Lecture sustainable investment model
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Lecture Sustainable Investment Model. Jan H. Jansen E-mail: [email protected] About Jan H Jansen. Senior lecturer International Finance Management Accounting Researcher Chair of Total Quality Management in Organizational Networks Chair of Logistics & Alliances Supervisor

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Lecture Sustainable Investment Model

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Lecture sustainable investment model

Lecture Sustainable Investment Model

Jan H. Jansen

E-mail: [email protected]


About jan h jansen

About Jan H Jansen

  • Senior lecturer

    • International Finance

    • Management Accounting

  • Researcher

    • Chair of Total Quality Management in Organizational Networks

    • Chair of Logistics & Alliances

  • Supervisor

    • Internships / Placements

    • Graduation projects / Dissertations


Sustainable investment model

Sustainable Investment Model


Sustainable investment model1

Sustainable Investment Model


Problem

Problem

  • Can Sustainable Investments contribute to a better future ecology?

  • Ecological impact of:

    • Energy production

    • Energy consumption


Sustainable investments

Sustainable Investments

  • Energy production

    • Traditional

      • Oil

      • Gas

      • Coal

      • Nuclear

    • Sustainable

      • Wind

      • Hydro

      • Solar

      • Biomass

      • Geothermal


Sustainable investments1

Sustainable Investments

  • Energy consumption

    • Transport

      • Inland vessels

      • Rail

      • Road

        • Trucks

        • Cars

    • Houses

      • Use of rainwater & sewage water

      • Use of solar cells & wind turbines

      • Insulation & energy management systems

    • Factories

      • Re-use of industrial warmth

      • Geothermic storage of industrial warmth

      • See also under Houses


Lecture sustainable investment model

Some facts about renewable energy in the

European Union (EU)


Renewable energy in final energy consumption 2020 target source www energy eu

Renewable energy in final energy consumption (2020 target) Source: www.energy.eu


Renewable electric energy in the eu

Renewable electric energy in the EU

Resource: www.energy.eu


Sustainable investments2

Sustainable Investments

  • Sustainable

    • Added value for social welfare

    • Better & optimal allocation of scarce natural resources

  • Investment

    • Capital

      • Equity

      • Debts / Loans

    • Recovery

      • Repayment Debts

      • Payment interest

      • Profitability


Sustainable investment model2

Sustainable Investment Model


Dosit model

DOSIT Model

Model developed by:

  • TNO (Applied Research in Science)

  • Research Chair of TQMinON

    • Prof. Gerard Berendsen

  • Source:

    • Duurzaaminnoveren met de DOSIT-methodiek, G. Berendsen cs, Sigma Kluwermanagement, June 2006

    • http://www.han.nl/onderzoek/kennismaken/ontwikkelen-van-excellente-organisaties/lectoraat/tqm-in-organisatienetwerken/publicaties/_attachments/kip_c2-11_20duurzaam_20innoveren_20met_20de_20dosit_20methodiek.pdf


Dosit model1

Dutch

Duurzaam

Ondernemen

Selectie

Innovatieve

Technologie

DOSIT

English

Sustainable

Entrepreneurial

Selection

Innovative

Technology

SESIT

DOSIT Model


Why dosit

Why DOSIT?

Hot topics in business are:

  • Innovation

    • Product innovation

    • Innovation of processes

  • Sustainability / CSR

    • Stewardship / Managership / Bailiff (UK) (Dutch: Rentmeesterschap)

  • Investments


Lecture sustainable investment model

  • Innovation:

  • Products

  • Process

Sustainability

Investing


Sustainability entrepreneurship in sme s

Sustainability & Entrepreneurship in SME’s

  • Company meets the requirements from the government and keeps in mind future requirements

  • Company fulfils its social and cultural role in society

  • Company plays in an effective way its role in the huge changes in society & economic development for the mid and long term


Sustainability entrepreneurship in sme s1

Sustainability & Entrepreneurship in SME’s

  • The product, the way the product is used and will be used

  • The production process (including resources)

