Quantify and Understand your Impacts using the Science-based Targets Path®

Just as financial forecasts guide business strategy, our Impacts Forecasts guide you to shape a sustainable future

In today’s rapidly evolving business landscape, understanding impacts, risks, and opportunities (IROs) due to sustainability is no longer a choice – it’s a necessity and, for some, even a regulatory requirement. Organizations worldwide are under increasing pressure to align their operations with sustainability, comply with disclosure regulations, and secure their future competitiveness, employability, and reputation – in short, their “resilience”. Our Impacts-Level tool empowers organizations and investors to navigate this challenge by providing a clear, data-driven way to measure and evaluate Impacts’ current and future Levels. Our proprietary Impacts methodology focuses on the impacts of economic activities on society (inside-out), without impact-washing the results.

Our tools empower organizations and investors to:
> Measure and evaluate current Impacts-Levels
> Forecast and evaluate future Impacts-Levels
> Benchmark against industry averages, peers, and science-based targets for each topic
> Engage suppliers on material KPIs
> Identify opportunities & risks
> Make informed, data-driven decisions for a sustainable future

Key features of our Impacts-Level tool include:
> Holistic assessment: Measure your Impacts across climate, water, biodiversity, health, social matters, and tax (net)
> Forward-looking: Forecast your Impacts based on trends, strategies, and targets
> AI-supported modeling to close data gaps: Use AI to fill missing data, including purchased impacts (upstream), by leveraging industry averages and historical trends from renowned global sources and proprietary databases
> Cross-industry applicability: Effective for all sectors and industries

PI's Science-based Targets Path® explained

find out where you are!

PI’s Science-based Targets Path® (SbTP) is at the heart of our tool – a scientifically grounded trajectory toward meeting material global sustainability targets. It connects the global status quo with science-based targets while expecting GDP growth, providing a clear roadmap for the global economy and your organization’s sustainability journey.

The Science-based Targets Path® outlines the path the global economy should follow to meet global sustainability targets, it:

> Provides a year-by-year roadmap from 2020 to 2050 and beyond

> Connects the status quo of 2020 with science-based targets, e.g., for 2050, while expecting GDP growth

> Covers several indicators on key sustainability topics: climate (such as CO2), water, biodiversity, health, social matters, and tax (net) – all along the entire value chain (see Methodology for the rationale for choosing the indicators for the Science-based Targets Path®)

> Enables organizations to benchmark their performance against global sustainability requirements (See Methodology: The Science Behind Our Impacts Assessment)

> Provides scienced-based thresholds for the mentioned topics, e.g., to be used in your double materiality assessments according to the CSRD by enabling a data- and fact-based assessment of the materiality of your current, short-, mid- and long-term Impacts

PI’s Science-based Targets Path® incorporates targets and data from authoritative sources like IPCC, UNEP, Stockholm Resilience Centre, UN Sustainable Development Goals, ILO, IMF and OECD:

What Sets Us Apart

Our Impacts assessment methodology uniquely offers:

Our Impacts assessment methodology uniquely offers:

> Holistic assessment of current and forecasted future sustainability Impacts-Levels, covering Environmental, Social and Economic Impacts that can and should be connected to societal targets

> Complete assessments by estimating every missing data point, allowing for fair comparisons

> Facts- and numbers-based assessments, not marketing, not ‘Only PR’ and certainly ‘impact washing free’

> Clear objective rules for including material sustainability KPIs

> A clear focus on achieving a sustainable market economy by 2050 and beyond

> 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.

Don’t get us wrong—yes, we want organizations to generate revenue, GDP and jobs! However, we don’t need those dependent on subsidies or created by avoiding taxes. Furthermore, in Impacts valuation, we focus on metrics that quantify public impacts, which can be connected to science-based targets. Allocating jobs or revenues to economic activities or actors does not fit the sustainable market economy we envision. However, we consider expecting a certain level of (net) tax payments as a reasonable and market economy conform target. By this we even implicitly consider job creation, management salaries and dividends as this is connected to profitable ventures that should pay a certain level of taxes and not be dependent on subsidies.

Guiding and quantifying the positive and negative impacts of sustainability on organizations, including risks and opportunities is at the core of what we offer under Strategy.

