Geometric mean and Impact Management Project: Difference between pages

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imported>Doug Williamson
(Clarify that larger negative number here means further away from zero.)
 
imported>Doug Williamson
(Mend link.)
 
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Geometric mean returns or growth are calculated by taking account of compounding.
''Sustainability - sustainability reporting standards''.


(Contrasted with the arithmetic mean, which ignores compounding).
(IMP).


Among other purposes, the Impact Management Project facilitates cooperation and coordination between sustainability standard-setting organisations including:


===<span style="color:#4B0082">Example 1: Positive returns or growth</span>===
*B Lab
*CDP
*The Climate Disclosure Standards Board and
*The Global Impact Investing Network


The geometric mean return calculated from sample returns of 4%, 5% and 6% is given by:


( 1.04 x 1.05 x 1.06 )<sup>(1/3)</sup> - 1
== See also ==
 
* [[Accounting for Sustainability]] (A4S)
= '''4.9968%'''.
* [[B Lab]]
 
* [[Build Back Better World Initiative]]  (B3W)
 
* [[Business & Sustainable Development Commission]]
===Relationship between geometric mean and arithmetic mean===
* [[Carbon footprint]]
* [[CDP]]
* [[Climate Disclosure Standards Board]]
* [[Corporate social responsibility]]
* [[Development finance institution]]  (DFI)
* [[G20 Sustainable Finance Working Group]]  (G20 SFWG)
* [[Global Impact Investing Network]]  (GIIN)
* [[Global Steering Group for Impact Investment]]  (GSG)
* [[Impact]]
* [[Impact economy]]
* [[Impact investing]]
* [[Impact Investing Institute]]  (III)
* [[Impact reporting]]
* [[International Sustainability Standards Board]]  (ISSB)
* [[Just transition]]
* [[Multilateral development bank]]  (MDB)
* [[Natural capital]]
* [[Principles for Responsible Investment]]  (PRI)
* [[Responsible investment]]
* [[Social Impact Investment Taskforce]]  (SIIT)
* [[Sustainable investment]]
* [[Sustainability]]
* [[Sustainability Accounting Standards]]
* [[Sustainability Accounting Standards Board]]
* [[Sustainability bond]]
* [[Value Reporting Foundation]] (VRF)


When returns or growth are positive, geometric means are smaller figures than arithmetic means.


In Example 1 above, the arithmetic mean is:
==External link==
[https://impactmanagementproject.com/about/ About the IMP]


(4% + 5% + 6%) / 3 = '''5.0000%'''
[[Category:Accounting,_tax_and_regulation]]
 
[[Category:The_business_context]]
 
[[Category:Corporate_finance]]
''The geometric mean of +4.9968% is a smaller positive number than the [[arithmetic mean]] of +5.0000%.''
[[Category:Investment]]
 
[[Category:Long_term_funding]]
 
[[Category:Compliance_and_audit]]
 
[[Category:Ethics]]
On the other hand, when returns or growth are ''negative'', the geometric mean is a larger negative number - further away from zero - than the arithmetic mean.
[[Category:Identify_and_assess_risks]]
 
[[Category:Manage_risks]]
 
[[Category:Risk_frameworks]]
===<span style="color:#4B0082">Example 2: Negative returns or decline</span>===
[[Category:Risk_reporting]]
 
[[Category:Financial_products_and_markets]]
The geometric mean return calculated from three ''negative'' sample returns of -(4)%, -(5)% and -(6)% is given by:
 
( (1 - 0.04) x (1 - 0.05) x (1 - 0.06) )<sup>(1/3)</sup> - 1
 
( 0.96 x 0.95 x 0.94 )<sup>(1/3)</sup> - 1
 
= '''-(5.0035)%'''.
 
 
The negative geometric mean of -(5.0035)% is a larger negative number - further away from zero - than the arithmetic mean of -(5.0000)%.
 
(The arithmetic mean of the negative returns of -(4)%, -(5)% and -(6)% is the three items added together and divided by 3.)
 
 
== See also ==
* [[Arithmetic mean]]
* [[CAGR]]

Revision as of 18:39, 15 December 2021

Sustainability - sustainability reporting standards.

(IMP).

Among other purposes, the Impact Management Project facilitates cooperation and coordination between sustainability standard-setting organisations including:

  • B Lab
  • CDP
  • The Climate Disclosure Standards Board and
  • The Global Impact Investing Network


See also


External link

About the IMP

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