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Universal ESG Metrics

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The execution of the std. Transformation Methdology CTM for the leading FIs and real economy large corporations yield a constant pipeline of impactful and credible projects and their non-financial outcomes for eg. Green House Gases reduction directly or indirectly for entities’ SDG 13 and other such outcomes for their other SDGs additionally. The other outcomes are achieved by entities through their multi stakeholder focus dir/indirectly. These individual GHGs’ reduction are the impact parameters for SDG13 and other such impact parameters will be incorporated in the methodology as they are discovered by the world, standardised and adopted by large businesses directly and by the leading FIs indirectly. The GHGs reduction are measured in absolute metric like metric tons of CO2, Methane or other GHGs, their goals are aligned with the science based targets and pathways standardised by sector. The methodology then ensures at a set period say every year the entity consolidates it’s baselines and targets of these GHGs reduction directly or as financed through a standardised Governance framework and updates into the NZDPU. The leading FIs will arrive at their baselines and targets from their underlying companies' and assets’ IP values in proportion to their investments made into or planned for.  The methodology will adapt to the frequency or reporting period as suggested by higher bodies or mandated by regulations. This governance framework and adherence to it will be open to external reviews and audit as per this methodology.

 

These non-financial outcomes like direct or indirect GHGs reduction and other such dir/indirect Impacts across SDGs then can be converted into the quantitative part of the universal ESG metrics based on the assumption that an entities total direct or indirect impact towards its one Purpose is equal to the sum of its direct or indirect impacts towards its 16 SDGs leaving aside the 17th that is created to support achievement of other 16. Thus the methodology then ensures the large corporates declare their relative focus across SDGs at the same frequency as above upon measuring their actual (previous reporting period) and having had discovered their ideal already. In the case of leading FIs, they will arrive at their targeted and actual (previous cycle) relative focus across SDGs based on their underlying companies’ and assets’ IP values (planned or actual) in proportion to the investments made into or planned for and additional data based on the standardised category the FI belongs to. These additional data will include the standardised IPs for each of the SDGs, their %contribution into the SDG, Ideal relative focus across SDGs, and IPs’ ideal value per unit of leading FI’s investments planned for./ turnover

 

Then at the end of the reporting period, in addition to the data mentioned earlier, the actual IP values for large corporates and in the case for the leading FIs their actual IP values arrived at from their underlying companies & assets actual IP values in proportion to actual investments made into them, and the FIs' turnover we can calculate entities’ %IP achievement, %SDG achievement and further weighted %SDG achievement. The sum of weighted %SDG achievement is nothing but the % of total impact towards its one purpose that is achieved and it is a comparable metric across entities and across sectors. Hence it becomes one part of the universal ESG metrics. The entire calculation, governance framework, and adherence to it will be open to external review and audit as per this methodology.

 

The other part of the uni. ESG metrics come from the qualitative measurements embedded into the standardised Transformation methodology CTM. As CTM is independent of the entity and its sector where it is deployed, these qualitative measurements are comparable across entities’ and their sectors. Hence together with these qualitative measurements and the derived quantitative metric as explained above they become universal ESG metrics. Some of the qualitative measurements are also lead metrics that can predict to some extent the outcomes from this transformation. These metrics are transparent, authentic and decision worthy. They can solve the problem of greenwashing.

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