Hi all – I am late to this discussion but have loved reading
through the responses. It is incredibly helpful to see these different approaches to impact ratings and how they reflect in overall impact logic. I personally love the 0 on any dimension = 0 impact approach. I haven’t successfully persuaded anyone I’ve worked with to adopt it, but feel emboldened by the fact that there are others taking this approach!
The biggest “impact logic” issue I grapple with when it comes to impact ratings has less to do with formulas and more to do with the
tendency to “cherry pick” the positive impact that is the focus of the
rating. These concepts of weights, dispersion and even 0 impact only really matters when there is an understanding of how that
specific impact relates to others impacts (both positive and negative).
I know there’s a lot of great work being done to get at measures of net impact, and I think impact ratings are an important step in that
direction. I also think that there’s more that we can do when applying impact ratings to more holistically capture overall impacts.
What if all investors used the formula Jackson proposed AND
produced a materiality map that showed all material negative and positive impacts, highlighting the specific impact of focus for the rating?
Perhaps it’s for a separate discussion board, but I would love to hear how others are representing material positive and negative impacts is relation to the impact of focus for the impact rating.
