SDG Impact Standards
Glossary
Glossary of terms to support the SDG Impact
Standards for Enterprises, Private Equity
Funds and Bond Issuers

April 2023

About UNDPThe United Nations Development Programme (UNDP) is the UN’s global development
network. It advocates for change and connects countries to knowledge, experience andresources to help people build a better life. UNDP aims to see our world radically changed
for good and is the integrator of the United Nations Sustainable Development Goals (SDGs).
UNDP is active in over 170 countries and territories, working with governments and people
on their own solutions to global and national development challenges and supporting
country-level programs to achieve the SDGs.
About SDG Impact
SDG Impact is a global UNDP initiative, catalyzing investment to achieve the SDGs by 2030:• SDG Impact Management: Providing a means to better decisions that drive
investment capital to where it is needed, comprising SDG Impact Standards, an SDG
Impact Seal and impact management education.
• SDG Impact Intelligence: Producing data and insights needed for increasing financial flows to
the SDGs, offering SDG investor maps of investable business models via a searchable desktop
platform.
• SDG Impact Facilitation: Fostering matchmaking and collaboration to realize SDG
investment opportunities, focusing on investor and policy dialogue drawing on UNDP’spresence in over 170 countries, deep sustainable development expertise andrelationships with governments and other influencers.
Acknowledgements
UNDP thanks the SDG Impact team – SDG Impact Director Fabienne Michaux, SDG
Impact former Director Elizabeth Boggs-Davidsen, Sebnem Sener, Sara-Lisa Orstavik
and Violeta Maximova – and the expert advisers who have led and contributed to theseStandards: Carol Adams, Rosemary Addis, Susan De Witt, Amanda Feldman, Ellen
Maginnis, Liza Murphy, Maria Laura Tinelli, Belissa Rojas, Jennifer Flynn (editing) andMaja Bialon (graphic design). UNDP also thanks the many organizations who havecontributed time and valuable input through the development process including The
Impact Management Project Team, IMP Structured Network Members and all who
contributed feedback.
The SDG Impact Steering Group, chaired by the UNDP Administrator, Achim Steiner,
comprises global champions and thought leaders from finance and industry from around theworld. UNDP thanks these sustainability leaders for their critical role in authenticating SDG enabling investment, signaling markets and driving adoption of these Standards: John Denton(Secretary-General, International Chamber of Commerce), Cheo Hock Kuan (Executive
Director and CEO, Temasek Trust), Anna Ryott (Chair of Board, Summa Equity), Amy
Jadesimi (CEO, Ladol), Ma Weihua (Chairman, China Alliance of Social Value Investment),
Lisa Genasci (Founder and CEO, ADM Capital Foundation (ADMCF)), Daniel Hanna (Global
Head of Sustainable Finance, Barclays CIB), Rajiv Lall (Chairman, IDFC First Bank), Ronald
Cohen (Philanthropist and Chairman of the Global Steering Group for Impact Investment),
Ken Shibusawa (CEO, Shibusawa and Company, Inc.) and Gavin Power (Chief ofSustainable Development and International Affairs, PIMCO). Thanks also to UNDPSDG Impact Standards – Glossary2colleagues, other UN bodies for their insights and support in developing these Standards.
Such leadership in embracing the SDGs and recognizing our collective responsibility is
instrumental in realizing the SDGs by 2030.
Copyright and Creative Commons Attribution© United Nations Development Programme, 2021
This document is provided under a Creative Commons Attribution 4.0 International
licence. Licence conditions are on the Creative Commons website along with the legal
code https://creativecommons.org/licenses/by/4.0/legalcode.

SDG Impact Standards – Glossary3Glossary
ABC Impact
Classifications

Developed by the IMP and adapted for these Standards by SDG Impact as away to categorize enterprises’ or investments’ contributions towards specificoutcomes. The ABC Impact Classifications are:
Act to avoid or reduce harm, including harm that detracts from achieving theSDGs by improving an existing negative outcome – moving from a morenegative to a less negative outcome level relative to a suitable outcome
threshold; e.g. reducing CO2 emissions, or eliminating child labor in supply
chains; orBenefit Stakeholders in relation to the SDGs by maintaining or improving
an existing positive outcome – maintaining a positive outcome level or movingfrom a positive to a more positive outcome level, relative to a suitableoutcome threshold; e.g. selling products that support good health oreducational outcomes for those already with good access to both; orContribute to solutions towards achieving the SDGs by generating a newpositive outcome – moving from a negative to a positive outcome level relative
to a suitable outcome threshold; e.g. providing health or educational services
in communities that currently have no access to them, or providing financial
services to people without access to credit or banking services.
Impacts that do not meet the above conditions are classified as May or docause harm.
Note: IMP also uses the ABC Impact Classifications to categorize wholeenterprises or investments, which can be understood as a combination ofseveral material impacts, however this application is not relevant for the
purposes of the SDG Impact Standards.
Source: Adapted from Impact Management Project.

Accountability

The condition of being held to account to all Stakeholders (including thoseexperiencing the outcomes) with consequences for impact performance.
Source: Social Value International.

Activities

Direct and indirect business operations, including sales, service, procurement,
marketing and stakeholder interactions whether undertaken by an entity’s own
workers or through related parties.

Baseline

An indication of the status/situation before the entity’s action or decision,
against which progress can be assessed or compared.
Source: Adapted from OECD Glossary of Terms in Evaluation and Results
Based Management.

B Lab

A non-profit organization that serves a global movement of people usingbusiness as a force for good. B Lab’s initiatives include B Corporation
Certification, administration of the B Impact Management programs andsoftware, and advocacy for governance structures like the benefit corporation.
B corps manage their impact with the B Impact Assessment and the SDG
Action Manager.

Bounded flexibility

A way of managing the tension between variability and decision-making instandard setting, by creating enough flexibility to generate options withenough standardization so that informed choices can be made between those
options.
Source: Social Value International.

SDG Impact Standards – Glossary4

Business model

A system of transforming inputs into outputs, outcomes and impacts that fulfill
an entity’s strategic purpose. In the context of the SDG Impact Standards, thisincludes integrating impact management into decision-making and businessmodels e.g. involving Stakeholders in decisions that impact them.

Capitals Coalition

A global collaboration that unites the natural, social and human capital
coalitions to transform our understanding of value.

Capitals Coalition
CapitalsProtocols

The Social & Human Capital Protocol and the Natural Capital Protocol aredecision-making frameworks that enable organizations to identify, measureand value their direct and indirect impacts and dependencies on social capitaland human capital, and natural capital, respectively.
The SDG Impact Standards link to the Capitals Coalition Capitals Protocols.
Source: Capitals Coalition.

Contributing
positively tosustainable
development andthe SDGs

Making decisions and taking actions that increase material positive outcomeswhile at the same time avoiding or significantly reducing all material negative
outcomes (generated in pursuit of the material positive outcomes or in otherparts of the business or portfolio) with a goal to achieve and then further
increase the net positive impact of the enterprise or investment overall.
Contributing positively to sustainable development and the SDGs cannot be
achieved without demonstrating respect for human rights, planetary
boundaries and other responsible business practices, and is realized througheffective impact management and decision-making.

Counterfactual

The situation or condition that hypothetically may prevail for Stakeholders if
the entity did not take any action. Measures what would have happened
anyway in the absence of the entity’s action or decision.
Source: Adapted from the OECD Glossary of Key Terms in Evaluation and
Results Based Management.

Cross-cuttinggoals

In the context of these Standards, goals that may not necessarily beconsidered material in a particular context but are material at a systems level
and require collective action to achieve the SDGs by 2030.

Data taxonomy

Classification of data into categories and sub-categories, with controls toimprove data quality, reliability, consistency and comparability.

Dependencies

Social and human and natural resources and relationships that enterprises
need to create and sustain value. An entity’s impacts and dependencies areinterrelated.
Source: Capitals Coalition.

Doughnut
economics

A framework for sustainable development that combines the concepts ofplanetary boundaries with social boundaries. Developed in 2012 by Kate
Raworth, University of Oxford (A Safe and Just Space for Humanity, Oxfam,
2012; Doughnut Economics: Seven Ways to Think Like a 21st-Century
Economist, 2017).

Enterprise

The Enterprise whose intention it is to embed contributing positively tosustainable development and the SDGs into its purpose, strategy,
management approach, governance practices and decision-making.
Enterprises may be publicly listed, public interest and private entities(including profit, not-for-profit, social enterprise entities), non-governmentorganizations (NGOs), small and medium enterprises (SMEs) and stateowned and other public sector entities.

Enterprise valueMarket capitalization plus debt.

