Working Report, 2/2005 – Environmental Shareholder Value – 12 Keeping a check on Environmental Shareholder Value

Environmental Shareholder Value

12 Keeping a check on Environmental Shareholder Value

Chapters 7-11 draw a picture of the general relationships between Shareholder Value and the company's environment. The questions below could form a good basis for mapping the extent of the knowledge of these relationships in a company and whether a company works with them in a structured manner. If not, the questions can be used as a check list of items to focus on in such a mapping. A company can ask itself the questions or investors and other stakeholders can ask the company the questions.

Fixed capital investments

Are environment savings and costs considered in connection with investment assessments?
Are environmental conditions considered in connection with the assessment of, for example, new technology?

Working capital investments

Does management know the financial significance of environmental conditions for the company?
What environment-related costs does the company have?
What environment-related income or savings does the company have?

Sales growth and operating profit margin

Does the company know the environmental conditions of its market?
Is the environment a parameter in the existing competition on the market?
Are there environmental barriers to new competitors?
Are customers interested in environmental conditions?
Are there bottle-necks for environment-friendly supplies?
What are the threats from substitute products that are more environment-friendly?
Are environmental concerns included in product development?
Does the company provide information on the environmental conditions that its stakeholders generally and its customers in particular are interested in?

Cost of capital

Risk management:
How does management ensure that the company complies with environmental legislation?
Does management know the company's environmental risks?
Does management receive information on an ongoing basis regarding environmental developments, so that it can control them?
Does the company know its stakeholders and their attitudes?
Does the company communicate with its owners and stakeholders on the issue?
Is the environment being included in assessments when buying and selling divisions or other companies?
Does the company report on environmental conditions of interest to the investors?
Does the company's reporting illustrate the relationship between the environment and Shareholder Value?

Value Growth Duration

How does management keep up-to-date on future environmental legislation and ensure that the company complies with it?
Has management prepared a strategy for future environmental legislation?
Have financial assessments been prepared of the future impact of environmental legislation on Shareholder Value?