Impact Measurement FrameworkEnvironmental, Social, Governance (ESG)

Author(s): John Elkington – Co-founder of the business consultancy Sustainability

Target Market: Institutional investors, portfolio investments

Overview: Provides overarching guidance to evaluate an organization’s operations across three main areas:

  • Environmental – Looks at how a company performs as a steward of the natural environment
  • Social – Examine how a company manages relationships with its employees, suppliers, customers and the communities where it operates
  • Governance – Deals with a company’s leadership, executive pay, audits and internal controls, and shareholder rights.

Data Collection / Measurement Method:

  • Companies determine applicable metrics in each main criteria
  • Scoring system is determined
  • Relevant data is collected
  • Report card is produced

Scoring Method: A report card using letter grades (A – F) is constructed to illustrate how well an organization performs in each category. Alternatively, textual analysis of performance in each category can be produced.

Key Points:

  • Organizations have to report across all three criteria
  • Best practice implementation should reflect industry benchmarks across the metrics