Published In

Strategic Finance

Document Type

Article

Publication Date

1-1-2012

Subjects

Sustainable development -- Evaluation, Sustainable living -- Analysis, Sustainable development -- Finance, Business enterprises -- Environmental aspects, Cost effectiveness

Abstract

Financial managers need basic models that incorporate the most significant variables, are robust enough to accommodate a wide variety of decisions, and provide results that are simple to communicate. We attempt to help fill this gap by providing a simple and familiar cost-benefit approach that's enhanced and improved through the addition of sustainability outcomes. We developed the cost-benefit tool presented here specifically with the needs of financial managers in mind. It allows them to simultaneously consider the financial and social outcomes of potential decisions without the need for advanced knowledge of sustainability models or methods. The tool is built on a decision-making model that highlights operational and sustainability outcomes. The underlying model is an adaptation of a corporate sustainability model presented in an article by Marc J. Epstein titled Implementing Corporate Sustainability: Measuring and Managing Social and Environmental Impacts, Strategic Finance, January 2008. We developed the tool to highlight the financial impacts of sustainability outcomes and provide a straightforward approach for incorporating them into cost-benefit decisions. The tool can be used for quick, ad hoc decisions made by individual managers, or it can be used as part of a comprehensive analysis of a strategic initiative. Here we provide an example of how the model can be applied to a common, everyday decision many organizations face: whether to alter factor inputs and production processes to reduce negative environmental impacts of the products or services offered.

Description

Copyright 2012 IMAA. Posted with permissions.

Persistent Identifier

http://archives.pdx.edu/ds/psu/9118

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