Impact Management
Definition
- Impact management
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The process by which an organisation understands, acts on and communicates its impacts on people and the natural environment, in order to reduce negative impacts, increase positive impacts, and ultimately to achieve sustainability and increase well-being.
The Actions of impact management are the core steps and components of impact management. Explore the Actions.
Rationale for impact management
Impact management is relevant for all enterprises, investors and financial institutions (collectively referred to as “organisations”), regardless of their overall purpose, vision and strategy.The way Impact Management is relevant to organizations with different objectives is illustrated below.
- Many organisations do not have sustainability as part of their purpose, vision or strategy. Impact management is still relevant for such organisations, as it enables them to discover and manage financial risks and opportunities they may not have identified via the typical channels of compliance and/or risk management. This can help reduce the organization’s negative impacts and potentially increase its positive impacts, but the scope of the impacts managed is more limited given the narrower overall objectives of the organisation.
- A growing number of organisations are seeking to operate sustainably, within environmental and social boundaries. Impact management enables them to align their operations and activities with sustainability needs and thresholds, in line with their overall vision and/or strategy. In doing so, it can also enable them to better manage financial risks and opportunities. Achieving the goal of operating sustainably implies a holistic approach (i.e. across the business and across all applicable sustainability topics) and therefore tends to involve an iterative process as impact management is embedded into the organisation’s strategy and operations over time.
- Some organisations specifically aim to solve environmental and social problems and maximise well-being for their beneficiaries. Impact management enables them to manage, deliver, and communicate the positive impact to their intended beneficiaries. It should also be used to avoid causing negative impacts in relation to topics and stakeholders beyond those that are explicitly at the heart of their purpose, vision and strategy. As with other organisations, Impact management can also enable these organisations to manage sustainability-related financial risks and opportunities.
More information on the relevance of impact management to sustained financial performance of enterprises, investors and financial institutions, is available in this thought piece.
Q.1 How do impact and financial materiality relate to each other?
“Impact materiality” is a term often used to denote the impacts of the organisation on people, society and the natural environment, while “financial materiality” typically denotes all factors (internal or external to the organisation) that might affect its financial performance and value.
While the starting point and lens are different, impact and financial materiality are intrinsically linked.
A company’s activities and outputs have impacts (positive and negative) on people, society and/or the natural environment. For example, agricultural sourcing practices may contribute to deforestation or water depletion; labour practices may affect worker health, safety, or income security; product design may affect consumer health or accessibility.
At the same time, companies rely on people, society, and the environment, and therefore any impacts (positive or negative) on them, including those generated by the company itself, may translate into financial risks and opportunities. For example, water depletion can lead to production disruptions and higher operating costs; poor labour conditions can result in legal liabilities, supply chain disruption, or loss of social licence to operate; positive impacts such as improved farmer livelihoods can enhance supply security and brand value.
Finally, it should be noted that while not all negative (or positive) impacts to people, society and the natural environment translate into financial risks (or opportunities), the financial materiality of impacts is dynamic in nature.
The financial gains of leaving some impacts unmanaged sometimes outweighs managing them; this reality is driven by unequal market, policy and regulatory environments and is typically known as externalities. For some companies it can reduce the incentive or even the capability of managing such impacts. Negative impacts that do not translate into financial risks today, may become material in the future. This shift is not necessarily a long-term matter; shifts can occur after a long period of time, or almost overnight.
For example, a water basin key to an organisation’s operations dries up because the organisation’s own contributions to its depletion were not managed; a human rights neglect becomes a public relations disaster overnight; or extreme weather events linked to climate change can abruptly destroy assets or disrupt entire industries, rapidly converting previously non-financial impacts into material risks and losses.
