DBS-21-06｢A Value Model for Responsible Business｣
Philip Sugai, Graduate School of Business, Doshisha University
Reyn Koizumi, Graduate School of Business, Doshisha University (MBA 2022)
Nicholas Linnan, Graduate School of Business, Doshisha University (MBA 2022)
Satanan Phattanaprayoonvong, Graduate School of Business, Doshisha University (MBA 2021)
and Jakkraphan Phetharn, Graduate School of Business, Doshisha University (MBA 2021)

March, 2022

Abstract
From July 2021 to February 2022 the research team at Doshisha University’s Value ResearchCenter integrated an additional 346 impact measurements from six new ESG and sustainability
reporting frameworks into its existing Value Model it had previously developed in June 2020.
Even by nearly doubling the number of impact measurements, the original 7 stakeholder, 27
theme, 80 goal model remained nearly unchanged. However, due to the increased focus on theuse of palm oil, and its negative impacts on the environment and society, one additional goal
“zero palm oil use” was added to the existing “biodiversity” theme within the nature stakeholder
category bringing our total Goal count to 81. The following paper outlines the foundational
thinking that has guided our research to date, the process that we have followed to conduct our
research, and the results of our most recent research efforts. In this phase of our research, wehave added more detailed assessment of the individual sustainability reporting frameworks interms of their coverage and reliability as value measurement models.
Keywords: Value, sustainability, ESG, value model

DBS Discussion Paper Series supported by the OMRON Foundation

The purpose of a business revisited
In August 2020, the Business Roundtable, a global alliance of the world’s top business leadersannounced that the purpose of a business was to create value for itself as well as its customers,
employees, shareholders, partners, society and the planet. Shortly afterwards, the World
Economic Forum (WEF) unveiled its Davis Manifesto 2020 which echoed this same requirement
for businesses to create value beyond just enriching their shareholders.
While these aspirational announcements sound compelling, they are incomplete. This isbecause two key questions remain unanswered:
1. How specifically can this complex, multi-stakeholder view of value be consistently andobjectively measured and managed?
2. How can these measurements then help businesses create the highest levels of value
for each of these stakeholder groups?
As outlined in our 1st white paper, Valuing Value, the mindset of value measurement andmanagement requires (1) clear goals that are (2) objectively measured, (3) transparently
reported on and (4) that go beyond binary yes/no variables. In addition to this, the terms usedand processes employed for these value measurement must not be so complex or complicatedthat they make their implementation out of reach for any micro, small or medium enterprise
without the resources to hire a consulting firm to assist in their value measurement efforts. Norat the same time can the reports developed by companies related to their value impacts be socomplicated or convoluted that the average reader will not understand what is being said orreport on in the first place.
Any system developed to measure and manage value that does not adhere to theserequirements enables businesses to “value wash”, a term we’ve coined to represent any
misrepresentation of actual value impacts that a business makes on its stakeholders either
accidentally or on purpose (Sugai, 2021).
Our 1st white paper found that existing reporting and disclosure systems unfortunately do notmandate these requirements and are therefore being employed in many cases to create rather
than remove value washing from everyday business practices. Because of this, investors incompanies who value wash their value impacts face increasing levels of unknown risk in theirinvestments as these hidden impacts on stakeholders remain undocumented and threaten toundermine future revenues and profits. At the same time, corrective or collaborative measures
to optimize value for a business’s stakeholders remain limited because the actual impacts
cannot yet be clearly seen.
This leads to two essential points for any organization hoping to embrace and promote a moresustainable, value-focused approach to business.
Point #1: Elimination of value washing reduces investor risk while increasing positive
value impacts.

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Understanding this, global regulatory bodies and governments continue to push for increased
reporting and greater transparency. The latest movement towards consolidation of impact
reporting frameworks under the International Sustainability Standards Board (ISSB) after the
COP26 conference underscores this point, as do Europe’s EFRAG sustainability reporting
standards.
In a business environment where the aim is to obfuscate the truth, ignore actual impacts or todeflect attention to the more insidious impacts that businesses actually have, the importance of
these regulatory efforts cannot be understated. These efforts are not new and are in line withother global sustainability reporting initiatives such as the Global Reporting Initiative (GRI)
whose purpose is to help companies move from not reporting or under-reporting their impacts tofull and transparent disclosure of their impacts across key stakeholder groups.
Based on this, we can then plot a company’s approach to impact reporting efforts along a linear
axis called “Objective, Transparent reporting on Impacts” scaled from negative to positive asshown in Figure 1 below. The ISSB, GRI and other competing standards all aim to help
companies move from subjective and opaque impact reporting practices or none at all, toincreasingly higher levels of objectivity and transparency of their stakeholder impacts. In and of
itself, this commitment to transparent reporting must be applauded.
Figure 1: Impact Reporting

While there remains strong opposition to these regulatory efforts and their efficacy, our researchshows that reporting alone can not and must not be the end goal of sustainability
reporting. Instead, it is essential to consider this as the first step in accounting for positive andnegative value impacts on various stakeholders.
Point #2: Optimizing Value for all stakeholders is the ultimate goal of sustainability
reporting
Clearly, as we have seen over the past decades, the increased reporting of impacts while
fundamental, has been insufficient in bringing about tangible change in negative impacts on abusiness’s stakeholders including its customers, employees, partners, shareholders, society
and the planet.
Returning back to the newly revised purpose of business definitions from the Business
Roundtable and World Economic Forum, we find the need for a second axis against which tobenchmark business sustainability efforts that is focused on the actual value impacts thatbusinesses have rather than just the ones they report on.
Once impacts are recorded and reported, the next step is for businesses to begin to take2

