INTERNATIONAL
FOUNDATION FOR
VA L U I N G I M PAC T S

GENERAL METHODOLOGY 1

Conceptual Framework for

ImpactAccounting

GENERAL METHODOLOGY 1
CONCEPTUAL FRAMEWORK FOR IMPACT ACCOUNTINGThe International Foundation for Valuing Impacts, Inc. (IFVI) is a section 501(c)(3) public charity dedicated tobuilding and scaling the practice of impact accounting to promote decision-making based on risk, return, andimpact.
The Value Balancing Alliance (VBA) is an independent and not-for-profit member association organized under
German law founded with the ambition of changing the way company performance is measured and valued so
as to enable decision makers to act consciously.
Information contained in this publication does not constitute financial or legal advice and is not a substitute forthe services of an appropriately qualified professional. IFVI and VBA disclaim all liability whatsoever arising fromthis publication or any use thereof.
© International Foundation for Valuing Impacts, Inc. and Value Balancing Alliance, e.V.
This work is licensed under the Creative Commons Attribution – No Derivatives 4.0 License. To view a copy ofthis license, visit https://creativecommons.org/licenses/by-nd/4.0/.
All rights reserved.

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2The Methodology is governed by the Valuation Technical & Practitioner Committee (VTPC), an independent
committee comprising 18 members, established by IFVI and authorized by its Terms of Reference to direct,
validate, and approve impact accounting research and methodology produced by the cooperation of the IFVI
and VBA.

Methodology development aims to follow a rigorous and credible due process balanced with the urgent anddynamic needs of stakeholders in the face of great social and environmental challenges. The development
process is outlined in the Due Process Protocol and designed to be impact-focused, stakeholder-informed,
collaborative, and transparent. As detailed in the Due Process Protocol, formal methodology statements
undergo public exposure prior to final approval by the VTPC.
The IFVI Board of Directors provides oversight to the Due Process Protocol through its Due Process OversightCommittee. More information about the VTPC and Due Process Protocol are available in the VTPC Terms ofReference and Due Process Protocol.

CONCEPTUAL FRAMEWORK FOR IMPACT ACCOUNTINGVTPC members are global leaders in the fields of impact, sustainability, accounting, business, and finance.
Members provide advice in their individual capacities as experts, with composition and procedures designed
to ensure independence, balance, and the avoidance of conflicts of interest. Please refer to the full Terms ofReference for information regarding membership, voting, and approval processes.

GENERAL METHODOLOGY 1

This publication has been produced by the International Foundation for Valuing Impacts (IFVI) in partnership with
the Value Balancing Alliance (VBA) as part of the impact accounting system (the Methodology). The Methodology
is a globally applicable and comprehensive methodology for the public good for valuing organizational social andenvironmental impact that is designed for incorporation into financial analysis and organizational planning anddecision-making.

Questions or comments about IFVI governance or methodology can be submitted to the VTPC at
VTPCLeadership@ifvi.org, the Chair of the DPOC at DueProcessOversight@ifvi.org, or directly to technical staff
at research@ifvi.org.

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1 INTRODUCTION

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1.1 Document purpose
1.2 Long-term vision for impact accounting
1.3 Architecture of the Methodology
1.4 Objective of the General Methodology

2 PURPOSE AND APPLICATIONS OF THE METHODOLOGY

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2.1 Purpose statement
2.2 Preparers of impact accounts and users of impact information

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3.1 Applying the qualitative characteristics of impact information
3.2 Relevance
3.3 Faithful representation
3.4 Comparability
3.5 Verifiability
3.6 Understandability
3.7 Use of the enhancing qualitative characteristics of impact information

4 FUNDAMENTAL CONCEPTS OF IMPACT ACCOUNTING

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4.1 The role of impact in impact accounting
4.2 The definition of impact
4.3 Comparisons between financial and sustainability topics
4.4 Fair presentation
4.5 Impact pathways
4.6 Reference scenario
4.7 The perspective of monetary valuation
4.8 Value chain
4.9 Stakeholders
4.10 Time periods and accrual impact accounting
4.11 Attribution of impacts

5 IMPACT MATERIALIT Y AND THE PREPARATION OF IMPACT ACCOUNTS
5.1 Impact materiality as the basis for impact accounts
5.2 The scope of impact materiality
5.3 The preparation of impact accounts
5.4 Sustainability context, impact identification, and measurement and valuation
5.5 Impacts for which a standardized impact pathway is not available

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APPENDIX A: GLOSSARY

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BIBLIOGRAPHY30

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3 QUALITATIVE CHARACTERISTICS OF IMPACT INFORMATIONGENERAL METHODOLOGY 1

Table of Contents

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GENERAL METHODOLOGY 1

1. Introduction

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1.1 DOCUMENT PURPOSE

2. The Methodology is a globally applicablesystem for measuring and valuing the impacts ofcorporate entities (entities or an entity) on people
and the natural environment. For the purposesof the Methodology, the valuation of an impact isunderstood to mean the use of a monetary valuation
technique, unless otherwise stated.1
3. The content of the Methodology builds onframeworks and protocols published by leadingorganizations in the impact management ecosystemand sustainability-related disclosures required bygoverning jurisdictions and international standard
setters.
1.2 LONG-TERM VISION FOR IMPACTACCOUNTING
4. The long-term vision for the Methodology is
to develop a system of impact accounting thatgenerates impact information that is as foundational
to corporate and investor decision-making as financial
information generated by financial accounting andcontained in general purpose financial reporting.
5. In contrast to general purpose financial reporting,the line between preparers of information and users
of information in impact accounting is not clearly
defined. The Methodology is designed to be appliedby either managers of an entity or investors in an

6. Impact accounts are used to derive impact
information. Impact information includes, but is
not limited to, impacts that have been classified
and aggregated for the purpose of presentation,
supplemental notes that describe the assumptions,data, or methods used to measure and value impacts,and qualitative commentary that contextualizes
impacts. The main users of impact information are
managers of an entity, investors in an entity, andaffected stakeholders of an entity’s impacts. Impact
information informs decision-making by interpreting
impacts in comparable and understandable terms,
specifically monetary units. Impact information isuseful for considering trade-offs between different
sustainability topics and between sustainability topics
and financial topics.
7. To prepare impact accounts, an impact materiality
perspective is applied to determine which impacts toinclude in an entity’s impact accounts. Impacts thatare material from an impact materiality perspective
are included in impact accounts regardless ofwhether they trigger or may trigger material financial
effects on the entity. The impact information derived
from impact accounts3 can be used to informan entity’s materiality assessment process. The
monetary valuation of an impact in the Methodology
is performed from the perspective of affectedstakeholders, or society in general, as opposed to theperspective of the entity.

1.

The role and importance of valuing impacts is aligned with the Natural Capital Protocol and the Social & Human Capital Protocol of the Capitals Coalition,
the Impact-Weighted Accounts Framework of the Impact Economy Foundation, and Principle 3: Value the Things That Matter of Social Value International.
In the case of the Capitals Coalition’s protocols, valuation is recognized to encompass many different approaches, including monetization. In the case of
the Impact Economy Foundation’s Impact-Weighted Accounts Framework, the principle of commensurability recommends the use of a monetary unit. In
the case of Social Value International’s Principle 3: Value the Things That Matter, the use of a monetary valuation technique should be considered in lightof the audience, the type of decision being made, and the level of rigor required.

2.

Impact accounts is synonymous with and used in place of impact-weighted accounts throughout the Methodology.

3.

Consideration of the effects of impacts on stakeholders to determine the relevance of information is consistent with the principles of relevance andsignificance in the Natural Capital Protocol and the Social & Human Capital Protocol of the Capitals Coalition, the double materiality view utilized in the
Impact-Weighted Accounts Framework of the Impact Economy Foundation, and Principle 4: Only Include What Is Material of Social Value International.

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1. The purpose of this document is to introduce
the impact accounting system (the Methodology)
that is being developed by the partnership between
the International Foundation for Valuing Impacts(IFVI) and the Value Balancing Alliance (VBA) and toestablish the foundations of its General Methodology,
or the component of the Methodology that is
generalizable across topics and industries. The
General Methodology is to be developed throughseveral methodological statements. This statement
establishes key concepts, definitions, and principles
for the Methodology.

entity to produce impact accounts.2 Impact accounts
measure the positive and negative impacts of anentity on people and the natural environment. To
produce impact accounts, it may be advantageous
to have direct access to the operational data of theentity; however, the Methodology is flexible enoughto be applied by investors and other stakeholders
to prepare impact accounts from an external
perspective. An external perspective refers to the
preparation of impact accounts from outside of theentity and may result in potential limitations, which aredescribed throughout the Methodology.

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1. Introduction

69. The vision for impact accounting is unlikely to beachieved in the short term because it takes time tosocialize, understand, accept, and implement new
ways of assessing corporate performance. Further,limitations exist to impact measurement and valuation,
including that the valuation of certain impacts inmonetary terms may not always produce decisionuseful information. Nevertheless, establishing a goal
towards which to strive, and continually addressing
possible limitations, is essential if impact accounting is
to evolve so as to improve its usefulness.5
10. There are many ways to conceptualize andimplement impact valuation. The Methodology isintended to provide a credible and standardized
approach that promotes the comparability ofsustainability-related data at scale through monetaryvaluation. Additional approaches may nonethelesscomplement the impact accounting systemdeveloped in the Methodology.

1.3 ARCHITECTURE OF THE METHODOLOGY
11. The Methodology is developed through a system ofinterrelated statements.
a.

General Methodology: The General Methodology
establishes the system of and conceptual
elements for impact accounting, including the
purpose, qualitative characteristics, fundamental
concepts, impact materiality, and measurement
and valuation methods. The General Methodology
is comprised of multiple statements, with thisstatement being the first.

b.

Topic Methodologies: The Topic Methodologies
include guidance for the measurement andvaluation of impacts at the sustainability topic
level. The inclusion of impacts related to any
specific topic in an entity’s impact accounts isbased on the application of impact materiality.
The Topic Methodologies are designed to apply
across industries.

c.

Industry-specific Methodologies: The Industryspecific Methodologies include guidance for themeasurement and valuation of impacts at theindustry-specific level. The inclusion of industryspecific impacts in an entity’s impact accounts
is based on the application of impact materiality.
Industry-specific methodologies are developedin circumstances in which a topic cannot be
generalized across industries.

12. Topic and Industry-specific Methodologies
are published in the form of standardized impact
pathways, and may include additional information
related to data sources, measurement and valuation
methods, and resources that establish links between
the activities of an entity and impacts.

CONCEPTUAL FRAMEWORK FOR IMPACT ACCOUNTING

8. To a large extent, and consistent with general
purpose financial reporting, impact accounts are basedon estimates, judgments, and models rather than exact
depictions. When impacts can only be estimated,measurement uncertainty arises. The use of reasonableestimates is an essential part of impact accounting anddoes not undermine the usefulness of the information
if the estimates are accurately described and explained.
Even a high level of measurement uncertainty would
not necessarily prevent impact accounts fromproviding useful information.4

GENERAL METHODOLOGY 1

1. Introduction

13. The Methodology is designed with consideration
given to practical feasibility and scalability.
Additional documents may be developed to support
interpretation and application of the Methodology,
separate from the Methodology itself.

4.

Adapted from IFRS. (2023). IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information.

5.

Adapted from IFRS. (2018). Conceptual Framework for Financial Reporting.

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develop a system of impact accounting andenable the development of Topic and Industryspecific Methodologies based on consistentconcepts, definitions, methods, and principles;b.

assist preparers to generate impact accounts
based on consistent approaches; andc.

assist users to understand and interpret impact
information that is derived from impact accounts.

16. No content in the General Methodology
overrides guidance in Topic and Industry-specificMethodologies. To meet the purpose of impact
accounts, certain guidance may depart from
aspects of the General Methodology. The General
Methodology may be revised periodically and revisionsof the General Methodology will not automaticallylead to changes in Topic or Industry-specificMethodologies.

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14. The General Methodology serves as the foundation
for the Methodology, meaning that it applies to all
Topic and Industry-specific Methodologies. The
concepts of and methods for impact accounting are
not inherently consistent across sustainability topics
and industries. The General Methodology provides
guidance on the conceptual and methodologicalcomponents that are generalizable.

15. The objective of the General Methodology is to:

GENERAL METHODOLOGY 1

1.4 O BJECTIVE OF THE GENERALMETHODOLOGY8

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2. Purpose andApplications of
the Methodology

92.1 PURPOSE STATEMENTa.

i.

18. Sustainability refers to the ability to meet theneeds of the present without compromising theability of future generations to meet their own needs.
Sustainability incorporates meeting the basic needsof all, extending to all the opportunity to fulfill their
aspirations for a better life, and observing limitations
imposed by environmental resources and the ability ofthe biosphere to absorb the effects of human activities.6
19. The Methodology is useful for entities andinvestors seeking to manage sustainability-relatedrisks, opportunities, and impacts, and it further
supports decision-making aimed at generating
positive impacts and reducing negative impacts inorder to improve the lives of affected stakeholders as
an objective in and of itself.

b.

