GRI Economic Value Generated & Distributed

The EVG&D calculation — step by step

Economic Value Generated: Total revenues from all sources — product sales, service fees, interest income, dividends received, royalties, and proceeds from asset sales. This is the gross value the organisation extracts from its economic activities before any distributions.

Economic Value Distributed — five categories:

1. Operating costs: Payments to suppliers for goods and services; costs of materials, components, and utilities; contractor payments; rent and lease payments. Excludes employee compensation, depreciation, and financing costs — these appear in other categories.

2. Employee wages and benefits: Total compensation paid to employees — salaries, wages, bonuses, pension contributions, healthcare benefits, and other employee-related payments. Includes employer social security contributions.

3. Payments to capital providers: Dividends paid to shareholders; interest paid to lenders; repayments of principal (borrowings) are not included — only the interest cost.

4. Payments to government: All taxes paid — income tax, payroll taxes, property taxes, VAT/GST net of refunds, customs duties, and any other government levies. Use cash-basis taxes paid, not accrued tax charge.

5. Community investments: Voluntary contributions and investment of funds in the broader community — charitable donations, social investment programmes, foundation contributions. Distinguish from commercial sponsorships.

Economic Value Retained: Generated minus total distributed. This represents value reinvested in the business — retained earnings, depreciation reserves, and other accumulated reserves.

Common EVG&D calculation errors

Confusing EVG&D with the income statement: EVG&D is not a reformatted P&L. The most significant differences: operating costs in EVG&D exclude depreciation and amortisation (these are non-cash and represent prior investment); payments to capital providers in EVG&D include only interest and dividends paid, not principal repayments or depreciation; payments to government include all taxes paid in cash, not just the income tax charge.

Using accrual basis instead of cash basis for taxes: GRI 201-1 specifically requires taxes paid on a cash basis — not the tax accrual in the financial statements. Cash taxes paid and accrued tax charge can differ significantly due to deferred tax movements and prior year settlements. Extract from the tax payment schedule in the cash flow statement, not from the P&L tax line.

Excluding intragroup transactions: For consolidated group reporting, eliminate intragroup transactions — payments between subsidiaries cancel out at group level and should not appear in the consolidated EVG&D.

Including employee benefits inconsistently: Employer social security contributions, pension contributions, and health insurance are employee compensation — include in the employee wages and benefits category. Some companies mistakenly include these in operating costs or exclude them entirely.

For multinational companies: produce EVG&D separately by country or region where meaningful — showing where value is generated versus where it is distributed. This is where EVG&D becomes a tax transparency and economic contribution tool beyond simple financial reporting.

EVG&D and economic impact communication

EVG&D is more than a compliance disclosure — it is a powerful communication tool for demonstrating economic contribution to stakeholders who care less about financial performance and more about community and social value.

For employees: EVG&D shows total compensation paid versus profits retained — providing context for pay negotiations and demonstrating the organisation's commitment to workers.

For governments and communities: EVG&D shows total taxes paid and community investments — demonstrating economic citizenship. For companies operating in communities where their economic contribution is significant (major local employer, significant local tax base), EVG&D is a core community relations tool.

For investors: EVG&D provides context for understanding how value is distributed between different stakeholder groups — relevant for assessing shareholder value capture relative to broader stakeholder value distribution.

For CSRD integration: ESRS 2 SBM-1 requires disclosure of the business model — including how value is created, distributed, and captured. EVG&D provides the quantitative foundation for this narrative. Reference your GRI 201-1 EVG&D calculation in the ESRS 2 SBM-1 disclosure — showing investors the financial substance behind the business model description.

Frequently asked questions