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Environmental Influences on Company Valuations
Author(s) -
Young P. J
Publication year - 1996
Publication title -
water and environment journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.437
H-Index - 37
eISSN - 1747-6593
pISSN - 1747-6585
DOI - 10.1111/j.1747-6593.1996.tb00006.x
Subject(s) - valuation (finance) , business , environmental impact assessment , sustainable development , cost–benefit analysis , risk analysis (engineering) , environmental economics , finance , economics , industrial organization , natural resource economics , ecology , political science , law , biology
The benefits accruing from good environmental management of companies are most often linked to economic benefit and the concept of moving towards sustainable development. However, the link between environmental liabilities, assets, or performance, and the financial valuation of a company remains obscure at best. Operational improvements, for example from implementing a waste minimization programme, can give a clear short‐term reduction in costs, and impact immediately on profits. Many environmental risk management programmes also need to deal with long‐term issues such as historical land contamination and changes in manufacturing technology. These have a much more protracted and ultimately fundamental impact on the perceived capital value and future prospects of a company. This paper seeks to describe how the relationship between environmental and financial risk management is becoming clearer, and uses examples to show how this is brought into focus during merger and acquisition activities.