The Caux Round Table for Moral Capitalism, from the adoption of its ethical Principles for Business 25 years ago in 1994, accepted as necessary for good business risk management prudent responsibility for the impacts of a business on stakeholders.
Such concern implicates the future profits of a business. Good risk management of stakeholder relationships makes future profits more certain. Certainty of future earnings improves the net present value of a business.
But our financial mechanics of putting a value on a business is timeworn, placing a blindfold on owners, managers and investors, preventing them from seeing clearly the real value of a business.
We are convening round tables this year in various cities around the world to explore how valuation methodology can be modernized for the current era of sustainability.
We asked the noted research firm Oxford Analytica to prepare for us a background report on valuation methodology and current initiatives to improve it, which is available here.
I urge you to read it and let me know your thoughts on the role of valuation in today’s global capitalism.