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Our Impact Measurement in Detail
Learn how we assess the sustainability of companies in the areas of Climate, Society & Gender.
A new economic model is needed
Investing and Doughnuts?
Not more crises
Increasing inequalities and the threat to our planet from climate change have prompted many researchers and activists to question current economic models.
Growth is not everything
British economist Kate Raworth is one of them. She questions the pursuit of ever-more growth in our global economy and proposes a new model: "Doughnut Economics" (Raworth 2017).
Doughnut Economics explained
An economy for people & the planet!
A doughnut as a compass
“Doughnut Economics” derives from the two rings that form the core of the model and are shaped like a doughnut. Within one ring is the social foundation, and around it is another ring, symbolizing planetary boundaries.
An economy that doesn’t break everything
The area between the two rings - within the doughnut - represents what Kate Raworth calls a safe and just space for humanity (Raworth 2017: 218). It's an economy where fundamental social needs aren’t neglected and the environment isn’t harmed.
More context instead of random numbers
Where are the limits of the economy?
Indicators for sustainable development
The United Nations Research Institute for Social Development (UNRISD) has released a series of indicators for sustainable development. They help us measure whether companies operate within these boundaries.
The special feature is in the context
The uniqueness of these standards lies in the limits. For example, it is not enough for a company to declare that it is reducing CO2 emissions. It is only sustainable if the share of the global CO2 budget is not exceeded in order to achieve the 1.5°C target.
Invest in the good ones
We use the indicators to assess whether companies align with the vision of the 2030 Agenda for Sustainable Development. We give changemakers like you the opportunity to make sustainable investment decisions.
Our Principles in Impact Measurement
1 Transparency
We know how little traceable so-called “sustainable” financial products are. Greenwashing is a huge problem. That's why we rely on complete transparency of impact data.
2 Impact
ESG represents risks to the company, not to the environment or people. For us, Impact means assessing the effects emanating from a company.
3 Holistic Approach
Sustainability is more than just the ecological aspect. We equally focus on climate, societal issues, and gender equality.
Our Impact Criteria
Climate
Renewable Energy
For a sustainable energy supply, a company's total energy consumption should be fully covered by renewable energies such as solar or hydropower. We therefore check the ratio of a company’s renewable energy consumption to its total energy consumption. To be classified as sustainable, 100 percent of the electricity needs must be covered by renewable energies.
Water Recycling and Reuse
Water scarcity threatens the health and well-being of more and more people around the globe. Therefore, it is essential that companies recycle and reuse the majority of their water consumption. To be classified as sustainable, at least 75 percent of the water used must be treated for reuse.
Recycling and Recovery of Waste
Natural resources are limited, so companies should minimize waste and instead recycle and reuse it whenever possible. We therefore look at the ratio of a company's recycled waste to its produced waste. To be classified as sustainable, at least 75 percent of the produced waste must be reused.
Greenhouse Gas Emissions
The emission of greenhouse gases significantly contributes to climate change. Following the SDPI Convention of UNRISD, we measure the amount of a company’s greenhouse gas emissions, divided by its budget for allowable greenhouse gas emissions, to globally achieve the 1.5-degree target of the Paris Agreement. To be classified as sustainable, CO2 limits must not be exceeded.
Society
Union Formation and Collective Bargaining Power
Solid collective bargaining practices allow equality in negotiations for a fair employment relationship, ensuring a fair and just outcome. We therefore look at how many employees of a company are covered by collective agreements. For sustainable collective bargaining practices, this should apply to the majority of contracts. To be classified as sustainable, at least 80 percent of employees must be covered by collective agreements.
CEO-to-Employee Pay Ratio
Income inequality is one of the major problems of our time. A key indicator of this inequality is the pay ratio. The ratio of CEO compensation to the average compensation of the rest of the employees in a company should not be more than 20:1. To be classified as sustainable, the CEO should therefore not earn more than 20 times the average salary of the employees.
Tax Gap
Taxes are a vital source of funding for capable states. A tax gap arises when a company's statutory tax rate differs from the estimated effective tax rate. In line with the SDPI Convention of UNRISD, this tax gap must not exceed 5 percent. To be classified as sustainable, the difference between the statutory tax rate and the effective income tax rate must not exceed 5 percent.
Harassment and Discrimination at the Workplace
People experience discrimination at the workplace not only because of their gender, age, race, or sexual orientation. Based on the SDPI Convention of UNRISD, companies should identify and disclose whether they have a policy and mechanisms to combat harassment and discrimination at the workplace, and whether there are designated positions and safeguards to prevent retaliation and protect the confidentiality of complainants. To be classified as sustainable, all four criteria must be met.
Gender
Women on the Board
For sustainable economics, the glass ceiling in companies must be broken. The percentage of female board members says a lot about gender justice in a company. In accordance with the SDPI Convention of UNRISD, we measure whether at least 40 percent of all board positions are occupied by women. To be classified as sustainable, at least 40 percent of the company's board members must be women.
Gender Pay Gap
The wage gap between men and women persists in all countries and in all sectors. However, the difference between the average compensation of men and women in a company should not be more than 3 percent in accordance with the SDPI Convention. To be classified as sustainable, the average salaries of men and women should not differ by more than 3%.
Women in Management
Women are still significantly underrepresented in management positions. Although women bring no fewer qualifications for these positions, the odds for women are significantly worse. Therefore, we check, in accordance with the SDPI Convention of UNRISD, whether at least 40 percent of all management positions are occupied by women. To be classified as sustainable, at least 40 percent of the company's management must be women.
Support in Care Work
Care work represents an additional burden for many people in everyday life, especially for women. Companies can support here by offering, for example, paid parental leave beyond the legal minimum, flexible working hours, and home office options. We check how many of a total of 8 support measures defined by UNRISD are available in the company. To be classified as sustainable, these 8 support programs for care measures must be provided by the company.
Did you know?
The money:care method is based on transparency, and we therefore only use data that is made publicly available by companies. We analyze the sustainability and annual reports of listed companies using artificial intelligence and search for valuable information that allows you to make sustainable investment decisions.
It's not so easy to measure impact...
We can only measure what companies publish
We primarily collect our data from sustainability reports published by the companies. These are published annually, so short-term scandals are not reflected. Also, data on some indicators we would like to measure is not published. An example is information on employee compensation.
Facts instead of promises
We do not look at target settings, but at a snapshot of the company at the time of each sustainability report. What we cannot adequately depict are transformation processes taking place within a company.
Measurement is only as good as the underlying evaluation criteria
There is no uniform definition of sustainability. With the UNRISD Sustainable Development Performance Indicators (SDPI), we use indicators that are more inclusive and context-specific than all other standards out there. However, these indicators are still evolving and can always get better.
The journey doesn't end here
In the future, we aim to dig deeper into topics such as circular economy, human rights in supply chains, policy engagement, impact of products & business models, as well as expanding on the SDPIs. We are committed to continually improving and adapting our approach.
In case of an error, we ask companies to send current information and evidence by email to office@moneycare.at.