Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, the scientific journal of the Mendel University in Brno, Czech Republic

The aim of the paper is to propose a model for measuring sustainable value which would complexly assess environmental, social, and corporate governance contribution to value creation. In the paper the concept of the Sustainable Environmental, Social and Corporate Governance Value Added is presented. The Sustainable Environmental, Social and Corporate Governance Value Added is based on the Sustainable Value Added model and combines weighted environmental, social, and corporate governance indicators with their benchmarks determined by Data Envelopment Analysis. Benchmark values of indicators were set for each company separately and determine the optimal combination of environmental, social, and corporate governance inputs to economic outcomes. The Sustainable Environmental, Social and Corporate Governance Value Added methodology is applied on real-life corporate data and presented through a case study. The value added of most of the selected companies was negative, even though economic indicators of all of them are positive. The Sustainable Environmental, Social and Corporate Governance Value Added is intended to help owners, investors, and other stakeholders in their decision-making and sustainability assessment. The use of environmental, social, and corporate governance factors helps identify the company’s strengths and weaknesses, and provides a more sophisticated insight into it than the one-dimensional methods based on economic performance alone.

Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, the scientific journal of the Mendel University in Brno, Czech Republic

The Sustainable Value-Added Model is a new approach in value-oriented strategic management that focuses on maximizing the value that is created by non-financial sustainability indicators. The objective of this paper is to refine the calculation of sustainable added value by incorporating environmental, social, and corporate governance sustainability indicators, assigning weights to the indicators and, by alternative methods, assigning target values to the indicators. Ten alternative models of Sustainable Environmental, Social, and Corporate Governance Value Added were created. The models encompass 11 environmental, social, and corporate governance indicators of sustainability, and two economic indicators (Earnings before Interest, Taxes, Depreciation and Amortization, and Value Added). Indicator values are related to the target values that represent the opportunity costs. The quality of the models was assessed by statistical methods, i.e., the Receiver Operating Characteristic curve, Gini index, and Kolmogorov-Smirnov statistic. The results of these statistics show sufficient quality of all the models proposed. The most accurate model is that with the economic indicator Value Added and target values that are based on the values of the company with the best economic results.

Sustainable investing is an investment approach in line with the values of sustainable development and compliance with environmental, social, and corporate governance (ESG) criteria. The aim of the article is to propose a sustainable investing model (SI_M) to support the decision-making of responsible individual investors. The proposed model aggregates economic indicators of investment decision-making, positive and negative ESG criteria, the market value of the stock, a systematic and unsystematic risk (expressed by the capital asset pricing model (CAPM)), thus widening the investment triangle by another peak—and that is sustainability. The research methodology is based on four key areas (environmental, social, corporate governance, and economic) associated with sustainable investments, stock market value, and risk. The research methodology of structural equation models is applied for the construction of the SI_M. Mathematical equations are used to apply the SI_M, which expresses values, the so-called factor scores. For the classification of sustainable investments, a classification scale is created that divides investments into three groups: above-average, average, and below-average. The SI_M comprehensively evaluates individual ESG criteria and economic areas of sustainable investments, thus assisting the investor in deciding on sustainable investments of Czech joint-stock companies in the manufacturing industry, including benchmarking with other sustainable investments.