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Abstract
Dozens of frameworks of sustainability assessment that focus on the performance of companies have been suggested by
now. They propose using numerous sustainability indicators, which are generally measured in very different units. While it is
important to assess sustainability with several indicators, it may sometimes be difficult to make comparisons among companies
based on a large number of performance measurements.
This paper presents a model for designing a composite sustainable development index that depicts performance of
companies along all the three dimensions of sustainabilityeconomic, environmental, and societal. In the first part of the paper,
the procedure of calculating the index that would enable comparisons of companies in specific sector regarding sustainability
performance is presented. However, the emphasis of the paper is on the second part, where the effectiveness of the proposed
model is illustrated with a case study in which two companies from specific sector are compared regarding their sustainability
performance.
D 2004 Elsevier B.V. All rights reserved.
Keywords: Sustainable development; Sustainability assessment; Composite index; Sustainability indicators
1. Introduction
Abbreviations: AHP, Analytic Hierarchy Process; AIChE,
American Institute of Chemical Engineers; CWRT, Center for
Waste Reduction Technologies; EMAS, Eco-management and
Auditing Scheme; GRI, Global Reporting Initiative; IChemE,
Institution of Chemical Engineers; ISO, International Organization
for Standardization; R&D, Research and Development; S.D.,
Standard deviation; SD, Sustainable development; UP, Unit of
Production (mass of oil equivalents); USD, United States Dollar;
WBCSD, World Business Council for Sustainable Development;
WCED, World Commission on Environment and Development.
T Corresponding author. Tel.: +386 2 229 44 51; fax: +386 2 252
77 74.
E-mail address: glavic@uni-mb.si (P. Glavic).
0921-8009/$ - see front matter D 2004 Elsevier B.V. All rights reserved.
doi:10.1016/j.ecolecon.2004.12.011
ECOLEC-02135; No of Pages 13
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IN;ijt
IA;ijt
Imin;jt
Imax;jt
Imin;jt
IN;ijt
1
IA;ijt
Imin;jt
Imax;jt
Imin;jt
+
where I N,ijt
is the normalized indicator i of type bmore
is betterQ for group of indicators j for time (year) t and
I N,ijt
is the normalized indicator i of type bless is
betterQ for group of indicators j for the same time
(year) t.
In that way, the possibility of incorporating different kinds of quantities, with different units of
measurement (i.e. physical, economic, etc.) is offered.
One of the advantages of the proposed normalization
of indicators is the clear compatibility of different
indicators, since all indicators are normalized.
IS;jt
Wjt IN;jit
Wji IN;jit
3
jit
n
X
jit
Wji 1; Wji z0
ji
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Table 1
Economic indicators of the case companies from years 2000 to 2003
Indicator
Symbol
Unit
2001
2002
2003
2000
2001
2002
2003
CA
f R&D
c expl
c env. fines
USD/t
%
USD/t
MUSD
71
1.3
4.59
3
55
1.4
4.88
1
49
1.7
5.44
1
64
1.7
7.59
17
63
1.7
3.71
7
39
1.5
2.82
12
39
1.7
3.68
28
58
1.2
3.02
7
BP
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Table 2
Environmental indicators of the case companies from years 2000 to 2003
Indicator
Symbol
q prod
f CO2
f CH4
f SO2
f NOx
f wst, hazard
f spills
kt/d
kg/t
kg/t
kg/t
kg/t
kg/t
kg/t
2000
Mass
Mass
Mass
Mass
Mass
Mass
Mass
a
b
flow
ratio
ratio
ratio
ratio
ratio
ratio
2001
2002
BP
2003
2000
2001
2002
2003
Table 3
Societal indicators of the case companies from years 2000 to 2003
Indicator
Number of employees
Fraction of societal and community
investment in gross profit
Number fraction of fatalities per employee
Fatality Accident Rate for employees and contractorsa
Recordable Injury Frequency (RIF) for employees
and contractorsb
a
b
Symbol
Unit
BP
2000
2000
2001
2002
2003
2001
2002
2003
N employ
1000 90
91
116
119
107
110
115
104
0.28 0.32
0.34
0.30
0.32
0.37
0.39
0.25
f soc and com %
X fatalities
R ac
m injury
%
1/Mh
1/Mh
5.56
8.20
3.20
3.30
5.20
2.90
6.90
6.30
2.60
4.20
5.40
2.30
9.33
5.00
6.30
4.54
3.20
4.75
2.60
2.50
3.85
4.82
3.80
3.05
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Table 4
Judging the indicators according to the indication of positive or
negative performance of the case companies
Group of
sustainability
indicators
Indicators of positive
+
performance, I N,ijt
Indicators of negative
performance,
