The Return on Sustainability Investment (ROSI): Monetizing Financial Benefits of Sustainability Actions in Companies

Ulrich Atz (), Tracy Van Holt (), Elyse Douglas () and Tensie Whelan ()
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Ulrich Atz: New York University
Tracy Van Holt: New York University
Elyse Douglas: New York University
Tensie Whelan: New York University

Chapter Chapter 14 in Sustainable Consumption and Production, Volume II, 2021, pp 303-354 from Springer

Abstract: Abstract Practitioners and researchers struggle with valuing the return on sustainability investment (ROSI). We apply a five-step methodology that systematically monetizes sustainability actions to answer a key question: Do sustainable practices lead to a positive financial return for the business? We demonstrate the versatility of this methodology by monetizing potential and realized financial benefits via mediating factors (i.e., financial drivers) across two types of industries: Brazilian beef supply chains that committed to deforestation-free beef and the automotive industry, where companies were working to make manufacturing operations more sustainable. The companies participating in our cases generated substantial value from implementing sustainability strategies. The beef supply chain yielded a potential net present value (NPV) between 0.01 to 12% of annual revenue, depending on the supply chain segment. For one automotive company, the five-year NPV based on realized benefits was 12% of annual revenue. Our ROSI methodology guides managers to better value sustainability’s financial benefits. Ultimately, monetizing sustainability can lead to a competitive advantage and shared value for multiple stakeholders.

Keywords: Monetization; Corporate sustainability; Strategy; ESG; Financial performance (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/978-3-030-55285-5_14

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