This section explains how the GID works using the data elements and philosophies introduced in the sections above:
GID uses the principals of IO analysis with the monetised indicator data to produce estimates of what the impact of economic stimulation is throughout the economy, the concepts behind this approach are further described below.
Raw GID data has the unit impact per euro economic activity in a specific sector. However, if you source from a sector, you do not only stimulate economic activity in the sector where you source from, but also in sectors where that sector in turn sources from, etc. Similarly, if an organisation (e.g., a bank) stimulates economic activity through provision of loans, it does not only activate the economic sector it directly lends to, but also their value chain.
The principle of ‘value chain responsibility’ as laid down in FIS and IAM Core, state that an organisation should take (co-) responsibility of the impacts in their value chain (such as contribution to climate change), GID helps the user to do that. For every euro of sourcing, it traces what other sectors are stimulated, and what is the cumulative effect of all these sectors on the impacts (such as contribution to climate change). Similarly, for every euro of interest income from business lending, it traces how the loan has stimulated economic activity at the direct business client and beyond – and how much impact results from that.
The impact estimates are represented by impact indicators describing the impact of global value chains, see the section below for a list of impacts per capital. These indicators can be used to easily communicate impact using a variety of frameworks, such as:
- International Integrated Reporting Council’s (IIRC) Integrated Reporting (IR) framework capitals – further described below
- United Nation’s Sustainable Development Goals (SDGs)