A Framework for Product Impact-Weighted Accounts
43 Pages Posted: 7 Feb 2020 Last revised: 15 Jun 2021
Date Written: October 27, 2020
While there has been significant progress in the measurement of an organization’s environmental and social impacts from their operations, metrics to evaluate the impact of products once they come to market lag far behind. In this paper we provide a framework for systematic measurement of product impact in monetary terms and delve into the rationale for the framework’s seven elements. We then apply the whole framework to two competitor companies to show the feasibility of measuring product impact and the actionability of the framework. We indicate the value of impact-weighted financial statement analysis with examples of insights enabled by industry-wide product impact measurement. We see our results as a first step, rather than a definitive answer, towards more systematic measurement of product impact in monetary terms that can then be reflected in financial statements with the purpose of creating impact-weighted financial accounts.
Keywords: impact measurement; product impact; ESG; accounting; metrics
JEL Classification: M41, M14
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