I N,ijt
Economic
Environmental
C A, f R&D
/
Societal
f soc
c expl, c env.fines
f CO2, f CH4, f SO2, f NOx ,
f wst, hazard, f spills
X fatalities, R ac, m injury
and com
Table 5
Estimation of preferences for sustainability indicators of the case companies
Estimated
indicator
Relative to
indicator
Average
factor
S.D. of
factors
Economic indicators
f R&D
CA
c expl
CA
c env. fines
CA
f R&D
c expl
c env. fines
f R&D
c env. fines
c expl
9
5
1/3
1
1/5
1/7
3
1/3
1
1
1/4
1/2
3
1/7
1/3
1/5
1
1
9
7
1/7
7
1/5
5
7
7
1
1
1/5
1/5
7
9
3
5
1
1/3
1/9
1/9
2
1/7
5
1/3
5
4
1
2
1
1
3.43
3.82
1.04
2.69
1.75
1.76
Environmental indicators
f CH4
f CO2
f SO2
f CO2
f CO2
f NOx
f wst, hazard
f CO2
f spills
f CO2
f SO2
f CH4
f CH4
f NOx
f wst, hazard
f CH4
f spills
f CH4
f NOx
f SO2
f SO2
f wst, hazard
f spills
f SO2
f wst, hazard
f NOx
f NOx
f spills
f spills
f wst, hazard
1/3
3
3
1
1
1
1
3
3
1/3
1
1
3
3
1
1/4
3
1/3
8
5
4
3
9
5
4
7
3
4
4
1
2
2
2
5
7
1
1
3
2
1
2
3
5
5
3
1/7
7
1/7
7
7
7
7
7
7
1/7
7
7
7
7
7
1/5
1/5
1/3
1
7
1
1
5
7
1
3
7
3
7
5
3
3
3
5
7
3
3
5
7
3
5
7
5
7
3
1
3
1
1
3
2
4
5
1/9
2
4
3
4
5
5
1
3
1
4
5
3
3
5
4
2
4
4
4
5
4
1.11
2.03
1.26
3.00
2.43
2.21
2.19
2.14
2.79
1.43
2.34
2.51
1.40
1.62
2.23
Societal indicators
X fatalities
f soc and com
R ac
f soc and com
rinjury
f soc and com
R ac
X fatalities
X fatalities
rinjury
rinjury
R ac
9
9
9
1
5
5
5
5
5
1
1/5
1/5
3
1/3
1/3
1
5
5
7
7
7
1
1/7
1/7
5
2
2
1
1/3
1/3
1
1
1
1
1
1
9
1/7
1/7
1
6
6
6
3
3
1
3
3
2.99
3.53
3.53
0.00
2.66
2.66
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Table 6
Normalized values of economic indicators (not normalized) of the case companies
I
Indicator
Symbol
Weight,
W 1i
BP
2000
2001
2002
2003
2000
2001
2002
2003
1
2
3
4
CA
f R&D
c expl
c env. fines
Total
0.120
0.281
0.363
0.236
1.000
1.00
0.14
0.63
0.94
0.53
0.47
0.57
1.00
0.34
0.87
0.45
1.00
0.80
0.97
0.00
0.42
0.75
1.00
0.81
0.80
0.00
0.60
1.00
0.59
0.01
0.99
0.82
0.00
0.62
0.00
0.96
0.79
Table 7
Normalized values of environmental indicators (not normalized) of the case companies
I
Indicator
1
2
3
4
5
6
Mass
Mass
Mass
Mass
Mass
Mass
ratio
ratio
ratio
ratio
ratio
ratio
of
of
of
of
of
of
CO2 emissions to UP
CH4 emissions to UP
SO2 emissions to UP
NOx emissions to UP
hazardous waste to UP
spills to UP
Symbol
Weight,
W 2i
BP
2000
2001
2002
2003
2000
2001
2002
2003
f CO2
f CH4
f SO2
f NOx
f wst, hazard
f spills
Total
0.061
0.055
0.110
0.103
0.263
0.407
1.000
0.00
0.00
0.94
0.35
0.53
0.42
0.51
0.08
0.87
0.25
0.00
0.30
0.98
0.22
1.00
0.16
0.74
0.00
1.00
0.03
0.89
0.00
0.78
0.08
0.14
0.10
0.13
1.00
0.54
1.00
0.19
0.30
0.00
0.77
0.99
0.75
0.66
0.82
0.38
0.61
1.00
0.61
0.86
1.00
0.70
0.82
0.98
0.49
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Table 8
Normalized values of societal indicators (not normalized) of the case companies
I
Indicator
Symbol
Weight,
W 3i
BP
2000
2001
2002
2003
2000
2001
2002
2003
f soc
0.0692
0.16
0.45
0.59
0.33
0.51
0.85
1.00
0.00
X fatalities
R ac
rinjury
0.2744
0.2410
0.4154
0.56
0.00
0.78
0.90
0.53
0.85
0.36
0.33
0.93
0.76
0.49
1.00
0.00
0.56
0.00
0.71
0.88
0.39
1.00
1.00
0.61
0.67
0.77
0.81
Total
1.000
2
3
4
and com
I ECN
I ENV
I SOC
1
2
1/2
1/2
1
1
2
1
1
3.50
2.50
4.00
Weights
0.286
0.571
0.143
0.200
0.400
0.400
0.500
0.250
0.250
0.329
0.407
0.264
I ECN
I ENV
I SOC
I CSD
BP
2000
2001
2002
2003
2000
2001
2002
2003
0.609
0.427
0.518
0.511
0.637
0.211
0.765
0.497
0.683
0.547
0.640
0.616
0.467
0.470
0.784
0.552
0.856
0.554
0.152
0.547
0.673
0.712
0.604
0.671
0.579
0.790
0.818
0.728
0.607
0.904
0.700
0.753
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Fig. 2. Variation of sustainability sub-indices and the I CSD of the case companies over a time interval of years 20002003: (a) economic subindex, (b) environmental sub-index, (c) societal sub-index and (d) composite sustainable development index.
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Fig. 3. Representation of the I CSD of the case companies for year 2003 using normalized values of indicators.
4. Conclusions
There are basically three different target groups
whose attitudes towards clarity of sustainability
assessment differ: scientists, decision makers and
individuals (Braat, 1991). Scientists are interested
primarily in statistically useable and possibly not
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Acknowledgements
The authors would like to acknowledge financial support from the Ministry of Education,
Science and Sport of Slovenia, Research Grant
No. 3311-02-831226.
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