Why impact transparency will drive new financial disclosure in capital markets transactions

As impact transparency becomes more widespread, it is easy to see how environmental and social impacts in addition to profit will affect the way in which companies coming to market position their investment thesis, report adjusted financial information and seek to increase their valuations. 

As the Impact-Weighted Accounts Initiative at HBS noted, of the 1,694 companies examined that had positive EBITDA in 2018, 252 firms (15%) would see their profit more than wiped out by the environmental damage they caused, while 543 firms (32%) would see their EBITDA reduced by 25% or more.

Capital market investors will help drive this transition by asking for impact-weighted accounting metrics to help assess those companies that are truly profitable, and those that are not.