David Freiberg: Why Impact Accounting Is the Next Frontier for CFOs

Every publicly traded company in the world reports its financial profit. Almost none of them report the cost of the pollution they produce, the health outcomes they influence, or the economic mobility they create or destroy. Financial statements tell investors how much money a company made. They say nothing about the broader value — or damage — that the company generated in the process.

David Freiberg has spent the better part of a decade building the framework to change that. As a partner at EY leading the firm’s impact measurement and valuation practice, and as the former Harvard Business School faculty member who co-developed the Impact-Weighted Accounts initiative alongside George Serafeim, Freiberg has been at the center of a quiet but consequential effort to make the invisible visible. He will bring that work to the Tech for Impact Summit 2026 in Tokyo on April 26, where the conversation will focus on why impact accounting is not a distant aspiration but an operational reality that CFOs need to understand now.

The Problem with Financial Statements

The idea that financial statements are incomplete is not new. Economists have been writing about externalities since Arthur Pigou formalized the concept in 1920. What is new is the ability to measure and monetize those externalities at scale — and the growing market demand for exactly that information.

Consider a hypothetical: two companies in the same sector report identical revenues and operating margins. By every traditional financial metric, they appear equivalent. But one generates significant carbon emissions and relies on labor practices that suppress wages in its supply chain, while the other has invested heavily in clean energy and pays above-market wages that lift communities out of poverty. Traditional accounting treats these companies as interchangeable. Impact accounting reveals them as fundamentally different businesses with different risk profiles, different long-term trajectories, and different relationships with the societies in which they operate.

This is the gap that Freiberg’s work addresses. The Impact-Weighted Accounts framework, developed at Harvard Business School and now being operationalized through EY’s global practice, assigns monetary values to a company’s environmental and social impacts. The methodology draws on environmental science, epidemiology, labor economics, and financial valuation techniques to translate externalities — carbon emissions, water usage, employment quality, product health effects — into dollar figures that can sit alongside traditional financial metrics.

The result is what Freiberg calls an “impact profit and loss” statement: a view of corporate performance that accounts not just for what the company earns, but for what it costs or contributes to the world in the process.

Why CFOs Cannot Afford to Ignore This

For most of the past two decades, sustainability metrics lived in a separate universe from financial reporting. CSR teams produced glossy reports. Finance teams produced quarterly earnings. The two rarely intersected in any analytically rigorous way. That separation is collapsing.

Three forces are driving the convergence.

Regulatory pressure is accelerating. The European Union’s Corporate Sustainability Reporting Directive requires companies to conduct double materiality assessments — evaluating both how sustainability issues affect the company and how the company affects the world. Japan’s Sustainability Standards Board is developing disclosure requirements aligned with the International Sustainability Standards Board framework. These regulations do not yet require full impact-weighted accounts, but they are moving decisively in that direction. The companies that have already built the internal capability to measure and value their impacts will find compliance straightforward. The companies that have not will face an expensive scramble.

Investors are demanding better data. The growth of ESG-integrated investing has been well documented, but much of the criticism directed at ESG — that ratings are inconsistent, that metrics are not comparable, that the entire framework lacks rigor — stems from the absence of a common unit of measurement. Impact accounting solves this by translating diverse environmental and social outcomes into monetary terms. When a company can say that its employment practices generated $200 million in positive social value while its emissions imposed $80 million in environmental costs, the conversation moves from narrative to analysis. Asset managers, pension funds, and sovereign wealth funds are increasingly signaling that this is the level of precision they expect.

Strategic differentiation depends on it. In a world where capital is abundant and competitive advantages are fleeting, the ability to demonstrate genuine value creation — not just financial returns but broader stakeholder impact — is becoming a source of durable competitive advantage. Companies that can quantify their positive impact attract better talent, negotiate better terms with partners, and build deeper customer loyalty. Companies that cannot are increasingly vulnerable to the accusation that their sustainability commitments are performative.

The Harvard Framework in Practice

The Impact-Weighted Accounts initiative began at Harvard Business School in 2019, when Freiberg and Serafeim set out to answer a deceptively simple question: what would happen if companies accounted for their impacts the way they account for their finances?

The research team developed methodologies across three dimensions. Employment impact measures the value of wages, benefits, training, and career development relative to local labor market conditions. Environmental impact monetizes emissions, water consumption, waste generation, and land use by drawing on established damage-cost estimates and willingness-to-pay studies. Product impact assesses whether a company’s products and services improve or diminish the well-being of their users and the communities they reach.