 

Key Impacts Metrics & Tools

Impacts-Levels, Forecasted Impacts-Levels & Desired Impacts-Level

PI’s Impacts-Levels can be expressed
> in quantitative terms (e.g., in %, $ or €, see below for more)
> and in qualitative terms (e.g., very high to low to understand the current or define a desired Impacts-Level)

They can assess
> the current Impacts (e.g., of the last fiscal year)
> or the forecasted Impacts (e.g, using trends, utilizing targets, or modeling what-if-scenarios).

The visual below explains how the qualitative evaluation of Impacts-Levels, that are derived from a quantitative assessment, are used to define possible desired sustainability Impacts-Levels that organizations or individuals can pursue, complemented by two forms of having no desired level:

The Impacts-Level (in%) evaluates the current sustainability performance compared to the Science-based Targets. It:

> Shows your actual overall Impacts-Level relative to the PI Science-based Targets Path® while considering the severity of your impacts in the six topics: climate, water, biodiversity, health, social matters, and tax (net)

> Is expressed as a percentage between 0 and 200%, with 100% representing full alignment with the PI Science-based Targets Path®

> Offers this percentage score also for each sustainability topic while considering the severity of the contained impacts, e.g., giving one work-related fatality a higher weight than one work-related injury.

> The overall Impacts-Level is the weighted average for each topic by considering their impact severity. The percentage scores are shown as stars (★), with 3 ★ defined as 100% and 5 ★ defined as >=200%

> Can be calculated for any economic (business) activity

> Helps you quickly identify areas of strong performance and those needing improvement

The Impacts-Level evaluates the current sustainability performance compared to the Science-based Targets Path® by quantifying your organization’s sustainability Impacts-Levels (in $ or €). It:

> Translates the absolute societal impacts associated with the assessed topics into a monetary unit, representing the costs or benefits that affect a party who did not choose to incur that cost or benefit (i.e., externalities) and other societal benefits or costs

> Aggregates the Impacts of your current performance across all assessed topics (climate, water, nature, health, social, and tax (net)) compared to the PI Science-based Targets Path®

> Expressed as a monetary unit, e.g., in $ or €, with 0 representing full alignment with the PI Science-based Targets Path®

> Provides an open-ended scale without any ceiling or bottom (in contrast to the Impacts-Level in %, which is capped between 0 and 200%)

> Offers this monetary unit also for each sustainability topic while considering the severity of the contained impacts (see Impacts-Level in %)

> Can be calculated for any economic (business) activity

> Allows for an easy comparison of activities in various scopes along the value chain

This KPI complements the Impacts-Level in % by providing a single, comprehensive metric to track your current overall sustainability impacts while being transparent on the positive and negative impacts on climate, water, nature, health, social, and tax (net) it consists of. The KPI is positive if the impacts are above expectations of the SbTP and negative if they are below.

The Net Present Target® (NPT®) is a forward-looking metric that assesses your organization’s alignment with PI’s Science-based Targets Path® in percent, discounted to the present date – comparable to Net Present Value (NPV) calculations. This technique gives higher target achievement rates to PI’s Science-based Targets Path® of the near future higher weights than bold long-term commitments without ambitious intermediate targets:

> It is calculated by discounting the target achievement of your forecasted Impacts-Levels for future years, e.g., for each year between 2024 and 2050, to a present value in %

> Expressed as a percentage between 0 and 200%, with 100% representing full alignment with the PI Science-based Targets Path®

> Allows for comparison between different companies, investments, and products in any industry

> Allows for assessing the level of alignment of existing targets to the Science-based Targets Path®, benchmarking these targets with peers, identifying gaps, setting targets, and desired Impact Levels (Very High, High, Medium, or Low, see above)

The NPT® is particularly useful for communicating with external stakeholders. It shows and explains your level of alignment with the Science-based Targets Path®.

The Net Present Impact® (NPI®) is a forward-looking metric that assesses your organization’s expected total sustainability impacts compared to the PI Science-based Targets Path® in $ or €, discounted to the present date – comparable to Net Present Value (NPV) calculations. This technique gives positive or negative impacts of the near future higher weights than bold long-term commitments without ambitious intermediate targets:

> It is calculated by discounting the forecasted Impacts-Levels for future years, e.g., for each year between 2024 and 2050, compared to the PI Science-based Targets Path® to a present value in $ or €

> Results in a single monetary figure: positive if mostly better than the Path, negative if mostly worse in the assessed period, with an NPI of 0 representing full alignment with the PI Science-based Targets Path®

> Provides an open-ended scale without any ceiling or bottom (in contrast to the NPT® which is capped between 0 and 200%)

> Allows for comparison between different companies, investments, and products in any industry

> Allows for assessing the level of alignment of existing targets to the Science-based Targets Path®, benchmarking these targets with peers, identifying gaps, setting targets, and Desired Impacts-Level (Very High, High, Medium, or Low, see PI Ambition Level Concepts)

The NPI® provides a powerful tool for sustainability planning and investment decision-making – just like NPV. The NPI® is particularly useful for communicating with financial stakeholders. It shows and explains the magnitude of alignment with the Science-based Targets Path® in a monetary unit.

The PI® Strategy Matrix is a proprietary, flexible tool for assessing any portfolio, such as a portfolio of products, product groups, services, projects, subsidiaries, entities, companies, or even countries. It can focus on comparing the performance within one industry/segment to reduce complexity or compare the performance of a portfolio across different industries. Its basic constituents are a financial performance KPI on the x-axis and an Impacs KPI on the y-axis, resulting in four quadrants: All Stars (+/+), Hidden Stars (+/-), Value at Risk (-/-), and Value at Stake (-/+). Further details are designed to fit your needs:

> Financial KPI on the x-axis: using a current earnings KPI (e.g., EBITDA) or a forecasted earnings KPI (e.g., NPV, IRR or Sharpe ratio), using the expected or average earnings for the middle of the axis

> Impacts on the y-axis: Using the Impacts-Level (in $ or €) for the current and the Net Present Impact® (NPI®) for the forecasted Impacts-Levels, using a 100% target alignment in the Science-based Targets Path® for the middle of the axis

> Optionally, it allows for the addition of further dimensions in the overview, e.g.,

> Impacts-Levels KPIs: Net Present Target® (NPT®), Downstream NPI® or NPT®, relative performance to the respective industry average, compliance with binary labels/assessments such as the EU Taxonomy

> Financial KPIs: any of the above, net sales, market share, growth rate, EPS, ROA, ROE, ROS, Tobin’s Q

Our double materiality solution enables organizations to conduct fact-based assessments that are compliant with CSRD (and ISSB), utilizing PI’s Science-based Targets Path®, Topic Taxonomy, and Financial Effects Database. This approach prevents over- or underestimating materiality, avoiding unnecessary costs, underestimated risks, and missed opportunities.

Proprietary PI Tools:
> PI Topic Taxonomy: Provides a holistic overview of nearly 200 sustainability matters at four levels, based on CSRD AR16 and other frameworks, with descriptions in English and German. It includes characterizations for each matter, such as whether an intervention represents a positive impact or a less negative one, and if it is irreversible or reversible

> PI Financial Effects Database: Offers a starting point to evaluate current, short-, mid-, and long-term effects, risks, and opportunities related to sustainability matters

> Fact-based thresholds: Used for materiality cut-offs in impact materiality assessments (science-based) and financial materiality assessments (fact-based)

The PI tool enables you to:
> Quantitatively and qualitatively assess Impact Materiality:

> Evaluate key CSRD topics for current, short-, mid-, and long-term performance.

> Use the Science-based Targets Path® for materiality cut-off.

> Provide rankings (e.g., 0-5) of impact materiality for each sustainability topic based on data and facts.

> Quantitatively and qualitatively assess Financial Materiality:

> Use Impact Materiality results to qualitatively or quantitatively assess financial materiality of key CSRD topics.

> Evaluate current, short-, mid-, and long-term financial effects.

> Utilize defined thresholds for materiality cut-off.

Methodology: The Science Behind Our Impacts Tools

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/$).

”The planetary boundaries concept presents a set of nine planetary boundaries within which humanity can continue to develop and thrive for generations to come. These nine Planetary Boundaries were first proposed by former centre director Johan Rockström and a group of 28 internationally renowned scientists in 2009. The Planetary Boundaries are the safe limits for human pressure on the nine critical processes which together maintain a stable and resilient Earth. The 2023 update not only quantified all boundaries, it also concluded that six of the nine boundaries have been transgressed.” (Source; Credit: “Azote for Stockholm Resilience Centre, based on analysis in Richardson et al 2023”). We currently address six of the nine Planetary Boundaries in our Science-based Targets Path®, as the remaining three are either not material or cannot be connected with economic activities.
The other topics, indicators, and targets of the Science-based Targets Path® were inspired by the UN Sustainable Development Goals and derived based on data and global trends from UNEP, ILO, IMF, and OECD.

