Underscoring efforts to advance the integration of material ESG issues into financial markets, the UN Global Compact in collaboration with the Principles for Responsible Investment (PRI) and Global Compact LEAD, has released a practical Value Driver Model. The new model helps companies to assess and communicate the financial impact of their sustainable business strategies and operations.

The Value Driver Model utilizes key business metrics to determine the return on investment of corporate sustainability activities in a way that helps investors effectively integrate sustainability data into their existing investment processes. The model assists firms in constructing their own metrics to describe the connection between their top financial objectives (e.g., return on capital or equity) and the following:

  • Revenue growth from sustainability-advantaged products, services and/or strategies
  • Total annual cost savings (and avoidance) from sustainability-driven productivity initiatives
  • Reduced sustainability-related risk exposure that could materially impair a company’s performance  

The model was developed as part of an ongoing project, which included a year-long series of briefing calls organized by the Global Compact and PRI between companies and investors on ESG issues. These ESG Investor Briefings marked a major shift in communications between companies and investors and included global companies such as EnelS.p.A, AkzoNobel, NovoNordisk and Eni. Building on the model of a quarterly financial call, companies are encouraged to hold ongoing ESG Investor Briefings as an opportunity to apply the model and present to an audience of mainstream investors on how their ESG strategies and performance translate into financial value.

Resources available to companies as part of the Value Driver Model include a publication, case examples, presentation slides and recordings of past ESG Investor Briefings hosted by Global Compact participants. Other stakeholders may use these materials to support workshops and trainings.