Integrated Value Creation

Dirk Schoenmaker and Willem Schramade
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Willem Schramade: Nyenrode Business University

Chapter 2 in Corporate Finance for Long-Term Value, 2023, pp 33-63 from Springer

Abstract: Abstract Chapter 1 gave us a clear starting point: responsible companies create integrated value based on financial value (FV), social value (SV), and environmental value (EV). But what does that mean and imply? This chapter outlines what value creation is, and how the various types of value creation can be prioritised. For the alignment of all types of value, the prospect of internalisation is crucial. Internalisation means that the burdens of (social and environmental) externalities are increasingly shifted back from society to the companies and consumers who cause them. If companies’ FV depends on the exploitation of an external impact (i.e., FV at the expense of SV or EV), that FV will be affected if and when internalisation occurs. As responsible companies aim to create value based on FV, SV, and EV, they should have a clear picture of their current value creation profile and of their capabilities to create integrated value. Based on their purpose and area(s) of value destruction, companies can accordingly adjust their strategy and business model. In the case of serious value destruction, they should be able to outline a credible transition pathway. Companies can invest in their capabilities to adapt to sustainable business models. In that way, they increase their transition preparedness.

Keywords: Adaptation; Business model; Environmental value; Financial value; Intangibles; Integrated value creation; Internalisation of externalities; Materiality; Mission; Purpose; Responsible company; Scenario analysis; Social value; Shareholder model; Stakeholder; Stakeholder impact map; Strategy; Sustainable business model; Transition; Transition preparedness; X-curve; Value creation; Value creation profile; Value destruction (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/978-3-031-35009-2_2

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