It is important to note that the more systemic risk builds up, the more likely it is for risks to materialise quickly and unpredictably.
| Value perspective Value perspective is another way of thinking about double materiality, specifically in the context of impact valuation. The significance of an impact can differ depending on whose perspective is considered. An impact may represent a substantial loss of well-being or opportunity for affected people or communities, while posing limited short-term financial risk to the company. For example, workplace harassment may have severe consequences for the affected individual, yet translate into a relatively small financial cost to the organisation. Similarly, polluted water may generate significant health impacts for communities while remaining financially immaterial to the company in the absence of law enforcement or liability. Considering both value perspectives – the value of the impact to stakeholders and the value of the impact to the organisation causing the impact – is at the heart of impact valuation methodologies. |
Q.2 How does impact management relate to risk management?
A company’s impacts on people, society and/or the natural environment may translate into financial risks and opportunities. These might be idiosyncratic (risks that are specific to the individual organisation or activity) or system-level (risks that accumulate across many organisations and affect whole sectors, economies or societies).
For example: unsafe working conditions in a company’s factories leading to accidents, legal claims, operational shutdowns, and reputational damage specific to that company; widespread over-extraction of groundwater by multiple companies contributes to regional water scarcity, affecting entire sectors, communities, and economies—including firms that did not directly cause the depletion.
The dual nature of sustainability-driven risk translates into three scenarios:
i) the organisation has an impact which translates into an idiosyncratic risk,
ii) the organisation has an impact which does not have an idiosyncratic risk but does translate into a system-level risk, or
iii) the organisation does not have an impact but is affected by the system-level risk anyway (the system-level risk is the result of the impact of other organisations).
As a result, it is important for any organisation to manage its impacts.
Impact management is central to enabling organisations to manage both idiosyncratic risks and system-level risks and opportunities. When impacts are left unmanaged, they can contribute to the build-up of system-level risks that ultimately feed back into financial performance; when they are managed well, they can mitigate risks, support innovation, access to new markets, and give license to operate. Similar to any other management practice, impact management has implementation costs, as new skills and processes require certain investments.
Q.3 How does impact management contribute to the creation of business & financial value?
Companies are intrinsically dependent on people, society and the natural environment; people represent human capital, societies represent social capital and the natural environment represents the natural capital that all companies rely on. These are known as dependencies.
As a result of these, impacts on people, society and the natural environment can drive financial risks and opportunities. Negative impacts can pose a risk to the company’s capitals, while positive impacts can drive more or better capitals for the company. For example: a beverage company, which is typically dependent on water for its operations, could be financially affected by a situation of water stress.
Better understanding and managing impacts and dependencies is therefore strategically important to managing an organization’s financial risks and opportunities. By systematically identifying, assessing and managing impacts across issues and geographies, organisations can understand potential market, regulatory, legal, operational, and financial exposures across the value chain and as a result, make better decisions in the short and long term.
The process of impact management can change the viability of some business opportunities, as a more holistic analysis is taken into account. Ultimately, it provides the benefit of enabling organisations to strategically act on changing market conditions, stakeholder expectations, and regulatory developments that may affect their performance and resilience.
In sum, impact management is a means not only to contribute to broader societal goals, but also to protect and create business and financial value.
Impact Management in context
Impact management and the main sustainability-related concepts
A few core concepts and objectives tend to underpin the sustainability-related frameworks, resources and initiatives. Typically these include: sustainable development, human rights, and well-being.
These concepts are not exhaustive, mutually exclusive, nor in contradiction to each other, they are some of the most frequently used concepts used to describe humanity’s efforts to define and drive a better world.
Achieving well-being for humans and all other living beings can be seen as an end goal. Sustainable development and the fulfilment of human rights are also used as over-arching goals; at the same time, they are essential to achieving well-being.
Impact Management is not attached to one over the other; it relates to all of these concepts, it supports their achievement in practice. As such, Impact Management is not an end in itself; it is a means to contribute to broader societal and environmental goals.
