In recent years shareholder value has become one of the most commonbuzzwords in the world of finance. Two schools of thought have emergedregarding the effect of corporate environmental protection on shareholdervalue.Some feel that the current level of corporate environmental protectionoften conflicts with other business objectives, particularly that of increasingthe company's enterprise value for the benefit of shareholders.Others believe that not only is the current level of corporate environmen-tal protection sustainable, but also that the environmental protectionpractised by companies may even have a beneficial effect on shareholdervalue.The often embittered debate surrounding the differences between the twopositions obscures what these two points of view have in common,namely that corporate environmental protection has a relevant impact onshareholder value, though this impact may be either positive or negative.But if environmental protection has an impact on enterprise value, thenit must also be brought into the company valuation.Both positions highlight the main difficulty encountered when trying toinclude environmental aspects in the company valuation: For a financialbusiness valuation, the question is not how much but rather what kind ofenvironmental protection is practised by a company.This study analyses the question both from the viewpoint of companymanagement and also from the viewpoint of external analysts.Part One attempts to define, from a management perspective, a form ofenvironmental management that is compatible with shareholder value,and goes on to consider how shareholder value can be increased throughenvironmental management. The degree of success or failure of thesemeasures are of particular interest to financial analysts. Part Twoconsiders the issue from the financial analyst's viewpoint, with the helpof various practical examples.We profited from discussions with various people before and whilewriting this study. Kaspar Müller and Andreas Sturm provided valuableinput. We are especially grateful to Erol Bilecen, Stefan Blum, René L.Frey, Andreas Knörzer, Michael Listner, Heinz-Rainer Müller and Bern-hard Speiser.