MODULE 21.1: STAKEHOLDERS AND ESG FACTORS

LOS 21.a: Compare the financial claims and motivations of lenders and shareholders.

LOS 21.b: Describe a company's stakeholder groups and compare their interests.

LOS 21.c: Describe environmental, social, and governance factors of corporate issuers considered by investors.

1. ROE = PAT / Average Equity
2. ESG factors are non-financial environmental, social, and governance issues that can materially affect a company’s operations, risk, and future cash flows; things that are purely financial or macro without an E, S, or G link are not ESG factors.
3. ESG factor materiality: ESG factors are material when they can have a substantial impact on a company’s operations, business model, financial results, or future cash flows, including through loss of customer goodwill, regulatory fines and judgments, stranded assets, litigation, cleanup costs, or governance failures that allow managers to exploit shareholders.