ValutECO: ESG Tool for Sustainable Business Valuations

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by KnowESG
KnowESG_ESG tool
Image courtesy of Valutico

Valutico, a pioneer in sustainable finance, has introduced ValutECO, an innovative tool that evaluates the worth of companies by considering their environmental impact.

This revolutionary move by the valuation platform marks a significant milestone in incorporating sustainability considerations into the conventional process of business valuation.

Valutico's recently introduced tool, currently in an alpha testing phase, empowers accountants, M&A consultants, investment managers, private equity professionals, and corporate finance practitioners to evaluate how Environmental, Social, and Governance (ESG) factors can impact a company's value.

By recognising the potential correlations between ESG and financial performance, ValutECO is at the forefront of integrating sustainability into both financial theory and practice.

What is ValutECO?

ValutECO offers financial professionals a streamlined ESG assessment that is tailored for small and medium-sized enterprises (SMEs) and designed to simplify reporting. This innovative tool enables analysts to pinpoint priority areas for improvement, such as greenhouse gas emissions reduction, water usage management, and increasing recycling rates.

Valutico's cutting-edge tool incorporates ESG scores into the 'Cost of Capital' element of a Discounted Cash Flow (DCF) valuation. This groundbreaking feature enables companies with favourable ESG scores to be assigned higher valuations, making them more appealing to potential buyers and investors who prioritise sustainability and long-term growth in their investment decisions.

ValutECO was developed with the support of a grant from Wirtschaftsagentur Wien and builds upon research examining the effects of ESG criteria on business valuations across diverse industries. Furthermore, the condensed ESG assessment used in ValutECO has been validated to align with more comprehensive assessments available in the market.

Impact on Sustainability

The widespread adoption of a tool like ValutECO has the potential to be a transformative force for sustainability across industries globally. By financially incentivising companies to prioritise sustainability and integrate environmental factors into their day-to-day operations, ValutECO could revolutionise how businesses approach their impact on the planet.

This would result in sustainability becoming a critical consideration in buying, selling, and investing decisions, shaping a new paradigm where companies' environmental performance plays a central role in business transactions.

Valutico recognises that the integration of ESG into financial analyses is an evolving field that requires ongoing academic research. However, they are optimistic that ValutECO will contribute to shaping the conversation towards a more sustainable future. By providing a practical solution for incorporating ESG considerations into business valuations, ValutECO aims to drive the dialogue towards greater sustainability awareness and action in the financial industry.

According to Valutico's CEO, Paul Resch:

"Being at the forefront of integrating sustainability into financial practices is a major milestone for Valutico. We acknowledge the significance of ValutECO as an initial step towards realising this goal, and we are grateful for the support from Wirtschaftsagentur Wien that made this achievement possible. We eagerly anticipate feedback from financial professionals on how this innovative tool can facilitate sustainable growth, and we are excited about the future ahead."

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Source: Valutico

To view and compare company ESG Ratings and Sustainability Reports across sectors, follow our Company ESG Profiles page.

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