Firstly, based on internal fundamental, as well as industry discussions, we have observed assessing valuation with the inclusion of ESG factors can vary by industry, investment opportunity and materiality. Similar to how there is more than one approach to valuation, there is not a singular way to view ESG factors in valuation.
We acknowledge that the forums for discussion around how and if ESG factors impact valuation, or whether to attribute how much alpha was generated from ESG factors is still in early days - and may or may not be directly applicable to fundamental research process in every case.
Such methods have included (on a case-by-case basis) top line sales forecasts, as well as operating costs and cash flows. In addition, adjustments to discount rates and terminal value, as appropriate, and if the ESG factor is material.