Whether and how environmental management can create enterprise value is intensively debated. There are a number of concepts that aim to link environmental management and enterprise value. These concepts are usually based on net present value approaches such as Rappaport's (1986) shareholder value model. What is usually overlooked is that environmental management based on net present value concepts risks making companies (eco-)efficient but vulnerable to environmental and social shocks. This article introduces the environmental option value concept as a compliment to concepts such as environmental shareholder value. As this article shows, creating environmental option value creates flexibility that allows companies to be shielded from the detrimental effects of possible future environmental and social shocks. In combination the two approaches can help environmental management to contribute to creating long-term enterprise value. Copyright © 2005 John Wiley & Sons, Ltd and ERP Environment.