Sustainable Value Added - Measuring Corporate Contributions to Sustainability Beyond Eco-Efficiency

15 Pages Posted: 2 Feb 2005 Last revised: 20 May 2014

See all articles by Frank Figge

Frank Figge

KEDGE Business School

Tobias Hahn

KEDGE Business School

Abstract

This paper proposes a new approach to measure corporate contributions to sustainability called Sustainable Value Added. Value is created whenever benefits exceed costs. Current approaches to measure corporate sustainable performance take into account external costs caused by environmental and social damage or focus on the ratio between value creation and resource consumption. As this paper will show, it is more promising to develop sustainable measures based on opportunity costs. Sustainable Value Added is such a measure. It shows how much more value is created because a company is more efficient than a benchmark and because the resources are allocated to the company and not to benchmark companies. The concept of strong sustainability requires that each form of capital is kept constant. As Sustainable Value Added is inspired by strong sustainability, it measures whether a company creates extra value while ensuring that every environmental and social impact is in total constant. Therefore, it takes into account both, corporate eco- and social efficiency as well as the absolute level of environmental and social resource consumption (eco- and social effectiveness). As a result, Sustainable Value Added considers simultaneously economic, environmental and social aspects. The overall result can be expressed in any of the three dimensions of sustainability.

Keywords: Corporate sustainability, assessment, performance measurement, efficiency, effectiveness, opportunity cost

Suggested Citation

Figge, Frank and Hahn, Tobias, Sustainable Value Added - Measuring Corporate Contributions to Sustainability Beyond Eco-Efficiency. Ecological Economics, Vol. 48, No. 2, pp. 173-187. Available at SSRN: https://ssrn.com/abstract=658902

Frank Figge (Contact Author)

KEDGE Business School ( email )

Domaine de Luminy
BP 921 13288 Marseille Cedex 9, 13288
France

Tobias Hahn

KEDGE Business School ( email )

Domaine de Luminy - BP 921
BP 921
Marseille, PACA 13288
France
+33491827313 (Phone)

HOME PAGE: http://www.kedgebs.com

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