third category of organisations, impact management is not directly embedded into their strategy. This does not mean that sustainability-related practices are necessarily absent. These organisations may manage their sustainability-related risks and ensure compliance with sustainability-related regulation, and address a subset of impacts in the process.


Resources

Guidance on integrating sustainability into company strategy

For all enterprises:

Ten Principles of the UN Global Compact

Last updated: 2000

Principles that list how organisations should, at a minimum, meet fundamental responsibilities in the areas of human rights, labour, environment and anti-corruption. The Ten Principles apply across all geographies in which the enterprise operates, and good practices in one area do not offset harm in another. They draw on several international declarations and other authoritative documents.

This resource calls upon organisations to:

  • Strategy: Align strategy with the Ten Principles prioritising societal needs such as the SDGs.
  • Governance: Incorporate the Ten Principles into operations to support the SDGs.

OECD Guidelines for Multinational Enterprises

Last updated: 2011

One of the main (and government-backed) international instruments on Responsible Business Conduct (RBC) setting out principles and standards on RBC. Regulators reference them in regulation.

This resource calls upon organisations to:

  • Strategy: Align strategy with the expectation to avoid and address negative impacts of their operations, while contributing to sustainable development in the countries where they operate.
  • Governance: under construction
  • Identify: Set objectives with reference to minimum safeguards on topics such as: human rights, labour relations, employment practices, public health and safety, bribery and extortion, science and technology and taxation.
  • Measure, assess and value: under construction
  • Implement: Embed due diligence across business operations and in the value chain in order to identify, assess, mitigate, cease and prevent adverse impacts on people
  • Communicate: under construction

SDG Impact Standards for Enterprises

Last updated: 2021

Practice standards that provide a common language and a system for integrating sustainable development issues, the Sustainable Development Goals and impact management into business and investment decision-making. These practice standards also outline the ‘ABC’ classification methodology, which helps organisations assess whether an impact ‘Acts to reduce harm’, ‘Benefits stakeholders’, or ‘Contributes to solutions’ in relation to the SDGs.

Use this resource to:

Set up processes and embed practices that orient an organisation towards achieving the SDGs. The SDG Impact Standard contains practice indicators that are relevant to several actions. Use the links below to access guidance for different practice indicators. Alternatively, view the whole guidance document here.

Natural Capital Protocol

Last updated: 2016

Guidance that outlines a process organisations should follow to identify, measure and value their impacts and dependencies on the natural environment.

Use this resource to:

  • Strategy: under construction
  • Governance: under construction
  • Identify: Identify stakeholders in order to set objectives for a natural capital assessment and to map the links between significant impacts and the business activities that affect or rely on them. This process helps organisations determine whether each impacted stakeholder is likely to affect their business model (and therefore enterprise value).
  • Measure, assess and value: Value impacts and dependencies on natural capital. This methodology draws on organisational data, data collected from stakeholders and publicly available country- or sector-level data.
  • Set targets and plan: Use the guidance on how to identify and engage with stakeholders in order to set objectives for a natural capital assessment.
  • Implement: under construction

Social and Human Capital Protocol

Last updated: 2019

Guidance that outlines a process for organisations to follow so they can identify, measure and value their impacts and dependencies on social and human capital.

Use this resource to:

  • Strategy: under construction
  • Governance: under construction
  • Identify: Map the links between significant impacts and the business activities that affect or rely on them. This process helps organisations determine whether each impacted stakeholder is likely to affect their business model (and therefore enterprise value)
  • Measure, assess and value: Value impacts and dependencies on social and human capital. This methodology draws on organisational data, data collected from stakeholders and publicly available country- or sector-level data.
  • Set targets and plan: Use the guidance on how to identify and engage with stakeholders in order to set objectives for a social and human capital based assessment.
  • Implement: under construction

Principles of Social Value

Last updated: 2015

The Principles provide the basic building blocks for organisations that want to make decisions whilst taking social value into account. They are intended to help organisations optimise value for all stakeholders materially affected by an organisations activities. Practice Standards are available to help organisations implement each principle to a point where they are accountable for their activities and are making decisions to optimise value.

Use this resource to:

  • Set up processes to include social value data in management decision-making.

Maximise Your Impact: A Guide for Social Entrepreneurs

Last updated: 2017

Guidance to help an organisation maximise the positive social value it creates.

