Beyond ESG —Rating Corporations’ Impact On Society And The Earth

A Swiss startup called Impaakt has introduced a thorough corporate rating service that examines a firm's influence on a variety of parameters, including job creation, carbon footprint, and board diversity.

It seeks to disrupt the ESG industry which has been widely criticized for oddities such as giving large oil industry polluters favorable rankings while giving a low score to Tesla.

Critics have criticised the lack of transparency and uniformity across companies that offer ESG ratings, such as S&P. Over 600 analysts created Impaakt's ratings, which are then evaluated and scored by 50,000 volunteer raters. Impaakt provides a thorough explanation of each rating.

According to Ben Robinson, co-founder of Geneva-based Aperture, a fintech analytics company that also invests in Impaakt, hundreds of businesses, financial institutions, and individuals have downloaded its report.

Bertrand Gacon, co-founder and CEO at Impaakt, has worked in sustainability and responsible investment for years at leading European commercial and private banks.

He said ESG is mis-used in judging how green a business is.

"That's not what it was intended for; it was to assess the risk associated with financing a business. ESG may address environmental risk, but it doesn't express whether a company's impact on the world is beneficial or negative; it just doesn't. And that's where the green washing comes from. ESG scores are not, despite what the financial sector asserts, a reliable indicator of how much of an impact firms have on society.

Impaakt, on the other hand, evaluates businesses in relation to the Sustainable Development Goals of the UN (SDG 6).

Impaakt stated in its announcement that the majority of the companies it has evaluated weren't doing enough. Regardless of how great their products are, the majority of businesses still leave a negative environmental imprint from their activities. There are some businesses that significantly improve both people's lives and the world, however no company's effects are ever entirely positive.

Impaakt has advanced past some of the overly straightforward ESG rankings since it examines a broader spectrum of a company's effects on people and the environment and provides an explanation of its conclusions.

"Our impact measuring tool focuses beyond greenwashing & ESG, looking at how corporations influence people and the earth," the company claims. A score might be anything between +5 (positive influence) and -5 (negative impact).

Over 600 fully qualified analysts from Impaakt do company research globally. Utilizing real information from dependable sources, including the firms themselves, NGOs, reputable media, and scientific publications, they address a wide range of environmental and socioeconomic concerns. Impaakt is also working with a Swiss university to create its own AI engine.

"The list is rapidly expanding, and we already compute and publish rankings for 3,500 companies from over 40 countries."

It comes as no surprise that First Solar, which develops, produces, and sells solar power systems, is ranked first on Impaakt's list with a score of 1.78.

"It outperforms other top rivals thanks to its affordability...

According to our data, its prices were much cheaper than the average in the US as well as those of the majority of its rivals. On the downside, it utilises water and generates greenhouse gases like the majority of manufacturing enterprises, Impaakt writes in a paragraph regarding the rating.

With a score of +1.54, though, what is Mastercard doing in seventh place?

The fundamental business of Mastercard received very excellent marks from our community. With the use of its cards and digital payment solutions, it helps small companies make the shift to the digital economy while also enabling consumers in more than 200 countries. It has certain specific programmes, such as those with textile workers in Bangladesh, and has an especially good effect on low-wage workers in underdeveloped nations where cash payments run the danger of theft and limit savings potential. Additionally, its analytics and data contribute to the efficiency of services like public transportation. It receives good marks for its endeavours in education and training as well, giving girls in 44 nations access to STEM programmes and higher education in Africa.