Definitions of the main sustainability-related concepts
Sustainable Development
Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. The Sustainable Development Goals – United Nations
Key framework/s and documents: 1992 Rio Declaration on Environment and Development and Agenda 21, 2012 Rio +20 and The Future We Want, the 2030 Agenda and the Sustainable Development Goals, Financing for Development Conferences
Historical context: The term sustainable development was initially coined by the Brundtland Commission (World Commission on Environment and Development) in 1987 through its report “Our Common Future”. This laid the groundwork for the 1992 Earth Summit in Rio de Janeiro, which adopted Agenda 21 and established the UN Commission on Sustainable Development. The concept evolved through the Millennium Development Goals (2000-2015) to the current Sustainable Development Goals adopted in 2015 as part of the 2030 Agenda. At the heart of the concept is the understanding that economic, social and environmental needs and challenges are all interconnected and hence require connected action and solutions.
Related terms: Sustainability, planetary boundaries, leaving no-one behind
Human Rights
Human rights are rights inherent to all human beings, regardless of nationality, sex, national or ethnic origin, color, religion, language, or any other status. They range from the most fundamental – the right to life – to those that make life worth living, such as the rights to food, education, work, health, and liberty. Office of the High Commissioner for Human Rights, United Nations
Key framework/s and documents: The founding International Bill of Rights of 1948, complemented by the International Covenant on Economic, Social and Cultural Rights (ICESCR), and the International Covenant on Civil and Political Rights (ICCPR), of 1966, the 1977 ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (MNE Declaration), the 2011 UN Guiding Principles on Business and Human Rights (UNGPs), the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct (MNE Guidelines), introduced in 1976, with latest revision in 2023.
Historical context: Human Rights were first articulated in 1948 in the Universal Declaration of Human Rights, which was later reaffirmed by all UN member states in 1993. Over the past 75 years they have been further elaborated in a number of international human rights treaties, including the ILO MNE Declaration, that have been ratified by a substantial majority of states globally. Interpretation and guidance on how human rights apply for business started to be explored as early as 1976 via the OECD MNE Guidelines, before being addressed directly by the UN Guiding Principles on Business and Human Rights (UNGPs) in 2011.
Related terms: Equality, non-discrimination, labour rights, decent work, modern slavery, child labour
Well-being
Well-being encompasses people’s individuals’ current well-being outcomes, inequalities in these outcomes across the population, and the resources (or capital stocks and flows) needed to sustain well-being over time. OECD Well-being Framework & database
Key framework/s: OECD Well-being Framework, OECD Well-being Data Monitor; Report by the Commission on the Measurement of Economic Performance and Social Progress
Historical context: The concept of well-being is at the heart of the 2011 OECD Well-being Framework, which itself builds on a rich history of defining societal progress, including: the capabilities approach, advances in behavioural economics, the 1987 Brundtland definition of sustainable development, the Sen, Stiglitz, Fitoussi Commission Report for the 2009 Commission on the Measurement of Economic Performance and Social Progress.
Since 2011, the OECD Well-being Framework, which defines the key components of well-being, has enabled the development of national well-being initiatives across multiple OECD countries, and has guided the OECD’s work on measuring and monitoring well-being beyond GDP. The concept of well-being is embedded in the 2013 Recommendations on Measuring Sustainable Development of the Conference of European Statisticians and current international developments such as the United Nations’s Pact for the Future, also draw, among other things, on the OECD Well-being Framework.
Related terms: Material conditions, quality of life, community relationships, subjective well-being, human development, sustainability , beyond GDP
Q & A
Q.1 How do the main sustainability related concepts relate to each other?
While they all represent humanity’s efforts to define and drive a better world, each has its specificities and nuances, linked to the history and context behind them.
Human rights and well-being are more people-centric concepts; they revolve primarily around the needs and aspirations of people. Sustainable development is expressed in a more system-focused manner; it reflects the aspiration to create convergence and equity between societies and economies, and to ensure this equity is sustained over time.
While both human rights and well-being are people-centric concepts, their underlying frameworks tackle different policy angles. The human rights conventions crystallize the legal obligations of states and the responsibilities of non‑state actors, whereas the well-being framework emerged from an effort to broaden the scope of economic policy beyond GDP in a measurable way, focusing on subjective and objective human outcomes at individual and collective levels.
