Editors: Busco, C., Consolandi, C., Malafronte, I., Sammarco, F., Scognamiglio, E.

Target Publisher: Routledge

 The handbook 

Companies do not live in isolation, they interact with the external environment and are actors of change in a world facing increasing environmental and social issues. World leading companies are looking beyond their financial performance towards a more holistic understanding of their externalities and impact and want to inform stakeholders about their corporate social responsibility efforts (Anderson & Abensour, 2017; Băndoi et al., 2021; Baron, 2014). In this setting, there is a growing debate on how to effectively measure the impact of an organization's activities, and eventually report on any relevant social and environmental impact generated (Donaldson et al., 2015).

Impact measurement and management entails the identification of the potential positive and negative consequences of the continuing operations of a proposed project, with the aim to expand the positive aspects and mitigate or avoid the negative ones (Lesic et al., 2019). In addition to effectively measuring and managing, it is fundamental to embed impact within corporate reporting to ensure stakeholders are aware of the social and environmental effects derived from business operations.

An increasing number of companies is measuring, managing, and reporting their environmental, social and governance performance, and this allows for a better understanding of their value creation process (Anderson & Abensour, 2017). As a result, transparent measurement and disclosure of sustainability performance is becoming a crucial part of effective business management, raising the need for a global consensus on measuring, assessing and reporting organizations’ impacts (IMP, 2020). The discussion is no longer about the relevance of these tools, but rather how to demonstrate impact accurately, and how to ensure comparability and consistency.

The debate around impact measurement and management represents an integral cornerstone of the practice of impact investing, that represents an investment strategy aimed at generating social and environmental benefits while delivering financial returns. Impact investors most commonly rely on the United Nations’ Sustainable Development Goals (SDGs) to shape their impact targets, and several projects have been launched over the recent years to address the need to building consensus on how to measure, manage, and report on impact and to incorporate monetary valuations of impact into accounting statements (i.e. the Impact Management Project, the Impact-Weighted Accounts Project) (Cohen & Serafeim, 2020; GIIN, 2020; Sarmento & Herman, 2020; Serafeim et al., 2019).

In line with these growing information needs, corporate reporting has evolved beyond traditional annual reporting to incorporate financial and non-financial information through integrated reporting, sustainability reporting and, more recently, impact reporting (Busco et al., 2019; Krasodomska, & Zarzycka, 2020; Lai & Stacchezzini, 2021). Global organizations in the corporate reporting landscape, i.e. CDP, CDSB, GRI, IIRC and SASB, have provided several frameworks and standards to guide companies’ sustainability and integrated reporting, and have recently announced a shared vision on the need to work together and progress towards comprehensive corporate reporting (IMP, 2020). In June 2021, the IIRC and SASB merged to form the Value Reporting Foundation that will soon consolidate under the IFRS Foundation, aiming to address the call from businesses and investors for a simplified corporate reporting landscape.

Although impact measurement and reporting are not new phenomena in the literature, they are far from being a trivial task (Bagnoli & Megali, 2011; Clark et al., 2004; Maas & Liket, 2011). Research shows that non-financial reporting reveals a company’s attitudes and values, together with the business actions, and as such it impacts stakeholder perceptions (Kim & Ferguson, 2019; Malafronte et al., 2020; Thaker, 2019).

Recent studies highlight a lack of comparability among the different impact reporting tools currently adopted within organizations. The evolving regulation on non-financial information disclosures (i.e. the Non-Financial Reporting Directive, NFRD - Directive 2014/95/EU and the subsequent Corporate Sustainability Reporting Directive, CSRD) require organizations to move to a more encompassing approach to sustainable value creation, without delving into the comparable set of reporting and performance measurement tools to be adopted (EU, 2021).

Also, CSRD extends the scope to all large companies and all companies listed on regulated markets, except listed micro-enterprises, and introduces more detailed reporting requirements, thus expanding the breadth of interested companies and stakeholders. The EU directive aims to make non-financial information comparable across the EU and enhance accountability through mandatory non-financial reporting (Krasodomska & Zarzycka, 2020).

Moreover, there is an issue of causality that current sustainable performance measurement systems are not able to address. Organizations still have difficulties in implementing suitable performance measurement systems able to reflect the cause-effect relations between the variety of ‘capitals’ that are used and affected within their value creation process (de Villiers et al., 2014; Dumay et al., 2016; Gray, 2010). Further, managers within organizations are willing to better comprehend whether possible improvements in impacts are caused by their own efforts or depend on other external factors (Brest & Born, 2013).

