The concept of Impact Accounting is gaining relevance as companies seek to understand not only the financial value they create, but also the social and environmental impacts associated with their activities. In simple terms, this methodology aims to translate these impacts into monetary metrics, allowing them to be compared with traditional financial indicators used in management. For many companies, understanding these impacts in monetary terms enables them to anticipate future risks, identify value creation opportunities, and improve decision-making in contexts of high complexity and uncertainty. The objective is not to replace financial accounting, but to complement it with a more comprehensive view of value creation.
It was precisely with this purpose in mind that the Value Balancing Alliance recently published the Value Balancing Playbook, a guide that systematizes the main applications of Impact Accounting within organizations. The document advocates an integrated view of the value created for the company and for society, proposing that business decisions should simultaneously consider financial performance and societal impact. According to the playbook, Impact Accounting can support multiple stages of business management, from strategy definition and goal setting to investment selection, risk management, capital allocation, performance monitoring, and external reporting. The document identifies more than 80 use cases across different business functions, demonstrating the potential of this approach to support decision-making.
The playbook presents several examples of the practical application of this methodology. In one case, a multinational company integrated sustainability targets into its annual planning and budgeting process, using impact metrics to support strategic priority setting and the evaluation of trade-offs between financial and societal returns. In another example, a global industrial company developed an integrated management dashboard that combines financial indicators with metrics related to carbon emissions, water usage, and community impact. Impact Accounting allows projects to be compared based on total value created and enables a clearer understanding of the interdependencies between profitability and impact, making these dimensions an integral part of operational and investment decisions.
Although many developments in this area have been driven by international companies associated with the Value Balancing Alliance, including organizations such as BASF, Novartis, Kering, SAP, Holcim, Michelin, and SK Group, interest in these methodologies is far from limited to international markets. In Portugal as well, pioneering companies are beginning to emerge in the implementation of these tools, through initiatives promoted by Católica Lisbon School of Business & Economics in partnership with PwC. The evolution of this topic will be in focus on July 1, during the 2nd Conference on Impact Accounting, integrated into Lisbon Sustainability Week organized by Católica-Lisbon SBE. The event will bring together companies, academics, and experts to discuss the challenges and opportunities associated with implementing Impact Accounting. As investors, regulators, and markets increasingly demand a more complete understanding of value creation, Impact Accounting is steadily establishing itself not merely as a reporting tool, but as a strategic management instrument.
Filipa Lancastre, Professor at Catolica-Lisbon SBE