A framework to measure corporate sustainability performance: A strong sustainability-based view of firm

Abstract

This paper proposes a framework to measure corporate sustainability performance by designing a composite sustainability index. Two core concepts form the basis of the proposed corporate sustainability index: (a) the triple-bottom-line approach and (b) the principles of strong sustainability. More specifically, the proposed index simultaneously combines the economic, environmental and social components of sustainability integrating the concept of thresholds into the logic composite index of corporate sustainability performance measurement so as to address some basic principles of strong sustainability. This implies that thresholds could be associated with the concept of carrying capacity, safe minimum standards and critical capital. Finally, a computational example has been designed in order to show the practical implications of the proposed index. The findings indicate that social and environmental thresholds could play a critical role in the overall sustainability performance of firms and the proposed index could be a good tool for scholars and practitioners to understand the logic of measuring corporate strong sustainability performance.