Frequently Asked Questions

What is the Sustainable Value Calculator?

The Sustainable Value Calculator is part of the research project "Sustainably successful? Analysing, measuring and managing corporate sustainability with the Sustainable Value approach" (In German: "NeW - Nachhaltig erfolgreich Wirtschaften") funded by the German Ministry of Education and Research (BMBF). In this project, we apply Sustainable Value to the assessment of corporate sustainability performance and develop tools to implement the Sustainable Value approach into corporate praxis.

What is the Sustainable Value approach?

The Sustainable Value approach is the first value-oriented approach to the assessment and management of sustainability performance. Sustainable Value deals with sustainability performance in the same way in which financial markets deal with economic performance. Read more about the background of the Sustainable Value approach here or watch our online tutorial about the calculation of Sustainable Value.

How is Sustainable Value different?

Existing approaches to assess and manage sustainable performance are burden-oriented. They concentrate on how bad, costly or burdensome the use of a resource is. A typical question in this context is: How dangerous or costly is the emission of a ton of CO2? Sustainable Value is value-oriented. Sustainable Value addresses the same question in a different way. How much value is created by a ton of CO2?

For this purpose, we compare the return a company creates with the use of different resources to the return that a benchmark would have created with these resources (opportunity costs). Value is only created if the return of the company is higher than the return that the benchmark would have achieved.

Sustainable Value integrates different forms of economic, environmental and social resources. Conventional performance assessments focus on economic capital as a resource. With its focus on economic as well as environmental and social resources Sustainable Value is the first fully integrated value-oriented assessment tool.

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What are opportunity costs?

Opportunity costs are the return that is foregone because a resource has been used at a different place. Reading these FAQs creates opportunity costs. One cannot read these FAQs and the latest Harry Potter at the same time. The joy of reading the latest Harry Potter is lost, if one decides to read these FAQs instead. This foregone joy can be considered to be the (opportunity) cost of reading these FAQs.

In the financial markets, the return that could have been created by investing capital differently is interpreted to be the opportunity cost of an investment. An investment creates value if it covers its opportunity costs, i.e. if it yields more return than could have been created by other investments. Opportunity cost thinking is used to allocate capital in a value-creating way.

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How is Sustainable Value calculated?

Sustainable Value is calculated by determining where the resources of the company create more return: within the company or in the benchmark. Read how to calculate Sustainable Value here or watch our tutorial.

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What is the Return to Cost Ratio (RCR)?

When companies are compared, a size effect gets in the way. Usually, large companies are expected to have larger profit, sales or cash flow figures. The same applies to Sustainable Value figures. We therefore take company size into account when comparing different companies. For this purpose, we use the so-called Return to Cost Ratio (RCR). The Return to Cost Ratio (RCR) compares the Gross Value Added of the company to the return the benchmark would have created with the resources (opportunity costs). A Return to Cost Ratio larger (smaller) than 1 indicates that the company yields more (less) return per unit of resource, i.e. the company uses its bundle of resources more (less) efficiently than the German economy or the EU15 on average. For example, a Return to Cost Ratio of 2 : 1 indicates that a company uses its resources twice as efficiently as the benchmark, a Return to Cost Ratio of 1 : 2 shows that a company uses its bundle of resources only half as efficiently as the benchmark.

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Why are there only thirteen indicators?

The Sustainable Value approach can consider all different kinds of resources that companies use. However, in the Sustainable Value Calculator we focused on the use of those resources which are readily available from corporate sustainability reporting. Also, indicators must not only be available on corporate but also on the benchmark level.

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Why do you use this return figure?

The choice of the return figure determines the explanatory power and perspective of the results. It is possible to calculate Sustainable Value with various return figures but in order to keep the explanatory power and perspective of this online calculator as wide as possible, we choose gross value added as a return figure. Thus results are able to show the Sustainable Value that is created for three kinds of stakeholders: In addition to the value created for the company's providers of capital, it also takes into account the value that is created for the state (in terms of profit tax payments) and for the company's employees (in terms of personnel expenses).

Regarding the scope of the data we follow the consolidation of the financial data. The environmental and social resources used by companies which are for example consolidated at equity can very rarely be found in environmental or sustainability reporting and they are not included in the consolidated accounts of the company either. In order to get meaningful results, the scope of activities covered by financial, environmental and social resources must be identical.

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Do you take into account indirect emissions?

In principle, Sustainable Value takes into account those emissions that are caused by a company in order to create an economic return. This is also the perspective taken by the traditional economic analysis. Consequently, emissions of suppliers are not taken into account. For CO2-related emissions, however, we take into account both direct and indirect emissions. We thus want to minimize the difference between companies producing their own energy and companies buying in energy.

For all other environmental indicators, the Sustainable Value Calculator considers direct emissions or impacts, i.e. the impacts that are caused by a company's own operations and activities.

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What is the reason behind the particular indicators chosen?

The selection of the 13 indicators that have been included in the Sustainable Value Calculator is based on both methodological and pragmatic reasons. First of all, we want to take those indicators into account that are readily available from corporate reporting. However, an indicator can only be taken into account if it is quantifiable. As a consequence, impacts that are of a qualitative nature (for example impacts on habitats and sensitive ecosystems), cannot be assessed with the Sustainable Value approach. This does not mean that these impacts should be left out - rather, the Sustainable Value methodology can and should be complemented by an evaluation of a company's qualitative impacts on the environment. In addition to that, the number of indicators is limited by the current practice of sustainability reporting.

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Why haven't indicators such as electricity use and energy use been included?

