A Company-Level Sustainability Model

The resultant company-specific model can be tested empirically. The impact of indicators on drivers and, in turn, on overall sustainability can be quantified, and changes in both indicators and drivers can be mapped to such performance factors as stock price, earnings, and market share. 

The Value Creation Index (see Section 6.2.2, Intangibles and Sustainability) quantifies nonfinancial corporate performance and links key intangible factors to a company s valuation in the market. Using a mix of publicly available and proprietary data, multiple metrics for each intangible were collected and scrutinized statistically to discern their relationship with real - not perceived (based on opinion surveys, and so on) - market value.1 

In 2002, Cap Gemini Ernst Young developed VCI models for the energy, utilities, and chemicals industries. About 70 of the largest United States-based companies are included in the data set after filtering for a minimum market capitalization in each industry, and for availability of data. The models ended up explaining at least 70 percent and up to 90 percent of the variability in market value in an industry. 

The intangible value drivers, along with the ones of greatest significance for each of the three industries, are ranked in Table 8.3.11 

TABLE 8.3. Key Intangibles for Chemicals, Energy, and Utilities Industries 

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