  • The way the product is introduced on the market


Basic assumptions dosit model

Basic assumptions: DOSIT model

  • Focus as a company on a limited number of activities connected to sustainability

  • Intrinsic motivation of staff concerning change in general and sustainability in specific

  • Communication in the company concerning sustainability: Top Down & Bottom Up

  • ‘Quick and dirty job’ in SME’s, staff wants to see immediately results

  • Aspects of sustainability have influence on the continuity of the company

  • Sound financial base is important for the continuity of the company


Lecture sustainable investment model

Profit

People

Planet

3 P’s


Stages in the dosit methodology

Stages in the DOSIT methodology

  • Preparation

  • Choice of priorities in the areas of Key Success Factors

  • Selection of possible Innovations

  • Final choices of Innovations

  • Implementation of Innovations


Elements of the dosit model

Elements of the DOSIT model

  • Supply Chain & Value Chain

  • Raw materials

  • Components

  • Business development

  • Logistic Processes (I >T > O)

  • Production

  • Packaging

  • Warehousing & Distribution

  • Product & Market Development

  • Product Use / Reversed Logistics


Dosit matrix overview priorities

DOSIT Matrix (Overview Priorities)


Constraints in the process of sustainable innovation

Constraints in the process of sustainable innovation

  • ROI requirement (bottom line)

  • Requirements clients

  • How do process interfere in the chain?

  • Feasibility (in a technical way)

  • Connection with future developments & ambitions of the company

  • What is target for the degree of sustainability

  • How much will be the impact of the innovation (paradigm shift?)


Sustainable investment model3

Sustainable Investment Model


Structure sustainable investment model

Structure Sustainable Investment model


Project structure

Project Structure

Source : Project Finance, Yescombe


Ring fenced project

Ring-fenced project

Source : Project Finance, Yescombe


Project risks

Project Risks


Financing

Investment

Equipment

Building

R&D

Environment

Sustainability

Staff / HR

Maintenance

Operating costs

Funds

Equity

Loans

Financing


Investment recovery

Cash Outflows

Equipment

Building

R&D

Environment

Sustainability

Staff / HR

Maintenance

Operating costs

Cash Inflows

Sales

Lower costs

Investment recovery


Components capital budget model

Components Capital Budget Model

  • Investment (Year 0)

  • Economic Life of the Investment

    • Years 1 - n

  • Interest Rate: i = r + π + σ

    • r = real interest rate

    • π = inflation

    • σ = risk (project risk mark-up)

  • Annual Cash Flows (During economic life)

    • Expenses

    • Revenues


  • Decision criteria

    Decision Criteria

    • Pay Back Period (PBP)

    • Return On Investments (ROI)

    • Break Even Time (BET)

    • Net Present Value (NPV)

    • Profitability Index

    • Internal Rate of Return (IRR)

    • Debt Service Coverage Ratio (DSCR)


    Weighted average cost of capital k wacc

    Weighted average cost of capital (kWACC)

    Cost of equity (ke) with the Cost of debt (kd)

    in proportion to the relative weight of each

    in the firm’s optimal long-term financial

    structure:

    kWACC = ke* E+ kd * (1-t) *D

    V = E + D

    V

    V


    Capital asset pricing model capm

    Capital asset pricing model (CAPM)

    CAPM defines the cost of equity (ke) for a

    firm as :

    ke = krf + βj * (km – krf)

    krf= interest rate on risk-free bonds

    km = expected (required) rate of return on

    equity

    βj = firm’s systematic risk coefficient

    risk free

    premium


    Example data

    Example: Data


    Example 20 million investment

    Example: € 20 million investment


    Calculations in ms excel

    Calculations in MS EXCEL


    Results

    Results


    The complexity of an investment decision

    The complexity of an investment decision

    Bookkeeper

    Entrepreneur

    Present

    Past

    Future

    20 years of uncertainty


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