The Kroll Created Value Attribution Whitepaper Series: Quantifying Value Created From Private Equity ESG Initiatives

Environmental, social and governance (ESG) factors have become a significant and continued focus for investors. The focus on ESG may or may not correlate with value for investors, however.

Nevertheless, value creation from ESG initiatives can be measured, and we suggest a more comprehensive framework for measuring ESG value creation that builds on the Kroll Created Value Attribution (CVA) Framework (Kroll CVA Framework).

In our Kroll CVA whitepaper, we provide insight on how to measure the value creation impacts from specific ESG activities at the individual company level. First, we begin with an overview of widely utilized financial metrics and the challenges they pose to investors. We then explore efforts to identify ESG-driven value creation more directly, and the limitations that we observe.  Lastly, we show how value creation attributable to ESG initiatives can be measured through the Kroll CVA Framework.