2.2 PREPARERS OF IMPACT ACCOUNTSAND USERS OF IMPACT INFORMATION
20. Any entity in any business sector, in any
geography, and at any organizational level can use
the Methodology to prepare impact accounts. The
Methodology can also be applied by any investor in an
entity to prepare impact accounts from an external
perspective.
21. For the avoidance of doubt, the Methodology
should not be applied to present impacts in a mannerthat is slanted in favor of positive impacts or is notneutral, for example by emphasizing a division of anentity that generates more positive impacts and fewer
negative impacts than the entity as a whole.
22. Impact information is derived from impact ac6.

c.

corporate management, including businessacquisitions, mergers, and/or joint ventures,
capital budgeting and investment, corporate
strategy, distribution, procurement, and supply
chain, employee compensation, engagement,
and performance targets, governancecontrols, processes, and procedures,new market entry and restructuring,product portfolio decisions, research anddevelopment, and risk management; andexisting or potential investors, lenders and othercreditors can use impact information reported in
an entity’s sustainability-related disclosures or
can prepare impact accounts from an external
perspective to inform investment decisions basedon:i.

an assessment of the positive and negative
impacts of an entity; andii.

an assessment of an entity’s enterprisevalue, including consideration of risks andopportunities that arise from an entity’s
impacts.

CONCEPTUAL FRAMEWORK FOR IMPACT ACCOUNTING

17. The purpose of the Methodology is to produce
impact accounts and generate impact informationthat enhances decision-making by entities
and investors related to an entity’s effects onsustainability. Impact information can be used toassess trade-offs between sustainability topics andalongside financial information to assess trade-offs
between sustainability topics and financial topics.

counts and can be used for decision-making by
the following users in the applications described
below. The use of impact information is not limited to the scenarios described herein.
managers of the entity, including executives,
finance departments, risk officers, andsustainability experts, can use impact information
to inform decision-making related to:

GENERAL METHODOLOGY 1

2. Purpose and Applications of
the Methodology

affected stakeholders, including individuals orgroups whose well-being is affected or could be
affected by the entity’s activities and its business
relationships across its value chain, can use
impact information to understand the significanceof impacts.
i.

Affected stakeholders use impact information
to inform a range of decisions, including
those related to consumption, employment,
procurement, and policymaking.

The term sustainability is adopted from the complete definition of sustainable development in section 3.27 of Brundtland, G. H. (1987). Our
Common Future: World Commission on Environment and Development. United Nations.

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3. Qualitative
Characteristics
of Impact
Information

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3.1 APPLYING THE QUALITATIVECHARACTERISTICS OF IMPACTINFORMATION 7
23. For the purposes of preparing impact accounts,
which includes measuring and valuing the impactsof an entity, and disclosing impact information insustainability-related disclosures, the following should
apply:b.

the fundamental qualitative characteristics ofimpact information, i.e., relevance and faithfulrepresentation; andthe enhancing qualitative characteristics ofimpact information, i.e., comparability, verifiability,
and understandability.

24. The qualitative characteristics of impact
information should be applied at the time when
impact accounts are prepared and any impact
information derived from those accounts is disclosed.
Over time, the qualitative characteristics may nolonger apply to impact information from prior time
periods.

the need for transparency and accountability
towards affected stakeholders.

27. For impact information to be relevant, only one of
the three perspectives needs to apply. For instance,
impact information may relate to an impact that issignificant to an affected stakeholder, but the impact
information may not be decision-useful to certain
users of impact information. In such a scenario, theimpact information is relevant for the purposes ofimpact accounting.
28. Impact information is relevant if the underlying
impact is significant to affected stakeholders. Impact
information is more relevant as the significance of theunderlying impact increases.
a. For actual impacts, the significance of the
impact is based on the severity of the impact, whilefor potential impacts, it is based on the severity andlikelihood of the impact. Severity is based on:8i.

scale: how grave the negative impact is or how
beneficial the positive impact is on people’s
well-being, including the duration over which
an impact lasts;9ii.

scope: how widespread are the negative or
positive impacts. In the case of impacts tothe natural environment, the scope may beunderstood as the extent of damage or ageographical perimeter. In the case of impacts
on people, the scope may be understood as
the number of people affected; and3.2 RELEVANCE
25. In general purpose financial reporting, the abilityof information to make a difference in the decision ofusers is the primary consideration for the relevance offinancial information, whereas in impact accounting,the ability of impact information to influence thedecisions of users is not the sole criterion.
26. The relevance of the impact information related
to any particular impact is determined by applying thefollowing perspectives:

iii. irremediable character: whether and towhat extent the negative impacts could
be remediated, i.e., restoring the naturalenvironment or affected people to their priorstate. The irremediable character of an impact
does not apply to positive impacts.

a.

the significance of the impact on affectedstakeholders;b.

the capacity of the impact information to
influence the decisions of users; and7.

The qualitative characteristics are primarily adapted from European Commission. (2023). Annex I European Sustainability Reporting Standards, ESRS
1 General Requirements and IFRS. (2023). IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information. The technicalprinciples of the Natural Capital Protocol and the Social & Human Capital Protocol of the Capitals Coalition, the general characteristics of useful impact
information included in the Impact-Weighted Accounts Framework of the Impact Economy Foundation, and The Principles of Social Value International
were also drawn upon to adapt the qualitative characteristics in this section.

8.

Adapted from the severity categories of European Commission. (2023). Annex I European Sustainability Reporting Standards, ESRS 1 General Requirements.

9.

Adapted from the Impact Frontiers. (2022). How Much—Five Dimensions of Impact.

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c.

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b. In the case of a potential negative human rights
impact, the severity of the impact takes precedence
over its likelihood.10
29. Impact information is relevant if it makes adifference in the decisions of users. Information may
make a difference in a decision even if some users
choose not to take advantage of it or are alreadyaware of it from other sources.

b. Impact information may impact decisions ofusers if the entity has influence over the factorsthat contribute to the underlying impact. An entity
has influence if it can make decisions that result indifferent outcomes for affected stakeholders. An
entity does not have to directly control the inputs,
activities, or outputs related to an impact to exert an
influence over it.
30. Impact information is relevant if an expectation
for transparency and accountability to affectedstakeholders exists. Such expectations are
determined through stakeholder engagement and set
out in authoritative intergovernmental instruments.12,13
While the Methodology helps preparers generate
decision-useful impact information on an entity’s
significant impacts, impact information related to lesssignificant impacts may be highly relevant in its own
right as a public interest activity.14

31. Impact information should not only represent
relevant impacts, it should also faithfully represent thesubstance of the impact that it purports to represent.
Faithful representation requires impact information tobe:a.

complete;b.

neutral; andc.

free from error.