PI, in a first step, mapped the Planetary Boundary concept to sustainability topics and metrics that can also be found in sustainability reports and global databases. We then, in a second step, used the current state of the mapped metrics of 2020 globally as a basis to connect the status quo, historical trends, and expected developments with the global GDP to model two scenarios:

> The Science-based Targets Path: representing a feasible path to reach science-based targets derived from the Planetary Boundary concept and the IPCC till 2050 (2100 for Climate Change)

> The Business-as-Usual-scenario: representing a reasonable expectation on how the world would develop if we don’t take further action on each indicator

The three graphs below show the state of the world (left), based on a publication of the Stockholm Resilience Centre as well as how the world would look like if it either followed PI’s Science-based Targets Path (SbTP, teal) or the Business-as-Usual-scenario (red borders) both in 2030 (middle) and 2050 (right).

In the final step, we connected the derived pathways to the global GDP and a conservative scenario of GDP growth till 2050.

Our Impacts tool is built on a robust, science-based, and impact-washing-free methodology that sets it apart in the field of sustainability impact measurement and valuation. Here’s how we turn complex data into actionable insights:

Holistic Indicator Framework

The carefully selected indicators of the PI Science-based Targets Path® provide a holistic view of an organization’s Impacts-Level. They cover crucial topics such as climate change, water, biodiversity (nature), health, social matters, and tax (net). The six topics currently consist of 14 key indicators, such as CO2e.

The included indicators all comply with the following criteria:

> they can be linked to a science-based societal target or belong to a material sustainability issue where a global target can be derived based on historical values

> they can reasonably be linked to the economic activities of organizations, projects, investments, or consumption (the final use phase)

> their impacts can be reported along the value chain in order not to allow the outsourcing (“hiding”) of activities, e.g., with high negative impacts

> where global reference data exists for the KPI regarding the status, from which a Science-based Target Path to the target value can be derived

> are non-binary, i.e., excluding compliance topics

> they are free from party-political preferences

Available Scopes

Impacts-Levels extend beyond an organization’s direct operations. That’s why our tool offers flexibility to assess:

> Your operations

> Your operations plus the entire upstream value chain

> Your downstream value chain

> Or the entire value chain (including up- and downstream)

This adaptability ensures that you can focus on the areas most relevant to your sustainability strategy.

AI-supported Data Modeling

One of our tool’s unique strengths is its ability to fill data gaps utilizing AI. Using sophisticated modeling techniques based on your CRM, revenue, spend, and industry averages, we can provide a complete assessment even when your data is incomplete. This addition sets us apart in the market – no other tool can offer this level of comprehensive analysis with limited input data.

Rigorous Data Verification Process of Assessments

We believe in the importance of data integrity. That’s why we offer a thorough verification process so that you can ensure that the data is complete and as reliable as reasonably possible:

> We evaluate the completeness of data provided by your organization or the entity we assess

> We evaluate the reliability of data based on the organization’s internal controls (if possible)

> We check if external audits cover the provided data

This verification process ensures that you can trust your assessment results and confidently make decisions.

Use Cases

Organizations

For Organizations: Ideal for evaluating the current and forecasted Impacts-Level of your organization, your segments, or product portfolio, as well as identifying risks and opportunities, identifying areas for improvement, and track progress:

Intention: Identify potential material impacts

Challenge: Incomplete data, e.g., on upstream impacts

Solutions:

> Identify and estimate data gaps in your organization, portfolio, or projects on the KPIs of PI’s Science-based Targets Path® using PI’s Advanced Data Modeling offering, helping you in addition to identifying those estimates that should be replaced by primary data in the future (in conjunction with Impacts-Level and Supplier Impacts-Levels)

> Impacts-Level: Understand your current Impacts-Level by calculating the Impacts-Level in % and in $ or € for the most recent year

Intention: Understand how your suppliers perform compared to each other and the industry average to inform your purchasing strategy