corrective actions to decrease their negative impacts on each individual stakeholder group.
Once this process has started, then management’s focus moves to changing value destructive
impacts to value creating outcomes. Finally, once value creation has been achieved for eachstakeholder individually, then working to consistently improve the amount of overall value
created for this entire stakeholder system, and in doing so achieve the highest possible systemlevels of value creation and social impact.
Based on this idea, Figure 2 below shows four quadrants which each represent different
approaches to sustainability efforts, including Quadrant 4, with both negative objectivity &transparency in reporting and negative stakeholder impacts. In such a case, the company
actively tries to hide the truth related to its impacts and at the same time has negative impacts
on its stakeholders. Quadrant 3 with positive objectivity & transparency in reporting but negative
stakeholder value impacts, Quadrant 2 with negative objectivity and transparency in reporting
but positive stakeholder value impacts, and Quadrant 1 with both positive levels of objectivity &transparency in reporting and high stakeholder value impacts.
The goal of impact reporting frameworks and businesses who work with them should therefore
be to move into consistently higher north-east areas of this chart, entering Quadrant 1 andultimately aiming for the top right corner of this quadrant.
Figure 2: The Four Quadrants of Sustainability Efforts

Alignment with Japanese Business Philosophy
Unlike in the West, where business was built in relative harmony with ethical customs andpractices of society, in early Japan Confucian principles suggested that the aim for profits was3unethical and detrimental to social good. From this initial negative view of the merchant andbusiness owner within Japanese society, early Japanese business philosophers such as Ishida
Baigan (1685 – 1744) argued that ethical business practices were the only correct form ofbusiness and urged merchants and business leaders to focus on broader value creation forstakeholders while extracting only the necessary level of profits to power their businesses
forward in a sustainable manner. Baigan’s view of a business was that of an engine for creatingsocial good. As his disciples became more dogmatic in their interpretations of his teachings, hisoverall social movement lost momentum, but the fundamental business philosophy that hetaught inspired the Ohmi merchants of the 17th century to codify the thinking of the larger
purpose of a business into a now famous business philosophy that remains prevalent even in
many successful businesses in Japan today called “Sanpo Yoshi” or “The three directions ofvalue”. These mandate that business success hinges on creating good for (1) the buyer, (2) theseller, and (3) society as a collective whole. Failure to achieve any of these meant that abusiness could not truly be considered a “success” even if it was highly profitable for its
owners. More recent proponents of such principles have repeatedly shown that a more ethicalcapitalism, where value for other stakeholders is optimized while simultaneously creating
shareholder value is not only possible, but can serve as the foundation for long-term competitive
advantage and sustainability of a business.
With this foundation at the heart of Japan’s early embrace of capitalism, it should not be
surprising that of all businesses globally that are 200 years old or older that 56% of these arelocated in Japan. When social impact and long-term sustainability are the ultimate goal of abusiness, damaging a key stakeholder for the short-term gain of the business becomes
impossible.
This thinking has now gained a strong foundation in the West as well. For example, the conceptof Stakeholder Theory was first proposed by Freeman (1984), arguing that the strategic
management of a business requires a sensitivity to and a focus on increasing stakeholder value.
Similarly in the marketing field Vargo & Lusch’s Service Dominant Logic which was first
proposed in 2004, argue that the best way for a firm to succeed is to “serve itself by serving
others” (Vargo & Lusch, 2014). This thinking is completely aligned with the more establishedbusiness philosophy of Japan, and together these serve as a solid foundation upon which tobuild a value measurement and management model simultaneously aligned with the newly
defined purpose of a corporation which spans across seven key stakeholder groups.
Review of our past work in Valuing Value
As outlined in the first Valuing Value (Sugai et al., 2021) white paper, both the Business
Roundtable and World Economic Forum have argued that there are 7 key stakeholder groups
for which a business and its management team must strive to create value including (1) thecompany itself and its (2) customers, (3) employees, (4) shareholders, (5) partners, (6) society
within which it is embedded, and (7) the planet.
Based on this, in our first phase of our research, we followed a 5-step process to first check
whether or not existing ESG and sustainability reporting frameworks could help measure and4manage value impacts across these stakeholders, and if so, specifically how they could be
combined to effectively do so. In this second paper, we followed the same process as well.
Below is the explanation of this five-step process from the Valuing Value white paper:
Step 1: Collected publicly available impact measurements/ESG disclosure requirements
With funding from Doshisha University’s special COVID-19-related research budget, ourresearch team collected 357 publicly reported impact measurement indicators from 15 of theworld’s top sustainability reporting frameworks including (1) the UN’s Sustainable Development
Goals (SDGs), (2) the Global Reporting Initiative (GRI), (3) Global Impact Investing Network’s
GIIN-IRIS+, (4) the Sustainability Accounting Standards Board (SASB)1, (5) B-Lab’s B Impact
Assessment (BIA), (6) the International Living Future Institute’s JUST 2.0, The Capitals
Coalition’s (7) Natural Capital Protocol and (8) Social & Human Capital Protocol, Canada’s (9)Common Approach to Impact Measurement, The UK’s (10) The National TOMs Framework,
Michael Porter’s (11) Creating Shared Value, Richard Branson’s (12) The B-Team, RBL’s (13)Organizational Guidance System, (14) McKinsey’s Five Fifty psychological safety framework,and McDonough & Braungart’s (15) Cradle to Cradle Certification.
Each of these 357 indicators was entered in its entirety into a database that we created using
Microsoft Excel, and was given a unique numerical ID that was used throughout our analysis
efforts to ensure that the actual contents and meaning of each micro-indicator was not
misinterpreted or mixed together with a similar meaning from a different sustainability
framework.
Step 2: Aligned these within stakeholder categories
To (1) confirm that the stakeholders that the Business Roundtable and World Economic Forum
had mentioned were reflected in these impact measurements, and (2) that there weren’t anyother stakeholders that had been overlooked by these organization, we read through eachindividual indicator and placed it within one main stakeholder category.
As shown in Figure 3, we found that impact measurements for six of the seven stakeholder
categories existed that were multifaceted and robust. Within these 357 indicators we found that
31.9% (n=114) were related to employees, 24.9% (n=89) were related to the environment,
14.0% (n=50) were related to the firm and its governance, 12.9% (n=46) were related to society,8.1% (n=29) were related to partners, 8.1% (n=29) were related to customers, and none (n=0)
were related to shareholders. While we were at first surprised that there were no impact
measurements specifically for shareholders, we concluded that this was because existingmeasures of shareholder value are widely understood and accounted for in traditional financeand accounting practices, therefore the ESG reporting frameworks that were included in ourstudy clearly felt there was no need to include them again in additional ESG reporting
frameworks.
FIGURE 3: SEPARATING MICRO-INDICATORS INTO STAKEHOLDER GROUPS
For this first phase of research we chose to look at only SASB’s impact measurements for eCommerce and Apparel, accessories &footwear).
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Step 3: Created macro-indicator groupings
Working to address the issue of complexity, within each of these six stakeholder categories, wethen worked to organize micro-indicators that shared similar a similar focus into what we havecalled “macro-indicators.” This process is similar to how code families are created fromindividual codes during qualitative data analysis work. From these efforts, we were able tosimplify the 357 micro-indicators that we had collected into 26 macro-indicator categories asshown in Figure 2 below.
As Figure 4 shows, we identified six macro-indicators that explain how to measure Employee
Value including (1) Diversity & Equity, (2) Fair Wages, (3) Health, Welfare & Safety, (4)Development, (5) Engagement and Satisfaction, and (6) Human Rights. Similarly, six macroindicators for Value for Nature were distilled from this data and included (1) Waste and
Pollution, (2) Water, (3) Energy, (4) Products, (5) Biodiversity, and (6) Buildings and Land. For
Value for Society, four macro-indicators were found including (1) Taxes, (2) Local Community
Development, (3) Local Employment & Engagement, and (4) Charity andVolunteerism. Related to firm value, three macro-indicators emerged from the data including (1)Transparent financial reporting, (2) Governance and firm structure, and (3) Management
capability. Regarding Customer value, three macro-indicators were identified including (1) Truthin Communications, (2) Privacy and (3) Satisfaction, health and safety. Finally, related toPartner Value, four macro-indicators were identified including (1) Reporting, (2) Structure, (3)Environment & Society, and (4) Fair Labor.
FIGURE 4: DEFINING MACRO INDICATOR CATEGORIES

