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  • 2020
  • Working Paper
  • HBS Working Paper Series

A Framework for Product Impact-Weighted Accounts

By: George Serafeim and Katie Trinh
  • Format:Print
  • | Language:English
  • | Pages:43
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Abstract

While there has been significant progress in the measurement of an organization’s environmental and social impacts from its operations, metrics to evaluate the impact of products once they come to market lag far behind. In this paper, we provide a framework for systematic measurement of product impact in monetary terms and delve into the rationale for the framework’s seven elements. We then apply the whole framework to two competitor companies to show the feasibility of measuring product impact and the actionability of the framework. We indicate the value of impact-weighted financial statement analysis with examples of insights enabled by industry-wide product impact measurement. We see our results as a first step, rather than a definitive answer, towards more systematic measurement of product impact in monetary terms that can then be reflected in financial statements with the purpose of creating impact-weighted financial accounts.

Keywords

Social Impact; Product Life Cycle; Environment; Sustainability; Measurement; Metrics; Impact Investing; ESG; ESG (Environmental, Social, Governance) Performance; ESG Reporting; Product; Environmental Sustainability; Measurement and Metrics; Framework; Financial Statements

Citation

Serafeim, George, and Katie Trinh. "A Framework for Product Impact-Weighted Accounts." Harvard Business School Working Paper, No. 20-076, January 2020. (Revised October 2020.)
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About The Author

George Serafeim

Accounting and Management
→More Publications

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More from the Authors
  • Machine Learning Models for Prediction of Scope 3 Carbon Emissions By: George Serafeim and Gladys Velez Caicedo
  • A Conceptualization of Sub-Living Wages: Liabilities, Leverage, and Risk By: Drew Keller, Katie Panella and George Serafeim
  • Business Implications from Regulating Carbon Emissions in the EU By: George Serafeim and Benjamin Maletta
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