32. A complete depiction of an impact includes all
information necessary for the users to understandthat impact. This includes information related toassumptions, data, and methods used to measure andvalue the impact.
33. Impact information is neutral if it is not
slanted, emphasized, de-emphasized or otherwise
manipulated to make it more likely that the users will
receive that information favorably or unfavorably.
It should consider positive and negative aspectsof impacts. Positive impacts should not be used to
obscure negative impacts in the presentation of
impact information.
34. Neutrality is supported by the exercise ofprudence which is the exercise of caution when
making judgments under conditions of uncertainty.
The exercise of prudence means that positive impacts
are not overstated and negative impacts are notunderstated. Equally, the exercise of prudence does
not allow for the understatement of positive impacts
or the overstatement of negative impacts. In casesof uncertainty, preparers of impact accounts should
default to avoiding the overstatement of positive
impacts and the understatement of negative impacts.

10.

Refers to human rights inherent to all human beings, which include, at a minimum, the rights set out in the United Nations (UN) International Bill of Human
Rights and the principles concerning fundamental rights set out in the International Labour Organization (ILO) Declaration on Fundamental Principles andRights at Work.

11.

Adapted from European Commission. (2023). Annex I European Sustainability Reporting Standards, ESRS 1 General Requirements and IFRS. (2018).
Conceptual Framework for Financial Reporting.

12.

See Social Value International. (2019). Standard on applying Principle 1: Involve Stakeholders.

13.

Examples include the International Labor Organization (ILO) Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy; theOrganization for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises; the United Nations (UN) Framework Convention on Climate Change (FCCC) Paris Agreement; and the UN Guiding Principles on Business and Human Rights.

14.

See Global Reporting Initiative. (2021). GRI 1: Foundation 2021.

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a. Impact information may impact decisions ofusers if it has predictive value, confirmatory value,or both. Information has predictive value if it can beused as an input to processes employed by users to
predict future outcomes. Information does not need
to be a prediction or forecast to have predictive value,
but rather has predictive value if employed by users
in making their own predictions. Information has
confirmatory value if it provides feedback about, byeither confirming or changing, previous evaluations.11

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35. Impact information can be free from error without
being perfectly precise in all respects. Informationthat is free from error implies that the entity has
implemented adequate processes and internal
controls to avoid material errors. The amount ofprecision needed and attainable, and the factorsthat make information free from error, depend on
the nature of the information and the nature of thematters it addresses. For example, being free fromerror requires that:factual information is free from material error;b.

descriptions are precise;c.

estimates, approximations and forecasts areclearly identified as such;d.

no material errors have been made in selecting
and applying an appropriate process fordeveloping an estimate, approximation orforecast, and the inputs to that process arereasonable and supportable;e.

assertions are reasonable and based on
information of sufficient quality and quantity; andf.

information about judgments about the futurefaithfully reflects both those judgments and theinformation on which they are based.

3.5 VERIFIABILIT Y
39. Verifiability helps to give users confidence that
impact information is complete, neutral, and freefrom error. Information is verifiable if it is possible
to corroborate either such information itself or the
inputs used to derive it.
40. Verifiability means that various knowledgeable
and independent observers could reach consensus,
although not necessarily complete agreement, thata particular depiction is a faithful representation.
Impacts should be identified, measured, valued,
assessed for materiality, and disclosed in ways thatenhance their verifiability, for example:a.

using information that can be corroborated bycomparing it with other information available tousers about the entity, about other entities, orabout the external environment; andb.

providing information about assumptions, data,
and methods used to measure and value impacts.

3.4 COMPARABILIT Y

3.6 UNDERSTANDABILIT Y

36. Impact information is comparable when it can becompared with impact information in previous periods
and with the impact information of other entities, inparticular those with similar activities or operating
within the same industry.

41. Impact information is understandable when it
is clear and concise. Understandable information
enables any reasonably knowledgeable and willinguser to readily comprehend the information being
communicated.

37. Consistency is related to, but is not the same as,comparability. Consistency refers to the use of thesame approaches or methods for the same impact
from period to period. Consistency helps to achieve
the goal of comparability. Maintaining consistency
does not preclude the possibility of improvements
and revisions to the Methodology. To maintainconsistency, changes in the Methodology over time
may require an entity to recalculate certain impacts
when comparing impact information across time
periods.

42. The completeness, clarity, and comparability of
impact information rely on the impact information
being presented as a coherent whole. For impact
information to be coherent, it should explain thecontext and the relationships between the related
assumptions, data, and methods used to measureand value the impact. Individual impacts may be
aggregated or categorized to enhance the clarity of
impact information but never in violation of neutrality
or to the point at which topic or industry-specificcontext is lost.

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38. Comparability is not uniformity. For information
to be comparable, like components should look alikeand different components should look different.
Comparability of information is not enhanced bymaking unlike things look alike any more than it isenhanced by making like things look different.

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43. The level of information, granularity andtechnicality should be aligned with the needs andexpectations of users. Abbreviations should be
avoided and the units of measure should be definedand disclosed.

45. Enhancing qualitative characteristics should
be maximized to the extent possible. However,
the enhancing qualitative characteristics, either
individually or as a group, cannot make impact
information useful if that information is irrelevant ordoes not provide a faithful representation of what it
purports to represent.
46. Applying the enhancing qualitative characteristics
is an iterative process that does not follow aprescribed order. Sometimes, one enhancing
qualitative characteristic may have to be diminishedto maximize another qualitative characteristic.
For example, a reduction in comparability may
be worthwhile to improve relevance or faithfulrepresentation.

15.

Adapted from IFRS. (2023). IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information

16.

Adapted from IFRS. (2018). Conceptual Framework for Financial Reporting..

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44. Some impact information is inherently complex
and might be difficult to present in a manner thatis easy to understand. An entity shall present suchinformation as clearly as possible. However, complex
information shall not be excluded to make impact
information easier to understand. Excluding suchinformation would render those impact information
incomplete and, therefore, possibly misleading.15

3.7 USE OF THE ENHANCINGQUALITATIVE CHARACTERISTICS
OF IMPACT INFORMATION 16

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15

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16

4.3 COMPARISONS BETWEEN FINANCIAL
AND SUSTAINABILIT Y TOPICS

47. To establish a system of impact accounting,several fundamental concepts must be defined. Those
concepts are introduced and described in this section.

