MONEY MATTERS
INVESTMENT IMPACT TAKING AN HOLISTIC VIEW
As a resident of East Yorkshire who lives about 8 miles from Hull City Centre I’ve watched the Siemens/ABP developments closely and like most other residents on 25 March was delighted at news of the progression.
My thoughts turn to the impact such an investment will have, not just this deal in this city region but the broader impact and value created by a progressive expansion of renewables.
TRUE VALUE QUESTIONED With line drawn on all sides of the political and media spectrums, the true value of renewables seems to be constantly questioned from one side or another. Not that surprising when the financial reporting
is based on a centuries-old system that really hasn’t changed with the times. We’re all so used to the traditional metrics and measures of valuation and success that we rarely question their appropriateness to different situations.
DO THESE METRICS REALLY IDENTIFY THE FULL IMPACT OF SUCH INVESTMENTS?
At an organisational level the results of our CEO pulse poll on total impact suggest that many companies now want to follow a different direction. Of the 187 CEOs we surveyed, 85% thought a total impact approach (taking into consideration their company’s economic, environmental, tax and social impacts) would provide more insight into their business than conventional reporting. And 93% thought it would help them manage their risks better.
AN HOLISTIC VIEW So what do we mean by ‘total impact’? It’s all about taking an holistic view of a company’s overall impact. By measuring business success beyond financial analysis, and calculating a value (and a cost) for the social, environmental, tax and economic activities of a company, business can see at a glance the total impact it’s making.
It’s a more innovative approach that also means companies can see the trade-offs between choosing different strategies, allowing them to make the optimal decision for themselves and all their stakeholders.
SOCIAL VALUE ACT
If total impact sounds so attractive, you might think everyone must be using it – and in truth with the Social Value Act now in place it does seem likely that its adoption will spread rapidly over the next couple of years.
That said we found that while 72% of CEO’s measure economic impact and 62% measure environmental impact as part of their board level decision making, less than 25% of CEO’s measure their total impact. So we asked them why? 89% of CEOs were put off by the lack of availability of data and 85% by the lack of a robust framework.
CHANGING TIMES
But times are changing. With new research and methodologies in place to turn qualitative into quantitative data and to put a value on it, it feels like there’s a new way to do business. Certainly, some companies are already embracing a total impact approach to better understand the value they create beyond the balance sheet.
If we adopt such an approach at the level higher for multi-stakeholder infrastructure and resource investments, then we can start to answer questions raised in some quarters as to the true ‘impact’ of renewables once and for all.
Rich Hall Director PwC
Click to view more info
www.windenergynetwork.co.uk
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