Challenge: Lack of holistic assessment approaches and incomplete data from your suppliers

Solution:

> Supplier Impacts-Levels & Forecast: Assess the current or forecasted Impacts-Levels of your suppliers (in % and $ or €) to identify the right ESG KPIs to be used for supplier engagement and evaluations

Intention: Understand how you perform compared to peers and industry average

Challenge: Lack of holistic assessment approaches and incomplete data

Solution:

> Impacts-Levels benchmark: Compare your Impacts-Level against industry averages and selected peers using the Impacts-Level in % and in $ or €

Intention: Set science-based/informed targets for climate and other material impacts

Challenge: Set context-based targets for climate and other topics (that make sense)

Solutions:

> Integrated target setting: Evaluate the level of alignment of your targets to science-based targets by calculating the forecasted Impacts-Levels (in %) based on plans, existing targets, and trends, using the Net Present Target® (NPT®) in % and forecasted Impacts-Levels, using the Net Present Impact® (NPI®) in $ or € and benchmark them with peers to inform future target-setting

> Desired Impacts-Level and Strategic Ambition: Determine the Impacts-Level and Strategic Ambition for your organization or venture that fits both your business strategy and your risk/opportunity profile

Intention: Understand the impacts of your customers and your contributions to them

Challenge: Lack of holistic assessment approaches and incomplete data

Solution:

> Customers Impacts-Levels & Forecast: Assess the downstream Impacts-Levels of your customers (in % and $ or €) to identify their blind spots and offer products/services that address them

Intention: Conduct a CSRD-compliant Double Materiality assessment

Challenge: Lack of understanding of the double materiality concept, its constituents, and ability to use science-based thresholds

Solution:

> Science-based double materiality: Use the assessment results to conduct Impact Materiality assessments by utilizing science-based materiality thresholds to obtain objective results (see PI’s Topic Taxonomy and PI’s Financial Effects Database as well as Methodology and Both for more)

Intention: Integrate ESG Impacts into your Financial Risk & Opportunity valuation and management

Challenge: Lack of understanding and ability to quantify ESGF risks & opportunities

Solutions:

> Integrated ESGF Risks & Opportunities Assessment and Valuation: Identify risks and opportunities linked to your forecasted Impacts-Level (in % and $ or €) and identify actions to manage them

> Strategic actions: Evaluate identified actions on their expected contribution to your Impacts-Level as well as to your non-financial and financial targets

Intention: Obtain a premium (greenium) through ESG financing

Challenge: Lack of holistic, context-based ESG Impacts valuations of Investments

Solution:

> Strategic, integrated financing: Use the insights to increase your multiple/save costs of capital by obtaining premiums when seeking capital to finance your actions

Intention: Integrate ESG into Business Strategy, Model and Processes

Challenge: Lack of standardized approaches that fit different business strategies and models

Solution:

> Integrated decision-making: Make informed decisions regarding your product-, project- or your organization’s portfolios based on your desired Impacts-Level and Strategic Ambition

Intention: Monitor the contribution of activities to manage Impacts, Risks & Opportunities

Challenge: Lack of methods to monitor the contribution of actions

Solution:

> Sustainability activity monitoring: track the progress of ongoing actions on Impacts as well as on non-financial and financial target achievements

Intention: Integrate Impacts, Risks & Opportunities into Reporting & Communication

Challenge: Lack of guidance for a strategic, yet CSRD, ISSB, or GRI-compliant reporting

Solution:

> Strategic reporting: Enhance reporting on organization-wide sustainability Impacts by providing sustainability-context-based KPIs together with your desired Impacts-Level and strategic Ambition for stakeholders

Intention: Communicate the sustainability performance of your products/services to your customers

Challenge: Presenting complex sustainability performance information in a concise, compelling manner

Solution:

> Effectively communicate the overall sustainability performance of your products/services to your customers

Investors/Financial Market Participants

For Investors/Financial Market Participants: Ideal for evaluating the current and forecasted Impacts-Level of your funds, your assets, or project portfolio, as well as identifying risks and opportunities, identifying areas for improvement, and track progress:

Asset Owners/LPs

Intention: Incorporate ESG Impacts factors and sustainability goals into the long-term strategy

Challenge: Difficulty in quantifying sustainability Impacts (performance) and related long-term ESG risks and opportunities