52. The creation or erosion of value related to thewell-being of people can be analyzed as a systemof flows and stocks, in which flows of value arerepresented by impacts and stocks of value arerepresented by capitals. Capitals are defined as theresources and relationships affected and transformedby an entity.18 Capitals are not entity-specific but arestocks of value upon which multiple stakeholders
depend. General purpose financial reporting measuresthe creation or erosion of value for specific typesof financial capital, such as the equity of an entity,
whereas impacts can primarily be represented aschanges in various types of non-financial capitals.19

48. Whereas general purpose financial reporting isgrounded in the concepts of assets and liabilities, toreport an entity’s financial position, and income andexpenses, to report an entity’s financial performance,
impact accounts are grounded in the concept of
impact. The unit of measurement for impact accounts
is monetary.
4.2 THE DEFINITION OF IMPACT
49. Impact can be defined as a change in one or moredimensions of people’s well-being directly or througha change in the condition of the natural environment.
An impact can be actual or potential, direct or indirect,
intended or unintended, and positive or negative.17
50. Impacts in the Methodology are valued
using monetary valuation techniques, and as aconsequence, impact is interpreted through humanwell-being due to limitations associated withmeasuring the intrinsic value of nature. To the extent
possible, the Methodology will over time consider
impacts beyond an anthropocentric perspective.
51. An impact is potential in nature when its effects
have a degree of uncertainty, in that they may haveoccurred in the past or may occur in the future, subject
to a degree of likelihood. An impact is unintended
when its effects were not the aim or expected resultof an entity’s activities. An impact does not have to be
directly observed to be included in impact accounts.
In many instances, the measurement and valuation of
impacts are based on models rather than depictionsof real-time changes in people’s well-being or thecondition of the natural environment.

4.4 FAIR PRESENTATION 2 0
53. Impact accounts should provide a fair presentationof the impacts of an entity. Fair presentation requiresthat impact accounts include all material impactsof the entity and that those impacts are measured,valued, and/or disclosed in a manner that provides afaithful representation.
54. Fair presentation also requires that impact
accounts provide for a comprehensive assessment.
A comprehensive assessment evaluates the societal
value created and/or eroded as a result of the entity’s
activities and business relationships across its value
chain. A comprehensive assessment allows for acomparison of societal value creation and/or erosion
between different entities, whether operating in thesame industry or different industries, and between
business units within an entity.

17.

Adapted from Impact Management Platform. (2023). Key terms and concepts.

18.

Adapted from Impact Management Platform. (2023). Key terms and concepts.

19.

A categorization of capital types, which includes human capital, natural capital, produced capital, and social capital, can be found in Capitals Coalition.
(2021). Principles of Integrated Capitals Assessments.

20.

Adapted from IFRS. (2023). IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information.

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4.1 THE ROLE OF IMPACT IN IMPACTACCOUNTING

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17

I MPAC T DR I V ER S

INPUTACTIVIT YOUTPUTOUTCOMESIMPACT

Figure 1: Impact pathway

4.5 IMPACT PATHWAYS 21

56. Impact pathways consist of the sequence of
events shown in Figure 1 and described below.
a.

Input: the resources and business relationshipsthat the entity draws upon for its activities.

Impact: the change in one or more dimensions ofpeople’s well-being directly or through a change inthe condition of the natural environment. As such,the term outcome describes a resulting state orcondition, where impact refers to the change andevolution in this state or condition as a result of
the entity’s activities.

57. Impact drivers refer to an entity’s inputs andoutputs that lead to outcomes and cause or contributeto impacts.23 Impact drivers are typically input or
output related data that are measured by the entity.
58. The boundaries between the different elementsof the impact pathway, particularly outcomes
and impacts, are dependent on the nature of theunderlying phenomena. In some cases, certain
components of the pathway may be implicitly
modelled as part of the monetary valuation. This may
depend on, for instance, the specific sustainability
topic or industry of the entity.

b.

Activities: everything that an entity does, including
operations, the procurement of inputs, the saleand provision of products and/or services, aswell as any supporting activities. Activities span alarge number of different actions that altogether
contribute to outputs and ultimately, outcomes
and impact.

c.

Output: the direct result of an entity’s activities,
including an entity’s products, services, and any
by-products.

d.

Outcome: the level of well-being experienced bypeople or condition of the natural environmentthat results from the actions of the entity, as well
as from external factors. Outcomes are used todescribe the one or more dimensions of people’s
well-being that are affected by an input, activity
and/or output.

21.

Definitions for input, activities, output, and outcome stages of the impact pathway are from Impact Management Platform. (2023). Key terms and concepts.

22.

Adapted from ISO. (2019). ISO 14008:2019 Monetary valuation of environmental impacts and related environmental aspects.

23.

Adapted from Impact Management Platform. (2023). Key terms and concepts.

24.

For example, see Capitals Coalition. (2021). Principles of Integrated Capitals Assessments.

25.

Adapted from Impact Economy Foundation. (2022). Conceptual Framework for Impact-Weighted Accounts.

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4.6 REFERENCE SCENARIO
59. An impact does not occur in isolation but inrelationship to a reference scenario. A reference
scenario is referred to as a counterfactual scenario
in other frameworks and protocols.24 A reference
scenario is the set of activities and related outcomesthat is assumed to happen in the absence of theentity’s activities.25 In the Methodology, a reference
scenario is not the same concept as a baseline
scenario, which is a set of observations at a point intime against which change is measured.

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55. An impact pathway describes the series ofconsecutive, causal relationships, ultimately starting at
an input for an entity’s activities and linking its actions
with related changes in people’s well-being.22 Impact
pathways provide a consistent method to measure
impacts, allowing for comparability across time andbetween entities for a specific sustainability topic.

e.

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18

61. The use of the default reference scenario resultsin the measurement of absolute impact.26 Absolute
impact reflects the gross change in well-being. If areference scenario is selected that does not result inthe measurement of absolute impact, that reference
scenario should be disclosed to users of impact
information such that it is clear what is measured in
the impact calculation.
4.7 THE PERSPECTIVE OFMONETARY VALUATION
62. Impacts can be valued from the perspective of
the financial opportunity or risk to the entity or fromthe perspective of affected stakeholders. Monetaryvaluation in the Methodology is performed fromthe perspective of affected stakeholders. In someinstances, an impact cannot be isolated to affectedstakeholder groups and is valued from the perspectiveof society in general.

63. While impact accounts are valued from theperspective of affected stakeholders, or society ingeneral, they may be used to inform assessments ofan entity’s dependencies on people and the naturalenvironment. Dependencies occur when an entity’s
impacts, or changes in the external environment
in which it operates, affect an entity’s cash flows,or future cash flows, and therefore create or erode
investors’ determination of its enterprise value.27
64. Monetary valuation of impacts from theperspective of affected stakeholders refers to theestimation of the relative importance, worth, or
usefulness of impacts to the people who experience
the impact, expressed as a monetary value. Impacts
can be experienced by people directly or throughchanges to the planet or the economy.28 An
anthropocentric approach is utilized whereby any
change in the condition of the natural environment isvalued from the perspective of the impact on humanwell-being. The valuation of an impact is typically
performed with a monetary value factor.
65. The use of monetary valuation is intended toprovide a standardized approach that allows for thecomparability of sustainability-related data at scale
and is not meant to represent or put a valuation on
the intrinsic value of human well-being.
66. The well-being of people cannot be separated
from social context and the valuation of impacts
should consider local or regional differences toprovide relevant information.

26.

See the definition of absolute impact in Impact Economy Foundation. (2022). Conceptual Framework for Impact-Weighted Accounts.

27.

Adapted from Impact Management Platform. (2023). Key terms and concepts.

28.

See definition of monetization from Impact Management Platform. (2023). Key terms and concepts.

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60. The default reference scenario in the Methodology
assumes that the entity’s activities, and any
comparable substitutes, do not exist. The default
reference scenario does not imply that the activitiesof the entity are replaced by a competing entity that
conducts its activities in a similar manner or provides
a next best alternative. As a result, the change in one
or more dimensions of people’s well-being in thedefinition of an impact refers to the change between
the outcome stage of an impact pathway and thedefault reference scenario.

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VALUEC H AIN
D ESC RIP T ION

UPSTREAMOWN OPERATIONSDOWNSTREAM

Cradle-to-gate

Gate-to-gate

Gate-to-grave

Includes suppliers of products andservices used in entity’s own operations, including immediate suppliers and indirect suppliers further
upstream.

Covers all activities over which
entity has direct control.

Includes distribution andprocessing of sold products,
use phase by consumers andend-users, and end-of-life
treatment.

Same scope as general
purpose financial reporting.

4.8 VALUE CHAIN
67. The value chain of an entity is the full range ofactivities and business relationships related to theentity’s business model and the external environment
in which it operates. A value chain encompasses
the activities and business relationships the entity
uses and relies on to create its products or services
from conception to delivery, consumption, andend-of-life.29 The value chain can be distinguishedinto three different levels (see Figure 2).
a.

Upstream: covers all activities and business
relationships from cradle-to-gate, including
products and services that the entity haspurchased from its immediate suppliers andindirect suppliers further upstream.

b. Own operations: covers all activities over which
the entity has control.
c.

Downstream: covers all activities and business
relationships from gate-to-grave linked to
distribution and transportation, direct customers,
product use by consumers and end-users, andproduct end-of-life.

68. In line with sustainability reporting standards andestablished frameworks such as the GHG Protocol,
the Methodology includes impacts on all three value
chain levels and is applicable to the full value chainof an entity. The scope of own operations in impact
accounts is consistent with that of the reporting
entity in general purpose financial reporting.

69. A direct impact of an entity is an impact caused
or contributed to by the entity’s own operations. An
indirect impact is an impact directly linked to theentity’s own operations, products, or services throughits business relationships in the upstream and/or
downstream value chain. While the cause of indirect
impacts is outside of the entity itself, the entity exerts
an influence on the pathway that determines thesignificance of the impact.
4.9 STAKEHOLDERS
70. Stakeholders are defined as those who can affector be affected by the entity.30 For impact accounts,
the affected stakeholder groups are of central
importance. Affected stakeholders are individuals
or groups whose well-being is affected or could
be affected, positively or negatively, by the entity’s
activities and business relationships across its value
chain.
71. Common categories of stakeholders areauthorities, including central banks, governments,
regulators, and supervisors, business partners,
civil society, employees, other workers, and tradeunions, consumers, customers, and end-users,
existing and potential investors, lenders, and othercreditors, local communities and vulnerable groups,
non-governmental organizations, and suppliers.
Nature is considered a silent stakeholder, in thatnature is affected by the impacts of entities, but it is
the responsibility of people to act as stewards of thenatural environment.

29.

European Commission. (2023). Annex II Acronyms and Glossary of Terms, European Sustainability Reporting Standards.

30.

Adapted from European Commission. (2023). Annex II Acronyms and Glossary of Terms, European Sustainability Reporting Standards.

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Figure 2: Value chain levels of an entity

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4.10 TIME PERIODS AND ACCRUALIMPACT ACCOUNTING

73. Impacts materialize over time and many impacts
triggered by an entity’s activities do not materialize
within the period being considered. Impacts that do
not materialize in the period may have materialized ina prior period or may materialize in a future period. For
example, an impact can have materialized in a priorperiod when it affected a stakeholder in the entity’s
upstream value chain during the manufacture of an
input that the entity draws upon for its activities in thecurrent period. An impact can materialize in a future
period when a good that the entity manufactures in
the current period affects a stakeholder in the entity’s
downstream value chain in a future period.
74. Accrual impact accounting depicts the impacts
on affected stakeholders in the period in which therelated activities of the entity occur. Impact accounts
for a particular period should reflect all of the impacts
connected to activities of the entity that occurred in
the period even if the impacts materialized in a priorperiod or may materialize in a future period.
4.11 ATTRIBUTION OF IMPACTS
75. The attribution of an impact refers to the portionof an impact that is reflected in an entity’s impact
accounts. Attribution is performed by partitioning
the inputs or outputs related to an impact anddetermining the portion that is linked to the entity.
Inputs and outputs may be partitioned based on
the underlying physical relationship, an economic
relationship, or an industry-specific practice. Inputs
and outputs should be partitioned in a way that bestreflects the causal relationship between the inputs
31.

76. Different attribution methods may yieldsignificantly different results. Entities that have a
choice between multiple methods for a given impact
should evaluate each method to determine the rangeof possible results before selecting a single method.
Topic and Industry-specific Methodologies will provide
guidance on the attribution method that should beapplied.
77. Categorizing impacts as either direct or indirect
helps to determine the appropriate level of attribution.
a.

Direct impacts that are caused by an entity’s own
operations are likely fully attributable to the entity.
The fact that direct impacts caused by an entity
may exist in a system that other entities are linked
to does not prevent their full attribution to theentity.

b.

