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

Review of Business: Interdisciplinary Journal on Risk and Society 39, no. 2, 1–31

32 Pages Posted: 7 Nov 2019 Last revised: 23 Jan 2020

See all articles by Ulrich Atz

Ulrich Atz

New York University (NYU) - Center for Sustainable Business

Tracy Van Holt

NYU Stern Center for Sustainable Business

Elyse Douglas

affiliation not provided to SSRN

Tensie Whelan

NYU Stern Center for Sustainable Business

Date Written: July 8, 2019

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 found substantial value from implementing sustainability strategies. The beef supply chain yielded a potential net present value (NPV) between 0.01 percent to 12 percent of annual revenue, depending on the supply chain segment. For one automotive company, the five-year NPV based on realized benefits was 12 percent 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: sustainability, monetization; strategy; ESG; financial performance

JEL Classification: M14, M2, M41

Suggested Citation

Atz, Ulrich and Van Holt, Tracy and Douglas, Elyse and Whelan, Tensie, The Return on Sustainability Investment (ROSI): Monetizing Financial Benefits of Sustainability Actions in Companies (July 8, 2019). Review of Business: Interdisciplinary Journal on Risk and Society 39, no. 2, 1–31. Available at SSRN: https://ssrn.com/abstract=3465637

Ulrich Atz (Contact Author)

New York University (NYU) - Center for Sustainable Business ( email )

44 West 4th St.
New York, NY 10012
United States

Tracy Van Holt

NYU Stern Center for Sustainable Business ( email )

44 West 4th St.
New York, NY 10012
United States

Elyse Douglas

affiliation not provided to SSRN

Tensie Whelan

NYU Stern Center for Sustainable Business ( email )

44 West 4th St.
New York, NY 10012
United States
19175099642 (Phone)

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