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Gaia Metrics Methodology
Gaia Metrics methodology is based on decades of research into novel asset-based methods and information technologies for mapping environmental, social and economic data into a common, multi-level, objectively comparable and dynamic framework of relative valuation. It combines this methodology with powerful semantic search and processing technologies to deliver extraordinary insight into the financial risks associated with environmental and social issues.
A methodology developed at the World Bank and adopted by advanced (OECD) countries
Gaia Metrics techniques for converting measures of environmental and social performance into forward looking quantitative assessments of financial risk are based on decades of pioneering R&D into:
Numerical methods for integrating environmental, social and economic metrics, and Multi-dimensional information systems.
Much of the economic sustainability R&D was performed or supported by John O'Connor, our Vice President of Sustainability Research, during the years when he was chief of the World Bank's Socio-Economic Data division and then when he became a senior advisor to the World Bank's Environment department. His unit was the incubator for many of the world's current sustainability indicator frameworks and approaches ('Millenium Development Goals, Ecological footprint, Human Development Index,etc.)
John's methods, which apply equally well to corporations as to governments, received world-wide attention when first published1 and, in addition to being used by the World Bank were recently adopted by advanced (OECD) countries as the way they will monitor sustainability in the future.
Much of the information systems R&D was performed by Erik Thomsen, our CEO, a recognized world authority on multidimensional information systems. This includes dealing with irregular data coverage across many levels of granularity with differing amounts of precision and many different kinds of dimensions.
Toward a single bottom line
The terms 'triple bottom line' (TBL) and 'people, planet, profits' were coined in the 1980s to underscore the need for profit-seeking corporations to take environmental and social factors into consideration when making resource allocation decisions.
Though it sounds like a good idea, the problem with TBL-like approaches is that they reinforce the disconnect between legitimate environmental, social and financial objectives. Rather what is needed (and is now being recognized as needed) is a single bottom line whereby environmental and social factors are integrated with financial ones.
A balanced approach to stocks and flows
As important as it is to recognize the need for an integrated approach to valuations, it is equally important to recognize that bottom lines as in income - or flow-like residuals are only a part of the financial and sustainability picture. Assets are the other side of the valuation coin and are at least as important as flows for determining the financial health and sustainability of an organization.
Gaia Metrics builds a picture of the corporation in terms of both stocks and flows
For both stocks and flows gaia Metrics separates issues of:
Physical quantity Relative price and Financial values
For flows, Gaia Metrics:
Uses an economic value flow approach that looks at the physical and financial quantities or resources consumed by all major factors of production (i.e., capital, labor, energy, material and services or KLEMS)
For stocks, Gaia Metrics:
Takes a capital services approach to building asset valuations from estimates of discounted future streams of financially valued services accruing to the asset Applies the capital services approach to new business intangibles such as human capital and brand equity
Risk assessment
Relative prices can change significantly in both time and space. Gaia Metrics analyses and projects environmental and social metrics in physical terms and relative prices separately.
Where relative prices for environmental or social factors change significantly, constant physical quantities of resources used will carry higher and possibly very material financial values.
Financial values can impact operating expenditures and asset valuations both traditional GAAP-like assets, such as machines and equipment and also non-traditional non-GAAP-like assets such as human capital.
Asset valuations can change both due to transactions, such as quantities bought or sold of an asset. They can also change revelations, such as product inventories that must be written down due to embeddd toxics, no longer allowed to be sold, or for which demand has evaporated due to new regulations.
Valuation techniques
Gaia Metrics extends what are recognized as assets in typical corporate accounting structures:
Identifying which traditionally off-balance sheet items are most valuable and worth quantifying Valuing 'new business intangibles such as human capital Calculating the financial value of depletions and impairments of non-financially valued assets such as public domain natural capital, human capital and social infrastructure Incorporating spatial information as an element of value Calculating and incorporating multi-factor productivity as another element of value Calculating the financial value of information-in-use and compairing it with the cost of collecting, managing and analyzing it in order to ensure a high ROI for all engagements Synthesizing and aggregating relative valuations for non-financial asset transactions such as consumption of drinking water
Semantic processing
Gaia Metrics proprietary software extracts social, environmental and financial information from naturally occurring text as found in either Word-like or HTML formats, and maps the extracted text onto any of the internationally recognized reporting standards for sustainable indicators such as GRI and ISO 14000.
Gaia Metrics groundbreaking domain-enriched sentence-level information extraction technology makes it possible to automatically figure out what kinds of information an entity does or does not publish about itself, and for each kind of information published, just how detailed that information is. Finally, the software can automatically create and enable users to view a first draft sustainability report.
Company Overview
http://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=108102038
Gaia Metrics, Inc. provides a suite of SaaS software and data services to help companies and investors to discover and qualify the financial risk attached to environmental and social issues. Its products include Gaia Metrics Financial Risk Assessment, which provides a picture of the links between social and environment factors, and financial risk by reaching deep into company's operations; Gaia Metrics SDR Data Prep, which searches across company sources to extract the key words and numbers used to populate a SDR; and Gaia Metrics Benchmarking, which helps companies to compare their sustainability indicators against industry norms. The company serves financial executives, sustainability managers, supply chain executives, and ratings services sectors. Gaia Metrics, Inc. was incorporated in 2010 and is based in Somerville, Massachusetts.
48 Grove Street
Somerville, MA 02144
United States
Founded in 2010
Key Executives For Gaia Metrics, Inc.
Mr. Erik Thomsen
Chief Executive Officer
Mr. Robert Schettino
Vice President of Marketing & Communications
Mr. George Spofford
Vice President of Engineering
Mr. John O'Connor
Vice President of Sustainability Research
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