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

Every listed company reports its financial profit. Almost none report the cost of the pollution they produce, the health outcomes they influence, or the wages they pay relative to the local market. Financial statements say how much money a company made. They do not say what it cost anyone else.

David Freiberg has spent most of a decade on that gap. He is a partner at EY, where he leads the firm’s impact measurement and valuation practice. Before that he was on the faculty of Harvard Business School, where he co-developed the Impact-Weighted Accounts initiative with George Serafeim. He speaks at the Tech for Impact Summit 2026 in Tokyo on April 26 on why impact accounting is already something CFOs need to know how to do.

The Problem with Financial Statements

The complaint that financial statements are incomplete is old. Arthur Pigou formalized the idea of externalities in 1920. What has changed is the ability to measure and put a price on them at scale, and the number of investors asking for the result.

Take two companies in the same sector with identical revenues and operating margins. On every traditional metric they look the same. One emits heavily and depends on supply-chain labor paid below the going rate. The other runs on clean energy and pays above-market wages. Standard accounting cannot tell them apart. Impact accounting shows two different businesses with different risk profiles.

The Impact-Weighted Accounts framework, developed at Harvard Business School and now run through EY’s global practice, assigns monetary values to a company’s environmental and social effects. The methodology borrows from environmental science, epidemiology, labor economics and financial valuation to convert carbon emissions, water use, employment quality and product health effects into dollar figures that can sit next to the financial ones.

Freiberg calls the output an “impact profit and loss” statement.

Why CFOs Are Paying Attention

For about twenty years sustainability metrics and financial reporting lived apart. CSR teams produced glossy reports. Finance produced quarterly earnings. The two rarely met in any analytical way.

Regulation is pulling them together. The European Union’s Corporate Sustainability Reporting Directive requires double materiality assessments: how sustainability issues affect the company, and how the company affects the world. Japan’s Sustainability Standards Board is drafting disclosure requirements aligned with the International Sustainability Standards Board. Neither yet requires full impact-weighted accounts. Both are heading that way, and a company that already measures its impacts will find compliance cheaper than one starting from zero.

Investors want a common unit. Much of the criticism of ESG ratings, that they are inconsistent and not comparable, comes down to the lack of one. Impact accounting supplies it by putting outcomes in money. When a company can say its employment practices generated $200 million in positive social value while its emissions imposed $80 million in environmental costs, the discussion moves from narrative to numbers. Asset managers, pension funds and sovereign wealth funds have been signaling that this is the level of detail they expect.

There is also the plainer commercial point. Companies that can quantify their positive impact have an easier time recruiting, negotiating with partners and answering the charge that their sustainability commitments are for show.

The Harvard Framework in Practice

The Impact-Weighted Accounts initiative started at Harvard Business School in 2019. Freiberg and Serafeim asked what would happen if companies accounted for their impacts the way they account for their finances.

The team built methodologies across three areas. Employment impact values wages, benefits, training and career development against local labor-market conditions. Environmental impact prices emissions, water consumption, waste and land use using established damage-cost estimates and willingness-to-pay studies. Product impact asks whether a company’s products and services leave users and communities better or worse off.

Applied to real companies, the published analyses found that some of the most profitable companies in the world are net negative once environmental and social costs are counted. Others that look modestly profitable are creating value their balance sheets never record. In several sectors the spread between best and worst performers on an impact-weighted basis is wider than the spread on a financial basis.

EY now applies these methods with clients across sectors: building the data infrastructure, measurement systems and reporting to produce impact-weighted accounts. The companies that measure first will also have a say in what the standard looks like.

CSRD and Double Materiality

For CFOs reporting into European markets, the link to CSRD is direct. The European Sustainability Reporting Standards require companies to assess their impacts on people and the environment, the “impact materiality” half of double materiality. Most companies treat this as a disclosure exercise: list the topics, describe the policies, report some metrics.

Freiberg’s argument, which he will develop at the Summit, is that this wastes the work. Once a company has a monetized figure for the social cost of its supply-chain labor practices, it can evaluate remediation spending with the same discipline it applies to capital expenditure. Once it knows the monetized environmental benefit of switching to renewables, it can make the case in the terms the board already uses for everything else.

Japan

Japanese corporate culture has long expected companies to serve employees, communities and society alongside shareholders. What it has lacked is a quantitative way to measure that stakeholder value. Impact accounting offers one, and for companies already oriented toward long-term contribution it reads less as an outside imposition than as a translation of commitments they have already made into language global capital markets can read.

The Sustainability Standards Board of Japan is developing disclosure standards that will require listed companies to report on sustainability impacts with growing precision. Companies that build measurement capability now will be ahead of the standards when they land.

What He Will Discuss at T4IS 2026

Freiberg will walk through how impact accounting works, what it reveals and what it asks of the finance function, using case studies from EY and the research base at Harvard Business School. The focus is how impact-weighted accounts change the way companies read their own performance, allocate capital and talk to stakeholders.

The rest of the roster: former Minister Taro Kono on Japan’s digital transformation policy; Cardano founder Charles Hoskinson on decentralized infrastructure; GLOBIS founder Yoshito Hori with the keynote on entrepreneurial leadership; Kathy Matsui of MPower Partners on impact-driven venture capital; Ken Shibusawa of Commons Asset Management on multi-generational stewardship; Jesper Koll of Monex Group on Japan’s capital-market shift. Freiberg covers the measurement side.

Why Executives Should Be in the Room

The regulatory frameworks exist. Investor demand is documented. The methodologies are mature enough for enterprise use. The open question for CFOs is whether their own organizations will be ready when impact accounting becomes standard practice. Freiberg built the method; the Summit is a chance to ask him directly.

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 in technology, investment, and impact.