Cornerstone-ValueScope ESG Valuation Offering

ESGv MEASURE DEFINE

VALUE

Environmental, Social and Governance…

2 What does “ ES G ” really mean?

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Today, ESG is not only a dominant topic of discussion across the American business and investment community, it is driving business decisions, impacting corporate structures and organizational charts, and is having a profound impact on investment decisions.

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The recent global pandemic and economic crisis has accelerated the drive by companies to establish ESG programs and report ESG metrics.

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Companies are seeking ways to attract investment capital and demonstrate rigorous ESG risk management in their organizations.

…known globally as “ESG” 3

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What has remained elusive for businesses and investors is a way to quantify the actual and potential risks, losses, benefits, and rewards associated with ESG decisions.

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The missing piece, the way to tie ESG to valuation, has been the problem facing corporate leaders and Boards, who, for good reason, tie every decision to value creation. They have a fiduciary duty to do so.

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How do you justify making substantial investments and fundamental changes to corporate structures and culture without empirical evidence that it will have a direct impact on shareholder value, total shareholder return, net present value, and individual rates of return?

The Cornerstone and ValueScope Offering 4

Cornerstone is a full-service, bipartisan consulting firm specializing in federal and state government relations, public affairs and strategic communications, and advisory services. Cornerstone advises clients in assessing, developing, communicating, and managing ESG and sustainability programs worldwide.

ValueScope is a valuation and analytics firm, capable of valuing nearly everything, and often called on to improve value. ValueScope values esoteric things, such as derivative instruments, loan guarantees, human capital, corporate damages, even life itself. The firm has deep financial analytics skills: predictive and probabilistic modeling, determining economic substance, and complex intangible asset analysis.

Together, we bring clients unique solutions that enhance their ESG performance, quantifying and qualifying its value to its investors and the broader market.

ESGv-Phase One: Define 5

The Challenge: •

It is difficult to measure and value things that are not well defined.

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General knowledge of ESG typically ends at “Environmental, Social and Governance.”

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Fixed definitions are hard to come by. The scattering of websites, scorecards, speeches, podcasts, and white papers that mention ESG in different ways do not help.

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ESGv is a risk management tool that enable risks to be defined, identified, prioritized and mitigated.

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There are, however, certain established and respected frameworks that can and should be used now.

Our Solution: Cornerstone’s Advisory Services Group helps clients identify their internal metrics and apply them to the Sustainable Accounting Standards Board (“SASB”) framework.

ESGv-Phase Two: Measure 6

The Challenge: •

Eight years ago, an article in Financial Times quoted Peter Drucker in the context of corporate reporting of ESG related topics: “What gets measured gets managed.”

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That was eight years ago! If we posit that ESG can be defined, and has been defined, and that the SASB framework will either be that which is chosen by regulators, or at the very least, play a substantial role in its definitions, then we can move on to measurement.

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How do we measure it? Most observers contend that this is hard to do, even impossible. We do not agree.

Our Solution: Cornerstone and ValueScope’s Big Data + Analytics Solution structures ESG information, quantifies it, and defines it for application to risk mitigation and valuation goals.

ESGv-Phase Three: Value 7

The Challenge: •

ESG issues are increasingly impacting the financial performance of companies, but there has been little agreement on how they impact valuation.

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The good news is that now that ESG has become more mainstream, ESG metrics used in conjunction with more traditional financial metrics is making it easier to assess the ESG profile of a company, including its overall impact on valuation.

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For some C-Suite management teams and Board room executives, having the ability to assess valuation enhancements through specific ESG criterial becomes the most critical factor in deciding whether that company decides to implement an ESG program at all.

Our Solution: ValueScope’s Portfolio + Intangible Valuation Services

ESGv: The Value Proposition 8

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Unlocking hidden value is always worth it.

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Do it now before you are forced to do it.

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Gain a competitive advantage over your peer group by being a first-mover.

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Drive the narrative actively, rather than passively.

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Mitigate the risks that poor ESG performance can have on the business.

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Access capital that will only engage if your ESG program and assets are defined, measured, and valued.

Call Us for a Free Consultation 9

Jack Belcher Principal | Advisory Services Cornerstone Government Affairs D 832.706.4752 M 713.494.2427 jbelcher@cgagroup.com www.cgagroup.com Thomas J McNulty CQF, FRM, MBA Principal ValueScope D 832.706.4754 M 832.472.3717 tmcnulty@valuescopeinc.com www.valuescopeinc.com