Sustainability valuation: An oxymoron?

At a glance

Sustainability valuation: An oxymoron?

Determining valuation of a company's sustainability initiatives presents challenges. Considering both direct and indirect valuation methods helps analyze, prioritize and measure the contribution sustainability initiatives make to shareholder value.

Putting a value on sustainability initiatives can pose a systematic and universal challenge: their costs, like most investments, are readily apparent, but some of their benefits are difficult to quantify.  

The typical shareholder value framework can be expanded to accommodate the intangible benefits of sustainability initiatives.

Key questions remain:

  • What level of sustainability investment is too little, and what level is too much?
  • How can we quantify the value created for longer-term, intangible benefits?

Answering these questions not only helps guide internal decisions around sustainability, it enables companies to communicate the value of their effort to all their stakeholders, including Wall Street.