Environmental, Social and Governance Key Performance Indicators From a Capital Market Perspective

Zusammenfassung

---

Environmental, social and governance factors are becoming increasingly significant for comprehensive firm valuation. These factors are, however, of a qualitative nature and therefore difficult to express in numerical figures. Consequently, disclosure and the relevancy thereof to investors are problematic. This article analyzes a breakthrough instrument which facilitates the quantification and representation of such data against the background of international institutional efforts aiming to promote standardized qualitative reporting for extra-financial information.

Siehe den Gesamtinhalt dieses Dokumentes

Auszug

---

Environmental, Social and Governance Key Performance Indicators From a Capital Market Perspective

1. Relevance of extra-financial information

There is more to corporate performance than what traditional financial reporting can illustrate. The increasing breach between financial reporting and firm value results from the declining ability of accounting and financial reporting data to represent and report information that is useful in assessing firm value and management performance (Yen 2004: 1). The shift of western countries to information and service economies has drasticaUy reduced the importance of tangible assets within enterprises. Accordingly, intangibles increasingly account for a significant proportion of the value of a company, especially over the longer term. A recent global survey indicates that these make up to 66% of the market value of globally listed companies (Brand Finance 2007: 5). "The problem with intangible assets [however] is that traditional accounting methods faü to capture their value" (Kossovsky 2007). Indeed, corporate financial statements lack the capacity to inform management and investors about the value of reputation, quaüty, brand equity, safety, workplace culture, strategies, know-how and a host of other assets that are more significant than ever in a knowledge-based global econ...

Siehe den Gesamtinhalt dieses Dokumentes

---