Value Creation Rating (VCr): A Primer
Type
book section
Date Issued
2025
Author(s)
Abstract
Chapter 2 of the VCr2025 report introduces the Value Creation Rating (VCr) as a comprehensive firm-level sustainability measurement designed to distinguish sustainable value creation from extractive value transfers in business models. Developed within the Sustainable Value Creation (SVC) framework, the VCr aligns financial performance and risk origination with long-term societal sustainability by assessing how firms create, appropriate, or transfer value across a wide range of stakeholders. Unlike conventional ESG, CSR, or sustainability ratings, the VCr explicitly incorporates political-economy relationships, power dynamics, and institutional contexts.
The VCr measures the proportion of value creation relative to value appropriation (revenue) by aggregating both inclusive value transfers (“transfer-OUT,” value created but not appropriated) and extractive value transfers (“transfer-IN,” value appropriated but not created). It is operationalized through a four-level architecture comprising 102 firm-level SVC Metrics, 12 Pillars, 4 Rating Areas (Non-market Power, Market Power, Non-market Value, Market Value), and two Sub-Ratings (Power and Value), which together yield a single VCr score. A complementary measure, the Value Creation Position (VCp), focuses more narrowly on the proportion of extractive value transfers relative to revenue.
The chapter details the conceptual foundations, data sources, calibration methods, weighting schemes, and sector-specific baselines underpinning the VCr methodology. It also introduces applied tools such as the Sustainable Value Matrix, which positions firms according to profitability and value creation. Overall, the VCr is presented as a practical analytical and decision-making instrument for managers, investors, policymakers, and society to evaluate and transform business models toward long-term sustainable value creation.
The VCr measures the proportion of value creation relative to value appropriation (revenue) by aggregating both inclusive value transfers (“transfer-OUT,” value created but not appropriated) and extractive value transfers (“transfer-IN,” value appropriated but not created). It is operationalized through a four-level architecture comprising 102 firm-level SVC Metrics, 12 Pillars, 4 Rating Areas (Non-market Power, Market Power, Non-market Value, Market Value), and two Sub-Ratings (Power and Value), which together yield a single VCr score. A complementary measure, the Value Creation Position (VCp), focuses more narrowly on the proportion of extractive value transfers relative to revenue.
The chapter details the conceptual foundations, data sources, calibration methods, weighting schemes, and sector-specific baselines underpinning the VCr methodology. It also introduces applied tools such as the Sustainable Value Matrix, which positions firms according to profitability and value creation. Overall, the VCr is presented as a practical analytical and decision-making instrument for managers, investors, policymakers, and society to evaluate and transform business models toward long-term sustainable value creation.
Book title
Value Creation Ratings Report 2025 proof-of-concept: The Sustainable Value Creation of Firms
Publisher
Elsevier BV
File(s)![Thumbnail Image]()
Name
VCr2025_CH2.pdf
Size
3.54 MB
Format
Adobe PDF
Checksum (MD5)
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