Illustrating the Financial Benefits of Green Chemistry

4 Pages Posted: 21 Oct 2008

See all articles by Andrea Larson

Andrea Larson

University of Virginia - Darden School of Business

Abstract

This technical note forms the basis of a discussion on the economic value added of green chemistry principles. Students can learn how to increase NOPAT by increasing sales; increase NOPAT by decreasing operating expenses; reduce WACC, driving down risk by decreasing risk perceived by capital providers; and reduce invested capital. A grid showing green chemistry principals and how adhering to each might affect the bottom line provides an excellent context in which to discuss business strategies.

Excerpt

UVA-ENT-0076

Illustrating the Financial Benefits of Green Chemistry

Illustrating the Financial Benefits of Green Chemistry-change 1

Economic Value Added (EVA) = NOPAT − (WACC) × (Invested Capital)

Levers of Change: There are four levers that green chemistry principles can move to increase EVA (note these may be worked separately or in combination):

1. Increase NOPAT by increasing sales

. . .

Keywords: green chemistry, environmental, sustainability, eco-efficiency, economic value added, net present value, finance

Suggested Citation

Larson, Andrea, Illustrating the Financial Benefits of Green Chemistry. Darden Case No. UVA-ENT-0076. Available at SSRN: https://ssrn.com/abstract=1278396

Andrea Larson (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

HOME PAGE: http://www.darden.virginia.edu/faculty/larson.htm

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