If investors are most concerned with financial performance and non-financial performance that determine future financial performance, then it follows that this has to be the starting point for effective communication between companies and investors. The laboratory has taken the view that non-financial performance has to be mapped against widely accepted key financial drivers. We have adopted those based on Rappaport’s model (A. Rappaport: Creating shareholder value (1998)).

There is a fundamental limitation in seeking to apply CSR, sustainability or ESG factors directly into financial terms. The materiality of specific factors will differ from business to business, sector to sector, market to market and from time period to time period. More pointedly, many of these factors, by their nature, defy measurement in conventional financial terms or even under the myriad approaches companies adopt to measure non-financial inputs and outputs of internal investment decisions. This lack of universality and inability to gain consensus on common metrics for a wide range of ESG factors is a problem the laboratory has side-stepped. Our focus has been on identifying a small number of key non-financial performance factors that most directly and demonstrably link to financial performance across sectors and markets and then explore how ESG factors relate to these.