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March 3, 2021

A4S launches framework for incorporating climate change into valuations

By Joe Pickard

Accounting for Sustainability (A4S) has launched a new framework which helps business valuators price climate change risks and opportunities for organisations.

A4S Essential guide to Valuations and Climate Change provides a five-step framework that enables investment and valuation communities to apply climate change risks and opportunities consistently to their valuations and decision making. The aim of the guide is for the integration of climate change into valuations to become accepted practice.

The guide was developed as part of A4S, in partnership with CPA Canada, finance teams from its CFO Leadership Network, global institutional investors and industry experts. Contributing members to this guide include Ontario Teachers’ Pension Plan (OTPP), New Zealand Superannuation Fund, OMERS, Brookfield Asset Management, Caisse de dépôt et placement du Québec (CDPQ), Chartered Business Valuators Institute (CBV Institute) and CPA Canada

A4S executive chair Jessica Fries said: “We are delighted to launch the A4S Essential Guide to Valuations and Climate Change today, which presents an exciting step towards the systematic integration of climate change into the heart of business valuations. At A4S, our ultimate goal is to make sustainable business, business as usual. Calculating the value of businesses and assets is one of the most important factors determining where investors put their money. By embedding these considerations into the valuation process – using guidance developed by industry professionals and the valuation community – there is potential to make the integration of climate risk become the norm rapidly. We hope that the launch of this guide will spur action from finance and investment teams globally and help accelerate the transition to a net zero, sustainable economy.”

CPA Canada CEO and president Charles-Antoine St-Jean said: “Until now, the general approach to considering climate change in valuations has been qualitative in nature. The Essential Guide to Valuations and Climate Change, on the other hand, enables valuators to quantify the impact of climate change on business valuations, providing a more robust, accurate and holistic indication of the true impact of climate change risks and opportunities.”

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