Valuing non-financial performance: A European Framework for Company and Investor Dialogue
An opportunity to help shape the quiet revolution
In the current economic situation, demonstrating the relevance of non-financial performance in the dialogue between companies and investors is a more timely challenge than ever, according to a report released by a group of companies led by Lloyds TSB and Telecom Italia together with other business and research partners.
The interim consultation report and associated website (www.investorvalue.org) are part of a project which aims to explore the relationship between companies' financial and non-financial performance and develop a European framework for improved company and investor dialogue. It seeks to demonstrate links between a wide range of environmental, social and governance factors and the financial performance of business through a filter of core non-financial value drivers, such as human capital, innovation and corporate governance. Through a better understanding of the causes of the long-term value of companies, investors can better identify winners and losers based on non-financial performance.
Led by Lloyds TSB and Telecom Italia with participation from other businesses and consultancies, the European Federation of Financial Analysts, the business network CSR Europe and some of Europe's leading business schools under the banner of the European Academy of Business in Society, the project is one of a number of collaborative "laboratories" launched as part of the European Alliance for Corporate Social Responsibility with strong backing from the European Commission.
Günter Verheugen, Vice President of the European Commission, said:
"Allow me to single out one laboratory whose work has particularly caught my attention: the laboratory on the valuation of financial and non-financial performance. I hope that the work of this laboratory can contribute to a quiet revolution in the way that enterprises who wish to can measure and communicate their non-financial performance, allowing investors and other stakeholders to use such information in their decision making processes. There is indeed no other powerful incentive to consider the strategic role of corporate responsibility than an investor able to value the role that it plays for the future prosperity and sustainability of a business."
The laboratory has launched an open consultation to seek feedback on the framework, an emerging set of principles and recommendations for implementation from companies, investors, trade and sectoral bodies, accounting organisations and other key stakeholders. The interim consultation report "Valuing non-financial performance" and feedback form are available online at www.investorvalue.org. The closing date is 28 February 2009.
For further information:
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22 January 2009