Direct impacts that are contributed to by anentity, such as climate-related impacts to thenatural environment that are measured from asocietal perspective, should be assessed for theappropriate level of attribution by partitioning
the inputs or outputs related to the impact anddetermining the portion that is linked to the entity.

c.

Indirect impacts that occur upstream from theentity should be assessed for the appropriate levelof attribution by partitioning the outputs of an
upstream supplier that are linked to an impact anddetermining the portion that is drawn on by theentity for its activities.

d.

Indirect impacts that occur downstream fromthe entity should be assessed for the appropriate
level of attribution by partitioning the inputs ofan activity, product, or service downstream anddetermining the portion that is linked to the own
operations of the entity.

CONCEPTUAL FRAMEWORK FOR IMPACT ACCOUNTING

72. The time period for which an entity measures its
impacts can be customized depending on the typeof impact information that is required by users. For
the purposes of disclosing impact information insustainability-related disclosures, this would normallybe the reporting period of the entity, but impacts canalso be measured for the period of a specific projector the life of a product.

and outputs and the impact.31

GENERAL METHODOLOGY 1

4. Fundamental Concepts of Impact Accounting

Adapted from Greenhouse Gas Protocol. (2011). Corporate Value Chain (Scope 3) Accounting and Reporting Standard, Supplement to the GHG Protocol
Corporate Accounting and Reporting Standard and ISO. (2014). ISO 14044:2006 Environmental management—Life cycle assessment. The approach toattribution in the Methodology is based on the concepts used to allocate GHG emissions in the GHG Protocol and more broadly to allocate input andoutputs flows in lifecycle assessments. Such approaches are typically referred to as allocation, as the objective is to allocate input and output flows withina product system or across a value chain. Attribution in the Methodology assumes that after allocating an impact to an entity, the full portion of the allocated amount is attributed to the entity.

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79. Double counting occurs when the direct impact
of one entity is the indirect impact of anotherentity. Double counting also occurs when indirect
impacts are accounted for by two separate
entities, such as when the impact to the naturalenvironment from the transportation of a productis accounted for as an indirect impact by the
upstream manufacturer and the downstream
retailer.

CONCEPTUAL FRAMEWORK FOR IMPACT ACCOUNTING

78. The inclusion of an impact in an entity’s impact
accounts does not preclude another entity thatis linked to the impact from including a portionof the impact in its impact accounts. As a result,double counting of impacts may occur across thevalue chain. This approach to attribution allows forcomplete information on value chain responsibility
at the entity level; however, impacts should not
be aggregated across companies to determine
the total impact in a value chain as the result may
overcount impact.

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and thePreparation of
Impact Accounts

235.3 THE PREPARATION OF
IMPACT ACCOUNTS 33

80. Impact materiality serves as the basis for
preparing impact accounts. Before a preparer canuse the Methodology to prepare impact accounts
at a point in time, the impacts of the entity underconsideration should be identified, measured, andvalued, and an impact materiality perspective should
be applied to determine which impacts to include in
impact accounts.

84. To prepare impact accounts, the following steps
should be considered.
a.

81. Impact materiality is an entity-specific aspect of
the relevance qualitative characteristic of impact
information. Preparers should assess whether
impacts that have been identified are relevant. The
Methodology does not include mandatory impacts ora uniform threshold for applying impact materiality.
82. As part of generating impact accounts, therelative importance, worth, or usefulness of impacts
is assessed through monetary valuation. As a result,the impact information derived from impact accounts
provides a data driven and empirical foundation to
support an entity’s materiality assessment process.
Ultimately, the process of identifying, measuring andvaluing impacts, and assessing them from an impact
materiality perspective is an iterative and ongoingprocess.
5.2 THE SCOPE OF IMPACT MATERIALI T Y 32
83. An impact can be material if it pertains to theentity’s material actual or potential, positive or
negative, intended or unintended impacts on thewell-being of people directly or indirectly throughchanges in the natural environment over any time
horizon. Material impacts can include direct impacts
caused or contributed to by the entity’s activities andindirect impacts that are directly linked to the entity’s
own operations, products, or services through its
business relationships. Business relationships include
the entity’s upstream and downstream value chain
and are not limited to direct contractual relationships.

Steps related to impact identification,measurement, and valuation:i.

understand the sustainability context of theactivities and business relationships of theentity under consideration;ii.

identify impacts through engaging with topic
and industry-specific research, stakeholders,and experts; andiii. measure and value the impacts identified tounderstand their significance.
b.

Step to prepare impact accounts at a point in
time:
i.

apply an impact materiality perspective todetermine which impacts to include in theentity’s impact accounts.

85. The first three steps relate to the entity’s ongoing
impact management process. These steps allow
the entity or investor to actively manage and assess
impacts as they evolve and as new ones arise. In
step four, the preparer determines which impacts toinclude in the impact accounts for a particular time
period.

32.

Adapted from European Commission. (2023). Annex II Acronyms and Glossary of Terms, European Sustainability Reporting Standards.

33.

Adapted from Global Reporting Initiative. (2021). GRI 3: Material Topics 2021.

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5.1 IMPACT MATERIALIT Y AS THE BASISFOR IMPACT ACCOUNTSGENERAL METHODOLOGY 1

5. Impact Materiality and thePreparation of Impact Accounts

24Engage with relevant
stakeholders and experts

1

2

Identify impacts

4

Measure andvalue the impacts
identified

Apply an impact
materiality
perspective todetermine which
impacts to include
in the entity’s
impact accounts

Include impacts from Topic andIndustry-specific Methodology andsustainability-related disclosures
Impact accounts inform the entity’s materiality assessment process

ImpactAccounts

Figure 3. The preparation of impact accounts34

5.4 SUSTAINABI LIT Y CONTEXT, IMPACT
IDENTIFICATION, AND MEASUREMENT
AND VALUATION
86. The following areas should be considered tounderstand the sustainability context of an entity’s
activities and business relationships: economic,
environmental, human rights, and other societal topics
that affect the well-being of people at local, regional,
and global levels related to the entity’s sectors andthe geographic location of its activities and business
relationships.35

87. An entity’s stakeholders are central to the ongoingpractice of preparing of impact accounts. The
measurement and valuation of impacts should be
informed by those affected by, and who affect, theunderlying activities of the entity.36
88. The Methodology is being developed to include
standardized impact pathways at the Topic andIndustry-specific level. Impact pathways in the
Methodology are a starting point to identify impacts,
but they do not necessarily identify all impacts ofthe entity. A preparer should also include impacts
identified as part of the entity’s sustainability-related
disclosures and impacts identified through an entity’s
periodic materiality assessment process.

