“The impact measurement and management framework developed by PwC is a huge step forward in assisting companies in thinking on an integrated basis and enabling them to do business in the 21st century. It also helps to change mindsets to take a holistic perspective and move towards Integrated Reporting. I urge all companies to start incorporating this type of thinking into their strategic business decisions.”
Prof Mervyn King SC, Chairman International Integrated Reporting Council
We live in a world of significant change and upheaval. We have a growing population, seeking a better lifestyle, to be delivered from a planet with finite resources, many of which are now rapidly running out.
At the same time, the expectations placed on business and the role it should play in society has shifted amongst stakeholders including customers, suppliers, employees, governments and society in general. The business models and practices of today are not equipped to deal with the new requirements, and many sectors recognise that they need to transform if they are to thrive in the future.
These changes are also affecting corporate decision-making and reporting. The new reporting framework recently proposed by the International Integrated Reporting Council (IIRC), assesses how a company derives value by using and affecting different types of capital, including social and natural capital. But until now, it’s been hard to quantify and monetise social and environmental considerations, leaving them stranded outside traditional accounting and return on investment decisions.
We’re developing ways of measuring impacts more holistically, in our unique ‘Total Impact Measurement and Management (TIMM)’ framework. For the first time, this offers businesses a structured framework for decision-making suitable for today’s world.
The TIMM framework can help business leaders and stakeholders understand how a business’ activities contribute to the economy, public finances, the environment and wider society.
It provides a more complete assessment of how value is generated - and potentially destroyed - for different stakeholders of a business in both the short and long term. In applying TIMM, it helps businesses consider the net impact of their actions and avoid a natural tendency to focus only on the positive, short term financial impacts.
The graphic, below, shows a business’s activities at the centre surrounded by the stakeholders who are affected by their operations. Each of their impacts is then represented in the categories around the outside of the model. These impacts are grouped into four broad areas - see below for more on each of the four TIMM quadrants:
The contribution to the economy, in particular through economic output and employment in a given area. For example, we’ve estimated the value created through our core business operations (i.e. the provision of services to our clients), our payments to suppliers and the spend arising from suppliers and employees in the wider economy.
The overall contribution to the public finances. We’ve measured our taxes from direct operations using a well-established process, which draws on PwC’s Total Tax Contribution (TTC) methodology. It covers all the taxes we pay in the UK and Channel Islands.
The consequences of business activities on societal outcomes such as health, community cohesion and empowerment. In our case this currently refers to accountants we train but who leave us, adding value to the marketplace.
The impact on society through emissions to air, land use change, water pollution and use, and waste generation. For most companies environmental impacts are negative. We’ve estimated the impact from our direct operations, our payments to suppliers and the spend arising from suppliers and employees in the wider economy.