SDG Impact Standards – Glossary5

ESG(environmental,social andgovernance)
integration

The explicit and systematic inclusion of material environmental, social andgovernance (ESG) factors in investment analysis and investment decisions
that are material to investment performance, i.e. with a view to lowering risk
and/or generating (financial) returns. Typically, ESG factors are selectedbased on their materiality to financial performance of the investment or
portfolio, and less typically based on other factors that are relevant to theasset owners. Therefore, the primary focus of ESG integration or ESG
investing is typically on how ESG issues impact the performance of theinvestment or entity, rather than on how the investment or entity impacts
Stakeholders or sustainable development outcomes.
Sources: Adapted from PRI and IFC, https://ifc-org.medium.com/thedifference-between-esg-and-impact-investing-and-why-it-matters8bf459b3ccb6.

EU GBS (EUGreen Bond
Standard)

Voluntary standard for use-of-proceeds bonds that finance green projects that(i) significantly contribute to at least one of the environmental objectives of the
EU Taxonomy, (ii) do not substantially harm the others, and (iii) otherwise
meet the criteria and thresholds in the taxonomy proposal (including meeting
minimum social safeguards). Use of the term ‘EU Green Bond’ is only
permitted when all components of the EU GBS are met.
The SDG Impact Standards complement the EU GBS.
Source: Supplementary Report 2019 by the Technical Expert Group of
Sustainable Finance, Financing a Sustainable European Economy: Using theTaxonomy.

EU Taxonomy

Proposed EU Taxonomy for Sustainable Activities. A list of economic activities
with performance criteria for their contribution to six environmental objectives(climate change mitigation; climate change adaptation; sustainable use andprotection of water and marine resources; transition to a circular economy;
waste prevention and recycling; pollution prevention and control; andprotection of healthy ecosystems). To be included in the proposed EU
Taxonomy, an economic activity must contribute substantially to at least one
environmental objective and do no significant harm to the other five, as wellas meet minimum social safeguards.
The SDG Impact Standards complement the EU Taxonomy.
Source: Supplementary Report 2019 by the Technical Expert Group on
Sustainable Finance, Financing a Sustainable European Economy: Using theTaxonomy.

Externalities

Positive or negative, intentional or unintentional, direct or indirect, impacts on
people, communities, society or the planet caused by an entity which is notreflected in market prices (i.e. an entity’s enterprise value or an investment’s
valuation).

Feedback loops

A system for improving a product or process by collecting and responding to
information from those affected by the entity action or decision.
Source: Adapted from Social Value International.

Financialmateriality

The consideration of sustainable development issues (risks and opportunities)
that are deemed to be financially material to enterprise value (i.e. as opposedto those broader issues that are material to sustainable development and theachievement of the SDGs, or to the Stakeholders experiencing the impacts
and go beyond strictly financial aspects).

SDG Impact Standards – Glossary6Five Dimensionsof Impact

Developed by a community of over 2000 practitioners through the Impact
Management Project. The Five Dimensions represent a set of management
questions that, when answered, help fully understand an individual impact andcompare or choose between different impacts. These questions guidemeasurement and the data requirements for impact measurement andmanagement (see Impact data categories below).
1. What – What outcome level is occurring in the period? Is it positive or
negative relative to an outcome threshold? How important is the outcome tothe people (or planet) experiencing it?
2. Who – Who experiences the outcome? How underserved are the affected
Stakeholders in relation to the outcome (when comparing the baseline to theoutcome threshold)?
3. How much – What is the change in outcome? For how many people? Andfor how long does it last?
4. Contribution – Would the change likely have happened anyway?
5. Risk – What is the risk to people and planet that impact does not occur as
expected?
Source: Impact Management Project.

Fund

The Fund whose intention it is to embed contributing positively to sustainable
development and achieving the SDGs into its purpose, strategy, management
approach, governance practices and decision-making. Funds may be private
equity, private debt or venture capital funds.

Fund manager

The entity responsible for implementing the Fund’s strategy and managing its
portfolio.

General partner

Raises the funds and manages day-to-day operations of the Fund, including
sourcing and structuring investments, and exiting investments to make
distributions to limited partners.

General purpose
SDG bond

Bonds issued by companies that have adopted a corporate-level strategy tocontribute to the SDGs and that are committed to providing accountability forthe general use of funds and corporate-level SDG impacts. General-purpose
SDG Bonds can also be issued by governments and are unsecured.
Sources: UNGC and UNEPFI, SDG Bonds| Leveraging Capital Markets for
the SDGs.

GIIN (Global
Impact Investing
Network)

A global network dedicated to increasing the scale and effectiveness of
impact investing around the world. The GIIN manages the IRIS+ system as apublic good.

GIIN’s Core
Characteristics of
Impact Investing

Baseline expectations of what it means to practice impact investing:
1. Intentionally contribute to positive social and environmental impact throughinvestment alongside a financial return
2. Use evidence and impact data in investment design
3. Manage impact performance
4. Contribute to the growth of impact investing.
The SDG Impact Standards are aligned with GIIN’s Core Characteristics of
Impact Investing.

SDG Impact Standards – Glossary7Globalcommons/tragedyof the commons“A commons is a tract of land or water owned or used jointly by the membersof a community. The global commons includes those parts of the Earth’s
surface beyond national jurisdictions – notably the open ocean and the living
resources found there – or held in common – notably the atmosphere”.
Source: Chapter 18, The Global Commons, World Conservation Strategy,
Internal Union for Conservation of Nature and Natural Resources.
The tragedy of the commons is where common resources are overused,degraded or otherwise depleted in pursuit of short-term, personal self-interest
to the detriment of the whole community in the longer term. Examples include
over-fishing and human caused climate change.

Governing body

The entity’s (i.e. the Enterprise, Fund, Investee, Issuer) board or highest
governing body.

GRI (Global
Reporting
Initiative)

An international independent standards organization that helps businesses,
governments and other organizations understand and communicate theirenvironmental, economic and social impacts. The GRI Standards are global
and distributed as a free public good.

GRI’s Reporting
Principles

Principles for defining report content:
Stakeholder inclusiveness: Identify stakeholders and explain responses totheir reasonable expectations and interests
Sustainability context: Present the organization’s performance in the wider
context of sustainability
Materiality: Cover aspects that reflect the organization’s significant economic,
environmental and social impacts, or substantively influence the assessments
and decisions of stakeholders
Completeness: Cover material aspects, and their boundaries, sufficient toreflect significant economic, environmental and social impacts, and to enable
stakeholders to assess the organization’s performance in the reporting period.
Principles for defining report quality:
Balance: Reflect positive and negative aspects of performance to enable areasoned assessment of overall performance
Comparability: Select, compile and report information consistently; present
information in a manner that enables stakeholders to analyze changes in
performance over time, and that could support analysis relative to otherorganizations
Accuracy: Provide sufficiently accurate and detailed information forstakeholders to assess performance
Timeliness: Report on a regular schedule so that timely information isavailable for stakeholders to make informed decisions
Clarity: Make information understandable and accessible to stakeholders
Reliability: Gather, record, compile, analyze and disclose information andprocesses used to prepare the report in a way that allows examination andestablishes the quality and materiality of the information.
Source: Global Reporting Initiative, and as updated from time to time.

Human capitalThe knowledge, skills, competencies and attributes embodied in individuals
that contribute to improved performance and wellbeing.
Source: Capitals Coalition.

SDG Impact Standards – Glossary8Human rights andthe link to theseStandards

The SDG Impact Standards are grounded in respect for human rights in linewith the UN Guiding Principles for Business and Human Rights (UNGPs) thatstate that businesses are bound to respect rights recognized under the socalled International Bill of Rights and the principles concerning fundamental
rights set out in the International Labour Organization’s Declaration on
Fundamental Principles and Rights at Work.
Businesses’ obligation to respect human rights means they should avoid
infringing on the human rights of others and should address adverse humanrights impacts with which they are involved which (in Principle 12 of the
UNGPs) requires them to:•••

Avoid causing harm (the ‘do no harm’ principle) through their own
activities
Address such impacts when they occur
Seek to prevent or mitigate adverse human rights impacts whenlinked to their operations 1“Business strategies to contribute to the Sustainable Development Goals areno substitute for human rights due diligence. On the contrary, robust humanrights due diligence enables and contributes to sustainable development. For
businesses, the most powerful contribution to sustainable development is toembed respect for human rights in their activities and across their value
chains, addressing harm done to people and focusing on the potential andactual impacts – as opposed to starting at the other end, where there are thegreatest opportunities for positive contributions. In other words, businesses
need to realize and accept that not having negative impacts is a minimum
expectation and a positive contribution to the Goals.”
Source: UN General Assembly: The Report of the Working Group on theIssue of Human Rights and Transnational Corporations and Other BusinessEnterprises A/73/163 2018, Paragraph 59.
ICMA(International
Capital Markets
Association)

A not-for-profit membership association headquartered in Switzerland thatserves 580 member firms from 62 countries in global capital markets. Serves
as Secretariat for the Green Bond Principles (GBP) and Social Bond
Principles (SBP), and Sustainability Bond Guidelines (SBG).
The SDG Impact Standards complement the ICMA GBPs, SBPs and SBGs.

