Sponsors are using EPS and ESG metrics to gauge company success. They used environmental, social, and governance (ESG) metrics mainly for non-profit organizations. Nowadays, investors are broadening the parameter’s scope by using them on all companies. In this article at Forbes, Suzy Taherian shares how EPS and ESG measure CFO and company success.
Using ESG to Measure Success Stories
According to a 2020 NASDAQ article, nearly 70 percent of the S&P proxy letters had earnings per share (EPS) growth numbers. Usage of dividend yield and return on capital employed (ROCE) are prevalent as well. Let’s find out the ‘what’ and ‘how’ behind the environmental, social, and governance metrics popularity:
Preference of Influential Investors Like BlackRock
BlackRock manages $6 trillion worth of assets. It is given that they decide which parameters the rest of the market would use to calculate your company performance. Their website already states their preference for environmental, social, and governance metrics.
Businesses Financial Reports
The majority of the enterprises have included the results of their environmental, social, and governance metrics in their financial statements. Xpansiv CBL Holding Group (XCHG) is why companies introduce goals like net-zero emission in their reports. The platform lists goods with such details as ‘Digital Feedstock’. According to XCHG CEO Joe Madden, “XCHG is the digital nexus where ESG goals and price signals merge.”
Favorites Among Non-profits Too
Driven organizations want conventional finance KPIs along with the ESG metrics. Astia is a non-profit investor that grants money to startups run by women CEOs. It uses venture capital (VC) of internal rate of return (IRR) to calculate company success. Big Path Capital co-founder and managing partner Michael Whelchel explains that ESG measures how well you are in business management. “If they’re good on ESG, they’re more than likely doing well on other business issues.”
The Essential Claims
Investors are looking for good results in areas like climate impact, education and technology, food and beverages, gender equality, and new market demands. You must have good numbers in both environmental, social, and governance metrics as well as finance parameters.
To view the original article in full, click on the following link: https://www.forbes.com/sites/suzytaherian/2020/05/22/cfos-are-measured-on-2-metrics-eps-and-esg/#1ceb274b3ede