External Disclosure and Internal Dialogue

Reporting and Communication Utilizing Impact Assessment

“Impact” represents the very essence of a long-term value creation story for companies, and it is from this perspective of impact that the true attractiveness of a company, its operations, and its investments should be quantitatively and qualitatively expressed. To achieve this, it is essential to work backward from the key components that should be included in internal and external reporting, organizing specific impacts with a comprehensive view.

The concept of a “long-term value creation story” is expected to gain even more attention from both investors and companies in the future, making it a theme that is likely to continue evolving across the market as a whole. Consequently, the importance of communication with external stakeholders, including investors, and its role in enhancing corporate value is expected to grow.

“It is important to clearly demonstrate the relationship between ongoing business growth and improved profitability.”

“Many companies only include key CSR priorities related to social contributions, without clear linkage to enhancing corporate value or corporate strategy.”

“Few cases are fully equipped with a narrative component.”

Activity Report from ESG Disclosure Study Group 2022

Key Elements to Include in Communication

To facilitate and activate dialogue with stakeholders, it is essential to engage in discussions about the following elements at a minimum.

Issue Definition

Setting the Issue and its Background	What issues are we addressing, and why is it necessary to solve these issues (purpose, materiality)?
Detailed Issue Definition	Specifically, what issues are encompassed, and where do we draw the line in considering them as issues?

Issue Resolution

Overview of the Solution (Impact Path)	What possible solutions are being considered for the identified issues, and what is the overall pathway for addressing them?
Resolution Narrative	Specifically, which pathways or combinations of pathways are expected to bring impact to the resolution?

Evaluation and Reporting of Issue Resolution Status

KPIs with Quantifiable Relationships (Overall KPIs)	Considering the resolution narrative, what is the situation with the overall KPIs that should be monitored for the entire impact (market indicators)?
KPIs with Quantifiable Relationships (Individual Company KPIs)	Among the overall KPIs, to what extent is the company contributing, and what is the basis for this when considering the company’s Action KPIs?
KPIs with Qualitatively Defined Relationships Only	Apart from quantitative targets, what is the situation with impact KPIs (both overall and individual company) that should be monitored?

Utilization Examples of Impact and the Use of impactlake™

Communication methods leveraging impact, such as those mentioned above, are anticipated to be used in various scenarios.

Relevant Scenarios

• Integrated Reporting, Investor Relations, and Engagement
• Disclosures (Sustainability Reports, Impact Reports, etc.)
• Promotion of Products and Services
• Internal Branding and Employee Engagement
• Branding and Attraction in Talent Acquisition

Utilization of impactlake™

impactlake™ enables continuous and practical impact management with a focus on external disclosure and internal dialogue as one of its key functions. The relevant features and their specific utilization scenarios are as follows:

• Build and quantify impact models (logic models) for key initiatives (businesses, funds, etc.) on the tool, and use the organized information to create and disclose external reports (integrated reports, sustainability reports, impact reports, etc.).
• Similarly, use the impact information managed on the tool to create simplified impact accounting and impact assessment reports on the tool, in preparation for concise explanations and reporting.
• Conduct impact assessments for your own initiatives and visualize the attractiveness of your company and the progress of your initiatives in a dashboard for stakeholders, major investors, or employees, making it easy to explain your company’s appeal.
• Use the impact disclosure function (SDK) to visually and dynamically publish your company’s impact-related information, managed and evaluated on the tool, on digital platforms such as your company’s IR page or recruitment page.

Exploring and Utilizing Impact Management

In the practical realm of impact management and impact accounting, publicly available information is still limited. IMPACTLAKE strives to systematically organize methodologies, case studies, and tips, making them as comprehensive as possible. We encourage you to make use of this information. Furthermore, for those considering the establishment of a structure and workflow to maximize the use of these resources and to continue creating value consistently, please don’t hesitate to contact us.

At IMPACTLAKE, we offer not only the provision and support for utilizing the tool but also consulting services related to ‘External Disclosure and Internal Dialogue Utilizing Impact.’ For those who wish to initially drive impact utilization in specific thematic areas toward achieving continuous impact management, we can propose a flexible process and steps to assist you.