IFC (International
Finance
Corporation)

The sister organization of the World Bank and member of the World Bank
Group. The largest global development institution focused on the private
sector in developing countries. The World Bank Group has set two goals toachieve by 2030: end extreme poverty and promote shared prosperity inevery country. In 2018, the group issued Operating Principles for Impact
Management.
The SDG Impact Standards are aligned with IFC’s Operating Principles for
Impact Management.

ILO Declaration on
Fundamental
Principles andRights at Work

Adopted in 1998, the Declaration commits Member States to respect andpromote principles and rights in four categories, whether or not they have
ratified the relevant Conventions. These categories are: freedom of
association and the effective recognition of the right to collective bargaining,
the elimination of forced or compulsory labor, the abolition of child labor andthe elimination of discrimination in respect of employment and occupation.
The eight fundamental Conventions are:
1. Freedom of Association and Protection of the Right to Organise
Convention, 1948 (No. 87)
2. Right to Organise and Collective Bargaining Convention, 1949 (No. 98)
3. Forced Labour Convention, 1930 (No. 29) (and its 2014 Protocol )4. Abolition of Forced Labour Convention, 1957 (No. 105)
5. Minimum Age Convention, 1973 (No. 138)

1 UN Guiding Principles on Business and Human Rights, principle 12

SDG Impact Standards – Glossary

96. Worst Forms of Child Labour Convention, 1999 (No. 182)
7. Equal Remuneration Convention, 1951 (No. 100)
8. Discrimination (Employment and Occupation) Convention, 1958 (No. 111)
IMP (Impact
Management
Project)

A forum for building global consensus on how to measure and manage
impact. IMP convenes a practitioner community of over 2000 practitioners andfacilitates the IMP Structured Network – a collaboration among standardsetting organizations (including B Lab, GIIN, GRI, GSG, IFC, OECD, PRI,
SASB, SVI, UNDP, UNEP Finance Initiative and World Benchmarking
Alliance) to co-create and coordinate standards for impact measurement andmanagement.
Core components of IMP’s conventions are integrated into the SDG Impact
Standards.
Source: Impact Management Project.

ImpactChanges to aspects of wellbeing as experienced by people and/or planetcaused by the organization through its decisions and actions in its own
operations and through its supply and value chains and its business
relationships. Impacts can be positive or negative, intended or unintended,direct or indirect.

Impactassessment

The process of measuring and valuing relevant impacts (and dependencies),
using appropriate methods.
Source: Capitals Coalition.

Impact data
categories

Developed by a community of over 2000 practitioners through the IMP. The
impact data categories outline the information required to assess an individual
impact with the most accuracy. They place an outcome in full context byproviding the data needed to answer all management questions included in
the Five Dimensions of Impact.
Note: the data categories represent an aspirational set of information. In manycases, organizations must deal with data gaps and/ or information that serves
as a proxy for the desired data category. This translates to higher impact risk.
What:
What outcome occurs in the period? Is it positive or negative? How importantis the outcome to the people (or planet) experiencing it?
Outcome level: The level of outcome experienced by the Stakeholder whenengaging with the entity (i.e. the Enterprise, Fund, Investee or Issuer). The
outcome level measures some aspect of wellbeing that can be positive or
negative, intended or unintended.
Outcome threshold: The level of outcome that is ‘good enough’ according tosocietal goals (e.g. SDG targets) or ecological limits. The outcome thresholddefines the acceptable range for the outcome. Performance outside of theacceptable range is negative or unsustainable. Performance within theacceptable range is positive or sustainable. Outcome thresholds can be set
locally, nationally, or internationally. They should also represent the affected
Stakeholder’s perspective, so Stakeholder feedback can be an important way
to corroborate outcome thresholds, especially when they are not wellestablished.
Importance of outcome to sustainable development and the SDGs: Data
from reputable governmental, scientific and civil society organizations andincluding Stakeholders’ perspectives of whether the outcome they experienceis important to them (relative to other outcomes).
SDG target: The specific SDG target(s) that the outcome relates to; an
outcome may relate to more than one SDG target, or may relate tosustainable development outcomes other than SDG targets.

SDG Impact Standards – Glossary

10

Who:
Who experiences the outcome? How underserved are the affected
Stakeholders in relation to the outcome?
Stakeholder: The type of Stakeholder experiencing the impact.
Geographical boundary: The geographical location where the Stakeholder
experiences the outcome.
Outcome level at baseline: The level of outcome being experienced by a
Stakeholder before engaging with, or otherwise being affected by, the entity(i.e. the Enterprise, Fund, Investee or Issuer). Stakeholders experiencing an
outcome level outside of the acceptable range defined by the threshold areunderserved in relation to the outcome.
Stakeholder characteristics: Socio-demographic and/or behavioral
characteristics and/or ecosystem characteristics of the Stakeholders to enable
segmentation.
How much:
How much of the outcome occurs – across scale, depth, and duration?
Scale: The number of individuals experiencing the outcome. When the planetis the Stakeholder, this category is not relevant.
Depth: The degree of change experienced by the Stakeholder. Depth isestimated by analyzing the change that has occurred between the ‘Outcome
level at baseline’ (Who) and the ‘Outcome level in period’ (What).
Duration: Time period over which a Stakeholder experiences an outcome.
Contribution:
Would this change have happened anyway?
Depth counterfactual: The estimated degree of change that would have
happened anyway – without engaging with, or being affected by, the entity.
Performance of peer entities, industry or local benchmarks, and/or
Stakeholder feedback are examples of counterfactuals that can be used toestimate the degree of change likely to occur anyway for the Stakeholder.
Duration counterfactual: The estimated time period for which the outcome
would have lasted anyway – without engaging with, or being affected by, theentity’s actions or decisions. Performance of peer entities, industry or local
benchmarks, and/ or Stakeholder feedback are examples of counterfactuals
that can be used to estimate the duration likely to occur anyway for the
Stakeholder.
Risk:
What is the risk to people and planet that impact does not occur as expected?
Risk type: The type of risk that may undermine delivery of the expected
impact for people and/or the planet (see Impact risk).
Risk level: The level of risk, assessed by combining the likelihood of the risk
occurring, and the severity of the consequence for people and/or the planet if
it does.
For example:‘Outcome level’ = outcome indicator in current period (What)‘Change in outcome level relative to baseline’ = degree of change in outcome
indicator (How much)‘Baseline’ = outcome indicator at baseline (Who)‘SDG and/or other outcome Threshold’ = desired level of outcome indicator(What)SDG Impact Standards – Glossary11‘Other contextual information required to fully understand impact’ = capturesother data categories, (Contribution) and (Risk)
Source: Impact Management Project.
Impact evaluation

An assessment of how the intervention (or activities) being evaluated affects
outcomes, whether these effects are intended or unintended. The proper
analysis of impact requires a counterfactual of what those outcomes would
have been in the absence of the intervention.
Source: OECD, Outline of Principles of Impact Evaluation.
Impact evaluations carried out by independent third-party evaluators may beappropriate, especially where the risks to Stakeholders are high and/or noteasily reversed.

Impact goals

The strategic impact goals of the entity (i.e. the Enterprise, Fund, Issuer). The
entity may also set impact targets, or impact performance (expected value) ofindicators it will use to monitor its progress towards specific milestones or its
impact goals. Impact targets support the entity’s longer-term impact goals but
may be more intermediate or shorter term in nature.