34.

Adapted from Global Reporting Initiative. (2021). GRI 3: Material Topics 2021.

35.

Adapted from Global Reporting Initiative. (2021). GRI 1: Foundation 2021.

36.

Adapted from Social Value International. (2019). Standard on applying Principle 1: Involve Stakeholders.

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Understand thesustainablility
context of the entity’s activities andbusinessrelationships

3

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25

Stakeholder
Categories

Value Chain Stage
Upstream

Own Operations

Downstream

Consumers &end-users
Employees &other workers

Governments & local
communities

Figure 4: Example of a materiality map for impact identification

89. A material impact will always affect one ormore stakeholder groups of the entity. To identify
impacts, a preparer should consider impacts for eachstakeholder category at each stage of an entity’s value
chain. A map that displays stakeholder categories andvalue chain stages may be a helpful for identifying
potential impacts and ensuring a fair presentation(see Figure 4).
5.5 IMPACTS FOR WHICH A STANDARDIZEDIMPACT PATHWAY IS NOT AVAIL ABLE
90. Impacts that have been identified should bemeasured and valued in accordance with standardized
impact pathways included in Topic and Industryspecific Methodologies. When an entity concludes
that an impact not covered or covered withinsufficient granularity by Topic or Industry-specificMethodologies is material due to its specific facts andcircumstances, the impact should still be measured,valued, and included in the entity’s impact accounts
to provide for a fair presentation. The preparer should
ensure that:

37.

a.

an impact pathway approach is utilized;b.

the measurement and valuation process
meets the qualitative characteristics of impact
information; andc.

measurement and valuation methods described in
the Methodology are applied as applicable.

91. When measuring and valuing impacts for whicha standardized impact pathway is not available, thepreparer should carefully consider:a.

comparability between entities, while still ensuring
relevance of the information provided, recognizingthat comparability may be more limited. The
entity should consider whether the available andrelevant frameworks, protocols, and reporting
standards provide elements that can support
comparability to the maximum extent possible;
andb.

comparability over time, as consistency of
methodologies and disclosures is a key factor forachieving comparability over time.37

CONCEPTUAL FRAMEWORK FOR IMPACT ACCOUNTING

Naturalenvironment

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Adapted European Commission. (2023). Annex II Acronyms and Glossary of Terms, European Sustainability Reporting Standards.

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Appendix A:
Glossary

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TERM

Activities

Businessrelationships

SOURCE 3 8Everything that an entity does, including operations, the procurementof inputs, the sale and provision of products and/or services, as wellas any supporting activities. Activities span a large number of different
actions that altogether contribute to outputs and ultimately,
outcomes and impact.
Affected stakeholders are individuals or groups whose well-being isaffected or could be affected, positively or negatively, by the entity’s
activities and its business relationships across its value chain.

Impact Management
Platform

N/A

The relationships the entity has with business partners, entities in its
value chain, and any other non-State or State entity directly linked toits business operations, products or services. Business relationships
are not limited to direct contractual relationships. They include
indirect business relationships in the entity’s value chain beyond thefirst tier, and shareholding positions in joint ventures or investments.

European
Sustainability
Reporting Standards

Capitals

The resources and relationships affected and transformed by anentity.

Impact Management
Platform

Comprehensive
assessment

A comprehensive assessment evaluates the societal value created
and/or eroded as a result of the entity’s activities and business relationships across its value chain

N/A

DirectimpactAn impact caused or contributed to by the entity’s own operations.

N/A

ImpactA change in one or more dimensions of people’s well-being directly or
through a change in the condition of the natural environment.

Impact Management
Platform

Impactaccounting

A system for measuring and valuing the impacts of corporate entities
and generating impact information to inform decisions related to anentity’s effects on sustainability.

N/A

Impactaccounts

A set of accounts that contain the material positive and negative
impacts of an entity valued in monetary terms.

N/A

Impactdrivers

Refer to the sequence of an entity’s inputs and outputs that may havepositive and/or negative impacts on people’s well-being.

Impact Management
Platform

Impact information is derived from impact accounts and informs
decision-making related to an entity’s effects on sustainability.
Impact information includes, but is not limited to, impacts that havebeen classified and aggregated for the purpose of presentation,
supplemental notes that describe the assumptions, data, or methods
used to measure and value impacts, and qualitative commentary that
contextualizes impacts.

N/A

Impactinformation

38.

CONCEPTUAL FRAMEWORK FOR IMPACT ACCOUNTING

Affectedstakeholders

DEFINITIONGENERAL METHODOLOGY 1

Appendix A: Glossary

Some definitions are adapted from the original source.

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TERM
Impactpathway

Input

Outcome

SOURCEThe series of consecutive, causal relationships, ultimately starting at
an input for an entity’s activities and linking its actions with relatedchanges in people’s well-being.

ISO

An impact directly linked to the entity’s own operations, products, orservices through its business relationships in the upstream and/or
downstream value chain.

N/A

The resources and business relationships that the entity draws upon
for its activities.

Impact Management
Platform

The level of well-being experienced by people or condition of thenatural environment that results from the actions of the entity, as well
as from external factors. Outcomes are used to describe the one ormore dimensions of people’s well-being that are affected by an input,
activity, and/or output.

Impact Management
Platform

Output

The direct result of an entity’s activities, including an entity’s
products, services, and any by-products.

Impact Management
Platform

Referencescenario

The set of activities and related outcomes that is assumed to happen
in the absence of the entity’s activities.

Impact Economy
Foundation

Stakeholder

Stakeholders are defined as those who can affect or be affected by
the entity.

European
Sustainability
Reporting Standards

Sustainability
topic

A term used broadly to denote aspects of stakeholder well-being(e.g. health, wealth, safety), or business activities or practices that areevidenced drivers of well-being (e.g. employment, diversity andinclusion). This term is synonymous with ‘sustainability matters’,‘impact areas’, or ‘general issue categories’ which are similar terms
used by different standard setters.

Impact Management
Platform

Sustainable
development

Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.

Report of the World
Commission on
Environment andDevelopment

Value chain

The value chain of an entity is the full range of activities and business
relationships related to the entity’s business model(s) and theexternal environment in which it operates. A value chain
encompasses the activities and business relationships the entity uses
and relies on to create its products or services from conception todelivery, consumption, and end-of-life.

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CONCEPTUAL FRAMEWORK FOR IMPACT ACCOUNTING

Indirect impact

DEFINITIONGENERAL METHODOLOGY 1

Appendix A: Glossary

European
Sustainability
Reporting Standards

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GENERAL METHODOLOGY 1

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