Use this resource to:

  • Strategy: Engage stakeholders and understanding their objectives and needs in order to design a business model around delivering these objectives.
  • Governance: under construction
  • Identify: under construction
  • Measure, assess and value: Check whether the organisation has all the information it needs to assess impact. The guidance contains 10 questions that guide impact assessment and function as a checklist to ensure all necessary contextual information is collected.
  • Set targets and plan: Use the guidance on engaging stakeholders and understanding their objectives and needs in order to design a business model around delivering these objectives.
  • Implement: Integrate information on social value into management decision-making.

B Corp certification

Last updated: 2019

Certification awarded when an organisation achieves a score of 80 on the B Impact Assessment.

Use this resource to:

  • Become B Corp Certified. Organisations undergo verification including interviews, submitting documentation, and as necessary site reviews, to increase confidence that the company’s score is accurate and the required 80-point score has been achieved.
For investors and financial institutions:

Principles for Responsible Investment

A voluntary and aspirational set of investment principles that offer a menu of possible actions for incorporating sustainability topics into investment practice.

This resource calls upon organisations to:

  • Strategy: Commit to considering environmental, social and governance risks and opportunities in investment, and to working with other industry participants to do the same. This initiative involves a fee for participation and requires periodic disclosure of progress made towards adopting the principles.
  • Governance: under construction
  • Measure, assess and value: under construction

Investing with SDG Outcomes: A Five-part Framework

Last updated: 2020

A high-level framework for any investors looking to shape real-world outcomes in line with the Sustainable Development Goals (SDGs).

Use this resource to:

  • Strategy: under construction
  • Governance: under construction
  • Identify: Identify and understand the unintended outcomes of an investors’ investments and their own operations. This assessment involves identifying positive and negative real-world outcomes related to investees’ operations, products and services.
  • Measure, assess and value: under construction
  • Set targets and plan: Move from identifying and understanding unintended outcomes towards taking intentional steps to shape outcomes.
  • Implement: Explore examples of how investors shape outcomes through investor actions including: investment decisions, stewardship of investees and engagement with policy makers and key stakeholders.

Responsible Business Conduct for Institutional Investors

Last updated: 2017

Guidance that explains the application of the OECD Guidelines for Multinational Enterprises in the context of institutional investors. The report highlights key considerations for institutional investors in carrying out due diligence that will help to identify and respond to environmental and social risks.

Use this resource to:

  • Strategy: under construction
  • Governance: Embed responsible business conduct into policies and management systems.
  • Identify: Understand the responsible business conduct expectations for institutional investors, including a discussion of key considerations when identifying negative impacts and risks.
  • Measure, assess and value: Understand the key considerations for institutional investors in carrying out due diligence as recommended by the OECD Guidelines for Multinational Enterprises (OECD Guidelines). This helps institutional investors to prevent and address adverse impacts related to human and labour rights, the environment, and corruption caused by companies in their investment portfolios.
  • Implement: Cease, prevent or mitigate negative impacts and provide for or cooperate in remediation where appropriate.

Operating Principles for Impact Management

Principles describe essential features of managing investments into companies or other organisations with the intent to contribute to measurable positive social or environmental impact alongside financial returns.

This resource has mandatory requirements for signatories.

This resource calls upon organisations to:

  • Strategy: Define strategic impact objectives consistent with the investment strategy alongside managing strategic impact on a portfolio basis.
  • Governance: Commit to following the principles and periodically having progress of adoption independently verified. The Principles can be applied to an entire investing organisation or an individual fund.
  • Identify: under construction
  • Measure, assess and value: Assess potential negative impacts of each investment.
  • Set targets and plan: under construction
  • Implement: Respond appropriately to information on actual and potential impacts.
  • Communicate: Use Principle 9 to enable public disclosure of alignment with the Principles.

Core Characteristics of Impact Investing

Last updated: 2019

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 calls upon organisations to:

  • Intentionally contribute to positive social and environmental impact, use evidence and impact data in investment design, manage impact performance, and contribute to the growth of impact investing

IRIS+ Guidance / Thematic Taxonomy

Last updated: 2021

Guidance on IRIS+ Impact Categories and Impact Themes.

Use this resource to:

  • Strategy: An impact investor sets ex ante intention within the Thematic Taxonomy.
  • Identify: Understand and frame portfolio objectives using the Impact Themes and Impact Categories contained in the Thematic Taxonomy.

SDG Impact Standards for Private Equity Funds

Last updated: 2020

Practice standards that provide a common language and a system for integrating sustainable development issues, the Sustainable Development Goals and impact management into business and investment decision-making.

