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Impact Measurement: The Essential “Accounting” for Doing Good 

Writer's picture: ZahraZahra

scales measuring good and bad chess peices

As more businesses strive to deliver social and environmental value, impact measurement has emerged as a necessity. Much like accounting ensures financial accountability, impact measurement validates a company’s claims about its ESG (Environmental, Social, and Governance) contributions. Far from optional, it is becoming essential for businesses of all sizes to have clear impact goals and be able to measure them effectively, especially with regulation tightening globally, stakeholders demanding transparency and consumers expecting it. 

Last year underscored the urgency of impact measurement, as a wave of ESG-related legislation reshaped expectations for businesses. Let’s explore why impact measurement is critical and how businesses can adapt to stay ahead in 2025 and beyond. 


Why Impact Measurement is Essential to Doing Good 


Impact measurement enables organisations to track, assess, and report on their impact goals with clarity and credibility. It ensures businesses understand whether their initiatives are creating meaningful change or merely symbolic gestures. For stakeholders—consumers, investors, and regulators—this data is the foundation of trust. 

However, impact measurement is no longer just about doing the right thing; it is becoming an operational and legal necessity. Regulators worldwide are introducing frameworks requiring businesses to report and substantiate their ESG efforts. The days of vague promises are over, replaced by a demand for measurable impact. 


Key ESG Developments in 2024 


2024 introduced pivotal regulatory changes, underscoring the need for robust impact measurement systems. 5 key developments include: 


  1. EU Corporate Sustainability Reporting Directive (CSRD): 


The CSRD expanded sustainability reporting to a wider range of companies, including SMEs. It mandates detailed ESG performance reporting with third-party assurance, compelling businesses to integrate ESG considerations into their core strategies. 

Source: European Commission 


  1. UK Green Taxonomy: 


This classification system for environmentally sustainable activities aims to steer investments toward green projects. It’s poised to influence capital allocation and investment decisions across industries. 

Source: UK Government 


  1. EU Regulation on ESG Rating Activities: 


This regulation raises transparency standards for ESG ratings providers. While increasing compliance costs for businesses, it also impacts ESG scores and investor appeal. 

Source: European Parliament 


  1. US SEC Climate Disclosure Rules: 


Despite being stayed in April 2024, these proposed rules—mandating disclosure of climate risks and greenhouse gas emissions—highlight the rising focus on climate accountability. Had they passed, they would have added significant reporting requirements for US-listed companies. 

Source: SEC 


  1. Modern Slavery Act Reforms (UK): 


Proposed updates to the 2015 Act aim to broaden reporting obligations and strengthen enforcement, driving businesses to examine supply chains more rigorously and increasing compliance costs. 

Source: UK Government 

These key developments reflect escalating regulatory momentum around ESG, pushing businesses to align operations with emerging sustainability standards. 


Moving Beyond Compliance 


While compliance with ESG legislation is critical, impact measurement offers far greater value. Done well, it can transform a business’s strategy and reputation. Organisations that invest in robust impact measurement systems can gain: 


  • Competitive Advantage: Verified data helps businesses stand out in a market crowded with sustainability claims. 

  • Investor Confidence: Transparent reporting attracts investors seeking sustainable and ethical returns. 

  • Operational Insights: Measuring impact highlights inefficiencies and areas for improvement, driving long-term value creation. 

  • Enhanced Credibility: Third-party assurance of ESG data builds trust among stakeholders and mitigates the risk of “greenwashing.” 


Defining and Measuring Impact 


To benefit from impact measurement, businesses must start with a clear understanding of their impact goals. These should align with the organisation’s values, operations, and stakeholder expectations. Key questions include: 

  • What are the social or environmental issues most relevant to our business? 

  • How can we create the greatest positive change? 

  • What measurable outcomes reflect our success? 


Once goals are defined, a robust measurement framework is essential. This typically includes: 


  1. Baseline Data: Establishing a starting point to measure progress effectively. 

  2. Key Performance Indicators (KPIs): Selecting clear metrics tied to specific objectives. 

  3. Stakeholder Engagement: Ensuring initiatives address the needs of those affected. 

  4. Independent Verification: Strengthening credibility through third-party audits. 


Impact measurement isn’t just a box-ticking exercise; it’s a strategic tool that drives continuous improvement and meaningful change. 


The Bigger Picture 


Impact measurement is no longer a choice—it is an operational imperative. The increasing regulatory pressure, exemplified by 2024’s legislative shifts, ensures that businesses failing to act risk falling behind. However, organisations that embrace impact measurement are better positioned to thrive. 


It’s not just about meeting regulatory requirements but leveraging and communicating the relevant impact data to build trust, innovate, and create lasting value. Much like accounting revolutionised financial reporting, impact measurement is transforming the way businesses demonstrate their contributions to society and the environment. 

The question is not whether to measure impact, but how quickly businesses can integrate it into their strategy. Because in today’s purpose-driven economy, what gets measured truly gets managed—and what gets managed has the power to change the world. 


Get in touch today to speak with our passionate team for an open discussion about your organisations Impact Measurement needs.  

 

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