Sustainability through Engagement, Empowerment, & Mobilisation

Further to the assumptions mentioned in the Universal ESG Metrics page,

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Hypothesis: 

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An entity's total dir/indirect impacts towards its one Purpose = Sum of its total dir/indirect impacts towards the 16 SDGs through their multi-stakeholder focus, leaving aside the 17th that is actually created to support the achievement of the other 16.

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Real-economy large corporations

 

Assumptions: 

There are standardised sectoral IPs for each SDG with their definition, goals, pathways and weightage into the SDG standardised by sector.

For a company, its each SDG's weightage in its one Purpose, in other words, the entity's ideal relative focus across 16 SDGs standardised by sector.

Known:

IP's target declared in alignment with its sectoral pathway

SDG consists of IPs, and their weightage into the SDG are standardised by sector

Ideal weightage of each SDG in its one purpose, in other words - the entity’s ideal relative focus across 16 SDGs standardised by sector = Ideal weighted %SDG

Targeted weightage of each SDG in its one purpose in other words - the entity’s targeted relative focus across 16 SDGs for the period declared (at the start of the cycle upon measuring its actual (from its previous cycle) relative focus across 16 SDGs and having noted its Ideal value based on its sector) = Targeted weighted %SDG

IP data Actual

 

Calculate at the end of the period (say every year):

IP %achievement = (IP data Actual / IP target declared) *100. (max 100%)

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For SDG %achievement

 

say SDG1 consists of IP1 & IP2 and =  % a of IP1 + %b of IP2

Then, SDG1 %achievement =  %a * IP1 %achievement + %b * IP2 %achievement

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say SDG2 consists of IP3 & IP4 and =  % c of IP3 + %d of IP4

Then, SDG2 %achievement =  %c * IP3 %achievement + %d * IP4 %achievement
….

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Then,
weighted SDG1 %achievement = Targeted weighted %SDG1 * SDG1 %achievement

weighted SDG2 %achievement = Targeted weighted %SDG2 * SDG2 %achievement

….

 

Sum of weighted SDGs %achievement -> denotes %of total impact towards one purpose achieved and is universal and comparable across companies and their sectors.

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The actual relative focus across SDGs for the entity will be arrived at by calculating its weightage from the sum of all weighted SDG %achievements. -> this information will be useful for planning in the next cycle

 

Leading Financial Institutions (FIs)

 

Assumptions: 

FI's financed-IP value is derived from its underlying companies' and assets' IPs (which ultimately needs to be arrived at from some real economy companies' IP data in proportion to investments made into or planned for) in proportion to investments made into or planned for and its own IP data. Then, they are called Actual financed-IP or Planned financed-IP.

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FIs are standardised by Categories 

FI’s SDGs consist of which financed-IPs and their weightage in the SDG standardised by FI's Category.

Ideal financed-IP per unit of FI's turnover (planned or actual) standardised by category

For an FI, its each SDG's weightage in its one Purpose; in other words, FI's ideal relative focus across 16 SDGs standardised by FI's Category​

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Known:

FI’s targets for its own IPs

FI’s own IP data

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wrt underlying company's (directly or as an underlying company for the asset when assets are from real economy companies)

IP target Comp (it is the proportionate value of the IP target Comp overall) 

IP data Actual Comp (it is the proportionate value of the IP data Actual Comp overall) 

proportionate value of IP target Comp is calculated from considering % Comp's Planned Funds, was planned for investment by FI

proportionate value of IP data Actual Comp is calculated from considering % Comp's Actual Funds invested, were invested in by FI

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Calculate at the start of the period, FI's planned relative focus across 16 SDGs

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Planned financed-IP ( for the FI in consideration or its assets when they are from the real economy companies directly, but if not, they need to be calculated for the underlying FI first and then added just like the IP target Comp. The chain continues till the real economy company becomes the underlying asset ultimately)

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Planned financed-IP = sum of ( IP target Comp ) + FI’s target for its own IP +additional tightness in targets may include considerations from FI's other plans 

Ideal planned financed-IP = FIs Planned turnover * Ideal financed-IP per unit of FI's planned turnover as per its category 

Planning %efficiency financed-IP = Planned financed-IP / Ideal planned financed-IP

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FI's SDG1 Planning %efficiency

Planning %efficiency financed-IP1 * IP1's % contribution in SDG1 +

Planning %efficiency financed-IP2 * IP2's % contribution in SDG1 +

......

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 (here, the idea is to prevent portfolio greening and encourage planning for NZ transition of underlying companies and assets, note the max value of  Planning %efficiency financed-IP will be 1 )

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Now FI's weighted planned %SDG1 = Ideal weighted %SDG1 * SDG1 Planning %efficiency.  (from FI's Ideal relative focus across 16 SDGs based on its category)

 

Likewise, calculate all FI's weighted planned %SDGs...

 

To arrive at the targeted relative focus across 16 SDGs for the FI calculate for each SDG as

 

FI's weighted planned %SDG1 weightage = FI's weighted planned %SDG1 / Sum of (FI's weighted planned %SDGs)

 

 

Calculate at the end of the period (say every year), FI's Actual relative focus across 16 SDGs:

 

FI's Actual financed-IP ( for the FI in consideration or its assets when they are from the real economy companies directly, but if not, they need to be calculated for the underlying FI first and then added here just like the IP data Actual Comp. The chain continues till the real economy company becomes the underlying asset ultimately)

 

Actual financed-IP = sum of ( IP data Actual Comp ) + FI’s  own IP data

Ideal actual financed-IP = Ideal financed-IP per unit of actual turnover based on the category of FI * FI's actual turnover for the reporting period
Actual financed-IP %achievement = Actual financed-IP / Ideal actual financed-IP  * 100  (max 100%)

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FI's SDG1 %achievement

 

Actual financed-IP1 %achievement * IP1's % contribution in SDG1 +

Actual financed-IP2 %achievement * IP2's % contribution in SDG1 +

......

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(here, the idea is to prevent portfolio greening and encourage NZ transition of underlying companies and assets, note the max value of Actual financed-IP %achievement will be 1 )

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FI's weighted SDG1 %achievement = FI's SDG1 %achievement  * Ideal weighted %SDG1 (from FI's Ideal relative focus across 16 SDGs)

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Likewise, calculate all weighted SDG %achievements...

The Sum of FI's weighted SDG %achievements - > denotes % total impacts direct or as-financed towards its one purpose achieved, and it is universal and comparable across FIs and their categories

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The actual relative focus across SDGs for the FI will be arrived at by calculating its weightage from the sum of all weighted SDG %achievements for the FI -> this information will be useful for the planning for next cycle

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read more about these universal ESG metrics here.

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