Decision-making on sustainability investment faces two challenges. First, appraisal methods are based on a narrow view of shareholder value and require extensions to support decisions that involve valuable outcomes for society. Second, the consequences of climate change are uncertain. However, firms have real options to adapt, which helps them realize the energy transition. An extended net present value that includes societal real options can assess the value of phasing in renewables (e.g., timing, expansion, and growth options) and phasing out fossil fuels (contraction, abandonment, and switching options). Increased corporate awareness of societal real options value should encourage corporations to act more responsibly.