Solution: Utilize PI’s Desired Impacts-Levels and Ambition Level Concept to determine overall investment strategies and conduct an Impacts-Level Forecast or a Strategy Stress test (external)/Due Diligence to assess sustainability Impacts, risks & opportunities, and strategy/governance gaps

Intention: Evaluate external asset managers’ strategic ESG integration capabilities
Challenge: Assessing managers’ sustainability understanding; distinguishing between asset managers who strategically incorporate ESG considerations into their investment decisions and those who merely use ESG as a marketing tool or as a tick-the-box exercise

Solution: Define criteria for GPs/asset managers to conduct a Strategy Stress test (external)/Due Diligence: A combination of an Impacts Forecast and a Strategy Assessment – where impacts, associated risks & opportunities, and gaps to a strategic sustainability governance & management that fits the risk/opportunity profile of the target are assessed

 

Intention: Integrate sustainability/ESG Impacts & governance criteria alongside financial analysis
Challenge: Balancing sustainability/ESG priorities with financial performance expectations
Solutions:
> Investment strategy alignment check: Identify and assess potential investments for alignment with the overall sustainability goals of your organization using the Desired Impacts-Levels

> Integrated valuation & pricing: Quantify societal impacts of investments using Net Present Impact® to adjust valuations based on sustainability risks and opportunities by integrating sustainability-driven risks and opportunities into your valuations (NPV, Sharpe-ratio, etc.), using the Integrated ESGF Risk & Opportunity Assessment and Valuation

> Integrated decision-making: Inform investment decisions and portfolio rebalancing based on Desired Impacts-Levels and financial KPIs in the PI® Strategy Matrix

Intention: Track sustainability/ESG Impacts-Levels, guide and ensure a strategic sustainability management alongside monitoring financial indicators
Challenge: Lack of standardized sustainability/ESG data and metrics, as well as a lack of strategic sustainability management guides for consistent monitoring
Solutions:
> Identify & close data gaps for your portfolio on the KPIs of PI’s Science-based Targets Path® using PI’s Advanced Data Modeling

> Sustainability Impacts-Level Forecast for portfolio industries:

> Evaluate portfolio industries’ current and forecasted Impacts-Levels based on trends of your portfolio and obtain a general understanding how much the portfolio companies are ‘on track’ compared to science-based targets (i.e., the PI’s Science-based Targets Path®)

> Identify assets to be assessed further in a detailed sustainability Impacts-Forecast

> Detailed sustainability Impacts-Level Forecasts for individual assets:

> Evaluate the forecasted Impacts-Levels of selected portfolio companies/assets based on existing plans, targets, and trends and understand how much selected portfolio companies are ‘on track’ compared to science-based targets (i.e., the PI’s Science-based Targets Path®)

> Identify potential risks and opportunities and determine investment strategies using the PI® Strategy Matrix

> Impacts Benchmark: Compare investees’ performance across sectors and against peers to identify investment opportunities and engagement strategies

> Sustainability activity monitoring: Track progress on Impacts-Levels across your entire portfolio in the PI® Strategy Matrix

Intention: Include sustainability/ESG metrics in performance reporting

Challenge: Complexity of sustainability/ESG regulations and reporting requirements

Solution: Utilize PI’s sustainability-context-based KPIs, namely Impacts-Levels for the past fiscal year as well as Net Present Impact® and Net Present Target® for standardized reporting across the portfolio

Intention: Continuously improve sustainability/ESG performance and integration, and maintain alignment with asset managers
Challenges:
> Lack of clarity on stewardship expectations
> Overemphasis on short-term performance
> Not taking enough account of stewardship outcomes which risk undermining longer-term sustainable growth

Solutions:
> Strategic engagement: Determine appropriate sustainability strategies for each investee to enhance their sustainability efforts and engage with them to ensure that they pursue them and use the PI KPIs to track and report your investor Impacts, using Strategy Stress test (external)/Due Diligence

> Integrated sustainability targets: Assess the level of alignment/ambition of sustainability targets set by portfolio companies to set targets for your portfolio, using Desired Impacts-Levels

Asset Managers/GPs

Intention: Design fund structures incorporating sustainability/ESG criteria
Challenge: Defining clear, measurable sustainability criteria for fund creation (focusing on risks, opportunities, or meeting sustainability goals)
Solutions:
> Utilize PI Ambition Level Concept to determine overall investment strategies

