Vienna-headquartered Valutico is trialling the launch of ValutECO, an advanced tool that assesses the value of companies based on their environmental impact.
The company’s newly launched tool, currently in an ‘alpha’ trial phase, allows accountants, M&A consultants, investment managers, private equity professionals and those in corporate finance to consider the impact of ESG factors on a company’s value.
By addressing the potential links between ESG and financial performance, the tool hopes to advance how sustainability is incorporated into financial theory and practice.
With ValutECO, financial professionals use a streamlined ESG assessment, specifically designed with small and medium-sized enterprises (SMEs) in mind and simplified to facilitate easier reporting.
In this, it allows analysts to better identify priority areas for improvement, which might include reducing greenhouse gas emissions, managing water usage and increasing recycling rates.
Valutico’s new tool integrates ESG scores into the ‘cost of capital’ component of a discounted cash flow (DCF) valuation. This feature allows companies with positive ESG scores to be valued higher, making them more attractive to potential buyers and investors seeking sustainability and long-term growth.
ValutECO was developed following a grant by Wirtschaftsagentur Wien, and follows research into the impacts of ESG criteria on the valuations of businesses across multiple industries, alongside validation that the condensed ESG assessment reflects more exhaustive assessments on the market.
Adopting a tool like ValutECO has the potential to be a game-changer for sustainability in industries all around the world.
If successful, its introduction would financially incentivise companies to prioritise sustainability and embed environmental factors as a key component of their everyday operations. This would also adhere to the significant customer demand for a rise in more sustainably-minded companies.
Yet above all, and in the context of Valutico, this would result in one way in which companies’ impact on the planet becomes a crucial aspect of buying, selling and investing decisions.
Valutico acknowledges that the integration of ESG into financial analyses is an ongoing conversation requiring further academic study, but the company remains optimistic that its new tool will contribute to steering the conversation in the direction of a more sustainable future.
The company’s CEO, Paul Resch, identifies the integration of sustainability into financial practices as “a significant accomplishment for Valutico.”
“We recognise the importance of ValutECO as an initial step towards achieving this goal, and we’re grateful for the grant provided by Wirtschaftsagentur Wien that made this possible,” Resch continues.
In addition, he adds that the company is looking forward to receiving feedback from financial professionals on how the tool can enable sustainable growth.
Founded in 2017 in Vienna with subsidiaries in the US and UK, Valutico is currently used by more than 600 financial firms in 80 countries, with the platform remaining popular amongst professionals in advisory roles such as in corporate finance, M&A, and tax and audit, as well as investment managers, accountants, venture capitalists and family offices.