Economy as a Code
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·2 min read·Tristan Méneret

The 4 ESG impact indicators explained simply

methodologyindicatorsESGexplainer

Why four indicators?

Measuring a company's impact on a territory cannot be reduced to a single number. A company generating high revenue but few local jobs has a different impact than a smaller company hiring massively on the territory.

Economy as a Code proposes four complementary indicators to capture this complexity.

1. Economic Impact (EI)

The question: how much does the company contribute to territories?

Economic impact measures the financial value generated by the company's activity:

  • Direct EI: total net revenue
  • Indirect EI: supplier expenditure
  • Induced EI: household consumption of direct and indirect employees

Formula: EI_ent = EI_D + EI_I + EI_In

2. Social Impact (SI)

The question: how many jobs does economic activity generate?

Social impact goes beyond headcount. It accounts for:

  • Direct SI: the company's own employees
  • Indirect SI: jobs at suppliers, proportional to expenditure
  • Induced SI: jobs generated by household consumption

Formula: SI_ent = SI_D + SI_I + SI_In

3. Fiscal Impact (FI)

The question: what is the fiscal contribution to territories?

Every job and every euro of revenue generates tax receipts. Fiscal impact measures:

  • Direct FI: taxes and duties paid by the company
  • Indirect FI: taxes generated at suppliers
  • Induced FI: taxes from household consumption

Formula: FI_ent = FI_D + FI_I + FI_In

4. Carbon Impact (CI)

The question: what is the carbon cost of economic activity?

Carbon impact translates each euro of economic impact into CO2 equivalent, using ADEME's GHG emission factors:

  • Direct CI: CO2e from direct activity
  • Indirect CI: CO2e from the supply chain
  • Induced CI: CO2e from household consumption

Formula: CI_ent = CI_D + CI_I + CI_In

The big picture

Total ESG impact combines all four indicators:

IESG_ent = EI_ent + SI_ent + FI_ent + CI_ent

This 4x3 matrix (4 indicators, 3 effect levels) yields 12 metrics that, when geolocalized by territory, provide a complete X-ray of a company's footprint.

Going further

Explore the complete methodology on the GitHub repository or get the book Economy as a Code on Amazon.