> Set fund-level sustainability objectives based on PI’s Science-based Targets Path®

Intention: Apply sustainability/ESG integration in investment decision-making
Challenge: Ensuring sustainability/ESG integration throughout the full investment lifecycle while existing ESG data is mostly incomplete and full of missing information
Solutions:
> Identify and close data gaps for your portfolio on the KPIs of PI’s Science-based Targets Path® using PI’s AI-supported Data Modeling

> Conduct Strategy Stress test (external)/Due Diligence by identifying and assessing potential investments for alignment with the overall sustainability goals of the asset owner(s) or the fund(s), evaluating the target’s impacts, associated risks & opportunities, and gaps in its sustainability strategy

> Evaluate the current sustainability performance of potential investments by using Impacts-Level metrics

> Conduct a forward-looking Impacts Forecast for the investment lifecycle, calculating their Net Present Target® (NPT®) and Net Present Impact® (NPI®)

> Integrate valuation & pricing by using the quantified societal impacts of investments to justify premium pricing and adjust valuations based on sustainability risks and opportunities, using the Integrated ESGF Risk & Opportunity Assessment and Valuation for integrating sustainability-driven risks and opportunities into your valuations (NPV, Sharpe-ratio, etc.)

Intention: Actively monitor and manage sustainability/ESG impacts, risks, and opportunities (i.e., ongoing sustainability/ESG data management)
Challenge: Accessing reliable and up-to-date sustainability/ESG impacts data of your portfolio
Solutions:
In case your existing portfolio needs to be assessed:

> High-level Impacts-Level Forecast for portfolio industries:

> Evaluate portfolio industries’ current and forecasted Impacts-Levels based on trends of your portfolio and understand how much they are ‘on track’ compared to science-based targets (i.e., the PI’s Science-based Targets Path®) and industry averages, by using the Impacts-Level (%) for the current and the Net Present Target® (NPT®) for the projected Impacts Levels in % and the Impacts-Levels ($/€) for the current and the Net Present Impact® (NPI®) for the projected Impacts Levels in $ or €

> Identify potential risks and opportunities and industries to be assessed further in the PI® Strategy Matrix

> Detailed Impacts-Level Forecast for individual assets:

> Update the forecasted Impacts-Levels of selected portfolio companies based on existing plans, targets, and trends and understand how much selected portfolio companies are ‘on track’ compared to science-based targets (i.e. the PI’s Science-based Targets Path®), by updating the Impacts-Level (%) for the current and the Net Present Target® (NPT®) for the projected Impacts Levels in % and the Impacts-Level ($/€) for the current and the Net Present Impact® (NPI®) for the projected Impacts-Levels in $ or €

> Identify or validate risks and opportunities and determine investment and engagement strategies in the PI® Strategy Matrix

> Perform Impacts-Level Benchmarks to compare investees’ performance across sectors and against peers (to identify investment opportunities and engagement strategies)

In case your existing portfolio was already assessed:

> Implement engagement strategies with investees based on their Impacts-Levels, using the Strategy Stress test (external)/Due Diligence

> Set integrated sustainability targets for the portfolio, i.e., a target NPT® informed by the NPTs of the individual portfolio companies

> Continuously update fund strategies using impacts, risk, opportunity and ambition to align with evolving sustainability standards while maintaining financial performance

> Implement integrated decision-making processes at the asset level by informing investment decisions and rebalancing the asset’s product/service portfolio based on both sustainability Impacts-Levels and financial KPIs in the PI® Strategy Matrix

> Monitoring: Track progress by comparing the expected Impacts-Levels to the achieved performance across your entire portfolio in the PI® Strategy Matrix while keeping track of the activities and actions initiated by you (in case you want to monitor and report your investor impacts)

Intention: Report on sustainability outcomes to investors
Challenge: Meeting diverse investor expectations for sustainability/ESG reporting
Solutions:
> Utilize PI’s sustainability-context-based KPIs for standardized reporting across the portfolio by leveraging Impacts-Levels for clear communication of the current sustainability Impacts-Level of your portfolio

> Use NPT® and NPI® to demonstrate forward-looking sustainability strategies and alignment with science-based targets, meeting diverse investor reporting needs

