We have identified a number of principles which we believe will support and guide practical implementation of the framework. We welcome feedback on these draft principles as part of our consultation process.

  1. The effective communication of non-financial performance is a prerequisite for enhanced long-term value creation.
  2. A critical mass of companies articulating the importance and demonstrating the materiality of nonfinancial performance will be a major catalyst for increased investor saliency.
  3. Identification of the core drivers of non-financial performance and associated key metrics will facilitate more effective communication and investor saliency.
  4. Key metrics based on widely established and robust business data collection processes across markets and sectors will enable effective company and investor dialogue.
  5. Establishing a relationship between the key metrics and a wider range of ESG factors will enrich companies’ strategic commentary on non-financial performance and the materiality of ESG factors for investors.
  6. Where core non-financial drivers and key metrics have a direct impact on financial performance, then the ESG factors contributing to those core non-financial drivers also impact on financial performance.
  7. Core non-financial drivers and key metrics need to be directly linked to individual business strategies so they are material to investors and incorporated into their valuation models.
  8. Where the link between key metrics and ESG factors can be calibrated within an individual business, that business is more likely to want to better measure , manage, and incorporate its performance against those ESG factors in its dialogue with investors.
  9. Core non-financial drivers, key metrics and relevant ESG factors need to be integrated into individual business management systems so the credibility of data and any forecast performance can be more easily accepted by investors.
  10. The focus on a small number of core non-financial performance drivers, key metrics and relevant ESG factors is more likely to fit with individual companies’ existing management models.