The Corporate Impact Analysis Tool helps banks and investors gain a cross-cutting view of the impact status and possibilities of their clients and investee companies. Based on the Positive Impact Initiative’s unique approach, it provides a holistic analysis of companies’ impacts across different sectors and countries.
The analysis is divided into three parts:
- Identification of significant impact areas, based on company typology, geography and sectors of activity.
- Assessment of the company’s impact performance and impact management capabilities.
- Monitoring of the company’s significant impact areas, performance and management capabilities over time.
The findings of the Tool are intended to help users manage their portfolios, set and meet impact targets, and ultimately become more effective at managing impact related risks and opportunities in close collaboration with their clients and investee companies.
It is also anticipated that the Tool may be used by corporates themselves as a contribution to strategic planning and business development.
The Tool is open source and freely available (for direct use or for adaptation and integration into proprietary systems), in a deliberate effort to promote transparency and continue to create a space for debate, consensus-building and harmonization.
You can view recordings of the launch webinars, which include a live demo here.
The development process of this tool was conducted over a period of 12 months through a Positive Impact Initiative Working Group made up of banks, investors and service providers.
This is the very first edition of the Corporate Impact Analysis Tool. Help us to improve it!
Whatever your profile your views are important:
- If you are a financial institution, or a non-financial company, please share your user experience and feedback with us
- If you are a topic or impact expert, help us to refine the Tool’s in-built sector-impact mappings
- If you are a policy-maker, a regulator or other form of standard-setter, help up us to go further in connecting the dots between your standards, policies or regulations and the Tool.
Frequently Asked Questions
- What do you envisage will be the main use cases for the tool?
There are multiple use-cases for the Tool. It’s original purpose was to enable banks and investors gain a holistic understanding of their client and investee companies’ impact status and possibilities so that they might become active partners in the transition to a more impactful and impact-driven economy. With or without specific products such as SL Loans or SDG bonds being associated. In practice we now envisage that corporates themselves might make use of the tool for self-assessment and strategic planning. We also think the Tool methodology and data-points might helpfully inform the on-going refinement of disclosure standards, frameworks and policies.
- Are those tools aimed to be widely used for the ESG assessments of the companies including banks?
The tools are intended to be widely used by banks, investors and companies themselves as a way to gather impact information and insights beyond what is currently available through ESG assessments. These analyses are indeed intended to enrich existing ESG analysis.
- Could the corporate impact analysis tool be used to reverse engineer which SDGs a given company should prioritize and report on?
Yes, the Corporate Impact Analysis Tool can indeed be used to help companies prioritize and target their SDG actions and disclosure. The purpose of the Identification stage is precisely to gain a holistic understanding of the impact areas that are (positively and negatively) associated to the company and to put these associations into perspective by understanding the company’s role in the economy and the context in which it is operating (review of country needs).
- Any suggestion in quantifying and incorporating green finance items (like sustainability linked loan, green bond) in this tool?
The Tool can be used to inform the development and issuance of dedicated products such as sustainability linked loans or green bonds. The tool will enable issuers to place a given action, project or product in the broader context of the company and understand whether the change underway is anecdotal or reflective of a more profound/strategic thought and change process.
- These tools are suitable for measuring and assessing Impact as we go but no room for ex-ante and ex-post comparison, right?
The tools are intended for repeated use over time, as part of an iterative process to collect increasingly complete data over time. So there is no reason why comparison over a period of time would not be possible. There is a dedicated monitoring space in the Corporate Impact Analysis Tool to capture changes over time.
- Is the Tool applicable all for types of companies?
Yes, although it is currently best suited to larger companies than to SMEs. All sectors are covered.
- How does the Tool relate to other impact-related resources?
By virtue of the holistic impact analysis methodology, the Tool is highly compatible with existing frameworks, from product-focused standards such as the Green Bond and Sustainability Linked Loans Principles, to impact investing resources such as the IMP 5 dimensions or the GIIN IRIS+ system.
UNEP FI is a member of the IMP Structured Network, a network of impact-related standard-setters working on promoting convergence and harmonisation.
- Can I adapt and/or make adjustments to the tool?
Yes, as long as this is done for internal purposes and without a view to commercialising the methodology. Full technical specifications are included in the Tool to enable multiple forms of usage. Kindly acknowledge UNEP FI and provide transparency on adjustments as required.
- Will the Tool be updated over time?
Yes. Updated versions will be posted on the UNEP FI website.
