In a post-pandemic world, investors are focusing on identifying the right governance and ESG topics. A key element in this decision is understanding financial materiality and governance quality at investee companies and potential new investments. In this report we combine Economic Value Added (EVA) and the ISS Governance QualityScore (GQS) for Emerging Market firms to identify financial materiality and governance quality.

EVA deducts the “cost” of giving shareholders a minimum acceptable return for their investment. EVA measures the returns generated on all capital against a strategic, long-run, weighted average cost of capital that is based on a blend of debt and equity. When EVA Margin is above zero, the firm is returning above its cost of capital and creating an economic profit.