ABSTRACT
A key question, in our view, is determining the underlying purpose of sustainability analysis. We propose to do this first by briefly reviewing the current state of sustainable and responsible investing (SRI) before moving on to consider the potential for sustainability to contribute to mainstream financial analysis. We will then investigate one possible way of integrating sustainability within mainstream analysis – as a factor modulating the risk premium used in dynamic valuation models, such as discounted cash flow. We believe that a financial basics-centred approach – notably an approach that focuses on calculating beta, or β, can provide a basis for the risk assessment of the long-term sustainability of companies.
