Submerged Value is Most of the Return on Sustainability Investment
Traditional Accounting sees the tip of the iceberg. We calculate the millions hidden beneath the surface.
The "Zero" Dollar Mistake
For decades, executives have known sustainability had value, but because intangibles are hard to measure, in management accounting they are often assigned the only value they cannot possibly have—Zero.
When companies focus only on visible metrics like energy savings, they miss the 80% of value that drives the company forward. We call this Submerged Value.
It isn’t just a nice add-on that rounds up the project’s visible benefits. Usually, it’s the majority of the project’s value.
Case Study: Hospitality Industry
The Expectation Gap
We quantified the value of a major hospitality corporation’s sustainability efforts. The gap between management’s expected value and reality was 100x.
CORE™ Framework
The Science Based Framework That Delivers Value
Customers
Preference, Price Sensitivity, Margin, Lifetime, & Vocality
Operations
Cost Savings, Innovation, Asset Productivity, & Speed
Risk
Vulnerability, Resilience, Responsiveness, & Foresight
Employees
Recruitment, Retention, Engagement, Productivity, & Vocality
The CORE™ framework surfaces submerged value across the value chain. Through causal modeling of the systemic and behavioral changes resulting from sustainability activities, the real financial impact can be calculated.
Whether it is our InVEST™ model of customers or our Talent model of acquisition and retention of employees, each CORE™ segment is backed by rigorous scientific research, augmented with Valutus’ proprietary experimental data.
InVEST™ Model
Quantifying Your Customers Response to Sustainability
How is sustainability driving customer revenue? The Valutus InVEST™ financial valuation model, backed by extensive scientific research and Valutus’ own half a million + proprietary data points across four continents, quantifies changes in your customers’ buying behavior caused by your sustainability activities.
For example, one well-known manufacturing company in a very competitive market was spending a lot of effort trying to break into accounts that were loyal to its competitors. It was time and resource intensive, and the success rate was low. However, when they began leading the sales discussions with their most sustainable offerings it made a big difference. Talking about their sustainable products got them in the door and converted some previously untouchable accounts to customers—even when they didn’t end up buying the sustainable product that had started the conversation.
An increase in your customers’ awareness of your sustainability activities can impact revenue in many ways, including:
Market Share: 10-point rise in awareness (10% to 20%) results in a 3 pt preference gain, worth $20m
Loyalty: 10-point rise in awareness (10% to 20%) results in a 1 month increase in customer lifetime, worth $5m