Impact Accounting Methodology

The impact accounting methodology (the Methodology), produced by IFVI in partnership with the Value Balancing Alliance (VBA), is a globally applicable and comprehensive open-source methodology that will allow corporates and investors to translate social and environmental impacts into the language of currency and make them comparable to financial performance.

In 2022, IFVI and VBA began collaborating to develop one common impact accounting methodology for the public good as well as to advocate for adoption globally.

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General Methodology 1: Conceptual Framework for Impact Accounting is now open for public comment

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The Methodology

The Methodology is being developed through a system of interrelated statements:

General Methodologies: Establishes the system of and conceptual elements for impact accounts, including the purpose, users of impact information, qualitative characteristics, fundamental concepts, impact materiality, and measurement and valuation methods.

Topic Methodologies: Include guidance for the measurement and valuation of impacts at the sustainability topic level. The impacts related to any specific topic included in an entity’s impact accounts is based on the application of impact materiality. The Topic Methodologies are designed to apply across industries.

Industry-specific Methodologies: Include guidance for the measurement and valuation of impacts at the industry-specific level. The industry-specific impacts included in an entity’s impact accounts is based on the application of impact materiality. Industry-specific methodologies are developed in circumstances in which a topic cannot be generalized across industries. 

Development Process

The development of the methodology is governed by the Valuation Technical & Practitioner Committee (VTPC), an independent committee established by IFVI to direct, validate, and approve research and methodology produced by the cooperation of IFVI and VBA.

The methodology builds on frameworks and protocols published by leading organizations in the impact management ecosystem and sustainability-related disclosures required by governing jurisdictions and international standard setters, including Capitals Coalition, EFRAG, Global Reporting Initiative (GRI), IFRS Foundation, Impact Economy Foundation, Impact Management Platform, Social Value International (SVI), and the Transparent Project. The methodology is designed to harmonize and build upon concepts, definitions, frameworks, methods, and principles.

In the development of the methodology, IFVI and VBA will follow the rigorous and credible process outlined in the Due Process Protocol balanced with the urgent and dynamic needs of stakeholders in the face of great social and environmental challenges. As detailed in the Due Process Protocol, formal methodology documents undergo public exposure prior to final approval by the VTPC.

The IFVI Board of Directors provides oversight to the Due Process Protocol through its Due Process Oversight Committee (DPOC). More information about the VTPC is available in the VTPC Terms of Reference.

Questions or comments about IFVI governance or methodology can be submitted to the VTPC at [email protected], the Chair of the DPOC at [email protected], or directly to technical staff at [email protected].