In the Sustainable Value Calculator, the corporate direct and indirect CO2-emissions have been taken into account. An additional assessment of the electricity use and/or the total energy use of the companies would therefore result in double counting, since emissions account for the main environmental impacts created by energy use. In addition to that, there is no fixed conversion between a company's energy use and its emissions. Instead, the amount of emissions strongly depends on the specific technologies that are applied. Therefore, in order to create an accurate picture of the company's actual impact on the environment, we decided to use carbon dioxide as the key indicators of the company's energy-related environmental performance.

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Does Sustainable Value cover the entire life cycle?

Sustainable Value assesses whether a company uses its bundle of economic, environmental and social resources in a value creating way. It thus covers the activities that occur within the boundaries of each company. Methodologically, Sustainable Value is compatible with life cycle thinking. As soon as there is a complete data set on the use of resources and return covering the entire life cycle, a Sustainable Value for the entire life cycle can be calculated. Unfortunately, such data is not available to date. Therefore, Sustainable Value assessements so far have covered only the resource use within each company.

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How are the different resources being weighted?

The weighting of different environmental and social resources is a problem that has attracted much attention during the last two decades. However, there is still no consensus on the weights of all different environmental impacts relative to each other. Consequently, we still have no answer to the question of how bad 1 ton of CO2-emissions is compared to 1 ton of waste generated or 1 m3; of fresh water used. With Sustainable Value we address this problem in a new way. We stop asking how bad one environmental problem is relative to another. Instead, we look at how much a resource contributes to the creation of a return relative to another resource. If, e.g., the benchmark needs 2 tons of CO2-emissions and 1 m3; of fresh water to create a return of € 1, the weight between CO2 and water is 1 : 2.

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What's the role of the benchmark?

The benchmark serves to determine the opportunity cost. In financial analysis, the market average return is often used as a benchmark. If an investment yields 5% and the market return is only 3%, then the investment beats the benchmark and has earned its opportunity cost. The benchmark thus determines the alternative investment that is foregone. In the Sustainable Value Calculator, we currently use the efficiency of the EU15 and the German economy to determine the opportunity cost of the use of twelve different resources in companies.

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Why are there currently only four benchmarks?

The benchmarks currently available in the Sustainable Value Calculator are the EU15 and the German economy, as well as future-performance-scenarios for those two benchmarks. Data on all indicators of these four benchmarks is publicly available. However, coherent data regarding the use of environmental and social resources by industries is not publicly available. We are working on gathering this data by performing sector studies for corporate clients and associations.

Nevertheless, we believe that a national or European benchmark can be of great interest to all kind of companies as it shows them whether they are contributing to the more sustainable development of Germany or Europe respectively.

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Is it fair to compare globally operating companies to the comparatively strict benchmarks of the EU15 or the German economy?

A benchmark is a hurdle that companies should (be able to) clear. The choice of a benchmark is therefore always a normative judgement. This applies not only to the Sustainable Value concept but also to benchmarks in financial management. An investor who chooses a stock market index as a benchmark for his/her investment, presupposes that the investment ought to outperform this benchmark.


The rationale behind using the German economy or EU15 as a benchmark is the assumption that companies domiciled in Germany or the EU15 ought to be able to outperform the economy of Germany or the EU15 with their operations - no matter where they operate.

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Does it make sense to compare companies from different sectors to the German economy or EU15 as a benchmark?

The current practise of corporate sustainability performance assessments is dominated by best-in-class approaches. This means that only companies from the same sector are compared and the best performing companies are identified for each sector. Sustainable Value can be used to perform sector studies. However, best-in-class studies cannot determine the potential of structural change. In order to allow transparent comparisons between companies one must choose a benchmark that goes beyond specific industries. This means that every company is assessed against the same benchmark. With the German economy or the EU15 as benchmark we can determine both, sector leaders as well as the potential of structural change.

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Does Sustainable Value take into account company size?

When companies are compared, a size effect gets in the way. Usually, large companies are expected to have larger profit, sales or cash flow figures. The same applies to Sustainable Value figures. We therefore take company size into account when comparing different companies. For this purpose, we use the so-called Return to Cost Ratio (RCR). The Return to Cost Ratio (RCR) compares the Gross Value Added of the company to the return the benchmark would have created with the resources (opportunity cost). A Return to Cost Ratio larger (smaller) than 1 indicates that the company yields more (less) return per unit of resource, i.e. the company uses its bundle of resources more (less) efficiently than the German economy or the EU15 on average. For example, a Return to Cost Ratio of 2 : 1 indicates that a company uses its resources twice as efficiently as the benchmark, a Return to Cost Ratio of 1 : 2 shows that a company uses its bundle of resources only half as efficiently as the benchmark.

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Who can use the Sustainable Value methodology?

The results of an assessment with the Sustainable Value approach are useful for different stakeholders. For instance, managers can use the Sustainable Value approach to measure, monitor, and communicate their environmental performance. Moreover, they can use the results of the future performance scenario as early warning signals for particularly relevant environmental areas in the future. Socially responsible investors and analysts can use the Sustainable Value methodology to identify out- and under-performers. The future performance scenario is particularly interesting in the context of risk analyses: SRI-investors can determine which companies are most vulnerable to tightened regulation in different environmental areas. Socially responsible investors and analysts will benefit widely from the value-based logic of the analysis because this makes the results compatible with standard financial analyses. Finally, regulators can use the Sustainable Value approach to identify those sectors and companies that are most critical for reaching economic and environmental performance targets.

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