Sustainable development is a well-established global policy objective, enshrined in the UN 2030 Agenda and the SDGs. It provides a shared vision and roadmap for integrating societal, environmental, and economic progress.
Q.2 How do other sustainability-related concepts relate to the main concepts and to Impact Management?
As the sustainability field evolves, sustainability-related concepts continue to emerge. Examples include concepts such as responsible capitalism and the impact economy.
According to GSG Impact, impact economy is an economy where all investment, business, consumption, and government decisions are taken with impact at its core. At its core, the paradigm moves beyond fixing market failures — it proposes a market logic where impact is embedded as a driver of economic performance, not a side effect. It is an example of an emerging concept, where the impact management practice is mainstreamed across all economic actors and becomes the business as usual. It aims to align all economic activity — public, private, and civil society — toward generating measurable positive outcomes for people and the planet.
As with the more well-known sustainability related concepts, impact management (or specific aspects of it) can help achieve the goals and objectives enshrined in these emerging concepts.
Impact management and other sustainability-related practices
Over time there have been a number of responses to business-driven societal and environmental issues, through concepts such as Corporate Social responsibility (CSR), Corporate sustainability, Responsible Business Conduct and Responsible investment, all of which have sought to define the role of the private sector relative to sustainability issues.
A growing number of sustainability related practices have emerged accordingly, from environmental and social risk management to ESG integration, due diligence, the capitals approach, and impact investing, to name a few. Impact Management, which is also a practice, shares features and characteristics with most of them.
These practices are not mutually exclusive or in contradiction to each other. Ultimately, all of them seek to respond to broader societal and environmental goals. However, they each approach these with a specific focus, as dictated by different mandates, objectives and audiences.
Definitions of the main sustainability-related practices
Due diligence
Due diligence is the process enterprises should carry out to identify, prevent, mitigate and account for how they address these actual and potential adverse impacts in their own operations, their supply chain and other business relationships. OECD Due Diligence Guidance for RBC
Key frameworks & documents: OECD Due Diligence Guidance for Responsible Business Conduct, UN Guiding Principles on Business and Human Rights
Historical context: The term ‘due diligence’ was originally put forward in 2011 by UNSpecial Representative for Human Rights and Business John Ruggie, who used it as anumbrella to cover the steps and processes by which a company addresses its human rightsimpacts. The OECD Guidelines for Multinational Enterprises (MNEs) were subsequentlyrevised to expect companies to “seek ways to prevent or mitigate adverse human rightsimpacts that are directly linked to their business operations, products or services by abusiness relationship, even if they do not contribute to those impacts“. In 2018, a commonunderstanding of the concept was articulated in the OECD Due Diligence Guidance forResponsible Business Conduct, and expanded beyond human rights to cover the followingtopics of the OECD Guidelines: workers and industrial relations, environment, bribery andcorruption, disclosure, and consumer interests. As due diligence has become integratedinto policy and regulation, in some jurisdictions it has become associated with distinctcompliance requirements and can give rise to corporate liability.
Related terms: Responsible business conduct, human rights due diligence, environmentaland social risk management
Relationship to Impact Management: Both IM and duediligence are processes throughwhich companies understand, actand communicate on their impactson people and planet, in order tocontribute to sustainabledevelopment. Due diligence is arisk-based, harm-preventionprocess, while impact managementcovers both risks and opportunities.
Capitals approach
Capitals approach is an approach that enables organisations to understand how their success is directly or indirectly underpinned by natural capital, social capital and human capital, empowering them to make decisions that offer the greatest value across all capitals. Capitals Coalition
Key frameworks & documents: Capitals Protocol, Governance for Valuation (which together with the Capitals Protocol form the Integrated Decision-Making Framework), IFVI Impact Accounting Methodology
Historical context: The capitals approach emerged from early work during the 1970s-1980s in ecological economics that sought to integrate environmental and social factors into economic thinking through concepts such as natural capital and ecosystem services. In the following decades, a wide range of initiatives explored how to apply these concepts in decision-making using systems thinking. The field matured in the early 2010s through environmental and social accounting efforts, namely with the Natural Capital Coalition and the Social & Human Capital Coalition, which respectively developed the Natural Capital Protocol (2016) and the Social and Human Capital Protocol (2016).