Finally, and no less important, organizations are interested in knowing whether their activities will contribute to the achievement of the SDGs, and particularly, whether and how these activities might have implications on shareholders’ value creation while generating positive externalities.  These efforts are also aligned with the objective of policy makers and public institutions to guarantee that Governments worldwide effectively generate positive outcomes to meet the SDGs by 2030 (Desa, U.N., 2016; OECD, 2017).

The importance of organizations' impact on society is even more critical during periods of crisis, like the Covid-19 pandemic. The human and economic costs of the pandemic have blurred the boundaries between for-profit and purpose-driven organizations which are aimed at finding more sustainable and innovative ways to serve and solve social problems while building their profitable operations (Battilana et al., 2020; Battilana & Dorado, 2010; Porter & Kramer, 2011; WEF, 2021). The impact of the pandemic has highlighted the relationships between social, environmental, and economic dimensions, and raised the need for high-quality information for stakeholders (Rinaldi, 2022).

The health and economic impacts of the virus are significant, with potential to increase inequality, exclusion, discrimination, and global unemployment in the medium and long term if not properly addressed. Although organizations may face conflicting priorities that could set back the sustainability agenda, there is evidence of increased attention on sustainability among business leaders who are taking the opportunity to re-evaluate their organization’s purpose, take a stance on societal issues, and take action on climate change (KPMG, 2020).

At the time of writing, the worldwide scenario is characterized by the Ukraine war, with early data suggesting that up to 90% of the population of Ukraine could be facing poverty and vulnerability to poverty (UNDP, 2022) and the risk of widening the gap in financing needed to achieve SDGs (UNCTAD, 2022). The crisis in Ukraine is forcing companies to take a stance and the room for businesses to be apolitical is shrinking; a mix of public, investors and reputational pressure is testing companies’ commitment to their organisational values and to doing things not necessarily driven by economic gains (KPMG, 2022) thus raising the need to discuss the role of these events for organizations’ impact.

To address this concern, managers are increasingly questioning themselves: Is it possible to face the emergent systemic risk through sustainable and impact strategy? Investors and companies’ expectations of sustainable assets are changing because of the emergent systemic risks? In this changing context, how to effectively manage, evaluate and communicate the impact to stakeholders and investors? What kind of performance measurement and reporting tools enable better and informed decisions on organizations’ impacts?

 Call for contributions 

The Handbook “Impact Measurement and Management. A Roadmap for a Changing World” aims to provide an enhanced comprehension of the relevance of measuring, managing and communicating organizations’ impact in the interest of companies, stakeholders, and policy makers.

We invite contributions in the following areas: sustainable value and impact measurement, value relevance and impact management, corporate reporting and impact evaluation. Contributions are welcome from academics, professionals, and practitioners in the field, and can be in the form of theoretical analysis, as well as data analysis and case studies. We encourage authors interested in submitting a contribution to focus their attention on the following list of potential topics; however, this is far from being exhaustive and can be freely expanded.

 Sustainable Value and Impact Measurement 

• Whether and how impact measurement systems increase managers’ understanding of the causality and materiality of strategic objectives and decisions.
• Impact management and systemic risk: how uncertainty, like the disruption caused by Covid-19 pandemic and geopolitical instability, can influence impact priority.
• The correlation between SDGs and impact measurement.
• The evolution of performance measurement tools to account for social value and social risk.
• Data quality and assurance in impact measurement practices.
• Impact measurement in practice across sectors.

 Value Relevance and Impact Management 

• The value relevance of impact and its effect on shareholders’ value and investment decisions.
• How emerging risks can influence impact and sustainable investment choice.
• The effects of SDGs and impact disclosures on companies’ market value.
• The evolution of impact investing and its effect on companies’ value.
• How to integrate impact into investment practices.
• ESG investing funds: practices and challenges.

  Corporate Reporting and Impact Evaluation 

• The role of corporate reporting in facilitating organizations’ impact communication.
• The evolution of the corporate reporting landscape to communicate integrated performance and impact management to stakeholders.
• The comparability among reporting standards and the materiality of impact performance.
• The importance of materiality and its relevance across sectors.
• Impact reporting in practice and its relevance across sectors.
• How the Covid-19 pandemic is reflected in corporate reporting on impact.