Integrating ESG into Valuation Models and Investment Decisions: The Value Driver Adjustment Approach

True ESG integration involves systematically integrating ESG factors into analysts’ and portfolio managers’ valuation models and decisions.

However, most ESG approaches fall short, making sustainable investing more of a marketing success than an operational one. Our Value Driver Adjustment (VDA) approach links ESG issues to value drivers in traditional valuation methods, showing initial findings of ESG factors impacting average equity target prices by 5% overall and 10% with adjustments; results vary widely, from -23% to 71%. This approach enhances our team’s analysis depth, risk assessment, and decision-making clarity.

For more details, please read Integrating ESG into Valuation Models and Investment Decisions: The Value Driver Adjustment Approach . And please read pages 3 to 6 to understand the steps of the value-driven adjustment method.