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Figure 4 also includes two additional pieces of data. The first column to the right of the macroindicator name, “Micro-Indicators” shows the number of micro-indicators that are housed withineach macro-indicator. The second column “Frameworks” lists the number of different
sustainability frameworks (i.e. GRI, BIA, etc.) from which these micro-indicators were sourced.
While we are confident that all macro-indicators are fully grounded in the data that wascollected, it is clear that some of these indicators are more deeply ingrained across multiple
frameworks, as well as measured from a variety of different perspectives. For example,
Employee health welfare and safety is comprised of 33 individual micro-indicators that weresourced from 9 of the 15 sustainability frameworks, making it a very rich macro-indicator,
whereas Customer: Truth in Communications was only mentioned by 1 of the 15 sustainability
frameworks (GRI) having only 3 unique micro-indicators.
Step 4: Scoring each micro-indicator
With all micro-indicators organized into larger macro-indicator categories, we then explored thequality of each micro-indicator across the first four metrics that we identified in the introduction,
including whether or not they were:
1) Goal-based: An indicator that had a clear goal or end-state that it was driving at was given 1
point if it did, and 0 points if it did not. We specifically defined a goal-based indicator as one that
“Clearly stated the goal of the measurement, identify a number or reference standard(s) that can

7specify the goal that this measurement aims to achieve.
For example, from the JUST 2.0 system related to “Gender pay equity” lists four levels of goal
achievement, with its Level 4 goal stating that an “Organization has a written policy that
documents its gender pay equity,” and that the “Organization must have a gender equity payscale with a maximum variance in pay of 5 percent between genders within each of theorganization’s pay scale classes.” This micro-indicator was given 1 point for being goalbased. However, The B-Team’s approach to this same issue also focuses on gender pay equity
but does so without defining a clear end-goal as JUST’s system does, stating that “Businesses
uphold gender balance, diversity and inclusion not only as the right thing to do, but as a driver ofshifting norms and delivering better business performance as well as economic growth.” While
this clearly addresses gender, diversity and inclusion issues within any organization, it fails tolist a clear end-state or goal, and therefore received 0 points within our assessment.
2) Objectively Measured: We defined objectively measured as any indicator that showed aclear, objective unit of measurement that was logical and reasonable for us to understand.
Specifically, this measure should have no chance for bias and the measurement for thisindicator must not be based on individual judgement. An indicator that could be objectively
measured was given 1 point, and those that could not be were given 0 points.
For example, related to the reduction of greenhouse gas (GHG) emissions, GRI disclosure 3055 requires companies to report on:a. GHG emissions reduced as a direct result of reduction initiatives, in metric tons
b. Gases included in the calculation (CO2, CH4, N2O, HFCs, PFCs, SF6, NF3, or all)c. Base year/Baseline (the rationale for choosing it)d. Scope in which reduction occurred (Scope 1,2,3)
e. Standards, methodologies, and assumptions used
This GRI disclosure is fundamentally objective in that metric tons of gasses can be measured at
the same time and from the same location by two different sensors and unless one of them isfaulty, the results will be the same. On the other hand, a non-objective goal would be similar to
the Organizational Guidance System’s question on employee/customer/community
relationships, asking respondents “Rate on a scale from 1-5 the current state of your business
about positive relation between employees and customers/community,” which is clearly asubjective measurement scale, and therefore received zero points.
3) Independently Checkable (Transparency): In addition to whether or not an indicator was
objective, the question remained as to whether or not an independent outside 3rd party could(easily) check and confirm that what was reported by a company was matched by actual
data. Our definition of this rating was that the information could be “checked by usingtransparent data that an outsider could access or obtain.” We allocated zero points to thosemicro-indicators that were not independently checkable, 1 point for those that could be
independently checkable, but that we did not have proof that this checking was actually being
done, and 2 points for those indicators that were in fact independently checkable and we had

