Impact refers to the lasting, meaningful changes that result from an action, focusing on long-term outcomes for people, communities, or the environment—like improved quality of life or environmental sustainability. Inputs, on the other hand, are the initial resources invested in a project, such as money, time, or materials, which lead to activities and immediate outputs, like the number of people served or products made.

Impact captures the broader, lasting effects of inputs and outputs, reflecting the real difference made over time.

Building on the distinction between inputs, outputs, and impact, ESG (Environmental, Social, and Governance) data focuses on identifying and managing risks related to a company’s operations, practices, policies, and value chains, such as environmental damage or social harm.

With an approach that essentially focuses on companies’ inputs and outputs, ESG data prioritizes financial materiality, i.e., it helps identify risks that could be significant to companies’ performance. However, it does not capture the actual long-term outcomes or the true social and environmental impacts (impact materiality) of a company’s actions, leaving a gap in understanding the broader effects they create.

Mitigation and remediation arise from risk assessments related to ESG data management. Mitigation involves efforts to reduce the impact of a threat when it cannot be eliminated, while remediation focuses on completely removing that threat whenever possible. However, neither mitigation nor remediation is classified as impact. Instead, they are responses aimed at addressing existing negative impacts. 

This distinction is crucial for understanding that while corrective actions aim to reduce or manage harm, the harm has already occurred, which means they do not constitute actual impact.