Impact intensity of profits

Sustainability - impact reporting.

Impact intensity of profits measures the relationship between a company's profits and its most important positive - or negative - effect on ESG issues.

The relevant detailed measure of ESG effect will differ, according to the business.

Impact intensity of profits must becoming guiding framework

"For the power company Enel, the primary issue is the environmental impact of its operational footprint, which means the company should make investment decisions that optimize profit per tons of CO2 emitted.

For Nestlé, the primary concerns are the nutritional value of its products and the ESG effects of sourcing from smallholders.

The company might optimize profit generated per micrograms of nutritional value in its products and the cost of raw materials relative to farmer income and environmental impact in its sourcing...

The mathematical relationship between changes in environmental or social factors and the resulting changes in profit must become the guiding framework for decision-making at all levels within the company.

The results are likely to lead to significantly different choices that not only improve ESG performance but also help reposition the company in ways that improve financial performance."

Harvard Business Review - The Essential Link Between ESG Targets & Financial Performance - Mark R Kramer & Marc W Pfitzer - September 2022.

See also

• Business impact analysis
• Capital intensity
• Carbon intensity
• Environmental impact
• Environmental Impact Assessment (EIA)
• Environmental, social and governance (ESG)
• EP&L intensity
• Impact
• Impact accounting
• Impact investing
• Impact reporting
• Impact Taskforce
• Impact-weighted accounts
• Intensity
• Sustainability
• Total Societal Impact
• Value Reporting Foundation (VRF)

Other resource

• Harvard Business Review - The Essential Link Between ESG Targets & Financial Performance - Mark R Kramer & Marc W Pfitzer - September 2022