Building sustainability composite indicators using a multi-criteria approach

António Xavier, Rui Fragoso and Maria de Belém Costa Freitas

European Journal of Operational Research, 2025, vol. 326, issue 2, 326-342

Abstract: Building sustainability composite indicators is a complex process that has been addressed according to different strategies. One interesting approach is based on the compromise between the maximum aggregate solution and the most balanced solution, by considering the most displaced indicator regarding the ideal. However, some shortcomings were identified in this approach. First, several decision-making units may present an equal composite indicator, and hence the same position in the ranking, while corresponding to different sustainability situations. Second, the use of only the maximum deviation to define the most balanced solution requires a more integrated approach. Thus, this paper proposes a novel aggregation methodology for building sustainability composite indicators, where a new normalized entropy indicator for the most balanced solution is proposed and integrated with the sustainability criteria of the maximum aggregate solution and maximum deviation. The method proposed was applied to two illustrative examples from the literature and provided promising and robust results.

Keywords: Sustainability; Composite indicators; Multi-criteria decision analysis; Normalized entropy (search for similar items in EconPapers)
JEL-codes: C5 Q01 Q2 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:326:y:2025:i:2:p:326-342

DOI: 10.1016/j.ejor.2025.04.024

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