Split-Screen Approach to Financial Modeling in Sustainable Fleet Management

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🔬研究者:Provides a novel integrated accounting-and-finance framework (Split-Screen Approach) for capital budgeting under complexity, with empirical demonstration of the profitability-sustainability trade-off.

🏢実務担当者:Offers a practical tool (Net Value Curve) to quantify the financial cost of CO2 reduction in fleet transitions, supporting investment decisions and sustainability reporting.

🏛政策担当者:Highlights the need for policy mechanisms that address the financial sacrifice required for environmental gains, as quantified by the NPV-to-NGV ratio.

Large-scale transitions to eco-friendly vehicle fleets present complex capital budgeting challenges, requiring the integration of extensive operational data with financial modeling while balancing economic profitability and environmental sustainability. Traditional approaches often struggle to manage this complexity and quantify the inherent trade-offs. This study develops and applies an innovative integrated accounting-and-finance framework to evaluate the economic and environmental implications of green fleet transition projects, explicitly quantifying the trade-off between profitability and sustainability. Focusing on waste vehicle replacement of Iren Spa, a leading European multi-utility company, we employ the recently developed Split-Screen Approach, a unified accounting-and-finance framework grounded in the laws of motion and conservation. It automatically reconciles pro forma financial statements and generates internally consistent valuation metrics, eliminating the manual adjustments and inconsistencies of traditional models. Its built-in diagnostic checks and scalability for highly complex datasets overcome the manual adjustments and inconsistencies inherent in traditional financial models. We process 2303 inputs across multiple “green” scenarios. This methodology integrates an Engineering Model, describing fleet evolution, operating costs, and CO2 reduction, with a HookUp Model, which serves to transform scenarios into well-defined projects. The latter model is then integrated with a Financial Model that generates pro forma financial statements, incorporates financing and payout policies, and assesses economic profitability through Net Present Value (NPV) and consistent accounting rates of return. Together, these elements form a robust framework for managing complex data integration and analysis. Our research reveals a fundamental trade-off: enhanced environmental sustainability (measured by Net Green Value, NGV), which quantifies CO2 reduction, is achieved at the expense of economic profitability, measured by NPV. This financial sacrifice is captured by the Net Value Curve, a Pareto frontier, while the NPV-to-NGV ratio provides “shadow prices” for CO2 reduction, revealing the financial cost per unit of sustainability gained. Based on 21 project scenarios and additional sensitivity analyses on financial inputs and energy prices, the results confirm a decreasing relationship between NGV and NPV. This study makes three main contributions: (1) it demonstrates the practical application of the Split- Screen Approach for capital budgeting under complexity, (2) it introduces the Net Value Curve framework as a useful tool for visualizing and quantifying the trade-off between profitability and sustainability, (3) it provides managers and policymakers actionable insights, supporting more informed decisions in green fleet transition planning where economic and environmental objectives may conflict. The findings provide managers and policymakers with a rigorous and transparent accounting-and-finance framework that enhances the reliability of capital budgeting decisions compared with traditional financial modeling, while offering a Paretian frontier for evaluating environmental trade-offs.

• openaire https://doi.org/10.3390/jrfm18110613first seen 2026-05-05 19:07:40