Market Valuation of Non-Financial Performance

Did you know?

• Capital markets are only as efficient as the information available to the market players
• Between 2002 and 2007 companies consistently participating in the BITC's CR Index outperformed, in terms of total shareholder returns, the FTSE 350 by 3.3% to 7.7% each year
• Only 19% of investors and 27% of analysts found financial reports very useful in communicating the true value of companies 

Corporate Responsibility and Market Valuation of Financial and Non-Financial Performance

Financial performance indicators have traditionally marked whether or not to invest in a firm. Non-financial indicators, however, are also indicative of the future performance of companies.

While it is broadly accepted that environmental, social and governance (ESG) issues impact a company's financial performance and share price, making this causal link in a manner useful for investors remains elusive - and urgent.

The work led by Lloyds TSB and Telecom Italia - in conjunction with CSR Europe, the European Academy for Business in Society (EABIS, through the sponsorship of Microsoft, Unilever, IBM, Shell, Johnson & Johnson), Cranfield School of Management, European Federation of Financial Analysts (EFFAS), Eurosif and Sodalitas makes the case that better mutual understanding between companies and investors around the sources of non-financial performance is a key driver for more accurate analysis of long-term business value.

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Valuing Non-Financial Performance: A European Framework for Company-Investor Dialogue (May 2010)

This report, based on the work of the Laboratory since 2007, discusses the links between financial and non-financial performance and outlines a European Framework for company-investor dialogue.

Sustainable Value - EABIS Research Project (September 2009)

This the final report from a two-year EABIS funded research project to explore how the environmental, social and governance performance of companies might impact on the drivers of business success; how companies explain these linkages to investors, and how the investment community treats these data. The research project was run in close contact with th Laboratory.

Consultation Report: Valuing Non-Financial Performance (December 2008)

Read more at www.investorvalue.org

See Also . . .

• Over 150 company solutions on Stakeholder Engagment in our CSR solutions database
• Over 50 company solutions on Communication and Reporting in our CSR solutions database
• More information about the CSR Laboratory on Corporate Responsibility and Market Valuation of Financial and Non-Financial Performance

Laboratory Leaders and Facilitators

EABIS Sponsors