Publication Type

Report

Version

publishedVersion

Publication Date

3-2020

Abstract

The measurement of ESG and its impact is becoming one of the more important and debated issues in sustainable business practice, with the significant challenges being the subjectivity of scope, criteria, as well as lack of consistency across different rating agencies and data providers

Impact measurement goes beyond ESG measurement. Apart from qualitative and input-based approach, it encapsulates a more outcome/impact-based approach, supported with quantitative methods

Impact measurement and valuation are still at the infant stage, with limited research and guidelines, thus [Impact Institute] II’s approach has significant novelty and is among the first to measure and value impact

II works with partners to continuously improve its approach, and helps the development of the field by providing a proof of principle that some of the challenges can be tackled The data compiled through Impact Institute’s (II) Global Impact Database (GID) are generally in line with what has been used in the mainstream academic literature; however, some data sources used by II focus more on Europe (e.g., Exiobase, European Social Survey), which may not be suitably adapted for the Asian context, and the inclusion of non-English sources can be improved The methodologies employed by II (Integrated Profit and Loss Assessment) are based on straightforward and acceptable assumptions; however, there is room for improvement with regard to (i) the attributions along the global value chains; (ii) the rigid weights between direct and indirect impact distribution; (iii) consideration of higher order indirect impact along value chains; (iv) use of interest rate in impact attribution to the loans made by financial institutions

The two case studies on Palm Oil sector and Automotive (electric vehicles (EV) versus combustion engine vehicles (CEV)) sector both utilise the methodologies and the data developed by II, but embody different approaches reflecting different characteristics of these two sectors.

- The analyses of the palm oil industry involve the combination of the top-down assessment on global demand and supply and bottom-up country and industry-specific data

- The Automotive sector is analysed through the bottom-up approach since the production of EVs is composed of several stages assembling a multitude of parts from various sectors

- Caveats in II’s case studies of the two sectors include insufficient higher order impact assessment (i.e. the indirect impact from the education of farmers’ children), and leaving the indirect impact of electronic disposals at the end-of-life phase of EVs out of scope

Overall, the methodologies and the data utilised by II are broadly consistent in comparison with the recent academic literature on the assessment of ESG impact, but may not be fully generalized to other countries and sectors

Keywords

ESG, impact measurement

Discipline

Business Law, Public Responsibility, and Ethics | Finance and Financial Management

Research Areas

Finance

First Page

1

Last Page

27

Publisher

Singapore Management University, Sim Kee Boon Institute

City or Country

Singapore

Embargo Period

3-29-2020

Copyright Owner and License

Singapore Management University / SKBI

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