Exploring the sustainability performances of firms using environmental, social, and governance scores

Abstract

Abstract Sustainability enables the present supply chains to stabilize their gains, particularly for those operating in developing economies. Considering the literature on sustainability and supply chain performances, the Environmental, Social, and Governance (ESG) scores appear to be an indicator of sustainability performances. The majority of papers related to sustainability are to assess the sustainability performance using various tools and methods. However, there is limited research that analyses those sustainability assessment results and use the results for improving the future sustainability performance. This research fills this gap by demonstrating the use of grey theory in analysing ESG score for Indian firms. To this end, we study the sustainability performances of 39 firms in the Indian context, listed in the Thomson Reuters ESG scores that are consistently rated for their Environmental, Social, and Governance performances, for a period of 5 years from 2014 to 2018. A grey incidence analysis is used to study the most important indicators or attributes contributing to the sustainability performances of the Indian firms. This is important for the continuous improvement of the firm or its supply chains towards sustainability and to enhance the visibility of supply chains to stakeholders. It is observed from the results of the analysis that the Resource use score, the Environmental innovation score, and the Corporate Social Responsibility (CSR) strategy score emerges as the most important indicators contributing to Environmental, Social, and Governance performances of Indian firms. Whereas, the Shareholders score, the Management score, and the Human rights score appears to be among the least determining indicators, in the Indian context to achieving total Environmental, Social, and Governance performances. The research throws insights into the areas of poor performances of firms to achieving sustainability in Indian context. As we observe that two out of the three identified areas, the Shareholders score and the Management score appears in the Governance performance side of evaluation in ESG, the implications are uncovered in the direction of improving the Governance performance of Indian firms.