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Value‐based environmental management. From environmental shareholder value to environmental option value

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  • Frank Figge

Abstract

Whether and how environmental management can create enterprise value is intensively debated. There are a number of concepts that aim to link environmental management and enterprise value. These concepts are usually based on net present value approaches such as Rappaport's (1986) shareholder value model. What is usually overlooked is that environmental management based on net present value concepts risks making companies (eco‐)efficient but vulnerable to environmental and social shocks. This article introduces the environmental option value concept as a compliment to concepts such as environmental shareholder value. As this article shows, creating environmental option value creates flexibility that allows companies to be shielded from the detrimental effects of possible future environmental and social shocks. In combination the two approaches can help environmental management to contribute to creating long‐term enterprise value. Copyright © 2005 John Wiley & Sons, Ltd and ERP Environment.

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  • Frank Figge, 2005. "Value‐based environmental management. From environmental shareholder value to environmental option value," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 12(1), pages 19-30, March.
  • Handle: RePEc:wly:corsem:v:12:y:2005:i:1:p:19-30
    DOI: 10.1002/csr.74
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    Cited by:

    1. Tobias Hahn & Mandy Scheermesser, 2006. "Approaches to corporate sustainability among German companies," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 13(3), pages 150-165, July.
    2. Elina Dace & Agnis Stibe & Lelde Timma, 2020. "A holistic approach to manage environmental quality by using the Kano model and social cognitive theory," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(2), pages 430-443, March.

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