ESG Integration in Valuation

ESG Integration in Valuation

In recent years, corporates and private companies have been widely impacted by environmental, social and governance (“ESG”) factors operationally and financially. The HKEX, among other exchanges and regulators across the globe, has set out ESG-related disclosure standards for corporates based on the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), a global leader in developing consistent climate-related financial risk disclosures.
 
The International Financial Reporting Standards (IFRS) sustainability disclosure standards were recently published for public consultation, and further integration of ESG disclosures in financial reporting is expected very soon. By then, shareholders and potential investors would be able to make their investment decisions based on the widely-available ESG disclosures.
 
This article explores how the valuation of public and private companies may be impacted by the evolution of ESG considerations.

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