8evidence that this feedback loop was healthily in place.
For example, related to the Organizational Guidance System measurement discussed in #2
above, clearly this rating of a relationship between employees and customers/community has no
independent measure that is regularly published and accessible by an outside third
party. Because of this, this indicator also received zero points for transparency. For the GRI
disclosure 305-5 listed above, it is conceivable that remote sensors could be placed on all GHG
emitting facilities with GHG emissions data openly documented and reported on. However, we
could find no evidence in the GRI Disclosure 305-5 discussion explaining a transparent way orsystem for companies to actually do this, nor could we find consistent evidence from GRI
companies globally of a standard way of transparently reporting on their GHG emissions andreductions. Because of this, GRI Disclosure 305-5, and in fact, all other micro-indicators that wecollected could not achieve the maximum 2-point score within this rating criteria. The highest
score achieved by any micro-indicator within our assessment then was 4 points.
4) Varies: One of the surprises of our initial efforts in Step #1 was the number of microindicators that simply required companies to file a report, with points given for simply filling indetails rather than its contents. For example, within some of the frameworks we’ve studied it ispossible to receive a positive score for reporting on the percentage of women on a company’sboard of directors, even if that number is zero. The fact that this is reported satisfies thedisclosure requirement with no qualification of the actual behaviors undertaken by thatcompany. This was true across a number of different themes and topics, and we therefore
added this final rating of an indicator based on its ability to highlight finer details beyond black
and white, yes-no answers. We specifically defined this rating as receiving zero points if “thescale that is used for this measurement is a nominal, binary, or a yes/no question,” and eligible
to receive 1 point if the micro-indicator was measured using an ordinal, interval or ratio scale.
Based on this analysis of the indicators used across all the assessment frameworks we studied,as shown in Figure 5 we found that 0% (n=0) indicators achieved a full five-point score as wehave explained above, and that only 5.3% achieved a 4-point score. This left 94.7% of theindicators that we rated (n=341) with scores of 3 or less points, with 30.8% (n=110) scoring 3
points, 16.8% (n=60) scoring 2 points, 23.5% (n=84) scoring 1 point, and 23.5% (n=84) scoringzero points. It is an understatement to say that we were surprised by these results, especiallythat nearly a quarter of all value measurements achieved zero points, meaning that they were
yes/no variables without goals that could be objectively and transparently measured, and thatnearly another quarter of all value measurements received credit for one of these factors.
One broad conclusion from our analysis is that a significant amount of work needs to be doneby the global ESG and sustainability communities to tighten their impact measures to haveclearly defined goals, establish methods for the objective and transparent reporting on these,
and to ensure that these measures go beyond simple yes/no, present/not-present binary
answers. Without such rigor put in place, too many loopholes exist such that any savvy
marketing, advertising or PR expert could “re-brand” the company’s clearly negative actions into
positive ones.

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In this step, we also circled back to the original sources of our impact measurement data to
confirm that these macro-indicators were for the most part supported by more than one
organization. As shown in Figure 6 below, except for the two macro-indicator categories that wehave created for Shareholders and Firm Capability (that we will discuss in detail subsequently),
all macro-indicators were derived from at least one of the frameworks we had studied and in
most instances there were a number of frameworks focused on exactly the same issue.
FIGURE 5: INDICATOR SCORING RESULTS

FIGURE 6: MAPPING MACRO-INDICATORS BACK TO SUSTAINABILITY FRAMEWORKS

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Step 5: Define specific goals for each macro-indicator
With each micro-indicator allocated within one of the 26 specific macro-indicator categories, wethen continued to organize micro-indicators within each of these categories so that we could
clearly define exactly what each macro-indicator was intended to achieve, and to operationalize
these definitions into specific, measurable goals. As outlined above, while most individual
indicators were poor at achieving a full five-point scale based on our assessment criteria, when
joining these together into larger goals, it became possible to develop clear goals throughaggregation around these specific themes.
Ultimately, a 27th theme focused on shareholder value measurement was added, and in total 80
goals were derived within these 27 themes, which included specific KPIs from their original ESG
and sustainability reporting framework sources for how these could be benchmarked andmeasured.
Testing Model Validity
From July 2021 through February 2022, our research team collected an additional 346 impact
measurements from six (6) new data sources including the newly released International
Sustainability Standards Board (ISSB)’s Prototype Climate-related Disclosures, the Stockholm
Resilience Center’s Planetary Boundaries, The International Finance Corporation’s (IFC)
Performance Standards, the UNDP’s SDG Impact Standards for Enterprises, the Science
Based Target’s climate disclosures, and the Task Force on Climate-related Financial
Disclosures (TCFD) guidance on metrics, targets, and transition plans.
To test the validity of our initial model, we retained the existing 7 stakeholder, 27 theme, 80 goalmodel, and assigned each of these new impact measurements into these existing categories
where possible. We kept track of any measurements that did not fit precisely into a single
category, could potentially fit into multiple categories, or for which an appropriate category did
not exist. Upon completion of this process for each framework, we discussed any categorization
issues that we encountered as well as the framework’s overall relationship with our model.

