The focus from many quarters on “Environmental, Social, & Governance” is intensifying. If you attended TIPRO’s annual summer conference week before last you heard Rep. Kenny Marchant confirm his belief that ESG considerations are not going away. Your energy business will be more competitive if you understand ESG and embrace it.

TOM MCNULTY, Principal and Managing Director at Valuescope, Inc., and JACK BELCHER AND PAUL LOONEY of Cornerstone Govrnment Affairs discuss ESG in “ESG A Valuation Framework”.

Tom’s takeaways:

• ESG’s biggest impact falls on energy companies.
• Rather than resist, it is best to engage.
• Using Valuescope’s DEFINE-MEASURE-VALUE model, energy companies can demonstrate positive valuation impact from developing and implementing an ESG program.
• DEFINE
  • ESG metrics can be defined using one of several global standards, such as SASB.
• MEASURE
  • Measurement is possible now for more and more corporate metrics due to digitization, “Big Data,” and analytics.
• VALUE
  • Comparative valuation techniques across portfolios and peer groups, along with specific valuation models for intangible assets, have been around for decades.
• REASONS TO ENGAGE NOW RATHER THAN LATER:
• ESG can unlock hidden value.
• If you don’t do it on your own you might be forced to do it by shareholders and regulators.
• You can gain a competitive advantage over your peer group by being a first mover.
• You can drive the narrative actively, rather than passively.
• You can mitigate the risks that poor ESG performance can have on your business.
• You will have access to capital that will engage only if your ESG program and assets are defined, measured, and valued.

And a musical interlude