More recently, these efforts have begun to converge, with increasing alignment around key concepts, frameworks, and applications. In 2020, the Capitals Coalition brought together these two coalitions and, more recently, developed the Capitals Protocol as part of the integrated decision-making framework for measuring, valuing, and accounting for business impacts and dependencies across all four capitals (natural, social, human, and produced). In 2025, the International Foundation for Valuing Impacts (IFVI) was merged into the Capitals Coalition, further strengthening the impact accounting dimension of the capitals approach.
Related terms: Impact valuation, impact accounting, capitals assessment, integrated thinking, integrated capitals assessment, externalities
Relationship to Impact Management: The capitals approach serves as a structured accounting lens for impact management, by providing visibility to the value of organisations’ impacts and dependencies in the short and long term. By virtue of its distinct capitals lens, it frames how impacts and dependencies affect the four capitals’ stocks and flows through valuation and accounting methods. The capitals approach thereby enables and encourages the consideration of externalities into decision making.
Impact Valuation
Impact valuation (and accounting) are core to the Capitals Approach as they are the processes through which changes in capital stocks and flows resulting from organisational activities are assessed.
It is a rapidly developing area both within and beyond the Capitals Coalition. Methods such as Social Return on Investment (SROI) illustrate how outcomes and impacts can be expressed in monetary terms relative to inputs, while other approaches focus on valuing material changes in capitals to inform risk, opportunity, and performance assessments. Ongoing methodological development is being advanced through a range of initiatives focused on impact accounting and valuation standardisation.
In the broader context of impact management, impact valuation is part of the “assess and value” action (see Actions of impact management), and refers to the process of estimating the relative importance, worth, or usefulness of the positive or negative impacts. Valuation may involve qualitative, quantitative, or monetary approaches, or a combination of these, and is aimed at enabling comparison across different impacts, as long as it provides transparency in assumptions, consistency in methods, and clear documentation.
Environmental & Social risk management
Environmental and Social (E&S) Risk Management (ESRM) is a proactive process for identifying, assessing, and mitigating potential adverse impacts of projects or business activities on the environment and society. IFC
Key frameworks & documents: World Bank Environmental and Social Framework, IFC Performance Standards, Equator Principles, Environmental impact assessment and strategic environmental assessment: Towards an integrated approach (UNEP, 2005), ISO 14001
Historical context: Environmental and social risk management emerged from international organisations (typically UN agencies and development banks) needing to improve their environmental and social performance in the context of large infrastructure, development and reconstructions projects conducted in the wake of 2nd World War. Over time environmental and social risk management has been embedded in international organisation’s core policies and processes in the form of environmental and social safeguards (ESS), such as the World Bank Environmental and Social Framework and via increasingly standardized approaches to environmental impact assessment (IEA). At present environmental and social risk management has been extended beyond public sector organisations, as illustrated by the Equator Principles and beyond the specific remit of large projects, as illustrated by standards such as the ISO 14001 series.
Related terms: Environmental and social safeguards (ESS), environmental impact assessment (EIA), strategic environmental assessment (SEA), risk mitigation, due diligence
Relationship to Impact Management: Environmental and social risk management and impact management share common, elements, including the identification, assessment, and monitoring of impacts on people and the environment. E&S risk management typically focuses on avoiding or mitigating negative impacts, often at the project or transaction level. Impact management builds on these foundations by considering both negative and positive impacts, integrating them across strategy, governance, and activities, and explicitly linking impact performance to long-term value creation and system-level outcomes.
