Positive or negative social and environmental impacts of companies on society, so-called externalities, have in the past had little impact on the financial success or risk profile of the originating company. For this reason, they were left out of the determination of corporate value for a long time.
But times are changing: stricter regulation, the increasing influence of stakeholder groups as well as new market dynamics have resulted in an ever more far-reaching internalisation of externalities, which have an ever greater impact on financial success. Thus, proactively avoiding negative externalities and increasing positive externalities is becoming an economic success factor.
According to the principle "You can't manage what you don't measure", this requires systematic measurement and monetary valuation to determine the "true" enterprise value. After all, only if the effects of business activities on third parties are measured and evaluated using robust methods can they be effectively managed.
With True Value, KPMG has developed a sophisticated methodology that has been supporting companies worldwide since 2014 in measuring and monetising positive and negative economic, social and environmental externalities of business activities and deriving measures to increase the social value of the company. KPMG True Value is scalable in any way. Depending on the needs and business case, the assessment and management of externalities can range from individual production sites to the entire value chain, including the supply chain and product use phase.
How KPMG True Value works:
Gerd Krause
Partner, Audit, Sustainability Reporting & Governance
KPMG AG Wirtschaftsprüfungsgesellschaft
The uniform assessment of material economic, social and environmental externalities in financial terms makes different impacts of the company comparable and thus reveals new perspectives on the business model that help in strategic decision-making. Especially in innovation processes, KPMG True Value helps companies to demonstrate the positive and negative impacts of new products and services and to increase their own social value.
In addition, many companies use the results of KPMG True Value calculations in external communication. Transparency about the impact of the business model on society promotes a positive public perception of companies and helps strengthen relationships with business partners, investors, authorities and governments, customers and non-governmental organisations.
