Enterprise Valuation from an ESG Perspective: A Case Study of BYD

With the rapid development of China's new energy vehicle industry, the impact of technological innovation, capital investment, and sustainable operation capabilities on corporate value is becoming increasingly prominent, while the traditional DCF model is still limited in reflecting ESG factors. This paper takes BYD as the research object, introduces ESG factors into the traditional discounted free cash flow model, and then modifies the revenue growth rate, weighted average cost of capital and perpetual growth rate, and compares the valuation results of the two models. This study finds that BYD's free cash flow in the early part of the forecast period was under continuous pressure due to high capital expenditures, and the present value of short-term FCFF will decrease slightly after ESG adjustments. However, the lower cost of capital and higher long-term growth expectations significantly improved the final value, increasing the enterprise value from RMB 244.424 billion to RMB 275.641 billion, an increase of approximately 12.77%, which indicates that the impact of ESG on firm value is primarily reflected in improvements in long-term capital costs and expectations of continued growth, rather than in increases in short-term cash flow.