ESG integration (or Sustainability and Governance Integration)
ESG integration is the ongoing consideration of sustainability-related issues within an investment analysis and decision-making process with the aim of improving risk-adjusted returns. PRI
Key frameworks and documents: Principles for Responsible Investment (PRI), A Legal Framework for the integration of environmental, social and governance issues into institutional investment (2005, UNEP FI), Sustainability Accounting Standards Board (SASB), International Sustainability Standards Board (ISSB)
Historical context: “A legal framework for the integration of environmental, social and governance issues into institutional investment’ authored by the law firm Freshfields and published by UNEP FI in 2005 was among the first analyses to set out investors’ fiduciary duty to incorporate financially material environmental, social and governance issues into their investment decision-making. This helped pave the way for the launch of the Principles for Responsible Investment (PRI) in 2006, created to help the investment industry better understand and address ESG issues. Since then, global agreements, regulatory and business developments have reinforced the critical importance of integrating these factors into investment practice. This includes the emergence of standards and initiatives such as SASB (2018), the TCFD (2017), TNFD (2023), and, more recently, TISFD (to be published), as well as the establishment of the ISSB. A more recent term used by PRI is “sustainability and governance integration”.
Related terms: Responsible investment, Corporate sustainability, sustainability risk management, financial materiality, Sustainability and governance integration
Relationship to Impact Management: ESG integration is primarily concerned with managing sustainability-related risks with a view to optimizing financial returns (financial materiality lens), while IM concerns itself with strategically integrating impacts in business strategy as a way of diving both business value and attaining societal goals. ESG integration has historically been applied primarily at the entity or portfolio level, particularly in investment analysis, whereas impact management typically applies at both entity and transaction or activity levels.
Impact investing
Impact investments are investments made with the intention to generate positive, measurable social or environmental impact alongside a financial return. The GIIN
Key frameworks & documents: Core Characteristics of Impact Investing, IRIS+, Operating Principles for Impact Management
Historical context: The term impact investing originated at the Rockefeller Foundation’s Bellagio convenings in 2007–2008, where early pioneers articulated the need for a coordinated industry and a shared identity. In 2009, this vision began to materialize through two foundational milestones: the launch of the Global Impact Investing Network (GIIN), and the creation of the IRIS initiative to standardize impact metrics, laying the groundwork for what has since evolved into today’s IRIS+. Over the following decade, the field expanded through a number of key initiatives including the definition of the five dimensions of impact, stewarded by the Impact Frontiers and initially introduced via the (now sun-setted) Impact Management Project. This momentum culminated in 2019 with the establishment of the Operating Principles for Impact Management (known as the Impact Principles), and the GIIN’s Core Characteristics of Impact Investing, which together further formalized widely accepted norms for practice and accountability across the global impact investing industry.
Related terms: Intentionality, theory of change, contribution, additionality, counterfactual, impact measurement, five dimensions of impact
Relationship to Impact Management: Impact investing is undertaken with the specific intention to generate positive impacts. Impact management is a core component of impact investing, although not exclusive to impact investors. It is the process by which impact investors can identify, manage, and measure both intended positive impacts and potential negative impacts across their investments.
Impact management
Impact management is the process by which an organisation understands, acts on and communicates its impacts on people and the natural environment, in order to reduce negative impacts, increase positive impacts, and ultimately to achieve sustainability and increase well-being. IMP
Key frameworks and documents: IMP Actions of Impact Management, IMP System Map, IMP Resource List
Historical context: Initially the term ”impact management” was usually found mainly connected to the concept of impact measurement, jointly referred to as IMM (impact measurement and management), a term used commonly in the context of impact investing and development finance. Over time the notion of impact management per se started to emerge, for instance in frameworks focusing both on impact and dependency assessment and management, such as the Capitals Protocol or the TNFD, and in frameworks seeking to embed impact across business strategy and operations, such as the UNEP FI PRB and Holistic Impact Methodology and the ISO/UNDP SDG Standard. Currently Impact Management can be used and understood at two levels: as an organisation-wide practice (conducted more or less fully depending on company vision and mission), or as a step in dedicated impact investments and interventions (see “Impact Investment” above).
