Most investors are moving towards a more rigorous ESG assessment in their decisions. Thus, the demand for incorporating these sustainable factors into the valuation framework is gaining unprecedented momentum, and is proving challenging for industry professionals.<\/p>\n\n\n\n
Environmental, social and corporate governance (ESG) factors are increasingly relevant non-financial aspects to be taken into account when assessing a company's performance.<\/p>\n\n\n\n
These analyses within the investment process consider concepts such as climate change mitigation and adaptation, biodiversity preservation, pollution prevention and the circular economy. They also include issues related to the rights, welfare and interests of people and communities, or governance, such as the management and oversight of companies and other investees, among others.<\/p>\n\n\n\n
This trend is expected to be encouraged and driven by legislative changes and increased investor awareness.<\/p>\n\n\n\n
Supported by the United Nations, the Principles for Responsible Investment (PRI) promote the incorporation of ESG issues into the investment practices and policies of companies.<\/p>\n\n\n\n
From a company valuation perspective, traditional approaches lean more towards financial indicators and metrics, neglecting ESG impacts on long-term value creation or impairment.<\/p>\n\n\n\n
Therefore, establishing a systematic approach to integrate ESG factors into the fair value calculation is of utmost importance to optimise the investment strategy.<\/p>\n\n\n\n
Performance.<\/strong> ESG factors represent one of the key components in determining the long-term prospects and financial performance of a company. <\/p>\n\n\n\n Companies with better ESG performance are associated with lower risks and higher returns.<\/p>\n\n\n\n Brand image. <\/strong>Sustainability has a positive impact on attributes such as reputation and brand image, and even sales.<\/p>\n\n\n\n Perspectives.<\/strong> Financing. Poor ESG practices can undermine the value of assets and limit access to funding.<\/p>\n\n\n\n Regulations.<\/strong> Companies with high emissions may suffer higher operating costs in the face of tighter environmental regulations.<\/p>\n\n\n\n For these reasons, ESG factors can be seen as a complementary element for investors because they provide an additional level of risk assessment and mitigation, which can translate into stronger and more sustainable returns over time.<\/p>\n\n\n\n The <\/a>EINF<\/a> is a report that provides information on environmental, labour, personnel and human rights, corruption and bribery, and sustainability issues. Through them, companies communicate how they make their profits and how their activities impact on society and their environment.<\/p>\n\n\n\n Until now, reports of a purely financial nature have carried more weight in the investment decision. But this is changing. To meet investor expectations, companies are beginning to unify financial and non-financial performance in order to provide a holistic view of how they plan to create, measure and communicate value over the long term.<\/p>\n\n\n\n Arguably, to the analysis of the traditional risk-return binomial, we should add a third vertex represented by sustainable impact.<\/p>\n\n\n\n There is a strong investor appetite for a formal framework that allows companies to measure and communicate intangible value, so that they can assess their long-term value creation strategy. EINF reports provide standardised and rigorous non-financial data to support investors' approach to ESG assessment through robust metrics that score and evaluate company activities against environmental, governance and social criteria.<\/p>\n\n\n\n Our experts can help connect financial and ESG information in enhanced corporate reporting.<\/p>\n\n\n\n Gesvalt has a division dedicated to the sustainable area, with services linked to green financing or certifications, sale of real estate company assets, environmental studies or new regulatory requirements, and is oriented to cover the needs of companies and administrations, which need to accredit their activity as sustainable.<\/p>\n\n\n\n<\/a>NFS (non-financial information statements): which are analysed by investors.<\/h2>\n\n\n\n
<\/a>How Gesvalt can assist<\/h2>\n\n\n\n