When one thinks of environmental, social and governance (ESG) investing, one should think of transparency. In other words, they should think of additional sources of information that help identify unseen risks and justify shareholder value. This investing style is known as ESG integration.
Private equity investors use ESG integration as a value-creation tool by analyzing material and non-financial factors during due diligence and ongoing monitoring. These material factors are centered around the SASB materiality map, which identifies material ESG information using more than 1,000 qualitative and quantitative factors across 77 industries. To understand how this value creation works, let’s take a look at energy management and worker injury rates.
For Joe Holman’s complete article on ESG’s impact on valuations and the benefits of ESG-mandated reporting, please visit the New Jersey Society of Certified Public Accountants website.
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For more information on this topic, please contact a member of Withum’s Sustainability and ESG Services Team.
