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Futureproofing Companies & Valuation Ratios

Author

Listed:
  • Marijnissen, Wander
  • Schoenmaker, Dirk
  • Schramade, Willem

Abstract

Companies face serious transition risks and opportunities, which put their futureproofness to the test. Current valuation ratios are not well suited to value those transition risks and opportunities. We argue that the solution lies in expanding financial-based valuation ratios with externalities (external impacts), which are good proxies for transition risks and opportunities. Building on impact accounting and valuation methods, we model a company’s integrated value, which combines financial, social and environmental value. This paper turns integrated value into a valuation ratio: the futureproofing ratio. To illustrate, we quantify the futureproofing ratios of 23 companies on the Amsterdam Stock Exchange. These estimates suggest that the futureproofing ratio varies significantly across companies and sectors, and provide valuable insight in the transition risk of a company’s business model. Company management and investors can use this ratio as a guide for investment decisions.

Suggested Citation

  • Marijnissen, Wander & Schoenmaker, Dirk & Schramade, Willem, 2025. "Futureproofing Companies & Valuation Ratios," CEPR Discussion Papers 20243, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:20243
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    File URL: https://cepr.org/publications/DP20243
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    Keywords

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    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects

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