How Accounting for Impact Can Deliver the Real Value of ESG

April 20, 2022

How Accounting for Impact Can Deliver the Real Value of ESG

Calvert

How Accounting for Impact Can Deliver the Real Value of ESG

April 20, 2022

In today’s market, the great majority of ESG metrics concerns operations: activities that happen within the company’s control. The next major milestone for ESG metrics, in our view, involves impact: how companies affect society and the environment through their employees, customers and products. This paper outlines a promising path for understanding and quantifying corporate ESG impact through impact-weighted accounts — line items on financial statements designed to supplement traditional financial reporting. Our analysis shows how positive impact, as disclosed in impact-weighted accounts, can be a material driver for key financial metrics and stock performance.

This paper draws from the findings of product-impact research sponsored by Calvert and conducted by KKS Advisors for, and in collaboration with, Calvert. KKS Advisors received compensation for the product-impact research completed in October 2021.

Click to see full paper

As a leader in ESG investing for more than 40 years, Calvert is uniquely qualified to evaluate the complex range of risks and opportunities for the companies we invest in.

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Risk Considerations

Investing involves risk including the risk of loss. There is no guarantee that any investment strategy, including those with an ESG focus, will work under all market conditions. Investors should evaluate their ability to invest for the long-term, especially during periods of downturn in the market.

The views and opinions are those of the author as of the date of publication and are subject to change at any time due to market or economic conditions and may not necessarily come to pass. The views expressed do not reflect the opinions of all investment personnel at Morgan Stanley Investment Management (MSIM) and its subsidiaries and affiliates (collectively the Firm”), and may not be reflected in all the strategies and products that the Firm offers.

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Prior to making any investment decision, investors should carefully review the strategy’s / product’s relevant offering document. For the complete content and important disclosures, refer to the full whitepaper "How Accounting for Impact Can Deliver the Real Value of ESG" mentioned above.