Ranking corporations based on sustainable and socially responsible practices: A data envelopment analysis (DEA) approach

Ranking corporations based on sustainable and socially responsible practices: A data envelopment analysis (DEA) approach

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Article ID: iaor200969176
Country: United Kingdom
Volume: 17
Issue: 4
Start Page Number: 257
End Page Number: 268
Publication Date: Jul 2009
Journal: Sustainable Development
Authors:
Keywords: measurement, statistics: data envelopment analysis
Abstract:

This study ranks publicly listed corporations based on social and environmental (i.e. sustainable) achievements in relation to financial results, by using a data envelopment analysis (DEA) approach with financial performance indicators (return on assets, return on equity and yearly stock return) as inputs and sustainability scores as outputs. The sustainability scores cover a wide range of sustainable practices and were provided by a specialized screening company. Our calculated DEA indices provide a measure of the commitment of firms towards sustainable practices. The main findings are that many companies are positioned well below best practice in their respective industries. Industry sectors that are less scrutinized by the public (e.g. banking) are found to be less competitive in terms of sustainable practices.

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