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One of the objectives of the Impact Management Platform is to drive clarity and to foster a more coherent ecosystem of standards, frameworks and other resources for managing sustainability-related impacts. Through dedicated R&D working groups, the Platform enables the Partners to address specific issues associated with the fundamental building blocks of impact management that can only be resolved via a collective approach. The classification of sectors and industries is an example of the type of issues associated with the system of impact management resources that the Partners are tackling through joint research and development. 

Industry classifications categorise economic activities based on a set of definitions, principles and classification rules. They are used across both public and private sectors for multiple purposes including economic analysis and policy development, corporate reporting and business development, financial market analysis and investor portfolio management. Because they help define what a company is and does, these classifications have also become indispensable for managing sustainability issues.

Several Platform Partners and further organisations came together as a working group to explore how industry classifications are applied in the management of sustainability issues, particularly focusing on impact management. The group also sought to shed light on the challenges faced by standard setters and practitioners in this context and to examine the root causes of these challenges, as well as approaches to overcome them.

This paper captures the working group’s findings and proposes a set of principles that could guide the further development of industry classifications in a manner that is fit for purpose for impact management. By applying such principles multiple benefits could be achieved:

• More granular and accurate impact management resources, including impact materiality mappings, sustainability indexes and ratings, ultimately resulting in better impact management.
• Ability of industry classifications to be more reactive to the evolving economy, especially in the context of the fourth industrial revolution.
• Enhanced interoperability between industry classifications, while also retaining the ability to reflect the specific realities and needs of different geographies.
• Progress towards a common language between public (macro-economic) players and private (micro-economic) actors, currently relying on different sets of classifications, ultimately resulting in more effective policy and regulatory implementation.