ESG Integrated Ratio Guideline

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Dec 15, 2017

On December 15, 2017, the Centre for Environmental, Social and Governance (ESG) Research released the "Integrated Ratio Guideline", which aims to be a practical formula collection for companies, investors and analysts, to help them calculate a number of non-financial and integrated ratios, and notably what investors and analysts can use these ratios for to evaluate companies’ performance and risk profiles.

Today, there are no standardized non-financial ratios – or ESG ratios (Environmental, Social and Governance) as they are called in investor circles – nor any integrated ratios, which is the term for mixing financial and non-financial indicators when calculating ratios. This makes it difficult for users of financial statements, such as investors, banks, assets managers, and insurers, to use the extra information that stems from ESG data directly in their analyses of performance and risk profiles of companies.

In the guideline, a suggestion for new standard ESG and integrated ratios and notes will be defined.

This guideline is not a replacement of existing financial, non-financial, or integrated reporting frameworks, but rather a guideline on how to use the data that has already been published in accordance with these frameworks.

This guideline includes the definitions, ratios, and standard notes that were deemed useful and valuable by the end of 2017 by the Center for ESG Research.

Review the guideline on the ESG Research's website.

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