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

In: Sustainable Consumption and Production, Volume II

Author

Listed:
  • Ulrich Atz

    (New York University)

  • Tracy Van Holt

    (New York University)

  • Elyse Douglas

    (New York University)

  • Tensie Whelan

    (New York University)

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.

Suggested Citation

  • Ulrich Atz & Tracy Van Holt & Elyse Douglas & Tensie Whelan, 2021. "The Return on Sustainability Investment (ROSI): Monetizing Financial Benefits of Sustainability Actions in Companies," Springer Books, in: Ranjula Bali Swain & Susanne Sweet (ed.), Sustainable Consumption and Production, Volume II, chapter 0, pages 303-354, Springer.
    • Handle: RePEc:spr:sprchp:978-3-030-55285-5_14
    DOI: 10.1007/978-3-030-55285-5_14
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    Cited by:

    1. Joaquin Sanchez‐Planelles & Marival Segarra‐Oña & Angel Peiro‐Signes, 2022. "Identifying different sustainable practices to help companies to contribute to the sustainable development: Holistic sustainability, sustainable business and operations models," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(4), pages 904-917, July.

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