Environmental, Social, and Governance (ESG) factors have become central tenets in the capital allocation process for both the providers of capital (e.g., investors) and the users of capital (e.g., corporations).
Many institutional investors leverage ESG filters to guide their investment strategies and improve returns.
Additionally, C-Suite management has begun incorporating ESG considerations into their capital budgeting processes to gain a fuller understanding of their ability to drive sustainable financial performance.
The events of 2020 have only acted to accelerate the broader adoption of ESG frameworks.
This Perspectives Paper, along with our recent panel discussion Unlocking the Value of ESG and our recent Agenda Consultation, represent the IVSC’s first steps on the path toward a more systematic approach to the incorporation of ESG into business valuation practice and standards.