KPIs for ESG - DVFA

(typically, but not always) higher granularity. We assume that sustainability disclosure will develop in a similar
way.
The KPIs for ESG 3.0 provide a non-costly, non-complex reporting format which reflects the thinking of economic
stakeholders. In the future, additional aspects of good corporate sustainability will enter the stage and, at the
same time, what companies consider demanding or daring today will become standard items within sustainability
disclosure.
6. Process of identification, selection and definition of KPIs
Throughout the last 24 months the DVFA Committee on Non-Financials and its ESG Framework Lab have engaged
with a large variety of potential users form around the globe (i.e. investors, financial analysts, asset owners, credit
desk staff, sustainability experts as well as corporates) to discuss which KPIs should be relevant for inclusion in the
sector supplements. We deployed and iterative process which included bottom-up analysis, surveying and
personal interviews as well as tests, validation rounds and workshops. After all of the sector-supplements were
compiled, we gave the entire set of supplements to a group of some 30 investment professionals for review and
final feedback, which has been included in this Exposure Draft.
7. Use of KPIs for ESG 3.0
KPIs for ESG 3.0 is a publically available, open reporting framework, i.e. application for companies is free-ofcharge.
However, it is required that companies reference the KPIs for ESG 3.0 when disclosing data or using the
framework in their sustainability or CSR reports or other vehicles for corporate disclosure.
Likewise, we encourage investors, financial analysts, credit rating agencies and other vital functions in capital
markets to integrate KPIs for ESG 3.0 into their valuation models and use individual KPIs or ESGs in their dialogue
with companies.
DVFA and EFFAS will periodically review the accuracy of the framework and implement modifications wherever
deemed necessary. In addition, DVFA and EFFAS reserve the right to licence the framework or parts thereof to
data vendors or providers of database solutions. Currently, DVFA/EFFAS have a licence model under preparation
which may include a royalty/fee-scheme. Finally, DVFA, EFFAS and National Member Societies reserve the right to
provide fee-based training courses for companies and/or investment professionals. Any third party training
programme or event aimed at providing instructions or information on KPIs for ESG is subject to prior
authorisation through DVFA and/or EFFAS.
II. ESG Reporting
1. Basic Principles
ESG is a generic term used in capital markets. Often, it is erroneously equated with terms like corporate responsibility
or sustainability. However, when mainstream capital markets look at ESG, two focal points immediately emerge: risks
caused by (bad) ESG performance and business opportunities based on proactive ESG performance. Corporate
responsibility reports from corporates address several stakeholder groups, not just investors and financial analysts.
However, as an association of investment professionals, the authors will focus on the use of ESG in capital markets
and how to assure that any ESG data be delivered in useful formats and with meaningful content to investment
professionals.
In order that environmental, social and governance (ESG) data can be used as a basis for analysis by investment
professionals, there are certain minimum requirements for the ESG management of individual companies and for the
quality of ESG reporting.
We recommend that companies demonstrate satisfaction of these minimum requirements in the context of their ESG
reporting, e.g. in an ESG report, or in online reporting, taking into account the essential elements outlined below.
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