Welcome to the second of the Leaders Interview series, where we dive into conversations with some of the innovators shaping the impact valuation landscape. With the new consultation on the Exposure Draft of the Waste Methodology just opened, we invited George Serafeim, Professor at Harvard Business School and Chair of the Impact Value Standards Board (IVSB). He worked with Sir Ronald Cohen on Impact Weighted Accounts, sharing the same profound belief in the importance of impact measurement and valuation, and he explores the challenges and opportunities in profitable purpose-driven organizations.
“Long before impact accounting became part of the mainstream conversation, Sir Ronnie saw that capital markets would eventually need information not only on risk and return, but also on impact. His leadership and persistence have been fundamental to the development of this field.”
Capitals Coalition) Harvard and you personally have long been a leading academic force on impact valuation. Why is this a priority for you?
George Serafeim) I came to this work from accounting, finance, and management, not from advocacy. The starting point is simple: organizations manage what they measure. If important effects on people, society, and the natural environment remain outside the core measurement system of the firm, they are too easily ignored. At Harvard, the Impact Weighted Accounts work was motivated by a very practical question: can we create accounting statements that reflect not only financial performance, but also a company’s positive and negative impacts on employees, customers, communities, and the environment? This is a priority for me because measurement systems shape behavior. When an impact is not measured, it is not neutral. In practice, it is often treated as if its value is zero. That is a value judgment, even if it is implicit. Impact valuation makes that judgment explicit and therefore open to scrutiny, improvement, and action. Ultimately, this is about better decision making. Companies make tradeoffs every day across cost, growth, risk, resilience, employees, customers, communities, and the environment. Impact valuation helps leaders see those tradeoffs more clearly and allocate resources more effectively.
CC) For those less familiar with the Impact Value Standards Board, could you outline its mandate? And can you explain why an independent standard-setting body is necessary in this space?
GS) The IVSB exists to create a common baseline for impact valuation and impact accounting for value creation. Its mandate is to oversee the governance framework for valuation, develop and expand a common methodology including standardized impact pathways and value factors, and provide guidance on implementation and best practice. That may sound technical, but the purpose is very practical. Organizations create, preserve, and erode value through their activities. Some of that value is captured in financial statements. Much of it is not. The IVSB’s role is to help make those impacts more visible, measurable, comparable, and decision useful. Impact valuation requires judgment. We need to make choices about scope, boundaries, causal pathways, valuation assumptions, uncertainty, and presentation. Without building a common baseline, the field risks fragmentation. Different organizations will use different methods, different assumptions, and different value factors. The result would be numbers that are hard to compare and difficult to trust. With an independent, transparent, public-good process, we can build confidence in the information and make it useful for companies, investors, and policymakers.
CC) How does the Waste Methodology that has just opened for consultation fit within the IVSB’s broader standards agenda? And what signals in the market or regulatory environment make it timely?
GS) The Waste Methodology fits very naturally within the IVSB’s broader standards agenda because waste is one of the clearest examples of why impact valuation matters. Waste is not just a disposal issue. It is a signal about how an economy, an industry, or a company creates and destroys value. Companies and investors are asking for more decision-useful sustainability information. Regulators are moving toward more structured disclosure around resource use, circularity, and waste. But disclosure alone is not enough. We also need methods that help users interpret the significance of the information. The IVSB’s contribution is to move from reporting quantities to understanding value consequences.
CC) Looking beyond this launch, what is your vision for the IVSB’s role in shaping global standards over the coming years? What is the biggest opportunity here?
GS) The IVSB could become the trusted source for impact valuation guidance. That means creating standards that are rigorous enough to build confidence, practical enough to be adopted, and transparent enough to earn legitimacy. This work is not only about producing technical documents. It is about building the infrastructure for a new generation of accounting and decision making. We need methodologies grounded in science, economics, accounting, and practice. We need transparent due process. We need public consultation. We need interoperability with existing reporting standards and regulatory frameworks. And we need guidance that helps companies, investors, and data providers implement the standards in the real world. This is a great opportunity to move impact valuation from experimentation to institutionalization. We have seen many companies, investors, and practitioners develop useful approaches. But for the field to scale, we need a common baseline. Otherwise, the same impact can be measured in many different ways, and users cannot distinguish between real performance differences and methodological noise. Over time, I would like to see impact valuation become part of the normal operating system of organizations. Something used in product design, procurement, capital budgeting, risk management, performance management, incentives, and investor analysis.
CC) This is very ambitious…
GS) Yes, the ambition is to improve decisions. If impact information is not used, it will not matter. If it is used well, it can change how organizations allocate capital, design products, manage risks, and create value.
CC) What would success look like for the IVSB in the first year following this methodology launch?
GS) In the first year, success would mean a strong, substantive consultation process: sustained engagement from companies, investors, academics, standard setters, civil society, data providers, assurance professionals, and policymakers across sectors and geographies. Success would also mean practical testing. We need to understand where the methodology works well, where data gaps exist, where assumptions need refinement, and where the guidance needs to be clearer. Standard setting improves through use. The first version of any methodology is not the final answer. It is the beginning of disciplined learning.
CC) And lastly, what outcome matters most to you personally?
GS) For me, the outcome that matters most is whether the methodology changes decisions. Endorsements and downloads are useful signals, but they are not the ultimate objective. The real test is whether a company can look at its waste footprint, understand the value of the impacts it is creating, and make better decisions about design, materials, operations, suppliers, and capital allocation. If the methodology helps leaders see waste not simply as a compliance issue or disposal cost, but as a signal of inefficiency, pollution, lost resource value, and policy failure, then it will have done something important.
The goal is not measurement for its own sake. The goal is accountability, learning, and better choices.
