We in general define an Impact as the effect that the activity of an organization or a stakeholder, a system, or any other event has

> on the society, including the economy and the lives of future generations (holistically named as an impact on society) or

> on an organization (called impact on business or financial effect, risk/opportunity),

which produces desired or undesired changes in the economy, the environment (nature) or the people at the micro or macro level. However, the EU decided to coin impact on society as Impact and impact on business as effect (for actual) and risk/opportunity (for potential effects).

Sustainability is always about both dimensions. However, in our Impacts section we focus on impacts on society. We connect these to impacts on business/effects in our Strategy & Both sections.

The first two visuals below explain the difference between a negative and a positive impact. Actions to manage them either lead to a less negative or a (more) positive impact, when taking the perspective of absolute impacts (bottom left visual). However, the main problem is that the added value of this distinction is very limited as it lacks context. PI solves this problem by innovating the concept of context-based impacts, where the distinction of positive and negative is in both cases done in connection with a science-based target (bottom right visual).

Let us explain this by using two examples:

> Example for a negative absolute impact: If organization A was able to reduce GHG emissions to 516 g/$ in 2020 and the science-based target was 416 g/$, then the context-based impact is negative (-100 g/$). If the competitor B  had emissions of 366 g/$ in 2020, then their context-based impact is positive (+50 g/$).

Example for a positive absolute impact: If organization A financed carbon sequestration of 0.1 g/$ in 2020 and the science-based target was 1.1 g/$, then the context-based impact is negative (-1 g/$). If the competitor B financed carbon sequestration of 2.1 g/$ in 2020, then their context-based impact is positive (+1 g/$).

> Apply market economy principles and avoid unreasonable sector pathways that, by nature, apply a centrally planned economy approach (contact us if you are interested in learning content on this)

> Apply clear & consistent accounting rules for full comparability

> Consider rebound effects by factoring in GDP growth

> Avoid impact-washing by not hiding negative impacts behind false positives (such as training or remuneration)

> and by all of this, having a non-partisan approach free from political preferences

Various initiatives knowingly or unknowingly impact wash overviews of impacts, “Integrated Profit/Loss” statements, integrated capital accounting, or the like by mixing private gains with public impacts.

Possible motives for promoting such approaches are:

> Imagine you are a large company and have quantified your negative climate impacts, and they are massive. You may have the desire to hide these negative impacts of yours behind all the jobs that you and your suppliers offer, which is ultimately what lies behind your revenues that are used to finance the jobs, management salaries, and provide dividends to the owners

> You may even want to impact wash your results further by adding more “positives”, e.g., by quantifying all the GDP that is generated by the consumption impact that is induced by the salaries and dividends you and your suppliers generate to secure your revenues

Several other platforms, initiatives, and organizations may simply not know exactly what they do.