Integrating Carbon Emission and Related Capital Expenditure into Discount Cash Flow Valuation Model: Using Chinese Coating Companies as Examples

Abstract

Environment, society and Governance (ESG) is used to evaluate an enterprise's sense of responsibility for social and environmental factors. With investors paying more and more attention to a company's sense of social responsibility and environmental protection awareness, and believing that companies with a high ESG score have greater prospects, many companies are forced to be involved in ESG investing. So how does this belief make sense? This study aims to integrate carbon emission and related capital expenditure in the discounted cash flow (DCF) model. With the aim to achieve this, we collected data from two (four) companies, both historical and predicted, to prove that there indeed is a relationship between corporate environmental investment and the company's intrinsic value of stock.