- Can the tools help with keeping track of the amount of private finance that is being mobilized that ultimately contributes to the achievement of the SDGs?
Yes, over time, if and as their usage becomes mainstreamed. With the Corporate Tool, financial institutions will gain an understanding of the portion of their clients and investee companies that are PI, PI Transition and not PI. With the Portfolio Tool, banks can gain an understanding of the impact performance of their different portfolios. These assessments are directly indicative of SDG contributions.
- Is the tool also tailored if the invested companies are banks or micro finance institutions, that on-lend investments?
Naturally, financial institutions and their activities are included in ISIC, the industry classification code used by the Tool. A number of additions have been made to the ISIC list to provide updates and granularity on certain economic activities – the finance sector is one of those. So, yes, banks and micro-finance are covered. However, for these types of players, a more tailored/ detailed analysis will be obtained through the use of the Portfolio Tool.
- The Corporate tool includes a drop down option for SME. But how much of the inputs are being driven from TCFD type disclosures which these smaller companies do not produce? Do you feel the tool could be actively used on SME lending in NAB today or is this an area where we’ll see this capability evolving from the very large companies down to SME over time?
The amount of data collection required for SMEs is less than for larger companies given their smaller size and lesser complexity. This is specified in the user guidance in the tool. There is, however, scope for further refinement and tailoring for the specific use-case of SMEs. This can be tabled in the new Working Groups.
Data Sources & Availability
- What is the scope of the data availability in terms of companies and countries?
- Could you elaborate on the data sources and collection methods for assessing management systems to mitigate negative impacts, particularly with reference to how public disclosures vs. proprietary data are used?
Data availability is a central factor to performing holistic impact analysis. The challenges you might face will vary case by case. If you are pursuing a self-assessment your challenges will be mainly at the assessment stage, when you are assessing your performance – it is likely that you are unable as yet to assess all your impacts in detail. If you are analyzing a client or investee company then you may also face challenges at the identification stage, when compiling the company cartography, though banks and asset owners will tend to have access to more data than asset managers. These challenges are well acknowledged; the expectation is that holistic impact analysis be an iterative process over time. By providing a common methodology to all players across the investment chain the intention is to facilitate engagement and accelerate the process.
- We have seen that the Corporate Impact tool excel model is quite labour intensive to fill in. Is there an ESG data provider that would be able to fill all of those fields? How would it work for a portfolio with a large number of holdings?
Our recommendation is to view this as an iterative process. You may not be able to fill all data immediately, but you can start with the more important part of a company’s activities or portfolio. You may also start by applying this analysis to those companies that are in key sectors and that are systemically important (to a sector or to a geography). Having said this, data providers have been engaged in the PII’s activities and further engagements lie ahead to encourage and facilitate their contribution.
- Are there links to the NFRD – data gathered while implementing it? Otherwise, it seems, indeed, to be a good tool to consider necessary regulatory changes to foster creation and availability of structured data.
The data points of the Tool may indeed serve to inform regulatory reform processes such as the EU NFRD. If you are inputting to the consultation we would encourage you to allude to the Tool if/where you deem appropriate.
- Could the tool go one step further and provide automatic data on corporate that will probably be the same customers for banks/investors/users of the tool ?
Further work is needed in assessing which data points might realistically and helpfully become part of regular disclosures (see previous question) and/or be captured and shared via secure platforms, of the kind currently used for KYC. These topics will be under consideration as the Positive Impact Initiative now moves forward into its next phase.
- How far along the value chain should we consider positive and negative impacts? Parent co and all subsidiaries? Direct suppliers? End use of product?
- How far should the sources/suppliers of the company go in supply chain? Theoretically it should be all the way to the most upstream. However, in the reality it might not be possible.
Yes, this would be the aspiration. In practice this may indeed not always be possible. Our recommendation is to place particular efforts on the supply chains of the sectors that are ‘key sectors’, as per the dedicated mapping in the tool. Also, once again, the expectation is that holistic impact analysis be an iterative process over time. Thus you might start with the parent company and just a couple of subsidiaries, and next time around, expand to more subsidiaries. As this kind of analysis becomes more mainstream and the different players of the investment chain become used to discussing these topics, it will be possible to get increasingly granular.
Note that depending on the level of ISIC that you make your selection at under ‘Cartography’, you may find that some of the supply chain is already included – e.g. if you select 29 Manufacture of motor vehicles, trailers and semi-trailers, this includes both 291 Manufacture of motor vehicles and 293 Manufacture of parts and accessories for motor vehicles. Note also that the end use of products has been considered in the sector-impact mappings. For instance CO2 emissions from vehicle use, and the disposal of used vehicles / vehicle parts.
