A Preliminary Framework for Product Impact-Weighted Accounts

37 Pages Posted: 7 Feb 2020 Last revised: 7 Jul 2020

See all articles by George Serafeim

George Serafeim

Harvard University - Harvard Business School

Katie Trinh

Harvard University - Business School (HBS)

Date Written: July 1, 2020

Abstract

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

Suggested Citation

Serafeim, George and Trinh, Katie, A Preliminary Framework for Product Impact-Weighted Accounts (July 1, 2020). Harvard Business School Accounting & Management Unit Working Paper No. 20-076, Available at SSRN: https://ssrn.com/abstract=3532472 or http://dx.doi.org/10.2139/ssrn.3532472

George Serafeim (Contact Author)

Harvard University - Harvard Business School ( email )

381 Morgan Hall
Boston, MA 02163
United States

HOME PAGE: http://goo.gl/q4cJ5A

Katie Trinh

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

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