Integrating esg into valuation standards and adjacent frameworks

Abstract

This paper analyzes the incorporation of ESG factors into the EVS valuation standards (Europe), USPAP (United States), the RICS Red Book (United Kingdom and common law markets), and relevant IFRS/IAS requirements (fair value measurement, impairment, and provisions). It further reviews national practices in Ukraine, Germany, Canada, Australia, New Zealand, and South Africa, as well as related frameworks such as the OECD Transfer Pricing Guidelines and banking regulatory expectations for collateral valuation. The analysis demonstrates that ESG influences value primarily through adjustments to cash flows, the discount rate, and constraints on highest and best use. A discernible trend is evident across markets: a shift from broad declarations toward systematic data collection, scenario testing, and transparent disclosure of key assumptions. Drawing on these findings, a practical step-by-step approach is proposed for embedding ESG into valuation terms of reference and valuation reports, with specific adaptation for the Ukrainian market.