CSB ROSI™ Methodology
The NYU Stern Center for Sustainable Business uses its Return on Sustainability Investment (ROSI™) methodology to monetize the benefits of sustainable practices. ROSI™ can be applied to practices throughout an organization that have already been implemented, are currently in development, or for future projects.
CSB ROSI™ BackgroundSustainability drives business and societal success. The challenge most businesses face is proving the monetary impact of sustainability (ESG). The NYU Stern Center for Sustainable Business believes successful sustainability initiatives are embedded in corporate strategy and tracked through financial metrics. Sustainability-related issues are no longer siloed as special projects or limited to efficiency-related sustainability efforts. Using the ROSI™ methodology, companies can clearly quantify the full range of costs and benefits, including intangibles. ROSI™ enables CFOs and investors to better integrate, measure, and report on corporate financial performance resulting from embedded ESG. The use of our methodology empowers managerial decision-making and investor communications.
CSB ROSI™ in Four Steps
- The first is to identify the material sustainability practices through the lens of the drivers of financial performance (innovation, operational efficiency, supplier loyalty, etc. (see figure below). For example, a specific practice for an auto manufacturer may be to improve waste management. We will review what innovations, operational efficiencies, employee engagement, etc., results from that commitment.
- Next, we determine the potential financial and societal benefits from these practices, e.g. under operational efficiencies: selling recycled materials, using recovered materials, using recycled water in manufacturing.
- As a third step, we quantify each benefit, e.g. % of manufacturing waste that is recovered and reused.
- Lastly, we apply a monetization process to calculate monetary values for the intangible and tangible benefits, e.g. weighted average unit cost of recovered materials vs the cost of reused materials, with the net being the return on investment.