What’s the role of the benchmark?
The benchmark serves to determine the opportunity costs. In financial analysis, the market average return is often used as a benchmark. If an investment yields 5% and the market return is only 3%, then the investment beats the benchmark and has earned its opportunity costs. The benchmark thus determines the alternative investment that is foregone. In ADVANCE, we use the efficiency of the EU15 to determine the opportunity costs of the use of seven different environmental resources in companies. Click here to go back to the top.
