The financial and market performance of any firm is the product of a complex array of factors. To fully integrate sustainability into financial markets, companies need to incorporate environmental, social and governance (ESG) information into all communication with investors.
The UN Global Compact and Principles for Responsible Investment (PRI) have developed a tool for companies to better assess and communicate the financial impact of their sustainability strategies and help investors integrate sustainability data into their existing investment processes. The Value Driver Model utilizes key business metrics to determine and illustrate how corporate sustainability activities contribute to overall performance.
The model enables firms to construct their own metrics to describe the connection between their top financial objectives (e.g. return on capital or return on equity) and the following:
- Revenue growth from sustainability-advantaged products, services and/or strategies (S/G)
- Total annual cost savings (and cost avoidance) from sustainability-driven productivity initiatives (S/P)
- Reduced sustainability-related risk exposure that could materially impair a company’s performance (S/R)
Next Steps for Your Company
- Adapt and Apply the Value Driver Model
Companies are invited to use the Value Driver Toolkit to apply the Value Driver Model to their strategies, operations, and communications. The toolkit, available in our library, includes the Value Driver Model, case examples and training presentations. Additional support is available to companies wishing to further adapt the Value Driver Model for their business
Help us improve. Share your company’s experience using the Value Driver Model by contacting our team
- Host an ESG Investor Briefing
ESG Investor Briefings allow companies to discuss sustainability information directly with investors. Building on the model of a quarterly financial call, companies are invited to host a call, featuring the CEO or CFO, and present to an audience of mainstream investors how their ESG strategies and performance translate into financial value. Read the briefing document to learn more or contact Danielle Chesebrough (danielle.chesebrough@unpri.org) and Sarah Bostwick (bostwick@unglobalcompact.org).
