The Role of Structural Context in Making Business Sense of Investments for Sustainability–A Case Study

Abstract

Energy efficiency is an important means for sustainable manufacturing. One action for manufacturing companies to improve energy efficiency is through investments. While these investments often are profitable, opportunities remain unexploited. This paper explores the structural context of the investment decision-making process by examining the associated activities, procedures, and the role of information. While the structural context may limit complex investments that do not fit predefined rules and controls, such as energy efficiency and other sustainability-related investments, it remains a scarcely studied aspect of investment decision-making for energy efficiency investments. Method-wise, the paper is based on a case study of a major investment at a pulp and paper company, motivated and justified based on productivity, strategic, energy, and sustainability rationales. The paper contributes with illustrating how configurations of internal investment activities and procedures may be crucial for sustainability-related investments to pass through the investment process. Moreover, the configuration of activities and procedures is also indicated as influential for the way in which an investment is executed. Hence, for energy efficiency and other sustainability-related investments to make business sense constitutes more than achieving desirable payback periods; the structural context should be considered.

Sustainable Metamorphosis: Examining Sustainability Transformation Into Value of Financial Institutions

“…S&P Global is chosen because it utilises one of the most advanced ESG scoring methodologies in the market today by drawing upon over 20 years of experience (S&P Global, 2022). When assessing how efficiently sustainability transforms to a company's value, which is expressed as the P/E ratio, special attention must be paid not only to the structure of its sustainability strategy and different sustainability aspects such as E, S and G but also to the emphasise of the government aspect should be taken into consideration, as an essential phase of sustainability strategy (Rasmussen, 2020).…”

Analysis of the Impact of Sustainable Development on Company's Value

“…A survey by Coppola et al (2020) also shows that most Figure 1. World Gross Product over 1960-2020(World Bank, 2022 companies feel pressure to act on climate change from customers, investors, and society due to increasing awareness on sustainability topics. Therefore, to remain successful, business must also connect these viewpoints of different stakeholders.…”

“…According to the Global Real Estate Sustainability Benchmarks [GRESB] (2021) organization as appetite for ESG disclosure and sustainability reports increases, the demand for non-financial data is rising nearly at the same level. Furthermore, the ESG index is selected as it is the only index that places emphasis on the governmental aspect, which is the primary and crucial stage of any sustainability strategy (Rasmussen, 2020).…”

“…Integration into capital investment decisions of such aspects, for example, energy efficiency measurement (Bunse et al, 2011) may bring additional perspectives to be considered. Therefore, governing process expands to new areas and management who is making investment decisions might not specifically work with these issues, so integration of sustainability-related information in investment decision-making becomes even more relevant for companies in order to create awareness and facilitate for how such aspects can be measured in the investment process (Rasmussen, 2020). Integration of sustainability related information and measuring activities into business processes could plausibly be a significant influencing factor when building sustainable development strategy.…”

Sustainable Development of Operations: Actors’ Involvement in the Process of Energy Efficiency Improvements

“…Given the large volumes of energy consumed for operational processes to produce products and services, the efficient use of energy is a major sustainability strategy [1] and an important enabler for achieving sustainable operations in the manufacturing and processing sector [2]. Operations rely on energy sources such as fossil fuels or renewable energy in terms of end use [3] related to both production processes and support processes such as heating and lighting [4]. Energy management has been found to be a determining factor in managers' environmental concerns [5].…”