Figure 7: Stakeholder Group Coverage of new Frameworks

11All 346 of these new impact measurements matched directly with our existing stakeholder
categories. 65.3% (n=226) were related to the environment, 20.8% (n=72) were related to thefirm and its governance, 9.8% (n=34) were related to society, 1.2% (n=4) were related topartners, and none (n=0) were related to customers or shareholders. Figure 7, above, displays
the stakeholder groups we assigned to each of these six new frameworks. We did not encounterany impact measurements for which the appropriate stakeholder classification was unclear or
did not already exist in our model.
Figure 8: Theme Coverage of New Frameworks
UnitedInternational
Planetary
Nations
Finance
Boundaries
Development
Corporation
Programme
Employee: Diversity & Equity
Employee: Fair Wages
Employee: Health, Welfare, Safety
Employee: Development
Employee: Engagement and Satisfaction
Employee: Human Rights
Environment: Waste and Pollution
Environment: Water
Environment: Energy
Environment: Products
Environment: Biodiversity
Environment: Buildings
Society: Taxes
Society: Local Community Development
Society: Local Employment and Engagement
Society: Charity and Volunteer
FIRM: Reporting
Firm: Governance
Firm: Capability
Customer: Relationship
Customer: Privacy
Customer: Satisfaction, Health, and Safety
Partner: Reporting
Partner: StructurePartner: Environment & Society
Partner: Fair Labor
Shareholder: Structure
Shareholder:EVA

Science
Based
Targets
Initiative

International
Sustainability
Standards
Board

o

o
o
o
o
o
o

Task Force on
ClimateRelated
Financial
Disclosures

o
o

o
o
o

o
o

o

o
o

o

o
o
o
o
o

o

o

o
o

3

12

1

1

8

2

We found that all of these 346 new impact measurements matched precisely with our existing
27 themes. While we occasionally encountered measurements that could fit into multiple
themes, we did not find any that were not accurately described by our existing model. Figure 8
displays the themes that each of these frameworks contribute to the Value Model. Figures 7 and8 both highlight the significant difference in scope between a comprehensive framework like IFC
and a narrowly targeted measurement standard like SBTi.

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Of these 346 new impact measures, 99.7% (n=345) fit entirely within our existing 80 goals,
matching directly with at least one goal within our theme and stakeholder categories. However,
one impact measurement from ISSB’s new guidance on palm oil could not be aligned perfectlywith our existing goals within our 5th theme in the Nature stakeholder category“Biodiversity”. Because of this, one new goal, “zero palm oil use” was added to our pre-existingbiodiversity theme, bringing our total number of goals to 81. Aside from this, our model testing
exercise resulted in greater confidence in the validity of our model, as the process of nearly
doubling the data resulted in no new stakeholder or theme classifications, and only one new
goal.
Based on the benefits we found from this experience, we will continue to update the data
included within our Value Model as scientific consensus evolves and in keeping with
developments within and across stakeholder groups.
Grading our newest data sources:
Following the same process applied to our initial set of sustainability reporting frameworks in ourJune 2021 Valuing Value paper, we assessed each impact measurement for its (1) objective
measurement (zero vs one point), (2) whether it was independently checkable with evidence ofsuch practices (zero, one or two points), (3) whether it used an ordinal scale or higher variable(zero or one point), and (4) whether it included an end-goal (zero or one point).
As this phase of our research also included a pre-existing model that we could benchmark newframeworks against, we also scored each of these six new frameworks as follows:
1) Stakeholder coverage: Of the seven total stakeholders included in the Business
Roundtable and World Economic Forum’s definitions of the purpose of a business, howmany were covered by each framework.
2) Theme coverage: Of the 27 themes identified in our first phase of research, how many ofthese were covered by each framework.
3) Goal coverage: Of the 80 goals identified in our first phase of research, how many ofthese were covered by each framework.
4) Total points, total possible, framework score: After scoring each impact measurement
against our existing assessment model, we created a “total points” score by summing
the points earned by all impact measurements within a single framework. We thencreated a “total possible” score by multiplying each measurement by the maximum scoreof 5 points. By dividing the total points score by the total possible score, we arrived at
the overall “framework score,” which we have shown as the percentage of total possible
points that the framework’s impact measurements achieved. We concluded that thehigher the percentage, the more reliable the framework would be in measuring the value
impacts that it covered.

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Stockholm Resilience Center’s Planetary Boundaries

Scoring:
Stakeholder
Coverage
1/7
14%

Theme
Coverage
3/27
11%

Total Points

Total Possible

72

80

Goal Coverage
6/80
8%Framework
Score
90%

Stakeholders, themes and goals covered from the Valuing Value model:
NatureN1: Waste and Pollution
N1-A: Carbon Neutral
N1-B: Zero Non-GHG Air Emissions
N1-D: 100% Waste Reclamation and Recycling
N2: Water
N2-A: Water Infrastructure Interaction Strategy
N2-C: Discharge Water Quality
N5: Biodiversity
N5-A: Net Zero Biodiversity Impact
Total Nature Impact Measurements

Number of
Measurements
3
2
3
2
2
4
16

Discussion:
The Stockholm Resilience Centre’s Planetary Boundaries framework identifies nine major
processes that govern Earth’s environmental stability: Stratospheric ozone depletion, biosphere
integrity, chemical pollution & novel entities, climate change, ocean acidification, freshwater use,land-system change, biogeochemical flows, and atmospheric aerosol loading. The frameworkthen establishes “planetary boundaries” - the safe, sustainable operating space for humanactivities.
We added the Planetary Boundaries to the Value Model by integrating the sixteen new impact
measurements from this framework into our Nature stakeholder category. We categorized eightof these measurements as N1 - Waste and Pollution, four as N2 - Water, and four as N5 Biodiversity. The Planetary Boundaries are our highest-scoring set of impact measurements
thus far; all sixteen measurements received a full five points in our assessment framework as
each one is goal-based, objectively measured, independently checkable, and includes a scalevariable for measurement.

