Total Economic Value (TEV)
What is Total Economic Value (TEV)?
Total economic value (TEV) is a measure of the total value that a company or product creates for society. It is a way of evaluating the economic impact of a business or product beyond just its financial performance.
TEV is calculated by taking into account both the direct and indirect economic impacts of a company or product. The direct economic impact includes the value created through the company's operations, such as the value of the goods or services it produces and sells. The indirect economic impact includes the value created through the company's supply chain, such as the value of the goods and services that are used in the production process.
TEV is important in business because it helps to understand the full economic impact of a company or product on society. It can be a useful tool for evaluating the overall economic performance of a business and identifying areas where it may be creating value or falling short. It can also be useful for making decisions about how to allocate resources and invest in the future.
The formula for calculating TEV can vary depending on the specific context and the data that is available. However, one common approach is to calculate the direct economic value (DEV) created by a company or product, and then add to this the indirect economic value (IEV) created through the supply chain. This can be expressed as:
TEV = DEV + IEV
The TEV framework is a structured approach for evaluating the total economic value of a company or product. It typically involves identifying the various stakeholders who are impacted by the company or product and then evaluating the value created for each stakeholder group. This can include financial value, such as profits or revenues, as well as non-financial value, such as social or environmental impacts.
The TEV framework can be a useful tool for companies to understand the full range of value that they create for society, and to identify areas where they may be able to create additional value in the future. It can also be useful for stakeholders, such as investors or policymakers, to evaluate the economic impact of a company or product.