Green Energy Markets: Towards an Internal Rate of Return and ESG Factors

The contemporary green transformation of the economy is a strategic imperative for businesses, especially small and medium-sized enterprises (SMEs) operating in the energy market, forcing the integration of sustainable practices in decision-making processes, including investment efficiency assessment. Classic financial tools, such as the internal rate of return and net present value, commonly used in the SME sector, do not always adequately account for environmental, regulatory, and social risks associated with green transformation. The goal of the study was to determine the impact of nominal and real discount rates, adjusted for a synthetic measure of green transformation, on investment decisions. The research methodology combines advanced multicriteria analysis techniques with sustainable finance concepts, offering an innovative approach to investment decision-making in the SME sector. The study shows that integrating environmental factors increases the cost of capital and reduces the net present value while maintaining the profitability of the analysed projects. Incorporating green components into the discount rate enhances valuation appropriateness and improves investment risk management, especially in conditions of macroeconomic uncertainty. The findings contribute to the development of research on dynamic methods of evaluating investment projects.