Our work

Our starting point 

Economic conditions have changed fundamentally in recent years. Buzzwords like resource-efficient growth, climate neutrality, fair prices, social standards, circular economy, and preservation of biodiversity characterize corporate agendas. This transformation is particularly visible in accounting: The book value and market value of companies are drifting further and further apart. Given all this, certain questions arise: What is business success in today’s world? How do we measure success? How do we manage a company? What should be reported to stakeholders and how?

Society and the economy strongly depend on the health of the environment. As a result, companies need to better understand, measure, and manage their impacts on the environment and society, as well as their dependencies on them. With our methodology we work on the necessary tools to do so.

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The double materiality perspective

There are two major perspectives on value in sustainable finance: Firstly, there is a stakeholder perspective that focuses on positive and negative impacts of corporate activities on the environment and by extension society – the value to society perspective. And secondly, a financial-driven view of how these impacts (and dependencies) affect the (longer term) financial performance of corporations – the value to business perspective. Both perspectives are inherently connected and have, thus, been widely acknowledged as “double materiality”. The VBA embraces both methodological streams, as both streams are fundamental for understanding a company’s long-term value creation.


Impact measurement and valuation (IMV)

The Value Balancing Alliance methodology employs a monetary metric to tangibly discern the impact of business models, place it in the local context of the activity, understand the significance and weighting of individual sustainability aspects and, ultimately, better integrate them into corporate management. 


For example, it makes a fundamental difference whether a company is consuming water in an arid climate (in the desert) or a humid area (by a lake). The value of water is not simply a quantitative function of the number of gallons consumed. A company also has to decide how to use its resources: for research, reduction of climate emissions or water consumption. Human resource development for employees is also very important. A monetary metric helps companies put the value of a program or initiative into context - as shown by the experience of member companies in the regular piloting of our methods.

Our methodology emphasizes the need to avoid offsetting individual dimensions and their indicators: e.g., impacts of greenhouse gas emissions can never be used to offset the financial or social performance of a company. In contrast, our methodology enables decision makers to see the relevance of negative impacts on society that the company needs to reduce, as well as its positive impacts that should be aimed to further increased.

To better understand the underlying logic for calculating monetary valued impacts, please have a look at our General Methodology paper.

Methodology development and testing

A globally harmonized impact measurement and valuation methodology is not only needed to foster long-term thinking, but also to consolidate all the knowledge that has already been created in this field. The Value Balancing Alliance is, therefore, building on the work of leading universities, the experience of its member companies and existing frameworks.


Since 2022, we are in close collaboration with the International Foundation for Valuing Impacts (IFVI) to co-develop an internationally accepted impact valuation methodology.


The methodology is tested in a structured piloting process conducted by VBA member companies to ensure feasibility, scalability, robustness, comparability, connectivity, and relevance of the methodology for corporates. To date, the VBA member companies have tested the methodology twice – have a look at our pilot study 1 and pilot study 2 to read more about what we have learned from these pilots. 

Calculation logic 

To calculate a corporate footprint based on impact measurement and valuation in a feasible way, the impacts of corporate activities on society are modelled based on the logic of impact pathways, as shown for example in the figure below for GHG emissions.

Impact pathway: Greenhouse gas emissions

To simplify the application, companies only need to measure their impact diver (e.g., CO2 emissions), and then can apply a valuation coefficient that incorporates the modelling of the societal impacts (as shown in figure above). In general, applying impact measurement and valuations requires a reliable data infrastructure and processes for the collection of internal company data on operational impacts and external data on value chain impacts (see figure below).

Value chain boundaries

The influence and responsibilities of a company goes far beyond the boundaries over which it exercises financial or operational control. For example, decisions regarding materials and suppliers have indirect impacts on a company’s supply chain. Similarly, the design of products and services affects how customers use and dispose products, which leads to indirect impacts on society. Hence, a meaningful assessment of the relationships between companies and nature and society needs to take such upstream and downstream effects into account. Therefore, it is important to consider all areas influenced by business activities even if the influence occurs outside the narrow boundaries of mainstream financial reporting. Such a value chain perspective is in line with latest regulation and established frameworks in sustainability (e.g., GHG Protocol).

Value Balancing Alliance Position Paper