The anticipated ESG outcomes may not be reliable as all stakeholders’ costs and revenues throughout the entire life cycle of the asset are not captured. It is also difficult to define the proper discount rate. Success criteria are not properly defined (e.g., carbon reduction, jobs created, and human well-being), and input variables are difficult to quantify.
Goals and Objectives
Develop methodologies to capture the full costs.
Define the KPIs.
Develop a framework for calculating the return of the investment through a business case.
Data analytics, artificial intelligence, client reporting, independent SME input, and ESG scoring
Use Case Summary
Calculating an ESG-compliant business case is tricky, given the difficulties in quantifying the costs and revenue and assigning the proper discount rate. FSIs need to develop and then evaluate a new methodology through practical usage. Further, FSIs need to consider external costs and develop a practical approach to estimating the risks.