RSM/Erasmus University, Nyenrode Business University and ftrprf research initiative continues to expand scope and methodology in its mission to make Integrated Value and Futureproofing Ratios the global standard in assessing companies’ true value.
The 52 largest AEX and DAX-listed companies collectively cost society more than they yield. The financial value of these AEX and DAX companies is offset by social and ecological value of minus 80 percent. Companies show little progress in reducing their environmental impact. It will only become more expensive to address the effects of climate change and biodiversity loss—tackling risk head on now is the key to weathering transition. Researchers intend to focus on the more robust reporting from the implementation of CSRD and adding more issues to better capture the current state of Integrated Value. Expanding to DAX is the first step to a scalable European benchmark.
What are the social costs of noise pollution?—What makes this study special is that these researchers—Professor Dirk Schoenmaker (RSM/Erasmus), Professor Willem Schramade (Nyenrode), Asst. Professor Moritz Wiedemann (RSM/Erasmus) and econometrician Wander Marijnissen (ftrprf)—are able to calculate the social and ecological impact of a group of companies into actual costs and benefits. They did so for a wide range of sub-areas, asking ‘What are the societal costs of noise pollution?’ Or, ‘what are the returns of a company training course in euros?’ Their methodology makes it possible to calculate the integrated value of a company as the sum of financial, social, and ecological value. The relationship between integrated and financial value—the Futureproofing Ratio—offers companies, investors and policymakers insight into their “futureproofness” and long-term value.
Short term uncertainty leads to long-term loss—Overall, the 52 companies analysed demonstrated a keen shift toward short-term gains over a long-term lens. As tensions around the world rise and there is further geopolitical uncertainty, long-term view and sustainability work goes by the wayside. Shareholders apply more pressure to see profit conversion, yet this leads to borrowing on the long-term. The shadow price of CO2 rose from around $200 to more than $300 per ton, a price that will only increase when companies fail as environmental constraints tighten, putting extra strain on companies that stay behind in the transition.
Europe’s industrial backbone exposed to large transition risks—The Energy & Utilities, Materials and Transport sectors are characterised by large positives and negatives. The negative societal value of the materials sector is 10.6 times as large as its financial value (9 for Energy & Utilities, and 3.7 for Transport). At the same time, the positive societal value for these sectors is 2.6, 2.8 and 2.4 times their financial value respectively, indicating that these sectors are highly exposed to both transition risks and opportunities. These pressures will grow stronger as environmental constraints tighten. The DAX-AEX Futureproof Index provides insights into the strengths and weaknesses of the companies’ business models, and guides them to take corrective actions to ensure their long-term success.
More robust report through inclusion of DAX and CSRD – The report represents a new step toward an integrated European benchmark. Following last year’s AEX Futureproof Index, the researchers aimed to expand their scope. By applying the methodology to the German market—the largest economy in Europe—more companies and sectors could be included in the analysis. The inclusion of systemically relevant firms and new sectors led to further refinement of the methodology for calculating integrated value, as well as the addition of important themes such as biodiversity loss, R&D spillovers, and the gender pay gap.
In addition, the introduction of the Corporate Sustainability Reporting Directive (CSRD) in the EU proved valuable: “To my surprise, I was able to find more standardized data than I had expected. So, in that sense, CSRD works,” said Professor of Finance Willem Schramade. With the necessary AI expertise of Wander Marijnissen, the team is gearing up to expand their research exponentially over the coming years, to cover an increasingly broad sample of companies, sectors and issues, whilst continuing to add academic rigor and preciseness.
Call to the EU: use this information—Willem Schramade, Dirk Schoenmaker, Moritz Wiedemann and Wander Marijnissen emphasize that extending the Futureproofing Index to German companies can help guide policymakers toward a more robust standard. “The Integrated Value methodology is forward-looking rather than backward-looking,” says Wander Marijnissen (ftrprf). “It captures a broader set of factors that drive long-term business success—not only financial performance but also social and environmental dimensions. In doing so, it makes often hidden positive and negative externalities explicit. The EU should use these insights to adjust its industrial policy now, while there is still time to build a more resilient and competitive economy.”
