Exploring Value Creation in Environmental Investments

This paper considers foundational theory of portfolio selection and capital structure to create a non-traditional approach for valuing sustainable projects within corporations and the corporations that approve such projects, called environmental investments. This paper uses the created valuation approach to value the electric vehicle company, Rivian. The result was the implication of considerable additional cash flow to arrive at analyst expectations of Rivian, which are not seen to be justified by the intrinsic environmental impact of the firm and others like it. Challenges such as this mispricing and unclear expectations are creating turmoil in this investing space, and opportunities are presented to resolve these challenges to create an efficient environmental investing marketplace that benefits companies, shareholders, and stakeholders alike.Financ