Related terms: Positive & negative impacts, impact materiality / double materiality, impact identification, impact analysis/impact assessment, impact measurement, impact valuation
Relationship to other practices: Impact Management is closely related to other sustainability management practices. Environmental and social risk management and due diligence are key to the systematic management of negative impacts. Impact management is core to impact investing and social entrepreneurship, in particular as regards the positive impacts that are directly at the core of investor and entrepreneur purpose, however, it is not limited to companies and investors with such a purpose or business lines and portfolios with a dedicated sustainability focus. Like ESG integration, impact management is relevant for all types of companies, across their activities, regardless of business purpose. However, impact management has a deliberate focus on outcomes and impacts that goes beyond ESG and is also intended to directly inform business strategy. The Capitals approach seeks to support impact management by providing visibility to the value of impacts and dependencies, thereby helping and encouraging the consideration of externalities into decision making.
Social entrepreneurship
Social entrepreneurship is a business model based on activities conducted in the public interest, organised with an entrepreneurial strategy, whose main purpose is not the maximisation of profit but the attainment of certain economic and social goals, and which has the capacity for bringing innovative solutions to the problems of social exclusion and unemployment. OECD
Key frameworks and documents: B Lab Impact Business Models, Social Value Principles
Historical context: Social entrepreneurship developed at the intersection of business and development, seeking to address social challenges through market-based solutions. It has evolved from philanthropic and NGO models toward scalable enterprises that intentionally generate positive social outcomes alongside financial sustainability.
Related terms: Theory of change, social enterprise, impact business model, impact economy, socially responsible investing (SRI)
Relationship to Impact Management: Social entrepreneurship is a business model type concerned with delivering solutions to specific social or environmental challenges, aligned with a clear mission and beneficiary group. Impact management is the process by which social entrepreneurs can identify, manage, and measure both intended positive impacts and potential negative impacts across their activities, particularly as organisations scale or diversify.
Sustainability reporting
Sustainability Reporting is a process used to identify and report material information about an organisation’s sustainability-related impacts, risks and opportunities to a broad range of stakeholders, including investors, governments and civil society (also referred to as “users of information”). IMP
Key framework/s & documents: Global Reporting Initiative (GRI) Standards; International Sustainability Standard Board(ISSB) Standards; Taskforce on Nature-related Financial Disclosures (TNFD); Taskforce on Inequality and Social-related Financial Disclosures (TISFD).
Historical context: Sustainability reporting emerged in the 1990s as civil society, investors, and regulators sought information on organisations beyond their financial statements. Early voluntary frameworks, notably those of the Global Reporting Initiative, shaped practice and developed into standardised approaches. Frameworks catering more specifically to specific audiences and/or sustainability topics have also emerged over time, namely the International Sustainability Standard Board(ISSB) Standards, which focuses on investment decision-making. Topical standards include those of the Task Force on Climate-related Financial Disclosures (TCFD) (now integrated into the ISSB Standards), the Taskforce on Nature-related Financial Disclosures (TNFD); and the Taskforce on Inequality and Social-related Financial Disclosures (TISFD) (under development).
As the practice and use of sustainability reporting has grown, the data and qualitative responses required for corporate disclosures are being compiled, analysed and shared to the wider market with multiple data-users by specialised entities such as CDP, among others. The field has also evolved from primarily voluntary practice to being increasingly mandated. A global system that combines impact and financial materiality into comprehensive reporting is emerging, most notably in the EU and China.
Related terms: disclosure, transparency, accountability, stakeholder engagement, impact / double / financial materiality, materiality assessment, non-financial reporting, sustainability-related financial reporting, integrated reporting, corporate sustainability.
Relationship to Impact Management: Sustainability reporting and IM are closely related and mutually reinforcing. The different actions of IM and its results are the effectively the object of sustainability reporting. The more robust an organisation’s impact management practices are, the higher the quality of its disclosures. Reporting reinforces IM by creating a governance feedback loop – driving standardization and accountability of impact management as well as continuous improvement.