When applied to real companies, the results are revelatory. The initiative’s published analyses have shown that some of the world’s most profitable companies are net negative when environmental and social costs are included. Others that appear modestly profitable on a financial basis are creating enormous value that their balance sheets never capture. In several sectors, the spread between the best and worst performers on an impact-weighted basis is larger than the spread on a traditional financial basis — meaning that impact accounting reveals more variation in corporate quality than financial accounting alone.

These are not theoretical exercises. EY is now applying these methodologies with clients across sectors, helping companies build the data infrastructure, measurement systems, and reporting capabilities needed to produce impact-weighted accounts. The work is technical, but the implication is strategic: the companies that measure their impacts first will define the standards that everyone else follows.

The Connection to CSRD and Double Materiality

For CFOs operating in or reporting to European markets, the relevance of impact accounting to CSRD compliance is direct. The European Sustainability Reporting Standards require companies to assess their impacts on people and the environment — the “impact materiality” half of the double materiality equation. Most companies are approaching this requirement as a disclosure exercise: identify the topics, describe the policies, report some metrics.

Freiberg’s argument, which he will develop at the Summit, is that this approach misses the opportunity. Impact accounting does not just satisfy a regulatory checkbox. It provides the analytical foundation for strategic decision-making. When a company knows that its supply chain labor practices impose a monetized social cost of a specific magnitude, it can evaluate remediation investments with the same rigor it applies to capital expenditure decisions. When a company knows the monetized environmental benefit of switching to renewable energy, it can make the business case in terms the board already understands.

The companies that treat CSRD as a reporting burden will produce compliance documents. The companies that treat it as an opportunity to build impact measurement capability will produce competitive advantage.

Japan’s Natural Alignment

There is a reason this conversation resonates particularly in Tokyo. Japan’s corporate tradition of stakeholder capitalism — the deep-seated expectation that companies serve employees, communities, and society alongside shareholders — has long been a defining feature of the country’s business culture. What it has lacked, until recently, is a rigorous quantitative framework for measuring that stakeholder value.

Impact accounting provides exactly that framework. For Japanese companies already oriented toward long-term value creation and societal contribution, the ability to measure and report those contributions in monetary terms is not a foreign imposition. It is the analytical language that makes their existing commitments legible to global capital markets.

Japan’s own regulatory trajectory reinforces this alignment. The Sustainability Standards Board of Japan is developing disclosure standards that will eventually require Japanese listed companies to report on their sustainability impacts with increasing precision. The companies that build impact measurement capability now — informed by the methodologies Freiberg and his collaborators have developed — will be positioned to lead rather than follow as those standards take effect.

What He Will Discuss at T4IS 2026

At the Tech for Impact Summit, Freiberg will address the practical mechanics of impact accounting — how it works, what it reveals, and what it demands of the finance function. He will draw on case studies from his work at EY and the research foundation built at Harvard Business School to show how impact-weighted accounts change the way companies understand their own performance, allocate capital, and communicate with stakeholders.

He joins a speaker roster built to examine the intersection of technology, capital, and impact from multiple angles. Former Minister Taro Kono brings the policy architecture of Japan’s digital transformation. Cardano founder Charles Hoskinson offers the decentralized infrastructure perspective. GLOBIS founder Yoshito Hori delivers the keynote on entrepreneurial leadership. Kathy Matsui of MPower Partners speaks to impact-driven venture capital. Ken Shibusawa of Commons Asset Management contributes the multi-generational stewardship lens. Jesper Koll of Monex Group anchors the macroeconomic narrative of Japan’s capital market transformation.

Freiberg’s contribution adds the measurement layer: the tools and frameworks that allow every other conversation at the Summit — about technology, about investment, about policy — to be grounded in quantified impact rather than aspiration alone.

Why Executives Should Be in the Room

The transition from financial accounting to impact accounting will not happen overnight, but it is happening. The regulatory frameworks are in place. The investor demand is clear. The methodologies are mature enough for enterprise deployment. The question for CFOs and C-suite leaders is not whether impact accounting will become standard practice, but whether their organizations will be ready when it does.

Understanding that transition from one of its architects — not from a summary report or a conference recording, but in a room designed for the kind of direct, senior-level exchange that produces real strategic clarity — is an opportunity that does not come around often.

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The Tech for Impact Summit 2026 takes place on April 26 in Tokyo. Seats are limited and allocated by invitation. Request your invitation to join David Freiberg and other global leaders shaping the future of technology, investment, and impact.