- How do you quantify the numbers? Are they from their opex, revenue or capex?
The indicators and metrics vary depending on the tool. The Corporate Analysis tool uses revenue/turnover by default, except where EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) or fixed assets are more relevant. The Portfolio tool uses a mix of drawn outstanding loans, market share and number of clients (among others).
- Noted that there is quantitative assessment of impact (scale of: 1-2) for determining company’s impact on the 22 impact radar categories. How is this quantitative scale determined?
There is no quantitative scaling. The ‘1’ and ‘2’ values are to distinguish between ‘simple’ impact associations and associations with sectors that are ‘key’, ie that are critical to an impact area. A mapping of Key Sectors has been included in the tool, based on international research and science. We welcome feedback on the mapping!
- Do the tools distinguish between extractive activities related to minerals critical to the green transition and those that are not?
The role of rare earths and metals in carbon-reduction technologies (e.g. for wind-power and the batteries for electric vehicles) is indeed acknowledged in the mapping. The grave environmental damage in non-climate impact areas is thus mapped out: negative impacts to soil for instance, as well as high energy intensity. Likewise the negative health impacts from the mining of these products is acknowledged. ‘Mining of rare earths and metals’ has been added to the ISIC list specifically to capture these often unseen parts of the ‘green’ transition. In passing it is worth noting that the same applies to ICTs, likewise highly dependent on these materials…
- So, every company in the same industry and location that is in a bank portfolio is assessed the same way? In other words, for example, if it’s a food company whose suppliers are involved with illegal deforestation or practice regenerative agriculture the assessment is the same? Another example, it also doesn’t matter if the company energy mix is based in renewables or fossil fuels, not even if it’s a resource intensive industry, right?
No. Following the first stage -Identification, follows the second stage: Assessment. The purpose of the Assessment stage is precisely to capture the specific and actual impact performance and management capabilities of a company. Regarding the specific example of renewable vs fossil fuels, note that this distinction is already made under ‘Cartography’, by selecting the appropriate items of the ISIC list.
Conclusions of the Analysis
- After the impact assessment is made, does the tool provide the possible solutions as well, to mitigate or reduce the negative impacts?
Solutions are case by case, so there is no automated solution mechanism in the tool. However, the holistic nature of the analysis means that the tool will by definition reveal areas of opportunity and solutions development that you may not have seen or considered before. You may wish to also browse through the additions to the ISIC list (in yellow on the corresponding worksheet), many of which have been added precisely for their important role in delivering solutions. Likewise the positive column of the Key Sector mapping can provide you with interesting insights.
- What does the term “climate” cover in these tools? Is it limited to GHG emissions? Is it limited to mitigation measures? What about adaptation & resilience? Doesn’t it overlap all the resource aspects, energy generation, etc?
Climate is defined in the Impact Radar as per the IPCC: Composition of the global atmosphere and its exposure to greenhouse gas (GHG) emissions as a direct factor contributing to climate change. International source: Intergovernmental Panel on Climate Change. Both mitigation and adaptation considerations have been taken into account when mapping the positive and negative associations of different sectors and activities with the climate ‘impact area’. Yes there are of course interlinkages with the resource efficiency ‘impact area’ – as a result you will find that sectors and activities that are very resource intensive are often also marked as negatively associated with the climate impact area.
- How will the tools definitions align with the EU taxonomy?
- How do the Impact Analysis Tools relate to the EU Taxonomy for sustainable activities, if at all? What are the synergies between the two, if any?
The tool does not include a new or different set of indicators to those in existence. While the 22 impact areas are spelt out, indicators of positive and negative associations are not predefined. Instead users are pointed to existing indicator sets, including those of the EU taxonomy (for climate impacts). This happens at the assessment stage, in the review of companies’ (or bank’s) performance. As part of the development process going forward, it is the intention to provide additional guidance on the applicability of existing indicators and metrics. We are also keen to promote more collaborative and targeted research on the important gaps that remain in the field of identifying relevant impact indicators for business.
You may also be interested in:
Careen Abb, Programme Leader, Positive Impact, UNEP FI – firstname.lastname@example.org
Mustafa Chaudhry, Communications, UNEP FI – email@example.com
The conclusions derived by users via the Tool are their own. Only the Tool methodology can be attributed to UNEP FI.