Impact integrity

Key attributes of impact integrity encapsulated in the SDG Impact Standards
include:•Embedding respect for human rights, planetary boundaries and other
responsible business practices into the approach•

Properly integrating robust and consistent impact management into
decision-making and practices (i.e. embedding into practice acrossstrategy, management approach, transparency and governance)•

Identifying, measuring, valuing, managing and communicating all
material positive and negative, intended and unintended, direct andindirect impacts on sustainable development and the SDGs, with aview to increasing material positive impacts and acting to av oid or
significantly reduce material negative impacts•

Defining materiality in terms of what matters most to sustainable
development and achieving the SDGs, including taking into accountStakeholder perspectives•

Making decisions in context, i.e. using credible and relevant data from
reputable agencies including government, scientific and civil society
organizations; involving Stakeholders in decisions that impact them;
determining suitable baselines, counterfactuals and thresholds; andsetting ambitious impact goals to relate decisions and performance to•Adopting common definitions and a shared language for impact that
becomes widely understood across all Stakeholder groups•

With respect to impact disclosures, acting to provide a whole,complete, sound and uncorrupted picture of how the reporting entity
has integrated responsible business practices and impact
management into its decision-making and all material impacts it has
on sustainable development and the SDGs, making impact claims ingood faith (i.e. not overstating positive impacts or understating
negative impacts, placing impacts in the appropriate context, beingtransparent about: (i) all material (positive and negative, intended andunintended, direct and indirect) impacts, accounting for the different
dimensions of impact and not netting positive and negative impacts
out against different Stakeholder groups; (ii) gaps and limitations inunderstanding about impacts (e.g. incomplete information, data
quality issues, assumptions made); (iii) trade-offs made between
positive and negative outcomes or between different Stakeholder
groups; and (iv) the nature and magnitude of risk that impact may notoccur as expected)•

With respect to impact performance, ensuring impact claims areaccurate and supported by evidence. Attribution impact claims should
be based on rigorous evaluation and should be clearly distinguishedfrom other types of evaluations that suggest a potential attribution but
SDG Impact Standards – Glossary

12do not attest the change in the outcome resulted from the entity’s
actions or decisions. While there are methodology limitations todemonstrating attribution in all cases, impact performance claims
need to be very clear. The proper analysis of impact requires acounterfactual of what those outcomes would have been in theabsence of the intervention•

Impactinvestments

Ensuring activities are underpinned and supported by appropriate
culture, sufficient capacity and capabilities, sound governance andindependent assurance of impact practices, data, performance andreporting.

Investments made with the intention to generate positive, measurable socialand environmental impact to global challenges including the SDGs, alongside
a financial return. Impact investments can be made in both emerging anddeveloped markets, and target a range of returns from below market tomarket rate, depending on investors' strategic goals.
Sources: Adapted from GIIN and IFC, https://ifc-org.medium.com/thedifference-between-esg-and-impact-investing-and-why-it-matters8bf459b3ccb6.

Impactmanagement

The ongoing practice of integrating sustainable development and impact
considerations into decision-making and practices through strategy,
management approach, disclosures, and governance to optimize
contributions to sustainable development and the SDGs. This includes setting
ambitious impact goals in the context of suitable baselines and thresholds;
involving Stakeholders in decision-making; identifying, measuring, valuing,
managing, and disclosing material impacts; and establishing learning andcontinuous improvement mechanisms.

Impact planA plan agreed by the Fund and its Investee setting out agreed actions theInvestee and the Fund will take to improve (or in the case of the Fund, support
improvement of) impact management practices and/or impact performance
during the life of the investment, and agreed upon impact indicators andtargets.

Impact risk

The likelihood that impact will be different than expected, and that thedifference will be material from the perspective of the Stakeholders who
experience the impact. For example, impact may be lower than expected oreven negative, or lower than required to contribute to the SDGs in thetimescale required.
To assess impact risks, enterprises and investors need to consider the
likelihood and the consequences of not contributing to sustainable
development and the SDGs, contributing at a rate that is sub-optimal or lower
than required to achieve sustainable development and the SDGs by 2030, orof making unintended negative impacts.
Types of impact risk include:
Evidence risk: Insufficient high-quality data exists to know what impact isoccurring
External risk: External factors disrupt delivery of expected impact
Stakeholder participation risk: Expectations or experience of Stakeholders
are misunderstood or not accounted forDrop-off risk: Positive impact does not endure or negative impact is nolonger mitigated
Efficiency risk: Expected impact could have been achieved with fewer
resources or at lower cost
Execution risk: Activities are not delivered as planned and do not result in
the desired outcomes
Alignment risk: Impact is not locked into the entity’s (i.e. the Enterprise,
Fund, Investee or Issuer) business model

SDG Impact Standards – Glossary13Endurance risk: Required activities are not delivered for a long enoughperiodUnexpected impact risk: Substantial unexpected positive and negative
impact is experienced by people and the planet
Materiality risk: Material outcomes are omitted and/or non-material
outcomes are included in decision-making that increase the risk of suboptimal
decisions being made.
Source: Adapted from Impact Management Project, Social Value
International.
Impact targets

Relating to the SDG Impact Standards for Private Equity Funds, impact
targets refer to the impact goals set by the Fund with respect to eachindividual investment (to differentiate them from the portfolio level impact
goals the Fund sets with respect to the Fund overall).

Impact terms

The objectives, expectations (of both the Investee and Fund), and terms
agreed between the Fund and its Investee that relate to impact management
and impact performance during the life of the investment (including provisions
for exiting investments) and are documented within the legal documents of theinvestment agreement.

Impact thesis (ortheory of change)

An outcomes-based hypothesis of how an Enterprise, Fund, Issuer,
investment, or Investee is expected to contribute positively to sustainable
development and the SDGs. The impact thesis may be separate to, but ideally
is integrated into, strategy, business models or investment thesis, asapplicable.
Relating to Funds, typically the Fund will develop its overall impact thesis withrespect to the Fund and then develop an impact thesis for each of its
investments or Investees. However, some Investees may have alreadydeveloped their own impact thesis (or theory of change) that the Fund reviews
as part of its pre-screening and due diligence process.
Source: Adapted from GIIN.2

Impact washing(also
greenwashing,rainbow washing)

The superficial or insincere display of concern for impacts on people and theplanet or the exaggeration of impact claims to attract investors or customers.

Integrative (orintegrated)thinking

Decision-making process to balance tensions between opposing variables(e.g. social, environmental and economic or financial) and generate
resolutions that contain elements of the opposing ideas but are superior toeach. Generally, follows four steps incorporating feedback loops: (i) salience –define relevant aspects of the problem; (ii) causality – determine relationships
between related and unrelated parts; (iii) architecture – create a model
outlining the relationships defined in steps (i) and (ii); and (iv) resolution –outline the decision and how it was reached.

Sources: Adapted from Rappaport, E., 2019, Impact investing is moving into
the mainstream, but at what cost? (Morningstar, cited 14 June 2019);
Marquis, C., and M. W. Toffel, 2011, The globalization of corporate
environmental disclosure: accountability or greenwashing? Harvard Business
School Working Paper No.11-115 (Citeseer, Boston, MA); and Ludvigsen, P.,
November 2015, Advanced topics in green bonds: Risks (First Environment,
New Jersey) cited 5 October 2019.

Integrated thinking is related to systems thinking.
International Bill of
RightsIncludes three key documents that form the bedrock of international humanrights law: the Universal Declaration of Human Rights, the International
Covenant on Civil and Political Rights, and the International Covenant on
Economic, Social and Cultural Rights.

2

https://thegiin.org/creating-a-strong-investment-and-impact-thesis
https://iris.thegiin.org/theory-of-change-checklist/
https://impacttoolkit.thegiin.org/theory-of-change-the-beginning-of-making-a-difference/https://impacttoolkit.thegiin.org/theory-of-change/
SDG Impact Standards – Glossary

14

Investee

Entities that are receiving financial investment from another entity (e.g. aFund) to produce financial and/or impact return; the portfolio company .
Source: Social Value International.

Investor

Provides financial capital to other entities with an expectation of financial
and/or impact return.
Source: Social Value International.

Investor
contribution(s) to
impact

The contribution(s), whether positive or negative, the Fund makes through its
own actions to sustainable development and the SDGs.
Positive investor contributions, including:(1) Signaling that SDG impact matters: Choosing not to invest in or to favorcertain investments – such that, if all investors did the same, it would
ultimately lead to a ‘pricing in’ of effects on the SDGs by the capital markets.
Signaling is an important baseline. But alone, it is not likely to advance
progress on societal issues when compared with other forms of contribution.
(2) Engaging actively: Significant proactive efforts using expertise andnetworks to improve the impact performances of Investees. Engagement may
include a wide spectrum of approaches – from dialogue with companies to theFund taking board seats and using its own teams or consultants to provide
hands-on management support.
(3) Growing new or undersupplied capital markets: Anchoring or
participating in new or previously overlooked opportunities that offer an
attractive SDG impact and financial opportunity in line with the Fund’s impact
thesis and portfolio level impact goals. This may involve taking on additional
complexity, illiquidity or perceived higher risk.
(4) Being flexible on risk adjusted financial return: Recognizing thatcertain types of Investees do require acceptance of disproportionate riskadjusted returns to generate certain kinds of SDG impact.
(5) Demonstrating market leadership and contributing to field building:To further enable the SDGs beyond the impact of the Fund’s direct portfolio.
This may include sharing SDG impact data and lessons publicly, mentoringand enabling others, exploring partnerships as an enabler for greater SDG
impact, developing industry infrastructure such as open-source tools andresources, helping to scale value – adding intermediaries, platforms, andnetworks, and promoting policy reforms.
Negative investor contributions, including:(1) Financial practices that undermine the positive impacts of Investees,such as:•Financial engineering, such as using debt to purchase companies,
pay dividends (in both private equity and public companies), or
conduct stock buybacks in public companies•

Financial analysis methodologies that focus on short-term results,
such as IRR’s time-value-of-money component that aims to make asmuch money back as fast as possible, or adjustments to EBITDA thatcan make investments in and loans to a company look safer than theymight be•

Domiciling funds in tax havens while relying on government fundingfor emergency support in times of crisis.

