Share

Share on facebook
Share on twitter
Share on linkedin

In-depth comparison of the Impact Analysis Tools for corporations and banks by the UNEP FI

Would you like to save a few hours? We have mapped out the similarities and differences of the new Impact Analysis Tools for corporations and banks by the United Nations Environment Programme Finance Initiative (UNEP FI). These tools assist banks, investors and socially responsible companies with planning, managing and improving their impact on society and the environment. 

One of these tools helps assess banks´ and investors´ client and investee companies individually (the Corporate Tool), another to analyse banks´ portfolios in their entirety (the Portfolio Tool). We have created manuals for both of them: the manual of the Corporate Tool, and the Manual of the Portfolio Tool. The following figure displays the main strengths and weaknesses of the tools.

Figure 1. The UNEP FI tools in a nutshell

 

Similarities and differences

While the tools do have a similar structure and methodology, there are a number of differences . The main similarities and differences for each section of both tools are presented in the following table.

Table 1. Comparison of the Corporate and the Portfolio tools

Corporate Tool Portfolio Tool
Main differences
1. Suitable for a for-profit company (especially large multinational corporations)
2. Includes information about impact management capabilities
3. Summarized by giving the company a single rating
Main differences
1. Suitable for a bank
2. Information collection is separated by four different banking types
3. Summarized by presenting an overview of most significant impact areas and the bank’s impact performance in those areas
Company cartography
• Asks about sectors, countries of operation, company’s influence (i.e. whether it is among the market leaders)
• 3 types of countries are separated: countries of sales, production, sourcing
– Does not ask about the types of customers
Bank cartography
• Asks about sectors, countries of operation, bank’s influence (i.e. its rank in the league tables)
• 4 types of banks are separated: consumer, business, corporate, investment banking
+ Asks about the types of customers
Country impact needs
• Asks about the societal needs of each country of operation
Country impact needs
• Asks about the societal needs of each country of operation
Corporate impact profiles
Each sector separately & then all sectors summarized

• Shows impact associations for sectors
– Does not show impact associations for customer types
• Shows country needs
• Highlights the LDCs (i.e. the least developed countries)
Portfolio impact profiles 
Each bank type separately & then all bank types summarized 

• Shows impact associations for sectors
+ Shows impact associations for customer types
• Shows country needs
• Highlights the LDCs (i.e. the least developed countries)
• Highlights areas of high influence
• Highlights key sectors
+ Option to add open comments
– No option to amend values
Highlights areas of high influence
• Highlights key sectors
+ Option to amend values
– No option to add open comments
Highlights areas of high influence
• Highlights key sectors
+ Option to add open comments
– No option to amend values
Most significant impact areas
• Asks to list the most significant impact areas based on earlier information 
• Asks to justify the choices
Most significant impact areas
• Asks to list the most significant impact areas based on earlier information 
• Asks to justify the choices
Impact performance
Each sector separately & then all sectors summarized

• Asks about quantitative and qualitative impact performance data 
+ Asks about being in line with internal goals
• Asks to compare performance with peers
• Asks to compare performance with wider policy goals
+ Asks about predictive models
– Does not ask about significant controversies
• Asks to assign a performance status
Impact performance
Each banking type separately without any summary

• Asks about quantitative and qualitative impact performance data
– Doesn’t ask about being in line with internal goals
• Asks to compare performance with peers
• Asks to compare performance with wider policy goals
+ Asks about significant controversies
– Does not ask about predictive models
• Asks to assign a performance status
+Asks about impact management capabilities – No impact management section
Conclusions
• Asks to choose a final rating for the company from one of three PI (Positive Impact) statuses: PI, PI transition, Not PI
Priority impact areas
• Shows the ranked list of most significant impact areas from earlier steps
• Shows the impact performance ratings from earlier
In conclusion, both tools follow the same general logic while there are some significant methodological inconsistencies, like the Portfolio Tool skipping the impact management capabilities section and the Corporate Tool missing the possibility to analyze the user´s impact by customer types. There are also a few technical inconsistencies between the tools: in the Corporate Tool there is an option to amend values but not to add comments in the section of impact profiles, and vice versa.

 

What has been automated in the tools?

One of the key attractions of the tools lies in automating some of the time-consuming elements of mapping the potential positive and negative impacts of banks, investment portfolios and corporations. The following figure shows the main elements that have been automated.

Figure 2. The aspects that have been automated in the tools

To enable running the algorithms and complete the analysis, the users still need to provide extensive manual inputs. Examples of the activities that have not been automated:

  • Gathering the country needs statistics;
  • Establishing country needs scores based on the collected data;
  • Choosing the most significant impact areas;
  • Choosing the indicators to measure your impact;
  • Actually measuring your impact in practice;
  • Scoring your current impact performance status;
  • Scoring your current impact management status;
  • Choosing final PI (Positive Impact) status (in the Corporate Tool).

Administratively, the most time-consuming non-automated parts are perhaps gathering the statistics about the country’s needs and choosing the exact indicators to measure your impact.

Also, a number of non-automated steps definitely need a well-argumented and transparent decision-making process inside the user’s organization. These steps include the choices about scores concerning impact performance and management status.

In conclusion: while the automated parts of the tools may save the users lots of time, still much time needs to be invested into validating the automated suggestions from the tools and completing the non-automated sections (including those that need input from relevant stakeholders internally and externally).

If you need any help with your own impact targets and activities, do get in touch with us at info(at)storiesforimpact.com or using our contact form.

Leave a Comment

Your email address will not be published. Required fields are marked *

Top Posts

More posts

Corporate Social Responsibility
Richard Annilo

Doing ESG – how does it work in practice?

The Responsible Investor Digital Festival was an online event lasting from June 15th to 19th 2020. It was filled with in-depth discussions about responsible investing. To save your time, we have summarized some key insights from a discussion about how banks manage their impacts and what has been the most challenging for them, titled “Doing

Read More »
Behind the Scenes
Jaan Aps

From vision to reality: creating the new design for Stories For Impact

How to create a new visual language that articulates what the organization´s contribution to the world is about? We wanted the main visual of Stories For Impact to express our core identity in a straightforward manner – no symbols or visual metaphors or overused “Scandinavian design”. What we also wanted was to capture the sense

Read More »
Responsible Investment
Richard Annilo

The road to net-zero economies and the investment implications

The Responsible Investor Digital Festival was an online event lasting from June 15th to 19th 2020. It was filled with in-depth discussions about responsible investing. To save your time, we have summarized some key insights from a discussion about the challenges and current progress in reaching a global economy with net-zero emissions, titled “The road

Read More »
Impact Investment
Richard Annilo

Catalysing ESG and sustainable finance through Fintech and AI

The Responsible Investor Digital Festival was an online event lasting from June 15th to 19th 2020. It was filled with in-depth discussions about responsible investing. To save your time, we have summarized some key insights from a discussion about how technology should be used to increase responsible investing, titled “Catalysing ESG and sustainable finance through

Read More »
Tools for Success
Jaan Aps

Why I believe in using mind maps and other diagrams [with examples]

Wikipedia says that a diagram is a symbolic representation of information using visualization techniques. I would add that mind maps and other diagrams are the most powerful yet still massively underused tools to transform real-world complexity into actionable blueprints. You don´t have to be a designer to work professionally with mind maps. I usually draw

Read More »
X