ESG and Real Asset Valuation
The IVSC publishes Perspectives Papers to explore critical topics and emerging trends in valuation. These papers aim to engage the global valuation community, offering insights and fostering discussions on how the International Valuation Standards (IVS) can be applied in various contexts. While these papers provide valuable guidance, they do not replace the IVS, which remains the definitive framework for valuation professionals.
Our latest Perspectives Paper, ESG and Real Asset Valuation: Sharpening the Focus, Not Reinventing the Wheel, explores the evolving significance of Environmental, Social, and Governance (ESG) factors in the valuation of tangible assets. This paper responds to recent changes in the IVS, including the introduction of an ESG Appendix in IVS 104, and reflects the increasing attention ESG considerations are receiving from market participants and regulators.
Key Themes Explored in the Paper:
- Incorporating ESG in Valuation Practice: The paper discusses how ESG criteria can influence the valuation of a wide range of tangible assets, including real estate, infrastructure, and commodities. It provides practical guidance on identifying and measuring relevant ESG factors and their potential impact on asset value.
- Regulatory Landscape: With heightened global regulation—such as the EU Taxonomy and the IFRS Sustainability Disclosure Standards—the paper highlights the need for valuers to stay informed about the regulatory environment and integrate these considerations into their valuation analyses.
- Valuation Methodologies: The paper addresses common concerns about existing valuation methodologies and provides clarity on how traditional approaches, such as the market, income, and cost approaches, can be adapted to incorporate ESG factors effectively.
- Challenges and Opportunities: Recognising the challenges faced by valuers in quantifying ESG impacts, the paper encourages a pragmatic approach, leveraging existing standards and professional judgement to navigate this evolving landscape.
This Perspectives Paper is intended to provide reassurance and encourage confidence in incorporating robust ESG concepts into everyday valuation practices. We invite you to read the full paper and share your feedback with the IVSC.
Click the link below to download and read the full Perspectives Paper: