Investment sustainability assessment methodology


Investment sustainability assessment methodology

The criterion of sustainable performance as an integral part of evaluating an investment is used for the first time in Greece, since, up to now, the conditions for financing an investment involved mainly providing financial information, preparing the environmental impact study and providing limited information on the characteristics of the investment regarding its social capital.

Typically, an investment characterized by a fair sustainable performance demonstrates higher risk tolerance to external factors that exert pressure, as well as increased chances for sustainable operation, which strengthen its economic reciprocity.

It is noted that the aim of the methodology is not to reject an investment, if the project is characterized by low sustainable performance, but to highlight the items in the business plan that should be modified in order to improve the investment's sustainable performance.

The assessment of an investment's sustainable performance is distinguished into two phases that include the sustainable performance assessment before its development (Phase A) and during its operation (Phase B).

Assessment of both phases is based on criteria that fall within eight (8) thematic categories:

  • Category 1. Environmental and Social Policy, legislation and standards
  • Category 2. Environmental and Cultural Capital
  • Category 3. Energy and Climate Change
  • Category 4. Pollution prevention and response measures
  • Category 5. Effective use of natural resources
  • Category 6. Society
  • Category 7. Workplace
  • Category 8. Business plan implementation and management

The process is flexible as to the composition of the criteria used to enable its implementation in investments of diverse nature and size.

More specifically, Phase A assesses sustainable performance by Category, highlights corrective and complementary interventions that enhance the investment's sustainable performance and reassesses sustainable performance on the basis of corrective and complementary interventions. The final (qualitative) classification of the investment in terms of sustainable performance is defined as follows:

Classification according to sustainable performance Definition
A No or extremely limited negative impact - low environmental and social risk investment - great potential for local development and social cohesion improvement.
B Significant negative environmental and social impact addressed with specific actions and/or targeted measures - relatively significant potential for local development and social cohesion improvement.
C Possible significant negative environmental and social impact that can hardly be addressed by specific actions.
D Unacceptable according to the characteristics and priorities set by ETVA

Phase B assesses the investment's sustainable performance during operation, under the same thematic categories included in Phase A, but with a significantly smaller number of criteria. During Phase B, criteria receive their value from a fixed range of values [0: negative assessment, 1: partially positive assessment and 2: positive assessment] and are combined with weighting factors that vary according to the criteria. The total score (T.S.), with a maximum of 100 points, is classified as follows:

  • High sustainable performance (> 90)
  • Moderate sustainable performance (70
  • Low sustainable performance (50≤ T.S.≤70)
  • No sustainable performance (<50)