CSB and HBS Partner to Show How ROSI™ and IWA Methodologies Can Drive Impact Valuation Decisions

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The adoption of sustainable practices increasingly drives better management and financial performance, and companies with strong ESG performance are being rewarded by stakeholders. However, the risk of “impact-washing” is growing as companies race to keep up with the exponential popularity of ESG and impact.

CSB partnered with the Harvard Business School’s Impact-Weighted Accounts project to provide managers a common analytical lens for evaluating the business and stakeholder outcomes of sustainable operations. The publication “Complementary Solutions for Holistic Impact Valuation: Return on Sustainable Investment (ROSI™) and Impact-Weighted Accounting (IWA)” describes how these complementary impact monetization methodologies together can offer a comprehensive assessment of financial, social, and environmental impact using the common language of currency.

The ROSI framework monetizes internalities of business impacts and demonstrates the financial benefits to conducting business responsibly. IWA is a tool that demonstrates the monetary value created or eroded for stakeholders and the environment, proving that these business practices also create positive benefits for the environment, workforce, and customers. Both frameworks are rooted in valuation, which is a familiar tool for managers and creates comparable and digestible information.

Using the CSB’s ROSI framework together with the IWA methodology, companies can improve internal management systems and performance as well as communicate concrete, decision-useful information to investors. For example, for the automotive industry, reducing the number of product recalls could save auto companies over $550 million while avoiding $675 million in negative externalities to customer health and safety. 

Excerpt: “By developing frameworks that assist managers and investors to assess the financial impact of sustainability-related issues, ROSI™ and IWA help companies improve the effectiveness of their decision making and investments.”