Impact Valuation
Impact Valuation represents a fundamental shift in how we measure success.
Impact Valuation translates sustainability information into the language of value creation, enabling leaders to make better informed decisions with information that is accessible and directly comparable to financial performance. It provides a clear and actionable lens through which an enhanced view of long- and short-term risks and opportunities become central to financial analysis.
Valuing natural, social, and human capitals alongside financial capital, and integrating these insights into financial markets, is key to transforming how we address the social and environmental crises of our time. We envision a world where impact valuation is “the new normal”, sustaining the wider economic, social, and environmental systems we all rely upon.
A Practical Information System
Impact Valuation builds on established global standards as it analyzes and acts upon information using the same management systems that are already well understood by firms, investors, and regulators.
At its core, impact valuation involves measuring a company’s relationship with society and the environment and it is about providing decision-makers with the clarity and confidence they need to make more informed choices.
It is important to view Impact Valuation as a practical information system, not a magic formula.
- It is specifically designed to provide data that is useful for real-world decision-making.
- It should not be used in isolation. It serves as a complement to qualitative insights, contextual judgment, and ethical reflection.
- It helps move organizations beyond intentions toward a precise understanding of both positive and negative impacts.
- It isn’t about reducing complex global issues to a single, isolated number.
The continuous evolution of impact valuation is a collaborative journey that we believe must include diverse perspectives and values. We are committed to a rigorous, respectful exchange to continue evolving the operating system that is transparent and effective in building a resilient economy.
Following the strategic merger of the International Foundation for Valuing Impacts (IFVI) into the Capitals Coalition at the end of 2025, the independent Impact Value Standards Board (IVSB) was established to set the baseline for all future impact valuation work. The IVSB builds directly upon the robust standards originally developed by the IFVI with the indispensable contributions of the Value Balancing Alliance (VBA). To ensure these global standards remain practical and relevant, the Capitals Coalition entered into a strategic partnership with VBA, with a focus on coordinating business voice in the evolution of impact accounting and ensuring industry perspectives shape its development.
Key Terms
- Impact = A positive or negative change in one or more dimensions of people’s well-being directly or through a change in the natural environment. In impact accounting, this is expressed in monetary terms.
- Impact driver = The sequence of an entity’s inputs and outputs that may have positive and/or negative impacts on people’s well-being.
- Impact pathway = The series of consecutive, causal relationships, ultimately starting at an input for an entity’s activities and linking its actions with related changes in people’s well-being
- Outcome = The change in the state or condition capital(s), in physical, biological, psychological, human rights, or equity terms, that results from an entity’s activities.
- Output = The direct result of an entity’s activities, including an entity’s products, services, and any by-products.
- Valuation = The process of estimating the relative importance, worth, or usefulness of capitals to people (or to a business), in a particular context. Valuation may involve qualitative, quantitative, or monetary approaches, or a combination of these.
- Value = The relative importance, worth, or usefulness of something.
- Value factor = An expression of the relative importance, worth, or usefulness of changes in the capitals to people.
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