The Return on Sustainability Investment (ROSI): Monetizing Financial Benefits of Sustainability Actions in Companies
Ulrich Atz, Tracy Van Holt, Elyse Douglas, Tensie Whelan
July 15, 2019
Africa, Asia - Pacific, Europe, Latin & South America, North America
Ethics & Social Justice
sustainability, return on sustainability investment (ROSI), ROSI, positive financial return, industry
Practitioners and researchers struggle with valuing the return on sustainability investment (ROSI). We apply a five-step methodology that systematically mon- etizes sustainability actions to answer a key question: Do sustainable practices lead to a positive financial return for the business? We demonstrate the versatili- ty 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 automo- tive 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 yield- ed 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.