Enterprise Valuation Based On ESG

In recent years,extreme weather and natural disasters have occurred frequently in the world.Excessive carbon emissions caused by human production and operation activities have led to intensified climate change,long-term imbalance of regional economic development,social inequality,fraud of listed companies,and the challenges brought by a series of controversial issues have become increasingly severe.COVID-19’s global explosion and continuous spread make the wave of "Sustainable development" increasingly agitated.The concept of Environmental,Social and Governance(ESG)has received unprecedented attention from regulators and investors,and has gradually become a global consensus.Since China’s 14 th five year plan and the long-term goal of 2035 emphasize "high-quality development",ESG has become an important yardstick to measure the sustainable development ability of enterprises and has a significant and far-reaching impact on the value of enterprises.ESG disclosure of listed companies in China is relatively mature in Hong Kong stocks.According to the newly revised ESG guidelines of the stock exchange,listed companies must disclose ESG reports simultaneously with financial reports.Although the ESG disclosure of A-share started late,it has accelerated rapidly in the past two years,and the disclosure proportion has increased to 25%.At the same time,a hundred schools of thought contend for ESG investment products,showing explosive growth.In this context,how to integrate ESG factors into the enterprise valuation system has become a key issue for the assets appraisal industry to further play an important role in evaluation and assurance.Based on the problem orientation,this paper aims to reasonably quantify the ESG factors,improve the existing enterprise valuation methods,and give a new consideration to the enterprise valuation from the perspective of ESG.Firstly,it reviews the literature research status at home and abroad,and also analyzes the relationship between ESG and enterprise value,the application results in the field of enterprise valuation.Secondly,from the perspective of relevant theories and institutional research,this paper expounds the transmission path of the impact of various ESG dimensions on enterprise value,analyzes the applicability and improvement direction of traditional enterprise valuation methods for ESG,puts forward the improvement model of income method,and introduces the data source,the application of Fuzzy analytic hierarchy process and ESG coefficient calculation.Finally,this paper chooses Huaneng International as the case study object for its excellent ESG performance in the power industry and uses the traditional income method and the improved income method model for valuation.By analyzing the differences of the evaluation results,we found that after taking the impact of ESG factors into account in enterprise valuation,the value of the enterprise in the growth period reduced while the value of the enterprise in perpetual period and the total value increased significantly.This shows that although the excellent ESG management practice raises the investment of the enterprise in the short term and reduces the enterprise value,but in the long run,it can significantly promote the sustainable development ability and long-term value improvement of the enterprise.Therefore,in the process of operation and production,enterprises should fully consider the externality of their own business activities,constantly improve their ESG management awareness and level,and achieve win-win with the environment,society and other stakeholders.