Page 82 - Design for Environment A Guide to Sustainable Product Development

Business Value Drivers 61

Components of Shareholder Value (continued)

waste disposal costs. Other indirect benefits of DFE
include re duced insurance premiums and training costs
(see Life-Cycle Accounting in Chapter 9).
3. Asset Utilization. DFE can reduce the complexity and
fixed costs of assets through process simplification and
streamlining of the supply chain. In addition, DFE can
improve the utilization of assets through increased busi-
ness continuity and equipment reliability, thus reducing
the total asset base required to support the business.
4. Risk Reduction. DFE can help to reduce overall enter-
prise risk, which is the main driver of WACC. Prevention
of incidents that may lead to business interruption, im -
proved responsiveness to crises, and assurance of regula-
tory compliance all contribute to lowering both the actual
and perceived risks associated with business operations.

Intangible value is less amenable to precise quantification,
but a number of studies have actually measured the strength of
intangibles across a variety of industries. Based on considerable

re search, the following characteristics depicted in Figure 4.3
have been identified as among the most important intangible
assets [10].
• Leadership Quality: Management capabilities, experi-
ence, vision for the future, transparency, accountability,
and trust.
• Reputation: How the company is viewed globally in
terms of stakeholder concerns, inclusion in “most

ad mired company” lists, and sustainability performance.
• Brand Equity: Strength of market position, ability to
ex pand the market, perception of product/service

quality, and investor confidence.
• Alliances and Networks: Customer and supply chain
relationships, strategic alliances and partnerships.
• Technology and Processes: Strategy execution, informa-
tion technology, inventory management, flexibility,
quality, and internal transparency.
• License to Operate: Regulatory positioning, relationships
with local communities, ability to expand operations.
• Human Capital: Talent acquisition, workforce retention,
employee relations, compensation, and perception as a
“great place to work.”