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.
