Value creation instead of greenwashing: global pilot study examines 122 companies

The Value Creation Report 2024 (VCr2024) assesses the business models of 122 companies on the basis of financial and sustainable criteria with regard to their value transfers. It determines whether companies create or destroy value for society. It uses 54 metrics in 12 areas (e.g. creative destruction, market power and unearned income). The report highlights those companies and sectors that create long-term financial value through authentic and sustainable strategies. However, it also shows where companies are merely riding the greenwashing trend.

Results of the VCr2024 

The following insights from the first Value Creation Ratings Report are noteworthy:

• Automotive sector leads the way:
  The automotive sector leads the VCr ranking thanks to its innovative strength in the field of e-mobility and CO₂ reduction. With inclusive workplace practices and proactive measures, the industry is setting standards for sustainable value creation.
• Technology sector has some catching up to do:
  Despite technical innovations, the technology sector is falling behind in the VCr because it is exploiting its own market power. The industry must also prioritise more environmentally friendly processes and social responsibility more strongly.
• Pressure on the oil and gas sector:
  The oil and gas sector is facing growing pressure to become more sustainable. Some companies are showing commitment by investing in environmental protection and local communities, which strengthens social acceptance and responsibility.
• High VCr scores in Japan and Germany:
  Countries such as Japan and Germany achieve high VCr scores through the sustainable value creation of their companies. Their investments in research and social responsibility promote long-term national and economic stability and growth.
• Transparency against greenwashing:
  The VCr provides clarity through measurable sustainability criteria that prevent greenwashing. In contrast to conventional ESG ratings, the VCr provides reliable insights and can strengthen the trust of the public and investors.

“The VCr results clearly show how differently the industries are positioned when it comes to sustainability,“ emphasises Prof. Dr. Martin Nerlinger. “The automotive sector is setting standards in CO₂ reduction and e-mobility, while the technology sector still has challenges in social and market economy issues. The oil and gas sector is also increasingly under pressure to move more towards value creation through sustainable investments and social responsibility, but it stands out for its social commitment.“

Redefining sustainability

The VCr2024 determines the ratio of sustainable value creation and risk appetite of companies to their turnover. It is the sister project of the ‘Elite Quality Index’ (EQx2024), which was also created at the University of St. Gallen and already established, and measures the sustainable value creation of countries. Together, the two projects redefine sustainability by analysing how value is created or transferred to promote economic growth and social development. Value transfer describes the value that a company shares in various ways or claims for itself. 

A negative value transfer (transfer-IN) means that a company absorbs value from outside without creating it itself, for example by causing environmental damage through noise or air pollution. A positive value transfer (transfer-OUT) shows the value that the company creates and that benefits society, for example by creating jobs or inventing new technologies. Value transfers are crucial to the analysis because they show how sustainably a company operates – whether it creates more value than it destroys and thus contributes to society in the long term. 

Prof. Dr. Tomas Casas i Klett emphasises: “The VCr looks at the balance between value creation and value transfers by analysing how companies generate their revenue. Negative value transfers are values that a company appropriates without creating them – such as unaccounted environmental impacts. By contrast, positive value transfers are values that the company creates but does not keep for itself – such as innovations that benefit the entire industry. These analyses in VCr2024 are based on 54 specific metrics that make the contribution of a business model to sustainable value creation measurable.”

Editors of the report

Dr Tomas Casas i Klett is a permanent lecturer at the University of St. Gallen's School of Management (SoM-HSG), at the Research Institute for International Management (FIM-HSG), Director of the China Competence Center and Visiting Professor at leading universities in Asia, including the School of Economics and Management at Tsinghua University and the Hong Kong University of Science and Technology. His research interests include economic development, geopolitics and the global political economy, elites and leadership in high-performance teams, entrepreneurship and the financial aspects of sustainable value creation.

Prof. Dr Martin Nerlinger is an Assistant Professor at the University of St.Gallen's School of Finance (SoF-HSG), the Swiss Institute of Banking and Finance (s/bf-HSG), and a Faculty Member of the Swiss Finance Institute (SFI-HSG). His research interests include climate and sustainable finance, empirical asset pricing, asset management, risk management, and sustainable value creation.

Click here to access the full Value Creation Ratings Pilot Report 2024 (VCr2024).

Image: Adobe Stock / Kanchana