Valutico, a the first fintech to provide web-based valuation tools to the financial sector in Austria, has received the go-ahead to build a framework that bridges the gap between ESG factors and modern valuation theory and practice, thanks to the support of the Vienna Business Agency.
The move comes in response to sustainability considerations becoming an increasingly integral part of the financial industry. The ability to quantify the ecological and societal impact of a company will become essential if not a mandatory requirement due to recent European regulatory developments and therefore beneficial to all financial professionals. The European Commission has set itself the task of encouraging financial institutions to help redirect capital flows in favour of combating climate change. Over the last 24 months, the European Commission has issued a number of directives that will change processes in the financial sector, especially in banks and financial service providers under The Sustainable Finance Disclosure Regulation (SFDR).
In the future, banks and financial institutions will have to take the sustainability performance of their corporate clients into account when providing loans. But also outside of regulatory pushes towards sustainable finance. The valuation experts and investors have shifted their focus towards making investment decisions based on ESG factors due to rising demands to consider the societal value of their investments. To do so, they need appropriate tools that enable them to effectively and inexpensively determine and measure the sustainability “footprint” of companies. Making these tools available is the purpose of ValutECO.
ValutECO will be an innovative product extension of the existing valuation models, which currently focus on the financial value of a company. Rooted in Valutico’s core competency of financial business valuation, the goal is to develop and offer a robust qualitative and quantitative module for the holistic assessment of an organisation’s impact on the environment (e.g. climate, biodiversity, water), on society (e.g. ILO standards, diversity and human rights) and on governance (e.g. proactive stance against corruption), and factoring it in to calculate the overall “Societal Value” of any organisation.
It is Valutico’s understanding that ESG integration strategies secure a financial edge by directing more capital towards companies doing a better job of managing pecuniary ESG risks, as often reflected in their higher ESG ratings. ESG aims to achieve the triple bottom line – good for people, planet and profits.
CEO & Co-Founder Paul Resch, a Corporate Finance professional formerly in M&A, comments: “This is a huge accolade for us – we are really proud to have secured the support and approval from the Vienna Business Agency. Only a handful of start-ups are awarded this type of funding so we are grateful. This is timely as ESG-oriented advisory and investing is experiencing a meteoric rise and will only increase. ESG proposition can safeguard a company’s long-term success and from the investor’s perspective, a company’s track record in handling environmental, social and governance aspects is an essential consideration for investing. Historically, analysing these aspects could be challenging, primarily due to a lack of resources including time and data. This will no longer be the case. ValutECO is the logical next step in growing our business and further supporting our clients’ future requirements“