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Article

1 Jan 2011

Author:
IFC

Financial valuation tool for sustainability investments [website]

Companies are spending millions of dollars in local communities to support sustainability – environmental, social and governance (ESG)...Measuring the real and perceived benefits to communities of sustainability programs is important for assuring positive outcomes...In addition to creating benefits for the local communities, sustainability investments also create significant business value for companies. Intuitively, companies understand that there is a business case for being a good corporate citizen...The Financial Valuation Tool calculates a probable range for the net present value (NPV) back to the company from a portfolio of sustainability investments, including value protected through risks mitigated and value created through productivity gains. The FV Tool, which is used to plan, prioritize, measure and scale a company’s site-level sustainability investments, is designed to supplement a company’s traditional discounted cash flow valuation model. [case studies from Newmont, Cairn Energy, Rio Tinto]