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™ is designed to be a simple yet comprehensive process that identifies material sustainability strategies and the changed practices resulting from those strategies, then quantifies and monetizes the benefits through the lens of the ROSI™ mediating factors.
How CSB ROSI™ Works
Step 1: Identify the material sustainability strategies for the sector and the company, using SASB or GRI as guides. For example, a specific sustainability strategy for an auto manufacturer may be to improve waste management.
Step 2: For each sustainability strategy, identify the material changes in business practice. For example, a practice to improve waste management for automakers is to recycle paint and solvents.
Step 3: Determine the potential and realized financial and societal benefits of these practices, through the lens of the mediating factors of financial performance (innovation, operational efficiency, supplier loyalty, etc.). For example, recycling paint and solvents (A) reduces purchase of the product, (B) reduces waste disposal costs, and (C) brings in revenue through selling excess recycled material.
Step 4: Quantify each benefit. For example, idenfity the % of manufacturing waste that is recovered and reused.
Step 5: Apply a monetization process to calculate monetary values for the intangible and tangible benefits. For example, weighted average unit cost of recovered materials versus the cost of reused materials and upfront investment, with the net being the return on investment.