A guideline for the integration of ESG into financial analysis and corporate valuation

DVFA Committee on Non-Financials has defined topical areas for the reporting of ESG issues, as well as Key Performance Indicators (KPIs) for use in financial analysis of corporate performance. After endorsement of the work by EFFAS “KPIs for ESG” is also available as an EFFAS standard in identical format. Topical areas throughout this document are referred to as ESGs; ESGs are numbered so that corporates and investment professionals can easily cross-reference the reported aspect as they can today with IFRS (IAS 1, IAS 7, IAS 19 etc.).

Measurable items are referred to as KPIs; typically for each ESG, i.e. in one topical area two KPIs were defined. 9 topical areas have been defined, which apply to all sectors and industries. This part of the work is considered a standardized and comprehensive framework. For 5 sectors, comprehensive lists of sector-specific ESGs and KPIs have been defined, sets of ESGs and KPIs for additional sectors are currently in the process of development.

A non-exhaustive list of additional sector-specific topical areas has also been defined as a starting point for specific sectors. This part is an open framework to be finalized for additional sectors in the coming months. Hence, additional topical areas may be added to the list of sector-specific topical areas. The work at hand includes the following items:

• Basic principles for ESG reporting
• Basic principles for reporting of quantified performance data with a specific focus
• On comparability and benchmarkability
• Details from the survey of the KPIs from international investment professionalsDescription, ratios, and detailed taxonomies for each individual KPI;

The framework is designed as a recommendation for corporates and investment professionals. The purpose is not to present an additional reporting framework. Rather, recommendations are provided to the corporates on the use of the KPIs within the framework of existing performance communication, e.g. financial reporting, MD&A, CSR reports, GRI/G3 etc.

source:

https://www.linkedin.com/posts/rajashazrinshah_kpis-for-esg-ugcPost-7416040729354993664-G_tM?utm_source=share&utm_medium=member_desktop&rcm=ACoAAAtGGkQBsxwMBmX3lEJO8btihnfBCaHqTz4