(2) Misaligned compensation and incentives, such as:•

Fund manager compensation that might disproportionately reward
fund managers relative to workers in the portfolio companies•

Structuring of investment professional incentives and performance
reviews – for instance, on near-term financial returns versus longer
time horizons.

(3) Shareholder or investor primacy, such as:

SDG Impact Standards – Glossary15•Elevating the interests of shareholders over those of other
Stakeholders.

Source: Adapted from Impact Management Project.
IRIS+

A public good system managed by GIIN. The system helps investors
measure, manage, and optimize their impact. It provides core metrics setsaligned to the SDGs and organized by the Five Dimensions of Impact, the
IRIS catalogue of standard metrics, evidence maps connecting common
strategic goals to outcomes, and how-to guidance and resources.
Source: IRIS+.

Issuer

The entity issuing the SDG bonds. Issuers may be sovereigns (and subsovereigns such as states, provinces, cities, towns, and municipalities), supranationals and government entities, as well as companies, financial institutions
and special purpose entities backed by activities, assets or projects (e.g.
securitizations, infrastructure transactions).

Limited partners

Investors in the private equity, debt or venture capital fund, for instancepension funds, institutional investors, or high net-worth individuals.

Material impacts/
materiality

Material impacts (see also definition of Impact) in the context ofthese Standards:• are those impacts that affect the wellbeing of Stakeholders (see also
definition of Stakeholders) experiencing them• and that would influence decisions of the entity acting in the interestof those Stakeholders, to maximise wellbeing and achievesustainability and the SDGs by 2030
• taking into account the sustainability risks and opportunities that are
most significant for the entity's own value creation, because strong,resilient, and sustainable entities will have more capacity to contribute
positively to sustainable development and the SDGs.
Having a formal assessment process to determine which impacts
are material helps entities identify which impacts to prioritise and manage tooptimise their contribution to sustainability and achievement of the SDGs andmaximise well-being of people and planet.
Sources: Social Value International, SDG Impact.

Metric set

Quantitative or qualitative indicators that allow entities (i.e. Enterprises, Funds
or Issuers) to measure and assess SDG performance across the Five
Dimensions of Impact. Wherever possible, it should reference and align withspecific SDG targets, but may require additional metrics to properly capture
performance.

Natural capital

The stock of renewable and non-renewable natural resources that combine toyield a flow of benefits to people.
Source: Capitals Coalition.

OECD(Organisation for
Economic Cooperation andDevelopment)

An international organization that works to build better policies for better lives.
Together with governments, policy makers and citizens, the OECD works onestablishing international norms and finding evidence-based solutions tosocial, economic and environmental challenges. It provides a forum andknowledge hub for data and analysis, exchange of experiences, best practice
sharing, and advice on public policies and global standard setting. Over the
past decades, the OECD has been engaged in a growing number ofinternational efforts focused on impact measurement.

OutcomeAn aspect of wellbeing. Aspects of wellbeing can be social, environmental or
economic.
Source: Social Value International.
The likely or achieved short-term and medium-term effects of an entity’s
outputs.
SDG Impact Standards – Glossary

16Source: Adapted from OECD, Glossary of Key Terms in Evaluation and
Results Based Management.
Output

The direct result of an entity’s (i.e. the Enterprise, Fund, Investee or Issuer)
activities (e.g. wages paid, hours of training provided, or products andservices sold). It may also include changes resulting from the entity’s actions
or decisions which are relevant to achieving outcomes.

Net positive
impactEnterprises and investments have positive and negative impacts onsustainable development outcomes and the SDGs. For an enterprise orinvestment to be net positive, the positive impacts need to outweigh thenegative impacts.

Perverse
incentives

Incentives that have an unintended and undesirable effect on behavior, suchthat it makes the original problem worse, or redirects actions from where they
are needed most (e.g. cherry picking).

Planetaryboundaries

Defines the environmental limits within which humanity can safely operate.
Proposed in 2009 by Johan Rockstrom, Stockholm Resilience Centre and Will
Steffen, Australian National University.

PRI (Principles for
Responsible
Investment)

An international network of investors working to understand investment
implications of environmental, social and governance factors (ESG) andincorporate these factors into investment and ownership decisions. Six
Principles for Responsible Investment are voluntary and aspirational:
incorporate ESG issues into investments, be active owners, seek appropriate
disclosure, promote the Principles, enhance implementation effectiveness,and report activities and progress.

Protection
measures

Predetermined agreed actions in response to potential adverse events.

Proxy

An indirect measure of an outcome that is correlated to that outcome. It may
be used when direct measures of the outcome are unavailable or unfeasible
to collect.

Risk appetite

The willingness of the entity and Stakeholders to accept risk in pursuit ofcertain outcomes or objectives, before requiring measures to be taken to
reduce or mitigate the risk.

Risk-based

Taking into account the likelihood and magnitude of risk when making
decisions, including deciding how much information is sufficient to make adecision, and when impact data or performance should be assured.

Risk tolerance

The entity’s and Stakeholders’ willingness to withstand variability in outcomesor outcomes that differ from what is expected.

SASB(Sustainability
AccountingStandards Board)

A non-profit organization that creates industry sustainability standards fordisclosing and recognizing financially material (to the Enterprise value)environmental, social and governance impacts of publicly traded US
companies.

SDG Bond
Program

The complete arrangements for issuing one or more SDG Bond as set out in
the Issuer’s SDG Bond Program documentation.

SDG Bonds

Broad category that includes use-of-proceeds, SDG-linked (i.e. performancebased) and general purpose bonds either issued by companies, governments
and municipalities, or for activities and projects (e.g. issued through a special
purpose entity).
Sources: UNGC and UNEPFI, SDG Bonds| Leveraging Capital Markets for
the SDGs.

SDG Impact Standards – Glossary

17

SDGD
(Sustainable
Development
Goals Disclosure)
Recommendations

Support the following recommendations:
(i)
(ii)
(iii)

Identification of material sustainable development risks andopportunities relevant to long-term value creation fororganizations and society
Changing what an organization does and how it does it tocontribute to the achievement of the SDGs
The communication of implications for and impact onachievement of the SDGs.

The SDGD Recommendations and the Fundamental Concepts and Principles
that underpin them are aligned with, and draw on, the: recommendations of
the Taskforce on Climate-related Financial Disclosures (TCFD, 2017); theGRI Standards; and the International <IR> Framework (IIRC, 2013).
Fundamental concepts:
Long-term value creation for the organization and society: Organizations
create (or destroy) value for their providers of finance through the value theycreate (or destroy) for the organization and society. Through the process ofcreating (or destroying) value, organizations have an impact (positive or
negative) on achieving the SDGs. Achieving the SDGs is critical to creating
long-term value for providers of finance.
The process of creating value involves identifying and responding to external
environment factors including sustainable development risks andopportunities. Value creation (or destruction) involves transforming multiple
capitals: social and relationship capital, natural capital, human capital,
intellectual capital, financial capital and manufactured capital. The value
creation process also involves trade-offs in impact on achieving the SDGs.
The Fundamental Concept of Long-term value creation for the organizationand society is informed by the Fundamental Concepts underpinning theInternational <IR> Framework (IIRC, 2013); value creation for the organizationand for others; the capitals; and the value creation process.
Sustainable development context and relevance: This Fundamental
Concept is informed by the definition of sustainability context in GRI 101.
However, it goes beyond presenting the organization’s performance in thesustainability context to also recognize that such context has implications forstrategy and the business model.
Information on targets should be placed in context of the targets underpinning
the SDGs. An organization’s consideration of sustainable development issues
should include, but go beyond, their relationship to both positive and negative
performance, to consider their implications for what business is done
(products and/or services) and how business (operations) is done. The
organization’s approach to contributing to achievement of the SDGs should bereflected through its strategy and business model.
Materiality: Material sustainable development information is any informationthat is reasonably capable of making a difference to the conclusions drawn
by:•Stakeholders concerning the positive and negative impacts of theorganization on global achievement of the SDGs and/or sustainable
development•

Providers of finance concerning the ability of the organization tocreate long-term value for the organization and society.

