Value Creation Ratings Pilot Report 2024: The Sustainable Value Creation of Firms 

133 Pages Posted: 13 Nov 2024

See all articles by Tomas Casas

Tomas Casas

University of St. Gallen - SoM: School of Management

Martin Nerlinger

University of St. Gallen - School of Finance; Swiss Finance Institute

Date Written: November 01, 2024

Abstract

The Value Creation Ratings Pilot Report 2024: The Sustainable Value Creation of Firms (or VCr2024) is an exploratory prototype that assesses 122 listed firms from the world’s leading economies on the basis of the value and risk creation and transfer exhibited by their business models. 

The Value Creation Rating (VCr) establishes the proportion of value creation in relation to revenue, while a second measurement, the Value Creation Position (VCp), establishes the percentage of value transfers in relation to revenue. It is the sister project of the already established Elite Quality Index (EQx2024) that measures The Sustainable Value Creation of Nations. Together, these two projects redefine sustainability in terms of how value is created and transferred in order to foster economic growth and human development. 

Sustainability is reconceptualized as the VCr2024 emphasizes that it must be considered in a more comprehensive manner, with high-impact phenomena like firm power, creative destruction, and innovation spillovers taken into account. Sustainability occurs when there is a greater proportion of inclusive value creation in relation to value transfers. The focus of analysis for sustainability in the VCRr2024 is the business model and on how revenue is generated by the firm.

The VCr, like the EQx, operationalizes the dichotomous rela­tionship between value creation and value transfer by look­ing at the total revenue of a firm and contrasting this with the respective proportions of value transfer-IN and transfer-OUT. Value transfer-IN is ‘value appropriated but not created’; value transfer-OUT is ‘value created but not appropriated’. Ascertaining value transfer-IN and transfer-OUT relies on sus­tainable value creation (SVC) Metrics to convert the activities of a firm business model into monetary terms. Each of the 54 Metrics used in the VCr2024 has a theoretically grounded rationale and draws on a unique data source. 

What are the main insights of the VCr2024? The VCr2024 pilot implements the incipient conceptual and technical apparatus to supply the VCr scores (and VCp per­centages) for 122 of the largest companies in the world and presents these on VCr scorecards.

Keywords: Sustainability, Elite Quality, Ratings, Valuation, Sustainable Finance, ESG, Value Creation, Risk

JEL Classification: G24, G1, G3, Q51, Q56

Suggested Citation

Casas, Tomas and Nerlinger, Martin, Value Creation Ratings Pilot Report 2024: The Sustainable Value Creation of Firms  (November 01, 2024). Available at SSRN: https://ssrn.com/abstract=5011047 or http://dx.doi.org/10.2139/ssrn.5011047

Tomas Casas (Contact Author)

University of St. Gallen - SoM: School of Management ( email )

Dufourstrasse 40a
St. Gallen, CH-9000
Switzerland

Martin Nerlinger

University of St. Gallen - School of Finance ( email )

Unterer Graben 21
St. Gallen, 9000
Switzerland

Swiss Finance Institute ( email )

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

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