Everything we do affects people and the planet. Managing impact means figuring out which effects are material and then trying to prevent the negative and increase the positive.

What is impact management?

Impact Management@1.5x Created with Sketch. Deliver and improve impact Understand experience of people and the planet Set financial and impact goals Define intentions and constraints
All enterprises affect people and the planet through their products or services, their distribution channels, their operations and governance and their supply chains.
Impact management is an ongoing process of figuring out which effects experienced by people and the planet are material, both positive and negative. Guided by this assessment, and our intentions and constraints, we set impact goals and financial goals. We put in place the governance and processes to deliver consistently on those goals but we also continue to learn about the experience of people and the planet, and use that information to adapt our goals and improve.
EXAMPLE: Impact describes material effects experienced by people and planet, both positive and negative. Effects are material if they are deep and/or occur for many people and/or last for a long time, relate to important positive or negative outcomes and occur for people (or planet) who are not well-served in relation to those outcomes. Read more about materiality – and the sort of data that drives our assessment of it - here.

You can start managing your impact at any time - whether you’re already running an enterprise or have a portfolio of enterprises, or you’re starting something from scratch. All parts of the impact management process influence each other. Explore how to understand experience of people and planet, define your intentions and constraints set impact, financial goals and deliver & improve impact.

Why do we need shared fundamentals to manage impact?

Many of us are looking to manage our impact. Whether we experience the effects ourselves, run an enterprise, invest our money, study social sciences, make policy decisions or evaluate performance, we are increasingly recognising that the change we want to see in the world can only happen if we manage impact together.

But do we understand each other? When we work in partnership with others, we rely on a shared understanding of the material impacts that people and planet are experiencing. This informs the goals we all set and deliver against, and allows us to adapt our approach as we learn more about what’s working (or not).

Ecosystem@1.5x Created with Sketch. Policymakers Investors & Funders Fund Managers People Planet Asset Owners Enterprises
EXAMPLE: We all want to use resources, frameworks and tools that are best suited to our context. Some people want detailed information about impact frequently; others want less detailed information, less frequently. The important thing is to be able to look at whatever information we share with each other about impact and observe the same fundamentals. For examples of how different impact frameworks convey information about the same 'shared fundamentals', see here.
Hundreds of practitioners, from different contexts and countries, have come together to agree on shared fundamentals for how we communicate impact to each other. Having widely shared fundamentals that help us to manage our impact does not mean that we all use the same resources, frameworks or tools. We want to use resources, whether proprietary or ‘off-the-shelf’, that suit our own context. Some people want detailed information frequently; others want less detailed information, less frequently. But it does require us to be able to look at whatever information we share with each other about impact and observe the same fundamentals.

Why are shared fundamentals important for enterprises?

Any enterprise directly affecting people or the planet - whether a large multinational, a small business or a non-profit - has an interest in understanding the impact it has, positive or negative. Some care about it because the creation of positive impact for people and planet is why they exist; some are driven by a concern about regulatory and reputational risk; some see it as a way to unlock commercial value (for example, cost-cutting through energy savings or increasing workforce retention or customer loyalty); some want to harness commerce to create positive impact that can run under its own steam; and some just believe that businesses should respect society and want to live up to that ideal.

Whatever their agenda, shared fundamentals allow enterprises of all kinds to communicate their impact goals and to understand the impact goals of others (from customers to employees to investors to funders to policymakers), so that those working together can agree on how best to deliver and improve.

Why are shared fundamentals important for investors?

Shared fundamentals for describing the effects that different underlying businesses - or portfolios of businesses - have on people and planet help investors to understand the different options available to them within each asset class. Investors can then build a portfolio that matches their intentions, constraints, financial and impact goals. For more detail, explore the section on Goals, where you will find model portfolios that put this into practice.
EXAMPLE: Is an investment product focused on businesses that are already avoiding negative impact for certain groups of people (or the planet), such as child labour? Or does it provide an opportunity for investors to engage actively in stopping companies from behaving that way? Does it create access to businesses that are not only trying to prevent negative impact but are generating positive effects for their employees and local communities? Or does it focus exclusively on growing the capital market for businesses that make a significant contribution to a specific important positive outcome, such as education or good health, for underserved groups of people?

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    Whether you are a frontline business, asset owner, intermediary or evaluator, managing impact starts with talking about impact in a way everyone can understand

    Will you start using these shared fundamentals when you talk about your impact? Have you already started, and have an experience to share?

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