COD-VERB, 2012

COD-VERB is an investor’s check list of what they need to know when deciding whether to invest: Cost, Ownership, Disclosure, Value, Existence, Responsibility and Benefit.

Those working on environmental, social and governance apsects may seek to persuade investors of the need for change. But ‘Long Financiers’ are already as likely as most to be sympathetic to the need, but require information that enables them to decide whether these are issues susceptible to an investment-led solution. These investor requirements are summed up in the mnemonic COD-VERB:

• An accurate understanding of the Cost (how much does it cost to acquire and maintain the asset?)
• Confirmation of Ownership of the asset (is there clear legal title, and what does it cover?)
• Some Disclosure of the importance of the asset (is there a published disclosure of the asset’s utility, and is it based on robust foundations?)
• Ability to confirm the Value of the asset (is there a defensible valuation methodology? Are the technical metrics aligned with their financial equivalents?)
• Evidence of the Existence of the asset (is there an accurate audit of the asset’s existence, location and particulars? Are control procedures in place to deal with any changes in the asset’s composition?)
• Clear lines of Responsibility for the asset (is the management system established, and line of responsibility for maintenance of the asset clear cut?)
• Is there a measurable Benefit from the asset (how are these measured? How can they be exploited to increase competitive advantage or shareholder value?)

From Future Business, Long Finance, 2012, MM/MMG