Intention: Continuously improve ESG impacts and strategy of individual investees
Challenge: Balancing investees’ financial performance with ESG-driven priorities
Solution:
> Engage with portfolio companies using your insights into Impacts-Levels and gaps to a strategic sustainability management that fits

Intention: Consider sustainability/ESG factors in exit strategies for individual assets or an overall fund
Challenge: Deciding the right time for a divestment. Quantifying the change in Impacts-Levels during the holding period and if desired the investor’s share of it as well as the forecasted Impacts-Levels
Solutions:
> Inform divestment decisions and portfolio rebalancing based on Impacts-Levels and financial KPIs in the PI® Strategy Matrix

> Conducting final Strategy Stress test (external)/Due Diligence to assess improvements during the holding period by calculating the change in Impacts-Levels

> Using NPT® and NPI® in exit valuations, demonstrating tangible current and forecasted Impacts Levels to potential buyers and leveraging the Integrated ESGF Risk & Opportunity Assessment and Valuation approach to justify premium pricing based on quantified societal impacts

From Data to Insights

Our methodology doesn’t just measure your Impacts – it provides a roadmap for your sustainability transformation. You can transform raw data into meaningful insights by assessing the current Impacts-Level and its Forecast. These insights empower you to:

> Understand your current & forecasted sustainability Impacts-Levels

> Gain insights into how you perform against science-based targets, your industry, and peers

> Identify areas for improvement

> Connect data to your organization’s strategy: Choose a feasible Strategic Ambition Level and a realistic Desired Impacts-Level (see PI Ambition Level Concepts) by evaluating the risks and opportunities that are tied to your material Impacts

> Assess the level of coherence of your current management to the chosen Strategic Ambition Level and design consistent sustainability management to create positive impacts, i.e., that pay off for both your organization and for society

> Set targets that are informed by the PI Science-based Targets Path®, your Desired Impacts-Level and Strategic Ambition
The Impacts tool provides a nuanced, comprehensive, and forward-looking view of your organization’s current and future sustainability impacts. This empowers you to make informed decisions, set meaningful, sustainability-context-informed targets, evaluate the envisioned contribution of actions to target achievements, and effectively communicate your sustainability journey to all stakeholders.

Contact us to access our online tool and discover how to measure, forecast, and improve your Impacts-Level.

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Impacts Solutions

Our Impacts Assessment Tool: Two Perspectives for the Assessment of

  1. Your Own Organization:
    > Quantify and understand the direct sustainability Impacts of your organization’s operations
  2. External Organizations or Projects:
    >As an Organization:     Quantify and understand the Impacts of your suppliers, partners, targets, peers, or customers enabling you to gain strategic insights for improving your or the Impacts-Level of your customers
    >As an Investors: Quantify and understand the Impacts-Levels of your funds, assets, projects, and targets, enabling you to balance your Impacts-Risks-Return focus.

The assessments can be conducted by you, by the external organizations themselves, or by PI, while sharing the results with you through our platform. PI can also verify all self-assessments. This gives you full flexibility and control to understand the basis for the presented information and its inherent limitations (such as scope or verification).

The following applies to all variations of our Impacts Solutions:

Common for all product scopes below

Own organization

*The scope of the assessment can be the organization’s operations, supply chain, or both; contact us if you want also to assess the downstream impacts of your product or product portfolio.

* We use this data to generate the forecast. However, contact us if you want to in addition or instead use your business plans to generate the forecast, e.g., if you plan significant changes or do not have (sufficient) historical data.

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Impacts-Level Lite (free)

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Assessing other organization’s or project’s Impacts:

Example use cases on Suppliers, partners, peers, targets, or assets (the external “entity”):
> Suppliers: Understand their current and forecasted impacts and which ESG KPIs are material
> Peers: Benchmark your current and forecasted impacts against key peers
> Clients: Identify where you can offer solutions for the current and future challenges that your clients may not be aware of
> Assets, projects, or M&A targets: Execute your fiduciary duty by complementing your Due Diligence to identify impacts, risks, and opportunities of your current or future portfolio of organizations, assets or projects

*The scope of the assessment can be the external entity’s own operations, its supply chain, or both

* We use this data to generate the forecast. However, contact us if you want to in addition or instead use your business plans for a target to generate the forecast, e.g., if you plan significant changes or if no (sufficient) historical data exists.

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