An impact is the effect or influence of one person, thing or action on another (New Oxford Dictionary).
Impact areas are the “themes” of the impacts, under the three pillars of sustainable development (economic, environmental, social). The impact areas used in this tool are based on the PI Impact Radar (PII, 2018).
Figure 1: Impact Radar
Source: Impact Radar, PII, 2018
Significant Impact Area
A significant impact area for an organisation is one where there is a strong correlation between the impact area and the organisation’ s current and/or future business, as a function of the type of company, the sector/s it belongs to and the countries it operates in. Understanding an organisation’s significant impact areas is key to ensure that actions are taken and targets are set in those areas where it can deliver the most positive impact and/or decrease the most negative impacts.
Impact needs, are the environmental, social and economic needs of the countries in which the company operates. Understanding these is an integral part of impact identification and assessment.
Impact identification is the process by which a company’s significant impact areas are identified, as a basis for an assessment of its impact performance and impact management capabilities, and ultimately for the definition of its PI Status.
Company impact profile
The Corporate Impact Analysis tool generates an impact profiles of the company. The profile provide an overview of significant impact areas based on the company’s typology, the sectors it supports and the countries it is operating in. Impact profiles do not reflect the company’s impact performance.
In PII’s Impact Analysis tools, Impact Assessment is the process by which a company or bank’s capacity to manage their most significant positive and negative impacts, and its performance in delivering positive impacts and managing negative impacts are reviewed. This process builds on the Impact Identification process, and yields a conclusion on the company’s PI status and possibilities.
Impact performance actual delivery of positive impacts and management of negative impacts. It can be quantitatively and/or qualitatively measured per impact area through indicators and metrics. It is judged relative to specific targets and benchmarks (e.g. as set by policy goals and targets or in industry standards).
The company or bank’s impact performance, among other things, is considered during Impact Assessment using PII’s Impact Analysis Tools in order to establish its PI status and possibilities.
Impact management covers all actions taken to drive positive impact and reduce negative impacts: identifying significant impact areas, reviewing performance, setting appropriate targets, taking action to reach those targets, monitoring their attainment, constantly improving processes and outcomes/performance, communicating both on process and performance. Effective impact management is a function of the quality of the governance, resources and processes established by the company to reduce its negative impacts and increase its positive impacts. Impact management capabilities of the company are reviewed as a part of Impact Assessment.