KPIs for ESG - DVFA

5. Consolidation of data
It is not uncommon that the basis of consolidation for financial and ESG data differ both geographically and segmentwise.
There may be several reasons to explain this phenomenon and indeed there may even be good reason for a
corporate to exclude geographic areas or business units, e.g. when data quality for these markets is low or assurance
cannot be obtained.
However, rigorous investment analysis requires that financial performance data relate with ESG data to the end of
peer-group or cross-industry comparison.
Companies should provide a statement as to the basis of consolidation of their ESG data which specifies and names
the markets, geographical areas, products, segments etc. that have been excluded from consolidation. Should bases
for consolidation vary between different ESGs, corporates should provide details in the ESG-specific annotation.
6. Benchmarks
Some of our KPIs specifically depict relational performance, e.g. of a specific indicator related to sales, output or
earnings.
There can be no clear rule as to which benchmark is superior to another. Sales/revenues e.g. is indicative of the size of
a company and, thus, any ESG performance related to revenues helps to provide perspective for comparison of
corporates of different sizes. However, benchmarking against earnings ratios such as EBIT or EBITDA is often used to
neutralize structural differences due to the consolidation of revenues from different markets. Finally, for a few
subsectors, there are commonly reported and used benchmarks such as metric tonne, kWh, available shopping space
in square metres/foot or simply units produced.
A corporate should provide a table of relevant benchmarks that investment professionals can use for comparison and
analysis at their discretion and based on their preferences. As a minimum the table should include 1. revenues, 2.
EBIT, 3. EBITDA, as well as those generally accepted and used non-financial benchmarks common for an industry.
Additionally, because investment analysis requires comparability of data and line items, i.e. users want to a) compare
corporate performance within a reported period to prior periods and b) compare line items of a corporate to an
external benchmark such as a typical industry average:
It is recommended that corporates report both line items and relational benchmarks, which can consist of sectorrelated
averages, data from peers or any other external reference point that serves to put individual corporate
performance into context.
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