The guide will help companies respond to investor demand for stronger ESG information
Investors want the companies they invest in to be more transparent on ESG factors and a new framework aims to help.
Specifically, The A4S Essential Guide to Valuations and Climate Change helps business valuators price climate change risks and opportunities for organizations, to give clearer indication of value.
It is hoped that the guide will help make the integration of climate change into business valuations accepted practice, benefitting businesses in performance and reputation terms as well as providing investors with better information to aid decision making.
"Factoring climate change into valuations is in its infancy,” said David McGraw, CFO at Ontario Teachers’ Pension Plan. “Through this guide we hope to inform the discussion among the valuation, accounting and regulatory communities to encourage moving this forward into accepted practice. By doing so, we would expect more disclosures on the impact of climate change in corporate reporting and a greater oversight by boards on this topic."
Industry collaboration
The pension plan is one of the collaborators in the framework which was developed as part of The Prince of Wales's Accounting for Sustainability Project (A4S), in partnership with CPA Canada, finance teams from its CFO Leadership Network, global institutional investors and industry experts including New Zealand Superannuation Fund, OMERS, Brookfield Asset Management, Caisse de dépôt et placement du Québec (CDPQ), and Chartered Business Valuators Institute (CBV Institute).
Calculating the value of businesses and assets is one of the most important factors determining where investors put their money,” commented Jessica Fries, Executive Chairman of A4S. “By embedding these considerations into the valuation process – using guidance developed by industry professionals and the valuation community – there is potential to make the integration of climate risk become the norm rapidly. We hope that the launch of this guide will spur action from finance and investment teams globally and help accelerate the transition to a net zero, sustainable economy."
The full guide is available on the CPA Canada website.