The sustainable development issues that are relevant and material to anorganization’s ability to create long-term value and prevent value destruction
present risks and/or opportunities for its Stakeholders, including society(people and planet) more broadly.
The sustainable development issues that led to the development of the SDGs
are interdependent in ways that are impossible to predict and over which anorganization has limited control. Organizations impact the achievement ofsustainable development both outside and within their organizationalboundaries.
The organization’s approach to materiality for SDG Disclosures shouldcommence with the approach set out in GRI 101 but be supplemented by
SDG Impact Standards – Glossary18

management and Board consideration of those issues that are material tolong-term value creation (or value destruction) for the organization andsociety.
The Fundamental Concept of Materiality is informed by the Principles ofmateriality in the International <IR> Framework and GRI 101.
Reporting Principles:•

Strategic focus and future orientation•

Stakeholder inclusiveness•Conciseness•Connectivity of information•

Consistency and comparability•

Completeness, balance, and understandability•

Reliability and verifiability•

Timeliness.

The SDG Impact Standards for Enterprises are aligned with the SDGD
Recommendations.
Sources: Carol Adams, Professor of Accounting, with Paul Druckman and
Russell Picot, published by the Association of Chartered Certified
Accountants (ACCA), Institute of Chartered Accountants of Scotland (ICAS),
Chartered Accountants Australia and New Zealand (CA ANZ), theInternational Integrated Reporting Council (IIRC) and the World
Benchmarking Alliance, 2020.
SDG Impact

UNDP initiative to create a suite of complementary resources to facilitate
increased private sector investment towards advancing the SDGs. The SDG
Impact products include the SDG Investor maps, and the SDG Impact
Standards, assurance framework and online IMM training developed throughthe Case Centre at Duke University.

SDG Impact
Investor Maps

Developed by UNDP to provide country level market intelligence on SDGaligned priority areas for both fully private or blended investments. The SDG
Investor maps identify investment opportunity areas that are proven andscalable considering the enabling regulatory and financial environment thatfacilitate investment.

SDG Indicators

232 indicators used to measure the 169 targets related to the 17 SDGs.
Indicators are generally set at the country level, so may not be appropriate or
relevant to apply at the entity level.
See: SDG Indicators.

SDG linked bonds

Bonds whose performance is linked to achieving (or contributing to) certain
SDG related outcomes or targets, such that failing to meet those outcomes ortargets results in a pre-specified cause of action (e.g. a step-up/step-down inthe margin required to be paid on the bond if impact performance islower/higher than a pre-specified target).
Note: Paying a step-up margin to investors where target outcomes are notachieved is not a well-aligned incentive. Directing any step-up margin to a
separate account to be paid, for instance, to a third-party organization andapplied towards improving the targeted outcomes could be more appropriate.

SDG Targets

169 targets that have been set in relation to the 17 SDGs.

SDGs(Sustainable
Development
Goals)

17 global goals set by the UN General Assembly in 2015 to be achieved by
2030. Each SDG comprises a list of targets and indicators.
The SDGs are integrated into the design of the SDG Impact Standards .

SDG Impact Standards – Glossary

19

SFDR (theSustainable
Finance
Disclosure
Regulation)

Came into force in December 2019 with an implementation date of 10 March
2021. Part of the European Commission’s package of reforms to implement
its sustainable finance strategy. Requires all EU-based financial market
participants to disclose ESG risks, with additional requirements forinvestments or products that make specific ESG or sustainable investment
claims.

Sensitivity andscenario analysis

The process of identifying a range of plausible scenarios based on different
assumptions (e.g. an expected case, a worst case, and a best case,scenario), and assessing the variability of outcomes based on changes in the
scenario. This is especially important in uncertainty, i.e. when the variables
are not completely within, or are outside, the entity’s control (e.g. climatechange).

Social capital

The networks and shared norms, values and understanding that facilitate
cooperation within and among groups.
Source: Capitals Coalition.

Stakeholder
involvement

Involving Stakeholders in ongoing planning and decision-making that is twoway, conducted in good faith, responsive and results in Stakeholders having
meaningful agency in decisions that impact them (i.e. there is evidence that
Stakeholder needs and preferences influence and change decisions andoutcomes).
The degree of potential social, economic and/or environmental impact on
Stakeholders, the level of risk of and Stakeholders’ tolerance for, unexpected
outcomes, and how disadvantaged Stakeholders are will determine theappropriate level and form of Stakeholder involvement.
Source: Adapted from OECD Due Diligence Guidance for Meaningful
Stakeholder Engagement in the Extractive Sector.

Stakeholders

Those (people and planet) who are affected, intentionally or unintentionally,
directly or indirectly, by an entity’s activities and decisions (noting that inactionis also a decision), including:
1. Human-rights holders including workers, local community members,
human rights defenders, migrant workers, persons with disabilities,
indigenous peoples, consumers and organizations such as tradeunions, which are not human-rights holders but may represent them.
2. Customers who use the entity’s products/services
3. Employees (and other workers) who work for the entity
4. Local communities who are directly or indirectly affected by anentity’s activities (e.g. unhealthy factory emissions that negatively
affect surrounding local communities; or affordable housing units forunderserved communities)
5. Suppliers and distributors who are affected by the entity’s volume
of procurement, regulations and quality control (e.g. a zero-tolerance
policy on child labor that affects suppliers)
6. The planet, which an entity affects through extracting, using andcreating environmental resources; and through pollution that isemitted by these processes.
Source: Adapted from Impact Management Project.

Standards (SDG
Impact Standards
for Enterprises,
Bond Issuers andPrivate Equity
Funds)Developed for Enterprises, Funds, Bond Issuers and other actors as a public
good to inform and encourage increased private sector investment towards
advancing the SDGs. Part of the United Nations Development Programme(UNDP) SDG Impact Initiative.
The SDG Impact Standards are internal decision-making standards to help
users integrate impact management and contributing positively to sustainable
development and the SDGs into strategy, management approach,transparency and governance practices. The Standards also help users to

SDG Impact Standards – Glossary20

connect to and work with actors across the system through a shared system,
conventions and language.
Subjectivity

Application of judgement based on an individual perspective when objective
data is not available.
Source: Social Value International.

Sustainable
development

Meeting the social, environmental and economic needs of the present withoutcompromising the ability of future generations to meet their needs (e.g.
climate change, inequality and human rights, biodiversity loss, deforestation,
waste and pollution).

SVI (Social Value
International)

An international membership network focused on adopting decision-making,ways of working and resource allocations that embed principles for social
value measurement and analysis. The aim is to promote equality andwellbeing and reduce environmental degradation.

SVI’s sevenprinciples of social
value

SVI’s seven principles of social value are a set of social accounting principles:
Involve stakeholders: To inform what gets measured and how, and to what
degree a good or service is valued
Understand what changes: Articulate how change is created and evaluate
this through evidence, recognizing positive and negative changes and thosethat are intended and unintended
Value the things that matter: Allocate resources between options based on
the values of Stakeholders
Only include what is material: Determine what information and evidence
must be included to give a true and fair picture, so that Stakeholders can draw
reasonable conclusions about impact
Do not over-claim: Only claim the value that directly derives from activities
Be transparent: Demonstrate the basis on which analysis may be considered
accurate and honest, and show that it will be reported to and discussed with
Stakeholders
Verify the result: Ensure appropriate independent assurance.
The SDG Impact Standards are aligned with SVI’s seven principles of social
value.
Source: Social Value International.

SVI’s Standards

SVI has developed a number of Standards to provide further guidance on
implementation of their seven principles of social value including:•Standard on applying Principle 1: Involve stakeholders•

Standard on applying Principle 2: Understand what changes (Part 1)•

Standard on applying Principle 3: Value the things that matter.

•

Standard on applying Principle 4: Only include what is material

The SDG Impact Standards link to SVI’s Standards.
Source: Social Value International.
SVI’s ten impact
questions

1. What problem are we trying to solve?
2. What is our proposed solution to the problem, what resources are
required/do we depend on?
3. Who experiences changes in their lives as a result of what you do?
What subgroups are there? Or customer segmentation?
4. What outcomes are (or likely to be) experienced?
5. How can we measure the amount of change in the outcomes?

