Abstract
The aim of the paper is to propose a model for measuring sustainable value which would complexly assess environmental, social, and corporate governance contribution to value creation. In the paper the concept of the Sustainable Environmental, Social and Corporate Governance Value Added is presented. The Sustainable Environmental, Social and Corporate Governance Value Added is based on the Sustainable Value Added model and combines weighted environmental, social, and corporate governance indicators with their benchmarks determined by Data Envelopment Analysis. Benchmark values of indicators were set for each company separately and determine the optimal combination of environmental, social, and corporate governance inputs to economic outcomes. The Sustainable Environmental, Social and Corporate Governance Value Added methodology is applied on real-life corporate data and presented through a case study. The value added of most of the selected companies was negative, even though economic indicators of all of them are positive. The Sustainable Environmental, Social and Corporate Governance Value Added is intended to help owners, investors, and other stakeholders in their decision-making and sustainability assessment. The use of environmental, social, and corporate governance factors helps identify the company’s strengths and weaknesses, and provides a more sophisticated insight into it than the one-dimensional methods based on economic performance alone.
Highlights
The concept of sustainable development was first discussed in the second half of the 20th century; it was defined in 1987 and gradually implemented at the macroeconomic level in response to global problems that cannot be addressed at the local level [1]
The aim of this paper is to present a model of the Sustainable Environmental, Social and Corporate Governance Value Added (SESGVA) that is based on the strengths of the original Sustainable Value Added (SVA) but overcomes its weaknesses
IESGi performance indicators from Exploratory factor analysis (EFA) and Confirmatory factor analysis (CFA) are used for the calculation of the SESGVA model, i.e., twelve IESGi performance indicators and their weights wi, which give priority to IESGi indicators, see Tables 3 and 4
Summary
The concept of sustainable development was first discussed in the second half of the 20th century; it was defined in 1987 and gradually implemented at the macroeconomic level in response to global problems (e.g., global warming, soil degradation, poverty) that cannot be addressed at the local level [1]. The authors [4] note that environmental, social, and corporate governance (ESG) indicators are important in terms of corporate strategy. It became apparent that non-financial ESG indicators needed to be included in the management of corporate value. The SVA model was first published in Sustainable Value Added—Measuring Corporate Performance Beyond Sustainable Eco-Efficiency [5]. The aim of this paper is to present a model of the Sustainable Environmental, Social and Corporate Governance Value Added (SESGVA) that is based on the strengths of the original SVA but overcomes its weaknesses. The goal of empirical research is to focus on measuring and managing sustainability of the manufacturing industry in terms of SESGVA model and, based on empirical research and data from 2009–2013, to propose a SESGVA model for manufacturing companies. The manufacturing industry is one of the most important sources for gross domestic product (GDP) in the Czech Republic
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