Guide for Sustainable Project Analysis to Improve Energy Efficiency of Mexican SME

Faced with the need of overall cleaner production processes, the Government of Mexico, in coalition with international cooperation agencies, has made efforts to spark to a cleaner transition by the conferment of financing under preferential conditions for small and medium-sized enterprises (SMEs), which are the backbone of the Mexican economy. This will help the implementation of sustainable projects that promote the reduction of energy consumption and Greenhouse Gas (GHG) emissions. However, these efforts have not yielded the expected results since the viability of the loans is determined by the Financial Institutions (FIs) based solely on profitability analysis of the SMEs. If this analysis is complemented with consideration of environmental and social aspects, a greater number of projects would be subject to financing. Real Options method allows the calculation of future cash flows incorporating the uncertainty from the volatility associated with the projects, allowing future adjustments to be made to them based on their performance. In addition, under the economic cost-effectiveness analysis, costs incurred in the implemented projects are compared against the results, assigning a monetary value to them to determine their overall impact. Derived from the limitations in the valuation of sustainable projects in SMEs, this article aims to establish a guide for comprehensive evaluation, using a cost-effectiveness approach and addressing the uncertainty of the project through Real Options. Considering the diversity of the SME during this study, the target companies and the type of projects that have the best opportunities for successful application of the proposed guide were segmented.