Development of ESG Measure Simulator for Predicting Impact on Financial Indicators

Abstract

In recent years, corporate management has placed significant emphasis not only on financial indicators but also on ESG indicators that demonstrate the environmental (E), social (S), and governance (G) status. In this context, it is necessary to seek effective engagement with ESG, balancing it with financial indicators. Therefore we have developed a simulator to assist in determining the combination of measures to promote. Based on the results of impact analysis between non-financial and financial indicators using structural equation modeling, this simulator predicts future financial indicator values by comprehensively combining multiple measures. In this study, we apply this technology to corporate data and present the comparative results of predicted financial indicator values with and without the implementation of a measure.