SDG Impact Standards – Glossary21

6. How much change in each outcome has happened (or is likely tohappen)?
7. How do we account for trade-offs between positive and negative andcompare options?
8. How long do we need to measure outcomes for?
9. How much of the change in each outcome is caused by our activities?
10. Which outcomes matter to the people who have been affected?
SVI’s what makesa ‘good’ impact
reportSystems change

A good impact report contains information about:•

how the impacts are determined or selected•

how we know these are the right ones•

what targets are set for our impact•

how positive and negative impacts are included•

performance on impacts and net impact, against these targets•

performance against a minimum threshold•

what decisions have been influenced by the information in the report•what plans are for increasing impact and improving the use of impact
information•

how the information was assured or audited.

Shifting the conditions that are holding a problem in place.
Source: Social Innovation Generation (SIG) Canada.
According to FSG, there are six interdependent conditions that typically playsignificant roles in holding a social or environmental problem in place. These
conditions exist with varying degrees of visibility to players in the system,
largely due to how explicit, or tangible, they are made to most people:
Policies: Government, institutional and organizational rules, regulations, andpriorities that guide the entity’s own and others’ actions
Practices: Espoused activities of institutions, coalitions, networks, and otherentities targeted to improving social and environmental progress. Also, within
the entity, the procedures, guidelines, or informal shared habits that comprise
their work
Resource flows: How money, people, knowledge, information, and otherassets such as infrastructure are allocated and distributed
Relationships and connections: Quality of connections and communication
occurring among actors in the system, especially among those with differinghistories and viewpoints
Power dynamics: The distribution of decision-making power, authority, andboth formal and informal influence among individuals and organizations
Mental models: Habits of thought – deeply held beliefs and assumptions andtaken-for-granted ways of operating that influence how we think, what we do,and how we talk.
Source: FSG, The Water of Systems Change, John Kania, Mark Kramer,Peter Senge, 2018

Systems thinking

A method of critical thinking to facilitate better decision-making and reduce
unintended consequences considering connections and interdependencies ofa system’s parts. First, define the bounds of a system. Second, define theparts. Third, analyze relationships between the parts to better understandconnections and interdependencies which ultimately affect the system’s
performance/ outcomes.
Systems thinking is related to integrated thinking.

SDG Impact Standards – Glossary22Threshold

A societal norm or ecological level deemed ‘good enough’, for example asindicated by science-based targets and the SDGs which outline targets (orthresholds) for achievement by 2030.
The outcome threshold defines the acceptable range for the outcome.
Performance outside of the acceptable range is negative or unsustainable.
Performance within the acceptable range is positive or sustainable. Outcome
thresholds can be set locally, nationally or internationally. They should also
represent the affected Stakeholder’s perspective, so Stakeholder feedback
can be an important way to corroborate outcome thresholds, especially when
they are not well-established.
(Note: Care should be taken to recognize – and adjust accordingly – that
under-represented Stakeholder populations may not be aware of the negative
impacts that business or other activities may have on their access to basic
rights and services. Precedence should be given to international norms where
locally set norms are less ambitious than international ones.)

Trade-offs

Quantitative (not necessarily monetary) comparison of impacts, all of which
are not attainable at the same time.
Source: Social Value International.

UNCTAD (United
Nations
Conference on
Trade andDevelopment)

A permanent intergovernmental body established by the United Nations
General Assembly in 1964 supporting developing countries to access thebenefits of a globalized economy more fairly and effectively and help equipthem to deal with the potential drawbacks of greater economic integration.
UNCTAD has released Guidance on core indicators for entity reporting oncontribution towards implementation of the Sustainable Development Goals(2019).
Source: UNCTAD.

UNDP (United
Nations
Development
Programme)

The UN’s global development network, advocating for change and connecting
countries to knowledge, experience, and resources to help people build abetter life. Active in over 170 countries and territories, working withgovernments and people on solutions to global and national development
challenges.

UNEP FI (United
Nations
Environment
Programme –Finance Initiative)

UNEP FI is a unique partnership between the UN and the global financial
sector. It was created following the 1992 Earth Summit to promote and enable
the integration of sustainability considerations at all levels of operation anddecision-making in financial institutions. Working with a network of over 350
financial institutions globally, UNEP FI spawned the Principles for
Responsible Investment in 2006 and currently operates both the Principles for
Responsible Banking and the Principles for Sustainable Insurance, as well as
the Positive Impact Initiative, a think and do tank at the origin of holistic impact
analysis, a unique solution for the impact management and SDG achievement
in mainstream finance.
The SDG Impact Standards are aligned with UNEP FI’s Principles for
Responsible Banking and Principles for Positive Impact Finance.

UNGC (United
Nations Global
Compact)

A voluntary initiative based on CEO commitments to encourage businesses
worldwide to adopt sustainable and socially responsible policies, and to reporton their implementation.

UNGC CFO
Principles on
Integrated SDG
Investments andFinance

The CFO Principles supplement the UN Global Compact’s Ten Principles tosupport companies in the transition to sustainable development and toleverage corporate finance and investments towards realizing the SDGs.
The SDG Impact Standards are aligned with UNGC’s CFO Principles on
Integrated SDG Investments and Finance.
Source: UNGC.

UNGC Ten
Principles

The Ten Principles account for the fundamental responsibilities of business inthe areas of human rights, labor, environment and anti-corruption. They arederived from the Universal Declaration of Human Rights, the International
Labor Organization’s Declaration on Fundamental Principles and Rights at
SDG Impact Standards – Glossary

23Work, the Rio Declaration on Environment and Development, and the United
Nations Convention Against Corruption.
The Ten Principles are based on the premise that corporate sustainability
starts with a company’s value system and a principles-based approach to
doing business. Responsible businesses enact the same values andprinciples wherever they have a presence and know that good practices in
one area do not offset harm in another.
By incorporating the Ten Principles of the UN Global Compact into strategies,
policies and procedures, and establishing a culture of integrity, companies are
not only upholding their basic responsibilities to people and planet, but also
setting the stage for long-term success.
The Ten Principles of the UNGC
Human Rights
Principle 1: Business should support and respect the protection ofinternationally proclaimed human rights
Principle 2: Make sure that they are not complicit in human rights abuses
Labor
Principle 3: Business should uphold the freedom of association and theeffective recognition of the right to collective bargaining
Principle 4: The elimination of all forms of forced and compulsory labor
Principle 5: The effective abolition of child labor
Principle 6: The elimination of discrimination in respect of employment andoccupation
Environment
Principle 7: Business should support a precautionary approach toenvironmental challenges
Principle 8: Undertake initiatives to promote greater environmental
responsibility
Principle 9: Encourage the development and diffusion of environmentallyfriendly technologies.
Anti-corruption
Principle 10: Business should work against corruption in all its forms,
including extortion and bribery.
The SDG Impact Standards link to the UNGC Ten Principles.
Source: UNGC Ten Principles.
Unintended
consequences

Unintended (and usually unforeseen) outcomes of a purposeful action.
Unintended consequences include unexpected positive outcomes,
unexpected negative outcomes and perverse outcomes (where the purposefulaction makes the original problem worse).

UNGPs (United
Nations Guiding
Principles on
Business andHuman Rights)

31 principles (the first 10 of which relate to State duties) implementing theUnited Nations ‘Protect, Respect and Remedy’ framework on the issue ofhuman rights and transnational corporations and other business enterprises.
The Guiding Principles were developed by the Special Representative of theSecretary-General and were unanimously endorsed by the United Nations
Human Rights Council in 2011.
The UNGPs are the most authoritative guidance on how to “prevent andaddress human rights abuses in business operations” 3 Under Pillar 1 of thisframework, the State has the primary legal responsibility to protect thehuman rights of its citizens. Pillar 2 requires businesses to respect humanrights by avoiding infringing on the human rights of others and addressing

3

The UN Working Group on Business and Human Rights, ‘The UN Guiding Principles on Business and Human
Rights: An Introduction’,https://www.ohchr.org/Documents/Issues/Business/Intro_Guiding_PrinciplesBusinessHR.pdf
SDG Impact Standards – Glossary24

adverse human rights impacts with which they are involved. Pillar 3 requires
states to ensure, through judicial, administrative or other appropriate means,that rights holders have access to effective remedy when human rights
abuses occur.
In addition, the UNGPs are cited by the 2030 Agenda for Sustainable
Development as a Means of Implementation, to be used to “foster a dynamic
and well-functioning business sector, while protecting labor rights andenvironmental and health standards in accordance with relevant international
standards….such as the UNGPs”4.
The SDG Impact Standards link directly to the UNGPs.
Source: Adapted from United Nations Guiding Principles on Business andHuman Rights
UN HLEG (United
Nations' HighLevel Expert
Group) Recommendations
on the Net Zero
Emissions
Commitments of
Non-State
Entities)

The UN HLEG Recommendations on the Net Zero Emissions Commitments of
Non-State Entities, released in November 2022 at COP 27, sets out fiveprinciples and ten recommendations to create a universal definition of net zeroand provide best-practice guidance for non-state actors (businesses, financial
institutions, cities and regions) to translate their net-zero pledges andcommitments into targets and action that align with their fair share of emissions
and support a just transition for all.

