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The Sustainable Value-concept allows to assess and manage sustainable performance similar to economic performance. Conventionally, investors and analysts concentrate on the return on capital. However, companies do not only use economic capital but also environmental and social resources to create a return. In order to assess corporate sustainable performance we need to assess the use of the entire bundle of resources. Sustainable Value expresses the use of a bundle of resources in monetary terms. It is based on a fundamental insight of financial economics: To create value, a company must use resources more efficiently than other companies. Sustainable Value therefore compares the resource use of a company to a benchmark. Sustainable Value extends the logic of financial markets to cover more than economic capital. And it translates corporate sustainable performance into a language that is inline with managers’ and investors’ thinking. Sustainable Value expresses sustainable performance in monetary terms (e.g. in €). At the same time Sustainable Value acknowledges the complementarity of economic, environmental and social capital. Put differently, Sustainable Value is based on what is called strong sustainability.
The ADVANCE (Application and Dissemination of Value-Based Eco-Ratings in Financial Markets) project applies the Sustainable Value-concept on a large European scale for the first time. To demonstrate the applicability of the Sustainable Value-concept ADVANCE has assessed the environmental performance of 65 European companies of the manufacturing sector using the Sustainable Value approach.
More information on of Sustainable Value and the ADVANCE-project can be found on www.ADVANCE-project.org or on www.sustainablevalue.com.
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