ESA Joint Committee · sfdr-23 Final

Calculation of Indicators 1 and 2 table 1 - Enterprise Value Question: For those indicators where Enterprise Value is used, how should we proceed if the Enterprise Value is negative?

Regulation
SFDR
Answered
2022-11-17
Answer provided by
ESAs (EBA, ESMA, EIOPA)
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Question

Calculation of Indicators 1 and 2 table 1 - Enterprise Value Question: For those indicators where Enterprise Value is used, how should we proceed if the Enterprise Value is negative?

Answer

The ESAs note that the widely used concept of “enterprise value”, outside the specific reference in Annex I can result in negative enterprise values. In such cases the cash held by the enterprise exceeds all other factors in the equation. However, the ESAs have specified in point 4 of Annex I of the Delegated Regulation that for the purpose of the calculation of certain indicators, “enterprise value” should be used but the definition specifies that cash or cash equivalents should not be deducted from the sum. Therefore, enterprise value calculated according to the definition laid down in Annex I cannot be negative.
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This Q&A is published by ESA Joint Committee (EBA, ESMA, EIOPA) and is non-binding. It does not constitute legal advice. Updated weekly from official ESA sources.

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