Corporate Finance for Long-Term Value

This open access textbook offers a guide to corporate finance for modern companies that want to create long-term value. Drawing on recent literature on sustainable companies, it starts by analysing the Sustainable Development Goals as a strategy for the transition to a sustainable economy. Next, it translates the general concept of sustainability into core corporate finance methods, such as net present value, company valuation, cost of capital, capital structure and M&A.

Current corporate finance textbooks are primarily based on the shareholder model, designed to maximise financial value. This book instead adopts the integrated model, which argues that companies have to serve the interests of their current and future stakeholders. Accordingly, companies move from simply maximising financial value to optimising integrated value, which combines financial, social and environmental value. Applying this new paradigm of integrated value is the truly innovative feature of this textbook.

Written for undergraduate and graduate students of Finance, Economics, and Business Administration, this textbook provides a fresh analysis of corporate finance. Combining theory, empirical data and examples from actual companies, it reveals the sustainability challenges for corporate investment and shows how finance can be used to steer funds to sustainable companies and projects and thus accelerate the transition to a sustainable economy.

Dirk Schoenmaker and Willem Schramade have set the example: corporate finance teaching can be adapted to focus on sustainable finance without compromising on the rigour and fundamentals of the core finance curriculum. Social and environmental objectives deserve their role in business decisions, Corporate Finance for Long-Term Value brings it to the class room.

- Arnoud Boot, Professor of Corporate Finance at University of Amsterdam

Whereas traditional Finance Theory is well established, the methods for the inclusion of environmental and social issues are still lagging behind. By integrating sustainability in corporate finance models, this book establishes a concrete link between sustainability and finance and transforms the idea of long-term value into standard procedures. Creating these methods and educating people on their use will make long-term value creation the standard among companies.
- Lea Schütze, Master of Finance student at Rotterdam School of Management

This groundbreaking book contains the key to unlock our economic system for long-term value. To business and investors, it provides the tools and incentives to accelerate the transformations towards a net-zero, nature-positive and equitable world.
- Peter Bakker, President World Business Council for Sustainable Development

This book is highly relevant to any investor looking to make long-term decisons and seeking better outcomes. It is both innovative and practical.
- Peter Harrison, CEO Schroders

Dirk Schoenmaker is a Professor of Banking and Finance at Rotterdam School of Management, Erasmus University, and Director of the Erasmus Platform for Sustainable Value Creation. He is a Research Fellow at CEPR and leads CEPR’s Research and Policy Network on Sustainable Finance. His research covers the fields of sustainable finance, central banking, financial supervision and European banking. Before joining RSM, Dirk worked at the Bank of England and the Dutch Ministry of Finance. Dirk is (co-)author of Principles of Sustainable Finance (OUP), Financial Markets and Institutions: A European Perspective (CUP) and Governance of International Banking: The Financial Trilemma (OUP).

Willem Schramadeis Head of Sustainability Client Advisory at Schroders, Professor of Finance at Nyenrode Business University, and Fellow of the Erasmus Platform for Sustainable Value Creation at Rotterdam School of Management, Erasmus University. Before joining Schroders, Willem worked as an independent consultant, advising financial institutions and corporations on sustainablefinance. Previously, he worked as a portfolio manager for listed impact equities at NN Investment Partners, and he held positions at Robeco, General Electric, PwC and Erasmus University, where he obtained his PhD in finance in 2006. Willem publishes about sustainablefinance in scientific journals and teaches sustainable finance at Nyenrode Business University and Erasmus University. His academic textbook Principles of Sustainable Finance (co-authored with Dirk Schoenmaker) was published by Oxford University Press in 2019.