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The only issue we encountered while adding the Boundaries to our model is that they are
extremely high-level limits governing enormous Earth systems. They are not designed to guidethe decision-making processes of individual businesses, creating a gap that must be filled.
Accordingly, the Planetary Boundaries serve two main purposes within our Value Model: First,
to ensure that our model keeps firms’ environmental impacts well within the boundaries.
Second, to translate the planet and region-level boundaries into metrics and goals relevant tofirms of all sizes, via integration with firm-level impact measurement systems. By pairing thePlanetary Boundaries with firm-level impact reporting and goal-setting metrics, we hope tocomprehensively document and address the environmental challenges facing stakeholders at alllevels.

15

International Finance Corporation (IFC)
Scoring:
Stakeholder
Coverage
5/7
71%

Theme
Coverage
10/27
37%

Goal Coverage
14/80
18%

Total Points

Total Possible

Framework
Score

134

335

40%

Stakeholders, themes and goals covered from the Valuing Value model:
Employee

Number of
Measurements

E1: Diversity and Equity
E1-A: Full Time Employment
E1-B: Ethnic Diversity
E3: Health, Welfare, and Safety
E3-E: Occupational Safety and Health
Coverage
E3-F: Employee Mental Health andWellbeing
E6: Human Rights
E6-B: Human Rights Corrective Action
Total Employee Impact Measurements
NatureN1: Waste and Pollution
N1-B: Zero Non-GHG Air Emissions
N1-D: 100: Waste Reclamation and Recycling
N2: Water
N2-B: Water Use Reporting
N5: Biodiversity
N5-A: Net Zero Biodiversity Impact
N6: Buildings and Land
N6-B: 100% Certified Safe and Accessible
Buildings
Total Nature Impact Measurements

1
1

1
1
6
10
Number of
Measurements
1
4
1
7

1
14

16

Society

Number of
Measurements

S2: Local Community Development
S2-A: Healthy, Safe, Resilient Community
Total Society Impact Measurements
Firm

37
37
Number of
Measurements

F2: GovernanceF2-B: Governance Reporting
F2-D: Outside Director Ratio
Total Firm Impact Measurements
Partner
P4: Fair Labor Practices
P4-A: Fair Labor Practices Throughout Supply
Chain and Distribution Channels
Total Partner Impact Measurements

3
1
4
Number of
Measurements22Discussion:
The IFC’s Performance Standards are designed to be a comprehensive environmental andsocial impact reporting framework. IFC emphasizes the creation of an environmental and social
management system developed through active stakeholder engagement. We added all of the
IFC Performance Standards into our Value Model integrating 67 new impact measurements
across five of our seven existing stakeholder groups.
IFC’s impact measurements scored very consistently; all received two points each, one forobjective measurability and another for independent checkability. The Performance Standards’
impact metrics were all measured nominally or as a binary yes/no, precluding any points forordinal scoring. Additionally, as a reporting-oriented framework, IFC by design does not set
goals or limits for firms to comply with. Its integration with the Value Model adds, as the namesuggests, goals for the reporting categories to work towards.
IFC added a large amount of useful qualitative information for five of the seven stakeholders in
our framework. In particular, the Performance Standards contributed a set of fundamental
workers’ rights, as well as new societal impact considerations related to indigenous peoples’
rights and the management of culturally significant sites and artifacts. IFC contributed supply
chain monitoring impact measurements as well as detailed emergency preparedness and risk
management guidelines.
Two major themes were present throughout IFC’s guidance. First, the Performance Standards’
approach to ESG impact reporting centered around policy and management, rather thanquantitative impact measurement standards. Second, IFC emphasized stakeholder involvement17

to a very high degree. Via its Environmental and Social Management System (ESMS), IFC
developed a policymaking process designed to encourage active stakeholder participation andgive all affected parties a genuine voice in firms’ policies.

18United Nations Development Programme (UNDP)
Scoring:
Stakeholder
Coverage
1/7
14%

Theme
Coverage
1/27
4%

Total Points

Total Possible

47

275

Goal Coverage
2/80
3%Framework
Score
17%

Stakeholders, themes and goals covered from the Valuing Value model:
Firm
F2: GovernanceF2-A: Mission Driven
F2-B: Governance Reporting
Total Firm Impact Measurements

Number of
Measurements
37
18
55

Discussion:
The UNDP’s SDG Impact Standards for Enterprises are designed to integrate the UN’s
Sustainable Development Goals with businesses’ organizational and decision-making
structures. Unlike the environmental accounting frameworks that contribute most of our Nature
stakeholder impact measurements, the UNDP is concerned primarily with structural andprocedural change rather than KPI-focused reporting. Instead of reporting on GHG emission
levels or product lifecycle impacts, the UNDP asks firms to adopt the SDGs on a foundational
level.
We added the UNDP’s guidance to our Value Model by integrating each of the UNDP’s 55
practice indicators into the Firm stakeholder category. We then classified all of these impact
measurements as F2 - Governance, making UNDP the single largest contributor to ourGovernance macro-indicator.
The UNDP’s impact measurements each received relatively low scores in our impact
measurement scoring process, with the highest-rated measurements receiving only two points one point for objective measurability and another for independent checkability. This is largely
due to the format of UNDP’s practice indicators, which serve as qualitative instructions for
adopting the SDGs without defined measurements or goals. However, the addition of these
impact measurements establishes more direct connections between the Value Model and theimplementation of the Sustainable Development Goals. While they do not set new goals forfirms to reach, UNDP’s intent to align firms’ governance structures and decision-making

19

processes with the SDGs helps them to consider stakeholder value through every aspect of
their business.