This resource calls upon organisations to

  • Measure, Assess and Value: Develop an impact management and measurement framework
  • Set targets and plan: Set portfolio level impact goals.
  • Implement: under construction
  • Verification, assurance and certification: Disclose how the SDGs and sustainability are integrated into decision-making and report on performance

Principles of Social Value

Last updated: 2015

The Principles provide the basic building blocks for organisations that want to make decisions whilst taking social value into account. They are intended to help organisations optimise value for all stakeholders materially affected by an organisations activities. Practice Standards are available to help organisations implement each principle to a point where they are accountable for their activities and are making decisions to optimise value.

Use this resource to:

  • Set up processes to include social value data in management decision-making.

Principles for Responsible Banking

Last updated: 2019

Principles for Responsible Banking (PRB) are designed to ensure that signatory banks’ strategy and practice align with the vision society has set out in the Sustainable Development Goals and the Paris Climate Agreement.

This resource calls upon organisations to:

  • Strategy: Commit to aligning the bank’s activities and portfolios to global goals, namely the Sustainable Development Goals (SDGs) and the Paris Agreements, by embedding sustainability at the strategic, portfolio and transactional levels, across all business areas.  This initiative involves a fee for participation and requires periodic disclosure of progress made towards enforcing the Principles.
  • Governance: under construction
  • Identify: under construction
  • Measure, assess and value: under construction
  • Set targets and plan: under construction
  • Verification, assurance and certification: Use the PRB Assurance Guidelines to assure adherence to the Principles.

Impact Protocol for Banks

Last updated: 2022

The Impact Protocol provides a step-by-step overview of how to analyse and manage bank portfolio impacts.

Use this resource to:

  • Understand how to manage bank portfolio imapcts as per UNEP FI’s holistic impact approach and in conformity with the requirements of the Principles for Responsible Banking.The Protocol provides an overview of the impact management process as a whole; it is complemented by further UNEP FI resources such as the Impact Management Tool and the Thematic Target-Setting Guidance, which can be used to operationalise the methodology.

Principles for Sustainable Insurance

Last updated: 2012

Principles for the global insurance industry to address environmental, social and governance risks and opportunities.

This resource calls upon organisations to:

  • Strategy: Commit to considering environmental, social and governance risks and opportunities in insurance business, and to working with other industry participants to do the same. These Principles are relevant to insurers in their dual role as both corporates and as organisations that make investments. This initiative involves a fee for participation and requires periodic disclosure of progress made towards adopting the principles.
  • Governance: under construction

Impact Standards for Financing Sustainable Development (IS-FSD)

Last updated: 2021

Practice standards to support donors in the deployment of public resources through DFIs and private asset managers, in a way that maximises the positive contribution towards the SDGs. The Standards are harmonised in approach with the UNDP SDG Impact Standards suite, the IS-FSD constitute a framework, ensuring that collectively (with the SDG Impact Standards for PE Funds, Bond Issuers and Enterprises) they help to connect actors across the system using a common language and approach for integrating SDG impacts in the investment strategy and throughout the investment process and governance structures.

This resource calls upon organisations to:

  • Strategy: Set impact objectives framed in terms of the SDGs and country priorities
  • Governance: Set up processes and embed practices that are aligned with the SDG Impact Standards.
  • Measure, assess and value: Understand whether all relevant information is being actioned to understand impact. The Standards outline how baselines, social/ ecological thresholds and other contextual information should be included in assessment of whether an underlying asset is contributing to the SDGs.
  • Set targets and plan: under construction
  • Implement: under construction
  • Communicate: Disclose how impacts are managed and measured

Guidance on disclosure about integrating sustainability in company strategy

GRI Standards

Last updated: Various

Reporting standards designed to help organisations understand and disclose their impacts in a way that meets the needs of multiple stakeholders. These standards are arranged by a set of Universal Standards that apply to all organisations, and 35 Topic Standards that contain disclosures for impacts related to economic, environmental and social topics.

Use this resource to:

  • Strategy:
  • Identify: Identify metrics to measure for each significant topic. The standards themselves provide guidance on selecting metrics to report. Using standardised metrics helps the organisation and its stakeholders compare performance with others.
  • 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. Using standardised metrics helps the organisation and its stakeholders compare performance with others.

Company categorisation for investors

Sustainability Performance Classification (ABC of Enterprise Impact)

Last updated: 2023

The ‘ABC’ of impact provides a way to connect these high-level intentions – which are what most enterprises and investors start with – to the more granular dimensions of impact and data categories, which help to measure and manage impact.

Use this resource to:

  • Connect high-level intentions – which are what most enterprises and investors start with – to the more granular dimensions of impact and data categories, which help to measure and manage impact.

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