ABSTRACT
This chapter presents a new methodology that enables managers and analysts to evaluate impending environmental pressures in terms of their impact on the bottom line and on share price. The financial performance of modern business is increasingly impacted by the costs and opportunities presented by environmental issues. The methodology, like financial analysis and asset markets, is forward-looking. It is transparent, consistent with the fundamentals of financial analysis, and applicable to an individual project, a firm, or to an entire industry. In the pulp and paper industry, environmental developments will significantly affect future materials and energy costs, earnings, and balance sheets. To be useful to analysts, the financial implications of environmental issues must be conveyed in such a way that they can be incorporated into the valuation frameworks currently used to assess conventional business risks and opportunities. In the light of the findings presented here, such statements are erroneous and potentially misleading to investors and financial analysts.