20

Science-based Targets Initiative (SBTi)

Scoring:
Stakeholder
Coverage
1/7
14%

Theme
Coverage
1/27
4%

Total Points

Total Possible

5

5

Goal Coverage
1/80
1%Framework
Score
100%

Stakeholders, themes and goals covered from the Valuing Value model:
NatureN1: Waste and Pollution
N1-A: Carbon Neutral
Total Nature Impact Measurements

Number of
Measurements
1
1Discussion:
The SBTi encourages firms to reduce their Scope 1, 2, and 3 greenhouse gas emissions in linewith the Paris Agreement’s warming target of 1.5 degrees. To join the Initiative, businesses
must develop their own greenhouse gas emissions targets and submit them to the SBTi forreview and approval. These emissions targets must be compliant with the Greenhouse Gas
Protocol and the Initiative’s own requirements for ambition, timeframe, and industry-specificcoverage.
We added SBTi to our model as a single Nature impact measurement within N1 - Waste and
Pollution. The Initiative is one of only two frameworks we have reviewed thus far that achieve afull five points for all impact measurements. The reason for this high score to be allocated ot
SBTi is due to the Initiative’s detailed requirements and mandatory review process, which
produces GHG emissions policies that meet all of our existing scoring criteria.
SBTi is immensely helpful for our existing N1 – Waste and Pollution indicators, explicitly linking
firm-level greenhouse gas emissions with their impacts on a planetary scale. Throughout the
Nature indicator categorization process, we have noted the difficulty of translating planet-level
impact measurements into actionable firm-level policies. SBTi makes this possible, establishingsynergistic links between individual firms’ GHG emissions policies and the Planetary
Boundaries’ eight N1 - Waste and Pollution indicators, as well as with the Greenhouse Gas
Protocol and the Paris Agreement itself.

21

International Sustainability Standards Board (ISSB)
Scoring:
Stakeholder
Coverage
3/7
43%

Theme
Coverage
8/27
30%

Total Points

Total Possible

421

1000

Goal Coverage
22/80
28%
Framework
Score
42%

Stakeholders, themes and goals covered from the Valuing Value model:
NatureN1: Waste and Pollution
N1-A: Carbon Neutral
N1-B: Zero Non-GHG Air Emissions
N1-D: 100% Waste Reclamation and Recycling
N2: Water
N2-A: Water Infrastructure Interaction
Strategy
N2-B: Water Use Reporting
N2-C: Discharge Water Quality
N3: Energy
N3-A: Energy Consumption Reporting
N3-B: Renewable Energy Operation
N3-C: Carbon Neutral Products
N4: Products and Services
N4-A: Transparently Reported Product Impact
N4-B: Sustainable Sourcing of Raw Material
N4-C: Products with Positive Social andEnvironmental Impact
N4-D: Efficient Packaging
N4-E: Efficient Transportation
N5: Biodiversity
N5-A: Net Zero Biodiversity Impact
N5-B: Humane, Compassionate Treatment of
All Animals
N5-C: Zero Palm Oil Use
N6: Buildings and Land

Number of
Measurements
19
1
5

12
10
2
6
16
9
47
10
31
1
14
5
1
1

22

N6-A: Transparently Reported Building andLand Use
N6-B: 100% Certified Safe and Accessible
Buildings
Total Nature Impact Measurements
Firm

1
2
193
Number of
Measurements

F1: Financial Reporting
F1-B: Government RelationshipTotal Firm Impact Measurements
Partner
P3: Responsible Partners
P3-A: Suppliers and Distributor Impact
ReportingP3-B: Environmental and Social Operating
Requirements
Total Partner Impact Measurements

55
Number of
Measurements1
12

Discussion:
The ISSB was established by the IFRS Foundation during the COP26 summit to develop
universal ESG reporting standards. In November 2021, it released its Prototype Climate-related
Disclosures, an environmental accounting framework designed to provide financial stakeholders
with comprehensive, standardized information regarding climate-related risks and opportunities.
Adding the Prototype Climate-related Disclosures to the Value Model resulted in 200 new
impact measurements spread across the Nature, Firm, and Partners stakeholder categories.
Accordingly, ISSB is now the largest single contributor of impact measurements to our Value
Model. As a standardized environmental accounting framework, these impact measurements
tended to be objectively measured, independently checkable, and measured ordinally. However,none of the 200 measurements received points for having a goal. Much like IFC’s PerformanceStandards, the ISSB’s Disclosures are purely a reporting framework, without any goal-setting
aspirations.
The ISSB’s prototype standards, as integrated into our framework, provide a set of clearly
defined impact measurements tailored to industries with particularly large environmental
impacts, such as oil & gas, utilities, and logistics. These industry-specific measurements arevery helpful for firms to precisely quantify their sustainability impacts and provided theinspiration for our 81st goal, N5-C within the Biodiversity theme, “zero palm oil use”. Many ofthese 200 impact measurements deal with use-phase environmental impacts, which contributed
103 new lifecycle impact measurements to our Products and Services macro-indicator. One of
ISSB’s strongest contributions to our model is its ability to precisely quantify product impacts

23

from raw material sourcing through end-of-life. Simultaneously, our model augments ISSB’s
Disclosures by defining goals, targets, and limits towards which individual ESG disclosures areoriented.

