The integration of ESG factors into valuation decision-making is still at an early stage of
development. This presents a significant challenge, particularly when it comes to projecting future cash flows and determining the cost of capital. In this paper, I will first provide
an overview of the origin, role, and significance of ESG. This discussion also clarifies the
linkage between ESG and Sustainable Development Goals (SDG), as well as the connection between corporate social performance (CSP) and corporate financial performance
(CFP). Second, I explore the integration of ESG considerations into business and real estate
valuation, highlighting ongoing challenges in ESG-sensitive valuation. Finally, I review the
recently updated IVS ESG rules, evaluating their potential gaps and impacts.
