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June 2025 (published: 05.06.2025)
Number 2(61)
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A forecasting model for business value dynamics in financial management:
harmonizing economic and environmental aspects of corporate development
Sidorov A.V.
, Kunin V.A.
Keywords: Economic Value Added; EVA; sustainable development; ESG factors; value-based management; environmental risks; environmental strategy.
References:
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License
UDC 336.64
DOI 10.17586/2310-1172-2025-18-2-22-31
A forecasting model for business value dynamics in financial management:
harmonizing economic and environmental aspects of corporate development
Article in
Russian
Reference for citation: Sidorov A.V., Kunin V.A. A forecasting model for business value dynamics in financial management: harmonizing economic and environmental aspects of corporate development. Scientific journal NRU ITMO. Series «Economics and Environmental Management». 2025. № 2. Р. 22-31. DOI: 10.17586/2310-1172-2025-18-2-22-31.
Abstract. In the context of the growing ESG-oriented economy and increasing demands for corporate environmental responsibility, there is a clear need to transform traditional approaches to corporate financial management. One of the most widely used tools in value-based management is the Economic Value Added (EVA) metric, which reflects a company's ability to generate profit in excess of the cost of capital employed. However, the classical EVA model does not account for the influence of environmental factors. The subject of this study is the integration of environmental sustainability factors into the value-based approach to corporate financial management. The purpose of the research is to develop a methodology for calculating EVA that incorporates the impact of environmental factors on the key components of the company’s financial model. The relevance of the study lies in the need to adapt corporate performance assessment systems to the realities of sustainable development, the rise in environmental accountability requirements, and the shift in investment priorities toward ESG-focused strategies. The object of the study comprises the three core components of EVA: Net Operating Profit After Tax (NOPAT), Weighted Average Cost of Capital (WACC), and Invested Capital (IC). As a result of the research, a modified EVA formula was developed that includes adjustments driven by environmental factors: profit changes due to emissions reduction, amortization of environmental infrastructure investments, revenue and margin shifts stemming from reputational effects, and the impact of a company’s environmental profile on the cost of equity and debt capital. A unified system of notation was introduced, along with analytical expressions enabling the quantitative assessment of ecological initiatives' contribution to EVA. The practical significance of the results lies in the applicability of the proposed model for evaluating investment decisions, forming ESG-aligned financial strategies, and integrating sustainable development into corporate value management systems.
Read the full article
Reference for citation: Sidorov A.V., Kunin V.A. A forecasting model for business value dynamics in financial management: harmonizing economic and environmental aspects of corporate development. Scientific journal NRU ITMO. Series «Economics and Environmental Management». 2025. № 2. Р. 22-31. DOI: 10.17586/2310-1172-2025-18-2-22-31.
Abstract. In the context of the growing ESG-oriented economy and increasing demands for corporate environmental responsibility, there is a clear need to transform traditional approaches to corporate financial management. One of the most widely used tools in value-based management is the Economic Value Added (EVA) metric, which reflects a company's ability to generate profit in excess of the cost of capital employed. However, the classical EVA model does not account for the influence of environmental factors. The subject of this study is the integration of environmental sustainability factors into the value-based approach to corporate financial management. The purpose of the research is to develop a methodology for calculating EVA that incorporates the impact of environmental factors on the key components of the company’s financial model. The relevance of the study lies in the need to adapt corporate performance assessment systems to the realities of sustainable development, the rise in environmental accountability requirements, and the shift in investment priorities toward ESG-focused strategies. The object of the study comprises the three core components of EVA: Net Operating Profit After Tax (NOPAT), Weighted Average Cost of Capital (WACC), and Invested Capital (IC). As a result of the research, a modified EVA formula was developed that includes adjustments driven by environmental factors: profit changes due to emissions reduction, amortization of environmental infrastructure investments, revenue and margin shifts stemming from reputational effects, and the impact of a company’s environmental profile on the cost of equity and debt capital. A unified system of notation was introduced, along with analytical expressions enabling the quantitative assessment of ecological initiatives' contribution to EVA. The practical significance of the results lies in the applicability of the proposed model for evaluating investment decisions, forming ESG-aligned financial strategies, and integrating sustainable development into corporate value management systems.
Read the full article
Keywords: Economic Value Added; EVA; sustainable development; ESG factors; value-based management; environmental risks; environmental strategy.
References:
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