24

Task Force on Climate-related Financial Disclosures (TCFD)
Scoring:
Stakeholders
Covered2/7
29%

ThemesCovered
2/27
7%

Total Points

Total Possible

Framework
Score

0

35

0%

Goals Covered
3/80
4%

Stakeholders, themes and goals covered from the Valuing Value model:
NatureNumber of
Measurements

N1: Waste and Pollution
N1-A: Carbon Neutral
Total Nature Impact Measurements
Firm
F2: GovernanceF2-A: Mission Driven
F2-B: Governance Reporting
Total Firm Impact Measurements2
2
Number of
Measurements
41
5Discussion:
The TCFD was established by the Financial Stability Board to furnish shareholders and otherfinancial stakeholders with climate-related information. In October 2021, TFCD released its
Guidance on Metrics, Targets, and Transition Plans. Unlike IFC, ISSB, and many otherenvironmental accounting regimes, TCFD’s Guidance adopts an open-ended approach to ESG
reporting. Rather than mandating disclosures with specific reporting categories and units ofmeasure, TCFD’s guidance sets seven broad reporting categories and allows firms to choose
the metrics most relevant to their individual situations. TCFD provides guidance and reporting
standards on what constitutes appropriate metrics but does not require verification andcertification like SBTi.
We added TCFD’s 2021 Guidance on Metrics, Targets, and Transition Plans to our Value Modelby creating one impact measurement for each of the seven cross-industry metric categories:
GHG Emissions, Transition Risks, Physical Risks, Climate-Related Opportunities, Capital
Deployment, Internal Carbon Prices, and Renumeration. This resulted in five new Nature
measurements and two new Firm measurements. Because of the framework’s non-specificity,25

wherein firms are left to create their own measurements and goals, TCFD scored the lowest of
our six new frameworks. None of the seven impact measurements scored any points, and theframework as a whole scored zero points.
Adding TCFD to the Value Model has been a priority due to the rapid adoption of the Task
Force’s reporting standards. Firms across the world, and especially in Japan, have voluntarily
committed to TCFD-compliant disclosures, and the UK has mandated TCFD adoption for its
largest companies. The Task Force’s open-ended approach to reporting is highly compatible
with our model, and our intent is for firms adopting the 81 Goals to be entirely compliant with
TCFD’s reporting requirements. Within our model, TCFD aligns with the ISSB prototype
standards particularly strongly, with ISSB’s industry-specific measurements providing a starting
point for TCFD-compliant reporting. In return, TCFD contributes high-level reporting principles
that contextualize our more granular impact measurements.

26

Introduction of the 81st Goal: Palm Oil
During our research efforts in the months following the publication of Valuing Value, we
identified the need for a new goal related to Value for Nature focused on the elimination of palm
oil use. From deforestation, habitat loss, and water pollution to greenhouse gas and particulate
air emissions, palm oil’s environmental impacts span several of our existing indicatorclassifications, and their severity merits their own dedicated goal. Accordingly, we are
introducing a new goal in the Value for Nature stakeholder category devoted to reporting,
reducing, and ultimately, eliminating palm oil use throughout firms’ value chains within our
existing Biodiversity theme (N5).
N5-C: Zero Palm Oil Use
Policy: Organization has a written policy related to its sourcing and use of Palm
Oil.
Practice Goal: Zero (0) use of Palm Oil in the organization’s operations or in its
supply chain.
This new goal has been adapted from ISSB’s reporting standard for “Environmental and Social
Impacts of Palm Oil Supply Chain”, which we have integrated as impact measurement 678:
678. Indicator: Environmental and Social Impacts of Palm Oil Supply Chain
Measurement: Amount of palm oil sourced, percentage certified through theRoundtable on Sustainable Palm Oil (RSPO) supply chains as (a) Identity
Preserved,(b) Segregated, (c) Mass Balance, or (d) Book & Claim.

Conclusion:
With the inclusion of these six additional frameworks and reporting standards, not only have wenearly doubled the number of impact measurements included in our model, but in doing so, we
have confirmed that our initial classification of impact measurements into stakeholders, themes
and goals, as outlined in our initial white paper was both valid and reliable.
While we will continue to add additional frameworks into our Value Model, we now aim to switch
our focus to the quantification of this model and its impacts, and mapping these against datathat is currently reported on by businesses themselves and collected by various data
providers. We continue to seek out other researchers, organizations and institutions committed
to bringing transparency and rigor to the reporting of value impacts, and hope that if thecontents of this white paper add value to your thinking or efforts that you will reach out andintroduce yourself to our team. We continue to look for strategic partners and collaborators toamplify and enhance our efforts globally.

27

28

The Value Research Center’s 7 – 27 – 81 Model
Through the collection of 703 impact measurements from more than 20 of the world’s top ESG
and sustainability reporting frameworks, our current model includes 7 stakeholders, 27 themes
and 81 goals as outlined visually below:

29

30

31

32

33

34

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Freeman, R. E. (1984). Strategic Management: A Stakeholder Approach (Boston: Pitman,
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Sugai, P. (2021). The Definition, Identification and Eradication of Value Washing. Journal of
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Sugai, P., Phattanaprayoonvong, S., Phetharn, J., Yamazaki, M. (2021) Valuing Value -Asynthesis of global sustainability frameworks to establish objective and transparent goals tomeasure value for a firm, its shareholders, customers, employees, partners, society and theplanet [Discussion Paper, No: DBS-21-01]. Doshisha Business School.
https://bs.doshisha.ac.jp/studygroup/discussion_paper.html
Vargo, S.L. and Lusch, R.F. (2004), “Evolving to a new dominant logic for marketing”, Journal ofMarketing, Vol. 68 No. 1, pp. 1-17.
Lusch, R. F., & Vargo, S. L. (2014). Service-dominant logic: Premises, perspectives,
possibilities. Cambridge University Press.

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