UDHR (Universal
Declaration of
Human Rights)

A milestone document in the history of human rights. Drafted byrepresentatives with different legal and cultural backgrounds from all regionsof the world, the Declaration was proclaimed by the United Nations General
Assembly in Paris on 10 December 1948 (General Assembly resolution 217
A) as a common standard of achievements for all peoples and all nations. It
sets out, for the first time, fundamental human rights to be universally
protected and it has been translated into over 500 languages.
Source: Universal Declaration of Human Rights (UDHR).

UNRISD (United
Nations ResearchInstitute for Social
Development)

An autonomous research institute within the UN system that undertakes
interdisciplinary research and policy analysis on the social dimensions ofcontemporary development issues.
The UNRISD Sustainable Development Performance Indicators Project
research has identified a number of blind spots in corporate sustainability
reporting that Stakeholders need filled to gauge whether companies’
performance is consistent with the transformative vision of the SDGs,
including:•measurement of actions that actually transform the root causes of
unsustainable development, including inequalities, distributive
injustice and unequal power relations•

quantitative, time series data that reveal performance trends overtime•"material" and “contextualized” metrics, informed by social science
research, that show how entities perform relative to sustainability
thresholds.

Source: UNRISD.
UN Women

The United Nations entity dedicated to gender equality and the empowermentof women. It works globally to make the vision of the SDGs a reality for
women and girls, and stands behind women’s equal participation in all
aspects of life, focusing on four strategic priorities:•

Women lead, participate and benefit equally from governancesystems•

Women have income security, decent work and economic autonomy

4 2030 Agenda for Sustainable Development, para. 67

SDG Impact Standards – Glossary25•All women and girls live a life free from all forms of violence•

Women and girls contribute to and have greater influence in building
sustainable peace and resilience, and benefit equally from theprevention of natural disasters and conflicts and humanitarian action.

Source: UN Women.
UN Women’s
Empowerment
Principles

A set of seven principles that offer guidance to business on how to promote
gender equality and women’s empowerment in the workplace, marketplaceand community. They were developed as a joint initiative between UN Womenand the UNGC and are informed by international labor and human rights
standards, and grounded in the recognition that businesses have a stake inand responsibility for gender equality and women’s empowerment.
Women’s Empowerment Principles
1. Establish high-level corporate leadership for gender equality
2. Treat all women and men fairly at work – respect and support humanrights and nondiscrimination
3. Ensure the health, safety and wellbeing of all women and men
workers
4. Promote education, training and professional development for women
5. Implement enterprise development, supply chain and marketing
practices that empower women
6. Promote equality through community activities and advocacy
7. Measure and publicly report on progress to achieve gender equality.
The SDG Impact Standards link to the UN Women’s Empowerment
Principles.
Source: UN Women.

Use-of-proceeds
bond

Bond with strict accountability of the use-of-proceeds towards eligible green,social or climate activities and with a link to the SDGs. Typically issued inaccordance with ICMA’s green, social or sustainability bond principles or the
Climate Bond Standard (CBI). Can be issued by companies, governments
and municipalities, and activities and projects. Can be unsecured, backed by
the creditworthiness of the corporate or government issuer. Can also be
secured with collateral on a specific asset.
Sources: UNGC and UNEPFI, SDG Bonds| Leveraging Capital Markets for
the SDGs.

Valuation

The process of estimating the relative importance, worth, or usefulness ofsomething to people and the planet (or an Enterprise), in a particular context.
Source: Adapted from Capitals Coalition.

Value creation

Entities create (or destroy) value through the value they create (or destroy) for
their entity (and its shareholders/owners/providers of finance) andStakeholders (people and planet). Through the process of creating (ordestroying) value, entities have an impact (positive or negative, direct orindirect, intended or unintended) on sustainable development and achieving
the SDGs. Achieving the SDGs is critical to creating both long-term value for
entities (and their shareholders/owners/providers of finance) andStakeholders (people and planet).
The concept of Enterprise value creation is broader than the concept ofEnterprise value. The concept of value creation encapsulates value createdacross multiple capitals (for instance, human, natural, social and financial or
economic value) for the Enterprise and for Stakeholders. The concept ofEnterprise value refers exclusively to financial capital for the Enterprise and its
shareholders/owners/providers of finance i.e. the Enterprise’s market
capitalization plus debt.
Source: Adapted from SDGD Recommendations.

SDG Impact Standards – Glossary26WBA (World
Benchmarking
Alliance)

WBA seeks to generate a movement around increasing the private sector’s
impact towards a sustainable future for all by working to incentivize andaccelerate companies’ efforts towards achieving the SDGs. WBA has set out
to develop benchmarks to compare companies’ performance on the SDGs.

Wellbeing

A state of being comfortable, healthy, or happy. For the purposes of theseStandards, aspects of wellbeing are social, environmental and economic.
Source: Oxford Dictionary.

SDG Impact Standards – Glossary27

Update Log
DateName of Definition
being updated

March
2021
April
2023

Action Description andrationale

Update Description

Initial release

Material
impacts/materiality

ChangeTo provide greater clarity
From: “Materiality is a processused to help identify the impacts
that need to be managed and to
determine the sufficiency of
information needed to make adecision. Any approach tounderstanding the impact of any
entity or its activities will need tofind a way to focus on theoutcomes that are relevant andsignificant, including:

To: “Material impacts (see also
definition of Impact) in the context
of these Standards:
are those impacts that affect the
wellbeing of Stakeholders (see also
definition of Stakeholders)experiencing them and that would
influence decisions of the entity
acting in the interest of those
Stakeholders, to maximise
wellbeing and achievesustainability and the SDGs by2030 taking into account thesustainability risks andopportunities that are
most significant for the entity's own
value creation, because strong,resilient, and sustainable entities
will have more capacity tocontribute positively to sustainable
development and the SDGs.
Having a formal assessment
process to determine which
impacts are material helps entities
identify which impacts
to prioritise and manage tooptimise their contribution tosustainability and achievement of
the SDGs and maximise well-beingof people and planet.”- the outcomes are important to
the Stakeholders experiencing (orlikely to experience) them
- the outcomes are important forsustainable development andachievement of the SDGs by 2030
- where the entity can make (or ismaking) the most significant(positive and negative) impacts onimportant outcomes- taking into account thesustainability risks andopportunities that are mostsignificant for the entity’s own
value creation, because strong,resilient and sustainable entities
will have more capacity tocontribute positively to sustainable
development and the SDGs.
Sources: Social Value International,
SDG Impact.

April
2023

ImpactChangeTo provide greater clarity andconsistency and make more
explicit
From: “A long-term change in an
outcome (aspects of wellbeing)caused by an entity’s actions or
decisions either directly throughits products, services or own
operations; or indirectly through its
supply and value chain(s).
Impacts can be positive or
negative, intended or unintended,primary or secondary.”

To: “Changes to aspects ofwellbeing as experienced bypeople and/or planet caused by theorganization through its decisions
and actions in its own operations
and through its supply and value
chains and its business
relationships. Impacts can bepositive or negative, intended orunintended, direct or indirect.”

SDG Impact Standards – Glossary28April2023

Stakeholders

April
2023

United Nations' HighLevel Expert Group(UN HLEG)
Recommendations on
the Net Zero Emissions
Commitments of NonState Entities

ChangeTo make more explicit

Inclusion of “and other workers” in
3. Employees

New Inclusion“The UN HLEG Recommendations
on the Net Zero Emissions
Commitments of Non-State
Entities, released in November
2022 at COP 27, sets out fiveprinciples and ten
recommendations to create auniversal definition of net zero andprovide best-practice guidance fornon-state actors (businesses,
financial institutions, cities andregions) to translate their net-zeropledges and commitments into
targets and action that align with
their fair share of emissions andsupport a just transition for all.”To link these Recommendations
on the Net Zero Emissions
Commitments of Non-State
Entities to the term “planetary
boundaries in line with sciencebased targets” used in the SDG
Impact Standards through theStandards Guidance.

SDG Impact Standards – Glossary

29