The Green Switch: Pricing Sustainability through Business Model Innovation in Corporate Finance

This thesis examines whether Business Model Innovation oriented toward environmental sustainability functions as a structural driver of corporate value creation, analyzed through the conceptual lens of corporate finance. The central argument is that the green transition does not merely alter a firm's operational profile; it reconfigures both inputs of the discounted cash flow formula simultaneously, compressing the weighted average cost of capital through mechanisms that conventional competitors cannot replicate, while expanding the set of positive-NPV projects available to management through the alleviation of financing constraints and the accumulation of stakeholder social capital. The first chapter establishes the macroeconomic and regulatory architecture within which this transition occurs, drawing on the systemic risk framework developed by central banking authorities to map how physical, transition, and liability risks propagate through the financial system. It then traces the strategic implications for corporate business models, examining how circular economy principles and open innovation architectures enable firms to internalize environmental externalities as competitive advantages rather than compliance costs. The financial mechanics of green asset pricing are analyzed through the dual-channel WACC model: on the equity side, through the ESG risk factor premium documented in asset pricing theory; on the debt side, through the yield compression associated with certified green bond issuance, conditioned on the materiality of the underlying project relative to the issuer's core business. The second chapter conducts a systematic literature review organized around four analytical nodes. The operational transmission channel is examined through the evidence on green innovation quality, patent citation depth, and the labor income distribution effects of green finance policy. The strategic restructuring channel is addressed through the emerging literature on sustainability-driven M&A and the premium associated with environmental commitment in acquisition pricing. The structural limits of the sustainable finance architecture are then assessed, encompassing ESG rating divergence, greenwashing incentives, and the collateral-based credit rationing that concentrates green finance access among asset-heavy incumbents. The chapter concludes with an integrated synthesis proposing a causal framework that binds these mechanisms into a sequential but mutually reinforcing model of sustainability-driven value creation. The third chapter applies this framework as a diagnostic architecture to three European energy utilities — Ørsted, Enel, and Iberdrola — selected through theoretical sampling to isolate distinct segments of the model. Ørsted tests the full financial feedback circuit under conditions of radical portfolio decarbonization. Enel tests the debt innovation channel and the capacity of green bond issuance to price environmental commitment within a firm exhibiting structural divergence between green capital expenditure and aligned turnover. Iberdrola tests the operational transmission mechanism connecting sustained R&D investment and open innovation architecture to top-line revenue growth and margin expansion. The empirical analysis draws exclusively on public financial disclosures and sustainability reports, examining whether the causal sequence predicted by the theoretical framework is observable in the firms' actual capital structure trajectories, cost of capital dynamics, and operating performance over the transition period