Disclosure of Long-Term Business Value: What matters?
Sustained and superior performance depends, in part, on effective measurement, management and disclosure of traditional financial metrics. There are many other metrics such as those used to evaluate environmental, social and governance (ESG) performance; resource efficiency; business model resilience; innovative capacity; brand strength and corporate culture can be just as informative on how a business is creating value.
Today, most companies who measure these nontraditional metrics disclose most of the information in a separate sustainability report — yet this is likely to change. The challenge faced by all public companies is how to determine what information ought to be disclosed.
This research takes an in-depth look at how companies determine materiality in the ESG context, and discusses the challenges managers face and how these impact what type of data is disclosed. Decision science methods, when applied to materiality determination, can put corporate leaders and CFOs in a stronger position by using a more structured approach to stakeholder engagement and thereby enable strategic choices, including capital budgeting decisions.
To read more, download the report and debate below.